LivePerson, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's first quarter 2022 earnings conference call. My name is Kyle, and I'll be your conference operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, the management from LivePerson will conduct a question and answer session, and conference participants will be given instructions at that time. To give everyone the opportunity to participate, please limit yourself to one question and one follow-up. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Ms. Jamie Goldstein.

Thank you, Operator. Good afternoon, and thank you all for joining us today. On the call with me are Rob Lacascio, LivePerson's founder and CEO, and John Collins, Chief Financial Officer. Please note that during today's call, we will make forward-looking statements, which are predictions, projections, and other statements about future results. These statements are based on our current expectations and assumptions as of today and are subject to risks and uncertainties. Actual results may differ materially due to various factors, including those described in today's earnings press release and the comments made during this conference call and in 10-Ks, 10-Qs, and other reports we file from time to time with the SEC. We assume no obligation to update any forward-looking statements. Also during this call, we will discuss non-GAAP financial measures. Reconciliations of GAAP to non-GAAP financial measures are included in today's earnings press release, where applicable. Both the press release and supplemental slides, which include highlights for the quarter, are available in the investor relations section of LivePerson's website. Finally, I'd like to remind everyone that we are here today to talk about our first quarter of fiscal year 2022. As you may be aware, a shareholder has announced its intent to nominate candidates for election as directors at the company's 2022 annual meeting of stockholders. The company intends to file definitive proxy materials relating to the 2022 annual meeting in due course. Stockholders of the company are strongly encouraged to read the company's definitive proxy statement, the accompanying proxy card, and all other documents filed with the SEC carefully and in their entirety as they contain important information. Information regarding the identity of the company's participants and their direct or indirect interests by security holdings or otherwise. will be set forth in the definitive proxy statement and other materials filed by the company with the SEC. Stockholders may obtain copies of these documents for free through the company's website or through the SEC's website at www.sec.gov. We will not comment further on this matter on this call. We appreciate you keeping your questions focused on my person's performance and results. And with that, I'll turn the call over to Rob. Rob?

Thanks, Jamie. Thank you for joining Y-Person's first quarter 2020 earnings call. We had a very strong quarter, and what you will hear from John and myself will reinforce the progress and improvements we are making to the overall business and our focus on profitable growth goals and our continued leadership in the AI space. We beat both top and bottom line guidance for the first quarter. Revenue and adjusted EBITDA exceeded the high end of the guidance range, with revenue growing 21% year-over-year to $130.2 million, and adjusted EBITDA loss of $17.6 million, $4.2 million better than the top end of our guidance range. These strong results were driven by both higher revenue and greater operational efficiencies. We signed five seven-figure ACV deals plus two additional eight-figure TCV deals. Overall deal count was solid, up slightly year-over-year. Many of these deals were very large upsells with existing customers, driving ARPU to increase 32% year-over-year as we continue to execute on our successful land and expand strategy. These achievements illustrate strength across the business and clear proof points of execution on the key strategic and operational priorities we announced heading into 2022, including our profitable growth plan, which we've been focused on since the beginning of the year. We are confident that our laser focus on these priorities will help us maintain our industry-leading position, strategically deploying capital to generate shareholder value and get more leverage on the business model. As John will cover in his remarks, we're also improving our Q2 and full-year 2022 guidance for adjusted EBITDA to reflect operating cost realignment. And we now have line of sight to generate free cash flow by Q4 2022. John and I are excited to share more details about the progress on our Q1 priorities and our plans to continue executing on them through 2022 and beyond. We continue to see robust platform usage during the quarter with conversational cloud volume growing 34% year-over-year for AI-based messaging conversations and 27% year-over-year for total messaging conversations. As platform usage grew, so did our brand relationships. As noted at the beginning of the call, the first quarter's strong execution reflects the great progress we're making as we focus on the key strategic and operational priorities we talked about on the previous earnings call. One of these initiatives is our continued focus on evolving and adapting our go-to-market strategy to align with our goal of profitable growth. We spent the last few quarters focused on building and ramping an extraordinary sales team, and I think in the next few quarters, we'll see an increase in traction as the team's capacity starts to grow. Our land and expand strategy continued to bear fruit as we renewed contracts and some of our longstanding brands and leveraged existing relationships with new logos. We closed an eight-figure TCV renewal for care and commerce with a multi-billion dollar North American satellite radio entertainment company during the quarter. In 2019, we began our partnership with this brand by providing them with IVR deflection capabilities to help manage the 24 million calls they receive each year. Since then, we've become an integrated partner, leveraging our platform and gain share model to support them in their mission to offer frictionless experience through the entire customer journey, whether a customer is signing up for a free trial or transferring an ongoing subscription to a new