LivePerson, Inc.

and welcome to LivePerson Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. John Perracchio, Senior Director, Investor Relations, Thank you, Mr. Peracchio. You may begin.

Thank you. Joining me on today's call is John Sabino, CEO and John Collins, CFO and COO. Please note that during today's call, we'll 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 7, 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. 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, ir.liveperson.com. With that, I'll turn the call over to LivePerson CEO, John Sabino.

Thank you so much, John, and thank you all for joining us today. Before getting into our results and strategy, let me share a high-level update on our business. Customers view LivePerson as a trusted partner to seamlessly orchestrate, automate, analyze, and personalize their digital conversations. This leads to significant return on investment through improvement in operational efficiency and stronger relationships with their end customers. Recently, at our Spark Customer Conference, we unveiled a unified omnichannel solution that seamlessly integrates digital and voice interactions. These enhanced capabilities elevate LivePerson From a trusted digital partner to a strategic partner for all channels, customers can now apply our best-in-class digital experience to their voice conversations with a consistent AI-powered automation capability. This drives increasingly more value for our customers by bringing our capabilities and outcomes to a larger share of their conversational volume. Furthermore, Brands can innovate over the top of their existing infrastructure without reliance on a risky multi-year CCAP migration. With solutions now available, our strategic partnership with Avaya is beginning to translate into bookings and pipeline momentum. This includes a joint new logo win with a large retail bank, a direct new logo win with a Fortune 200 insurer, and a large joint renewal with a Fortune 50 logistics company. I will provide more detail on the momentum here later in my remarks. In addition, the strategic changes we have made to better serve customers are resonating. Many customers have shared that LivePerson has become much easier to do business with. We now offer simpler and more competitive pricing and packaging, as well as allowing customers to use LivePerson's leading digital capabilities within an integrated best-of-breed solution. I am confident that our customer-centric approach and ongoing commitment to enhancing our capabilities, we'll position LivePerson as the preferred partner for enterprise digital transformation. While we're still early days in our turnaround, we're beginning to see improvements in sequential bookings that John Collins and I will discuss in greater detail. Now, let me discuss our high-level third quarter results. Revenue in the third quarter was $74.2 million, above the high end of our guidance range, mainly driven by successful efforts in retention during the quarter. and adjusted EBITDA to $7.3 million, also above the high end of our guidance range, given by the actions we have taken thus far to right-size our cost structure. John Collins will provide more detail about our financial results in his section, but I want to point out that these results and the maintenance of our full-year guidance midpoints represent the third consecutive quarter of execution. Now I would like to provide additional detail on the progress of our transformation strategy. First, let's discuss our product. At our recent Spark customer event, we announced several innovative solutions. We launched a unified omnichannel workspace that integrates third-party voice providers like Avaya into LivePerson's best-in-class agent workspace. By transcribing calls in real time, brands benefit from our AI capabilities such as co-pilot assist and automated summaries for their voice conversations. The voice conversations integrate seamlessly with Analytics Studio, unifying both speech and text-based conversations into rich, actionable data. Our customers can now analyze customer journeys and coach agents across all channels. Many contact centers do remain on-premise due to the complexity and cost of migrating to cloud, with legacy systems deeply embedded in their operations. By integrating with on-premise and cloud voice vendors, LivePerson enables brands to bring digital, AI, and advanced analytics to their contact center without disrupting their existing operations. This gives customers the flexibility and agility to move to the cloud on their own terms and timelines. We also enhance the administrative experience for our co-pilot products. We launched a self-service portal for brands to test and tune their experiences. Now customers can quickly customize AI models to meet the unique business needs. Additionally, we enhance our reporting capabilities to connect these co-pilot experiences to outcomes. This enables customers to measure the real impact of specific generative AI use cases on their operations. These enhancements are critical as generative AI usage is growing rapidly across our customer base. In Q3, We saw a 14% sequential increase in the number of clients leveraging our generative AI capabilities and a 40% sequential increase in conversations using our generative AI suite. Now, let me share a few examples of this. Let's start with FrostBank, which is known for premium, union-first customer care. LivePerson's co-pilot solution enables their human agents to respond in less than a minute to hundreds of thousands of conversations annually, resulting in a consistent 91% customer satisfaction score. Then there's Signet Jewelers, the world's largest retailer of diamond jewelry. Our AI is trusted by Signet