LivePerson, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LifePerson's second quarter 2024 earnings conference call. My name is Irene 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 LifePerson 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 Mr. John Paracchio, Senior Director of Investor Relations. Please go ahead.

Thank you, Irene. Joining me on today's call is John Sabino, CEO, and John Collins, CFO and COO. Please note that during today's call, we will make four 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, July 31st, 2024, 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 filed with the SEC. We assume no obligation to update any forward-looking statements. Also during this call, we'll discuss certain non-GAAP financial measures. The reconciliation of GAAP from 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 at ir.liveperson.com. With that, I'll turn the call over to LivePerson's CEO, John Sabino.

Thank you so much, John. Thank you all for joining us today. Before providing a detailed update on our business and strategy, let me briefly touch on where we are today and what we have delivered since our last earnings call in May. On our last call, we reiterated that addressing our 2026 convertible notes remained a key priority. We have since announced our deal with Linrock Lake, which closed in early June. This transaction has significantly improved our capital structure. and has given our customers and partners confidence that LivePerson will be a long-term strategic partner. Moving on to conversations with customers, I have now met with over 200, doubling from the time of our last call. And I continue to hear that they value our product and want to partner with us in their digital transformation. I've also heard from a select group that we have an opportunity to serve them better, validating our focus on customer success, which has contributed to improve with the added rigor and process installed over the past two quarters. Customers have also expressed their excitement about our strategic partnership with Avaya, which I am pleased to report is on track with addressable opportunities building in the pipeline. More importantly, customers are excited about our pivot to embrace voice in Omnichannel, which aligns with our strategy to improve our go-to-market motion with strategic voice partners and other strategic partnerships. Supporting our activity with customers and partnerships, we've also been able to roll out new pricing and packaging as GA well ahead of schedule, which I will discuss in greater detail later on the call. Finally, I want to acknowledge Sandy Hogan joining LivePerson as our new Chief Revenue Officer who started in early June. With decades of go-to-market experience and a proven track record of driving significant growth, I cannot wait to see what she will bring to LivePerson. With our go-to-market leadership team in place, our commercial organization is in position to execute on expansion and retention, as well as driving new business. Now that I've shared that summary of our progress since our last call, let me update you briefly on our second quarter results. Revenue in the second quarter was $79.9 million at the high end of our guidance range, mainly driven by successful efforts to retain at-risk customers during the quarter. and adjusted EBITDA with $8.2 million above the high end of our guidance range, largely as a result of the actions the company has taken to reduce costs. John Collins will provide more detail on financial results in his section, but I wanted to reiterate that we achieved what we set out to do in second quarter and that these results and the maintenance of our four-year guidance represents a second consecutive quarter of execution on our strategy. Now I would like to provide more detail on our progress in the three key focus areas of our transformation strategy. First is our capital structure. As discussed earlier, in the second quarter, we completed the first step in addressing our 2026 notes, which increased confidence with our customers who are renewing and expanding their business with us. Prior to this transaction, some of our largest customers raised concerns about live person viability with a long-term partner. But since the transaction was announced, customers have expressed confidence in strategically partnering with us, which has enabled key renewals. These included two of the largest telecommunications companies in the world, one renewal being in excess of eight figures, and one of the top investment banks in the world. We have a long way to go to systemically address our renewal challenges, but these renewals are a step in the right direction. Second, let me update you on our go-to-market motion. As I've already discussed, the announcement of the transaction back in May has removed a significant hurdle in our go-to-market motion. In addition, the operational improvements put in place with customer success are increasingly providing more value. The rigorous structure and forecasting has allowed us to be more strategic in the application of adoption frameworks and maturity models for our enterprise customers. These frameworks are purpose-built to deliver the highest return on investment by driving increased usage and adoption of the broader capabilities of our platform, including the ability to orchestrate several LLMs across BUs, use cases, and vendors. Highlighted earlier, our new pricing and packaging was launched GA on June 18, months ahead of schedule. The new pricing and packaging is extremely simple and streamlined with good, better, and best packages that showcase our innovation. Services have been bundled into the price, along with platform capabilities such as analytics and integration. Unlike most other vendors, LivePerson now only has two pricing meters with almost no add-on costs. The contracts are easy to scope with no surprises. It also allows brands to bring their own LLMs and third-party AI without incurring additional costs. In part, thanks to this new pricing model, alongside our strong product capabilities, We were able to win back and expand a major healthcare provider. This customer found that our straightforward, all-inclusive pricing structure provided significant value and faster scaling. We expect this momentum to continue in future quarters. I would now like to update you on our partner strategy. We have had dozens of enterprise brands leaning into our vision for a unified, omni-channel workspace. that integrates LivePerson with best-in-class voice solutions like Avaya. But by unifying the agent workspace, analytics, and AI within the conversational cloud, LivePerson becomes the single pane of glass for brands as they navigate their voice to digital transformation. We anticipate a GA release of these capabilities by the end of Q3 and a rapid expansion of functionality and partnerships with more integrated CCaaS vendors to come in the following quarters. This brings me to our third area of focus, extending our advantage in product integration and orchestration. Today, we have over 70 customers paying for generative AI, including 23 of our top 100 customers. The number of customers who have adopted generative AI has grown 20% since last quarter. Additionally, in the last quarter, we have powered over 6 million conversations with our generative AI capabilities, which is up over 165% quarter over quarter. Unlike legacy chatbot systems, which struggle with complex conversations and they often sound robotic, live persons generative AI bots engage in a sophisticated, personalized interaction that drives business outcomes and helps agents provide better customer service. Our customers using LivePerson's generative AI capabilities report seeing higher customer satisfaction and improved operational efficiency. In the last quarter, the adoption of LivePerson's generative AI capabilities has grown significantly, and the highlights include a leading North American telecommunications provider deploying our AI co-pilot to now over 7,000 agents, a major European telecommunications provider reducing average response times by seven minutes and improving their net promoter score by five points. Another is a large retailer utilizing live person's AI to cut operational costs by 60%, and a top 10 US credit union lowering their average response times by 20%. These results show that generative AI is getting deployed throughout our customer base globally because it's driving real world results. We also continue our track record of product innovation at our Spark conference in May, During this event, we introduced several new AI innovations designed to deliver better customer experiences and increased operational efficiencies. Highlights from the event included bringing your own LLM, which allows brands to integrate their own large language models from Google, Amazon, and OpenAI and others into live person. Co-pilot rewrite, which refines agent messages for clarity and professionalism, helping agents achieve exceptional customer experience. We have generative AI routing agents that accurately understand customer needs and efficiently routes them to the appropriate resource, whether that be a bot or a human agent. And we've created data collection agents, which effectively gather information from customers, making the data collection process more efficient and accurate. The innovations launched at Spark will help our customers remain at the forefront of generative AI in customer care. Over the next several quarters, the innovation coming from LivePerson will continue our focus on building more AI agents, improving AI co-pilot, and integrating voice into the LivePerson agent workspace. Before handing this call to John Collins, I want to reiterate that we are continuing to execute a multi-quarter turnaround that will take time to see the long-term results. I want to thank the LivePerson team for their strong commitment and the rapid execution on the transformation strategy that we've laid out in February. We continue to deliver the expectations we set by improving our capital structure and continue to make strides and go to market by adding new leadership, launching new pricing and packaging, and advancing our partnerships with Avaya and others. We have also continued to increase our strengths in our product with exciting solutions to drive incremental value as we work with our customers to deliver their digital-first future. I look forward to continuing to update you on our progress in the quarters to come. Now, let me pass this call to our CFO and COO, John Collins. John?