device. This deal represents an expansion with the brand across multiple core conversational cloud capabilities, including, in addition, our voice analytics products. It's a great example of the product synergies and market traction we're already seeing as we execute our strategy for the voice assets we acquired towards the end of last year. We also expanded our partner-led relationships with one of the largest automotive manufacturers in the UK. This brand has been leveraging the conversational cloud to enable a high-quality messaging experience through almost every channel to manage conversations among brands, its retailers, and its customers. In Q1, we added an AI virtual assistant to assist retail technicians by suggesting methods to resolve vehicle issues immediately, rather than involving human agents from the OEM. Going forward, we're also working to help increase engagement with the efficiency of their HR processes, as we evolve their HR FAQ chatbot into an AI-powered virtual agent, providing 24-7 assistance to their employees. This expansion is a great example of execution on a strategy to drive greater leverage in our go-to-market model, with continued focus on our indirect distribution channels. We also secured a renewal with one of the largest and biggest standing game share customers of the quarter. Renewal, which converts about 90% of the customer spending into recurring revenue for live person, was driven by the volume messaging we support for the brand, the strong customer satisfaction they're seeing using our platform, and our automation capabilities. We continue to make headway in the growing Web3 space and have quickly become the go-to messaging provider for customer care in this vertical. including having one of the largest Web3 exchanges and also one of the largest Web3 wallet providers as a customer. During the quarter, we closed a three-year renewal with ConsenSys and are powering their customer engagement offering for their MetaMask wallet. As their MetaMask wallet grew from 5 million monthly active users to over 30 in just one year, they're looking to accelerate customer support capabilities to meet consumer needs. We started with a consumer support bot to help users quickly access content to help resolve their needs faster without back and forth on email. The live person and consensus teams continue to collaborate on optimizing the AI automation, which now reduces support wait times by 93%. Consensus is quickly expanding to use our entire product suite into some of their lines like NFT platforms and leveraging other bots beyond what they're doing with the wallet. We also expanded our relationship with one of the largest crypto exchanges during Q1. They are now expanding to new international markets, and we should see continued growth from them over the next few years. Some of our international markets, especially in LATAM and APAC, are also seeing more traction with new logos. In LATAM, with a distribution partner, we closed an exciting new win with a government agency in Argentina. The government agency built an online portal to help its citizens access education and reduce the country's unemployment rate to increase traffic on the portal. They've been using our messaging capabilities to send 300,000 proactive outbound messages per month via WhatsApp and enable citizens to continue the conversation over WhatsApp to register for educational courses. As of now, close to 60% of the proactive messages are reaching their target audience, a number which government considers to be a huge success. This story, along with many others, highlights on this call represents an incredibly wide span of use cases and projects that can be built on the conversational cloud. In addition to these wins, I want to highlight that we were thrilled to have hosted the return of our popular in-person executive community events last week in New York City. We had close to 100 participants from many of the leading consumer brands in North America, of which approximately two-thirds were new prospects and one-third existing customers. Several of our top brands in the healthcare retail software industry hospitality spaces presented on stage about their successes in working with live person, and how they're leveraging our AI platform to drive automations across many different powerful use cases. It was our first large customer event since 2019, and these events in the past have proven to drive meaningful deal flow. We're hosting another one in London in a few weeks, and we'll add events during the year in alignment with the impact in sales pipelines. Beyond our achievements and strength in our core messaging business, we're focused on two main areas of platform expansion. The first is extending our platform to include voice and voice AI. As you know, brand-to-consumer conversations take place today across both messaging and voice channels. We're executing on our strategy of bringing a powerful, unified AI-based consumer experience across both voice and messaging. We've been organically building the foundations of voice natively into our platform, and then made the acquisition of VoiceBase to accelerate high-quality voice analytics and natural language understanding, or NLU, within our platform. The power of the combined live-person voice-based solution is demonstrated by a global technology and business services client that uses VoiceBase conversational insights to increase conversion rates by 104% and inform real-time agent assist and coaching that reduces agent attrition by 39% in just four months across both voice and messaging. The second area of focus is extending our platform so that it can be fully integrated into critical third party systems that exist in the enterprise today. With the acquisition of Tenfold and our integration hub, we can now help companies connect with the conversational cloud with hundreds of integrations. And we're leveraging Tenfold's flexible user interface to extend our core messaging capabilities into other agent workspace and CRM platforms like Salesforce and Microsoft Dynamics. The focus of this acquisition is to integrate across a myriad of technology applications so we can greatly expand the amount of use cases we can automate for brands. A good example is a Fortune 100 software company that leveraged Tenfold across their global services operations to integrate Genesys, Microsoft