LivePerson, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's third quarter 2022 earnings conference call. My name is Ryan, 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 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 to Mr. Chad Cooper, Senior Vice President, Investor Relations. Please go ahead, sir.

Thank you, Ryan. Joining me on the call today is 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, November 7th, 2022, 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 in the comments made during this conference call, as well as 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 certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release. Both the press release and the supplemental slides, which include highlights for the quarter, are available on the investor relations section of LivePerson's website. With that, I will turn the call over to Rob. Rob? Thanks, Chad.

Thank you for joining Life First and Third Quarter 2022 earnings call. I'd like to start off with an overview of the quarter. In Q3, revenue grew 9.5% year-over-year to $129.6 million, and just the EBITDA of $9.1 million moved into positive territory. Our non-GAAP gross margins were 74% of 200 basis points year-over-year. A few weeks ago, we hosted one of our customer events in San Francisco. where 80 of our largest brands and key prospects were in attendance. Our partners and customers at Google, Verizon, Virgin Media, Priceline, and Elevents Health gave attendees a private view into AI-powered digital customer engagement journeys and strategies they have implemented with LivePerson to date. These events offer us a clear lens into our customers' thinking and help inform our product roadmap in the future. There were three broad strategic themes that were validated by our largest brands at the event that I want to share with you. First, I was struck by the fact that meeting after meeting, our customers told us that they now consider us a tier one provider. The CTO of one of the largest airlines in the world told me that out of their thousands of systems that they have in their company, that there's only a small group that are considered tier one, including the reservation system, and that we are now one of those systems. Where we're now seeing enterprise customers shifting 30, 40, 50% of contact volume to us, we really validate what no other company has done in our space. We took something that for 50 years was ingrained in people, that we need to pick up the phone, a call brand for customer care, and we create a clear alternative to traditional voice. Being considered a tier one provider serves as a validation of how we execute against our long-term vision, become the mission critical customer engagement partner for brands across a multitude of industries. Brands now entrust their businesses to us more than ever before. We expect this trend, as well as conversational volumes, to both continue to grow in the months and years ahead. This new reality is an exciting opportunity that brings heightened responsibility and expectations. One highlight when we release our voice this year, it'll be a voice AI, enabling consumers to converse with the machine through natural language and have a curiously human experience. Second, Brands have validated our vision for how the use of AI and automation in the enterprise. Our brands are adopting AI thanks to our tools and expertise and continue to build their teams and AI specialists to support the prominence of the function across their business. As discussions we had with one of our major banking brands exemplifies this trend, they're seeing increased value in our platform as they deploy additional automation. For them, an increasing number of brands, LiveHerson is much more than a chatbot company. that helps them connect to a multitude of channels, our leading AI automation and product roadmaps are helping them innovate and operate the most sophisticated AI-driven digital customer engagements in the markets today. Finally, brands want us to be the platform where they integrate key systems that create a unique, powerful customer engagement hub. One of our largest telco customers is using our platform as that central hub, creating integrations with other digital legacy systems in order to deliver a rich consumer engagement experience. The acquisitions of Tenfold and Voicebase are part of this long-term strategy to move us into the central role. Also want to note that Google joined us on the main stage of our conference to highlight our partnership around conversational commerce use cases, which focus on the work we're doing together to unlock the opportunity for conversational ads and search. We've already kicked off engagements with several of our enterprise customers that are seeing really compelling results in conversion rates. We expect to have more exciting updates with this partnership as we move from beta to general availability with Google in the coming quarters. So on all, it was a terrific event and strong validation of our AI driven approach and the product roadmap for us to continue to build on as a tier one platform to serve as a central customer engagement hub with the world's leading brands. Now let's dive deeper into our results for the quarter. As we outlined in our Q4 call, With the changes in the market, we focused during fiscal year 2022 on three actions to optimize cross-over revenue growth. New logo growth, expansions with existing customers, and our strategic partnerships initiatives, opening our AI so that it can be accessed on other platforms and strengthening the AI platform to drive enhanced value to customers. While we do not divulge bookings numbers, I would like to highlight that we had a strong bookings quarter in Q3. Evidence that our newer quota carrier reps are starting to gain traction. In fact, we achieved the highest bookings number since Q1 of 2021 after netting out the COVID testing revenue. Starting with customer wins and logo growth, we signed seven seven-figure deals and achieved a total deal count of 86 deals in the quarter. As brands look for a strategic partner for AI-powered digital customer engagement, they're increasingly recognizing live person expanded value proposition. This holds true even under the current economic conditions because they recognize