LivePerson, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to LivePerson's second quarter 2022 earnings conference call. My name is Claudia Guentert, and I will be your conference operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, the management team for LivePerson will conduct a similar session, and the conference participant 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, and I'd like to turn the conference over to Mr. Chad Cooper, Senior Vice President of Investor Relations. Please proceed.

Thank you, Claudia. Good afternoon, everyone, and thank you 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. And with that, I'll turn the call over to Rob. Rob?

Thanks, Chad. Thank you for joining LifePerson's second quarter 2022 earnings call. In 2Q, we generated revenue of $132.6 million. Non-GRAP gross margins were up 500 basic points sequentially, and our adjusted EBITDA was at the top end of our guidance range at negative $5.5 million, a $12 million improvement sequentially. We're still on track to deliver positive EBITDA and cash flow by year end. Earlier this year, we made a commitment to prioritize profitable growth. I'm pleased to report we're delivering margin expansion faster than expected through a combination of OPEX discipline, improving productivity of our sales force, and focusing on more high-margin revenue. We continue to make substantial changes to strengthen our P&L by focusing on the most differentiated high-value components of our business with the greatest capacity to drive high gross margins, strong operating margins, and high-quality revenue growth. In the short term, we will be intentionally trading some lower margin top-line revenue for substantial, sustainable near and long-term margin expansion and growth. Our goal is to achieve best-in-class operating and financial models, which will be near or above 80% gross margin in mid-teens or better operating margins. Incredibly proud of the agility and innovation that allowed us to rapidly respond to the needs of our clients and the market and to drive growth during the past two years of the pandemic. But as pandemic-driven trends normalize, we're laser-focused on our more repeatable and high-margin growth engines. As the industry leader in conversational AI and messaging, we provide AI-powered customer engagement solutions to thousands of companies, including 450 enterprise brands worldwide, among them many of the world's leading consumer businesses. Our solutions help brands cut costs while improving consumer experience and achieve measurable ROI. Our platform has reduced our brand's customer care costs by up to 50%, while increasing customer satisfaction. Equally important, our commerce solutions have increased annual sales by hundreds of millions of dollars for some of our customers. We do not simply automate labor-intense tasks. We help our brands optimize their engagement with their consumers throughout the customer lifecycle. We're proud to consistently deliver measurable ROI to brands through our care and commerce solutions. We're also excited about new applications and our conversational cloud technology, including moving into voice, and into expanding our healthcare vertical, which I'll touch on in a moment. Focused on three key actions to optimize profitable revenue growth, new logo growth, expansion within existing accounts and partnerships, and opening our AI so that it can be accessed on other third-party platforms. So let's start with new logos. We're seeing progress with our quota-carrying reps and continue to expect them to be productive with bookings in Q4 and contributing to revenue in 2023 and beyond. In Q2, we delivered the most new logo wins we've had since 2020. We won 45 new logos in the quarter, which was a 55 percent year-over-year and 73 percent increased sequentially. These new logo wins are green shoots indicating that our enterprise sales force is returning to historical rates of productivity after a change in field leadership we made early this year and made great progress at generating new land and expanding opportunities. Second, we're leveraging and extending our existing customer relationships by both cross-selling and upselling, and we're seeing strong adoption of multiple AI and automation products. In Q2, we continue to see robust platform usage, with overall conversational cloud messaging volume growing 32% year-over-year, and AI-based messaging conversations growing 20% year-over-year. Third, we have continued our partnership momentum to unlock expanded and indirect revenue opportunities. We added 15 unique partners in Q2, This channel produced nine new logo deals. A few weeks ago, we announced new partnership with Solonis. Technology has been focused on improving business process for large enterprises. Our joint offering called Contact-Centered Conversation Mining combines the omni-channel conversational analytics from VoiceBase and customer journey mapping and back-office execution management from Solonis. I'm also happy to note that Q2 marked the return of our in-person executive community events. with extremely successful events held in New York and London during the quarter. Pre-pandemic, these events were a key element to our go-to-market strategy, and they've historically accelerated our sales cycles because they educate brands about the power of conversational commerce and AI, generally through our existing clients sharing their real-world outcomes. In aggregate, the Q2 events directly influenced over 50 million pipeline. From a product perspective, we are capturing incremental scale world revenue opportunities by opening up our platform. This will enable brands whose agents primarily use a third-party CRM to have conversations within consumers