Dynamics 365, and ServiceNow. By connecting customer communications into their consumer data and case management systems, They eliminated 30 to 57% of manual steps across dozens of common call scenarios for thousands of agents, leveraging Tenfold's contextual UI and workflow automation capabilities. Another benefit of the Tenfold acquisition is that we have strengthened our team's expertise in developing a strong technology partner ecosystem. And the founder of Tenfold, or co-founder of Tenfold, is now heading up this team globally. This is important to us as we execute on our strategy to empower brands and partners to extend the conversational cloud with integrations and interoperability with a broader care and commerce systems. We are starting to see demand generation momentum with strategic technology partners, a new source of opportunity for live person consistent with the strategy we discussed previously to drive more leverage in our go-to-market motion through distribution and technology partners. As we announced last year, we have executed our strategy to bring together the expertise and technology of VoiceBase and Tenfold with our own voice offering. We're creating a uniquely unified, deeply integrated voice and conversational AI platform. We successfully launched the comprehensive global sales and name for Tenfold and VoiceBase, which expect to accelerate pipeline growth in Q2 and beyond. A key voice win for the quarter is a seven-figure multi-year deal with Atelco there's already expansion discussions with us to include other parts of their business. There's widespread demand for unified consumer experiences with a clear preference for brands that connect across channels and connect the history of their interactions. 87% of consumers prefer brands that connect voice and messaging together. We've already been leveraging voice-based and tenfold to help brands gain complete ownership and visibility over engagements across all these channels and drive scalable profitable growth for live person as we are cross-selling and up-selling into these opportunities. Now I want to turn to healthcare. Another strategic priority has been continuing to build out the healthcare vertical on our conversational cloud. As of today, it's our third-largest vertical behind banking and telco. Third-party research estimates that American telehealth market expected to grow to over 43 billion by 2026, at a CAGR of over 28% for software. and services. And just like customer care and commerce, we view the application of conversational AI to the healthcare vertical as a natural extension of our core platform. We've been expanding our position in this space over the past two years, signing four of the five largest health insurance providers in the US and the leading consumer health solutions company to build conversational AI services. And we continue to see a substantial opportunity to dive deeper into healthcare vertical, given the strong relationships with our customer base, increasing demand for conversational AI. In order to accelerate our healthcare offerings, we acquired a company called WildHealth during Q1. WildHealth was founded by a group of medical professionals and technologists who built an underlying AI-based medical data platform called Clarity, which uses machine learning algorithms in a secure and compliant way to gather consumer health insights. This platform is intended to underpin our overall healthcare offering so that insurance companies and other medical professionals who are key clients and prospects for us in the B2B healthcare vertical can use our core conversational AI platform to scale patient interactions. We see huge growth potential in this business and are excited to play a part in what we believe is the scalable technology-driven platform for the future of the healthcare space. In order to service the healthcare space, I cannot overstate the importance of having a leadership team with vertical IP expertise like Wild Health has today. I believe it will give us a path in becoming the best AI platform both for healthcare providers and insurance carriers so that they can use AI to drive a fundamental change in the broken flows of patient engagement. In line with this broader vision, our continued focus on the healthcare vertical during the quarter led us to expansion with a major online marketplace for health insurance in the U.S., as well as one of the top three health insurance providers in the UK. We're helping Bupa Global cut costs by converting some of the 430,000 customer service calls they receive each year related to referrals, medical guidance, and claim information to messaging conversations via their website and mobile apps. This expansion was driven by the excellent messaging experience reported by other brands in the Bupa family, particularly in the Australia region. In closing, the strength of our company can be found in our culture and the people who work here each day. I'm really proud to announce that LivePerson was recently named Fast Company's number one most innovative AI company in the world, as well as its number 21 most innovative company across all industries. LivePerson was also recently ranked as leader out of 19 vendors in Quadrant Spark Matrix for digital first customer care solutions. We were ranked number one. We also kicked off 2020 with the Golden Stevie Award for Best Contact Center Solution, and we were honored to once again be recognized on BuiltIn's 2020 Best Place to Work list, earning eight awards countrywide for our hub locations in New York City and Seattle. These are incredible accomplishments and testaments to the work that we have done to maintain our industry-leading position, pushing the cutting edge of conversational AI, and empowering brands to build entire businesses on the conversational cloud. These awards are also on the back of us winning Newsweek's top 100 places to work last year, reinforcing the strength of our company's culture and representing another proof point in our ability and agility to focus our investments in our people and our products. We continue to make progress and improvements in the overall execution of the company. I'm very excited about what happened in Q1 and what we're seeing coming up in the next couple of quarters. And with that, I'll now turn the call over to John, who can do a deeper dive on the financials and our guidance.