the cost savings they can achieve with our platform. As I turn to some of our top customers' wins for the quarter, some of which include the most innovative brands in the world. Let's start with new logos. We won 29 new logos in the quarter. While the number of new logo deals is down year over year, the dollar bookings on the new logos is up 20% year over year. Additionally, the number of enterprise new logos is up 14% year over year. These new logo wins provide the foundation for the upsells of tomorrow and are excited to have these customers on board. They expand our presence in the market and bring us the opportunity of significant expansion dollars. One of the largest new logo wins of the quarter was Muddy Mart, an operating unit of Momentum Financial Services Group and an alternative lending provider operating across North America. In addition to being an amazing new brand for Leifersen, In just 59 days after signing with us, MoneyMart was able to launch an entire digital service servicing strategy that included messaging, automation, and agent workspace, call to messaging, deflection, and voice base for voice-based AI analytics. Another large new logo win was a three-year, seven-figure TCV deal with UK's largest auto insurance provider. They have over 14 million members. They plan to use our software to offer messaging, with automation and IVR deflection so that they can reduce costly phone calls and improve customer satisfaction. This is a year-long RFE process where we beat a number of other vendors. In the healthcare vertical, we signed a new logo deal with a provider of public healthcare programs. Our tenfold integration platform gives their sales and service reps the full context of each customer in real time. This enables their agents to quickly identify who's calling, members or providers, to deliver the best customer experience while also reducing average handle time, quickly creating new cases, and ensuring analytics are captured back into the ERP and CRM systems. It's also interesting to note that we partnered with one of our channel partners, which enabled us to avoid a lengthy procurement process. We expect this new partner, who is a heavy Cisco partner, will open the door to jointly pitching a new set of logos and potential customers and partners. We also had a strong quarter with upsells and renewals. Our growth reflects the trends brands moving into us being a tier one provider. Chipotle, the largest fast cashflow dining chain by sales in the US, renewed and expanded upon its partnership with us. This deal highlights the power of live person's combination of best in class AI, cloud platform, and expertise in professional services. Chipotle leverages a concierge bot named Pepper to support its 3,000 US restaurant locations, helping them deliver curiously human feeling and personalized experiences on a national scale. I'm also happy to announce a two year renewal and expansion with the RealReal, our second largest deal in the quarter. The RealReal renewed as an automation as a service customer, as we continue to deliver an enormous amount of value in designing and executing the customer strategic roadmap for conversational AI and conversational commerce. We achieved a renewal upsell with the top US based insurance company. This insurance company is focused on digital customers journeys and expanding their current success and automation to new lines of business like roadside claims. Also in the healthcare vertical, we signed a seven-figure multi-year renewal with the largest Fortune 20 payers in the US. We established a relationship about 18 months ago and just one line of business via web messaging. We're now deploying our platform and the remaining six lines of business to do see additional messaging channels like in-app, Apple Business Chat, and Google Business Message. And finally, we signed a renewal in the world's largest cosmetic company. They are looking to expand their digital footprint, invest in deflection activities around voice to messaging, and improve personalization on their brands' websites. We are deployed in 16 of the company's 37 brands and will continue to use this for both customer care and commerce. As we discussed recently, we're working on a greater open platform strategy to address what we see as a larger incremental addressable market opportunity for us by our customers, partners, third-party developers, and internal teams. This will enable the acceleration of new areas within our customer base. As an example, TR VoiceBase transcription product is currently available across several third-party marketplaces, including Twilio's Flex marketplace. While early in its development, we're encouraged by the fact that revenue from VoiceBase product on Twilio has grown more than 100% in the past six months with no direct sales or marketing investment. In Q1, we plan to launch Marines of the LivePerson app marketplace and build on the pipeline momentum from Solonis and Affinity, who jointly uncovered nearly 20 opportunities for us in Q3, helping to contribute to our pipeline in Q4. As we eye a formula launch for the app marketplace in the next three to four months, we have a strong pipeline of RevShare program partners, including Telium, Medallia, and Quantum Metric. We see partnerships as a major untapped growth lever for LivePerson, and are dedicating appropriate resources to this very scalable opportunity. Finally, I'd like to also take the opportunity to talk about our new Chief Marketing Officer, Ruth Zietz. Ruth is a three-time enterprise software CMO, most recently serving as CMO of a chatbot company called Ada, where her leadership helped transform the company through triple-digit growth. Her life person, Ruth's priority is to grow scalable, measurable, and predictable world-class demand generation while driving operational rigor. So we want to welcome Ruth to the team. We're really excited to have her here. As I mentioned at the top of the call, we continue to execute our profitable growth plan announced at the start of the year. And we're on track to deliver double-digit adjusted EBITDA margins in Q4 and sustain these margins with a focus on free cash flow in 2023 and beyond. And with that, Let me now turn the call over to John to discuss the detailed financial results. John? Thank you, Rob.