driven by our conversational cloud. This has historically been a pain point for brands and has been a key component of our product roadmap. Our acquisitions of VoiceBase and Tenfold have accelerated this initiative. VoiceBase is being integrated into the core analytics of our platform, and Tenfold is driving the overall go-to-market, probably work with CRM and other enterprise technology platforms. We're unifying our voice strategy from a standalone business unit to an integrated part of our broader portfolio. This provides a clear value proposition for our salespeople as voice becomes a key channel within our conversational cloud. With VoiceBase, we're digitizing the voice channel so we can extend the benefits of our conversational AI platform into it. This enables brands to not only meet consumers on voice, if that's their preferred channel, but also extract AI-powered insights from this traditionally analog channel in real time. These insights can also be analyzed post-conversation to help brands better serve their customers. Tenfold and voice-based both play key roles in the strategy and have enabled us to extend these capabilities to voice providers like Avaya, Cisco, Genesis, to just name a few. As I turn to some of our top customer wins in the quarter, I'd like to highlight how each reflects how brands recognize life versus ability to deliver tangible value, even as current economic conditions are driving brands to assess cost savings, consolidate technology stacks, and deprioritize all projects that do not have direct impact on savings or revenue growth. These are some of the most innovative brands in the world. They are working with us to cut costs while simultaneously improving the customer experience through automation and AI. We signed five seven-figure deals and achieved a total deal count of 104 deals in the quarter. Utilizing our rich data set, we also are able to target vertical industries with repeatable AI and automation strategies. In Q2, we signed one of the largest new logo deals in our history with Capitec, the largest retail bank in South Africa with approximately 19 million consumers. Capitec originally came to us from an initial use case with Voicebase, however, we're able to show them that they could go further automating their customer experience over WhatsApp, as well as take advantage of the power of voice-based for real-time insights into their consumer's experience and banking operations. This is a seven-figure, three-year deal. Even more importantly, it provides us with a referenceable customer and an important new geography with a new use case. It's a great example of our new logo initiatives and rich product synergies following last year's acquisitions, driving revenue expansion as we execute on our plan of profitable growth. We also won a large multi-deal deal with Canada's largest bank, being selected over two of our major competitors. The client chose LivePerson for our ability to reduce the cost of servicing customers and open the virtual doors of the bank to new account growth by managing the entire consumer journey via messaging, AI, and automation. On the renewal front, we signed a large two-year extension with one of our major airlines. Using Liferay's platform technology, this customer makes it easy for travelers to begin conversations on their app and directly from Apple Business Chat, SMS, IVR deflection, QR codes within airports, and social media. We also signed a multi-year renewal agreement with Verizon. Verizon has been a client for ours for three years. They started with messaging for customer care and sales, and now they have expanded to leverage our AI as well. In Q2, our gain share division signed a three-year, seven-figure automation as a service contract with the largest automotive OEM finance companies in the world. This deal is a great example of the type of higher margin contract structure for prioritizing going forward with the gain share offerings. This brand wanted to transition from 100% voice agent call center environment into AI-driven digital first contact center with the goal of supporting their consumers through automation while reducing OPEX and increasing CSAT. And finally, we're making excellent progress on our healthcare strategy, which is one of our largest verticals behind telecom and financial services, and it's one of our fastest growing. We're working towards delivering a very scalable solution for the healthcare market, especially around using machine learning and conversational AI for improving patient experience and outcomes. This is a big opportunity, and we are in a good strategic position to go after it. specifically related to our wild health acquisition. The group is performing very well and is ahead of their revenue plan. And in Q2, we signed deals with Spartan Race and USA Boxing to bring our AI and telehealth capabilities to their athletes as their official healthcare partner. As I mentioned at the top of the call, we continue to execute on our profitable growth plan announced at the start of the year, and we're ahead of schedule, delivering results faster than previously forecasted. As we embarked on these initiatives, we have found other areas of the business that we can further improve our margins and profitability and lay the groundwork for future growth. While some of these initiatives are anticipated to reduce total revenue in the near term, as we de-prioritize lower margin, non-repeatable areas of the business, we continue to expect to generate positive free cash flow in the fourth quarter, positioning us well for profitable growth in 2023 and beyond. And with that, let me now turn the call over to John to discuss to detail financial results and a revised outlook for the rest of the year. John?