to help their customers navigate one of their most stressful and expensive purchases in their lives. Using LivePerson's AI-powered agent assist, smart rewrites, In summarization capabilities, Big Book sales agents orchestrate highly personalized buying experiences that increase the average order value while achieving a 90% customer satisfaction score along the way. Next is Najim, a Saudi Arabian vehicle insurer. After years of using voice as their only support channel, Najim turned to LivePerson to launch AI agents in WhatsApp. LivePerson's AI agents have reduced response times by 92%. and enhanced personalization across millions of annual interactions, lowering the gym's cost by over 60% while improving retention rates. Finally, one of the world's largest health insurance providers is accelerating digital sales with LivePerson. They use AI for external customer-facing and internal agent-facing use cases, with a variety of AI agents assisting consumers and agents at various stages of the customer lifecycle. LivePerson solutions have helped them achieve 222% year-over-year growth in digital sales and an 86% customer satisfaction rate. Over the next several quarters, LivePerson's innovations will remain focused on these core areas. We plan to expand our voice partnerships, increase generative AI use cases, and enhance our digital channel capabilities, and double down on unified analytics. These investments will further enable brands to analyze, orchestrate, automate, and personalize conversations at scale across any channel. Now I'd like to update you on our progress in go-to-market. We're beginning to see momentum in our bronze, silver, and gold pricing and packaging strategy. In Q3, we saw a significant increase in deals closed with our new pricing and expect that to increase into Q4. In fact, Majority of our new logo pipeline has already moved to new pricing and packaging. We are starting to see the intended results with larger deals and shorter sales cycles. For example, a leading sports sporting goods retailer adopted our gold package based on a successful pilot of our generative AI suite. This resulted in a significant renewal in upsell. As mentioned earlier, our expanding partnership with Avaya has already resulted in our first new logo win together. One of the largest privately held banks in the US chose our integrated solution. It helps them accelerate value and innovation while avoiding the risks and costs and delays associated with a full migration of mission-critical systems. This is our key to our value proposition. Additionally, we secured a new logo win with a Fortune 200 insurer looking to leverage the same integrated solution and renewal through our Avaya relationship with a Fortune 50 logistics company for an ACV of nearly a million dollars. We're also seeing strong pipeline in the early access program for a unified workspace from a number of additional Fortune 500 companies. Looking ahead, we plan to integrate with more on-premise and cloud voice platforms like Cisco and Amazon Connect. We're seeing the start of real momentum But I want to be clear, this is just the beginning of our omnichannel journey, and that it will take time for this to become a material source of revenue. To conclude, I want to reiterate that we delivered on our expectations we set in the last earnings call. We've continued to innovate on our product by adding unified experiences for voice and messaging, enhancing our current analytics suite, and growing our enterprise generative AI adoption. We have also continued to make strides in our go-to-market by setting the foundations to reignite growth and increase adoption of our new pricing and packaging options. And finally, driven by our product innovation and key partnerships, we have continued to advance our omnichannel strategy with our solutions now deployed and sales momentum building. These positive developments in both product and go-to-market show our continued progress on our strategy. That being said, there is still progress to be made to get us back to profitable growth. Before I turn the call over to our CFO and COO, John Collins, to discuss our financials in detail and guidance for the remainder of the year, I would like to provide an early view of our expectations for bookings and churn in 2025. As we discussed in the past two quarters, aligning our operations and industry best practices has translated to sequential improvement in bookings and greater visibility into addressable churn risks. Our expectations for retention rates continue to steadily improve as we look forward to future renewal cycles. We do see heightened risk for the remainder of the current renewal cycle with customers who are likely making their renewal decisions before we install our new customer success motion. The last of these customers are slated to renew in the fourth quarter of this year and the first quarter of next year. As a result, we currently expect attrition to continue into the first half of 2025 offsetting expected revenue gains from sequential bookings improvement with the transition towards positive net new AAR expected in the second half of 2025. That said, I believe this near-term churn is largely the result of the legacy issues in the business that I've been focused on since the day I joined LivePerson. Regarding the new bookings trends, We expect to see eight-figure bookings in the fourth quarter, and early indications suggest that we should be able to maintain that bookings level through the first quarter of 2025. We'll provide a more detailed update on our 2025 expectations on the next earnings call, but we felt it was important to provide you with this improved visibility today. So now let me hand over the call to John Collins. John?