LivePerson, Inc.: AI Stock Soars on Q2 Earnings Beat, Up 323% Over March Low

LivePerson, Inc. Soars on Q2 Earnings Beat, Raises 2020 GuidanceLivePerson, Inc. Raises Guidance, Stock Poised to Double Again

LivePerson, Inc. (NASDAQ:LPSN) stock took a hit along with the broader market back in March, when uncertainty around the coronavirus pandemic hobbled Wall Street.

Eventually though, investors realized that people will still spend money from the comfort of their own homes. This optimism has helped LPSN stock trounce the broader market.

LivePerson stock has advanced a respectable 52% year-over-year and 53% year-to-date. That far outpaces the S&P 500, which went up 14.5% year-over-year and 2.5% year-to-date. Meanwhile, the tech-heavy Nasdaq advanced 40.5% year-over-year and 22% year-to-date.

Most impressively though, LivePerson, Inc.’s share price has soared 323% since hitting a low of $14.08 in March. In the opening hours of August 5, LPSN stock surged more than 20%, hitting a new 52-week high of $59.66.

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The leading provider of artificial intelligence (AI)-powered conversation cloud technology announced very strong second-quarter results after the markets closed on August 4, with both its revenue and net loss beating Wall Street expectations.

LivePerson, Inc. also provided a solid outlook. In fact, it’s one of the few companies that is actually raising its full-year revenue and profitability guidance.

Why? Because of the coronavirus pandemic, working from home and social distancing is the new norm. That means the traditional voice call center is becoming, or has become, an obsolete relic.

And businesses have been rushing to invest in AI-cloud technology. During the second quarter, the first full quarter that included COVID-19-related lockdowns, social distancing, and other restrictions, spending on cloud technology surged 30% year-over-year and 11% sequentially to a record $34.6 billion. (Source: “Cloud Spending Hits Record Amid Economic Fallout From Covid-19,” The Wall Street Journal, August 3, 2020.)

Those who are already operating in the cloud have been increasing their spending while those who are late to the game have been busy trying to catch up.

LPSN Stock Overview

With LivePerson’s cloud-based conversation technology, sometimes you’re talking to a live person, but most of the time you’re not. LivePerson provides conversational AI customer service support tech to more than 18,000 customers. (Source: “Corporate Profile,” LivePerson, Inc., last accessed August 6, 2020.)

The New York City-based company’s real-time messaging platform (AI-powered bots, call-to-message, and live) for social media networks and web sites make it easier for businesses to answer questions and sell their products.

Since its inception, LivePerson’s technology has powered over one billion brand-to-consumer conversations.

LivePerson, Inc.’s customers include Home Depot Inc (NYSE:HD), HSBC Holdings PLC, (NYSE:HSBC), and Orange SA (NASDAQ:ORAN).


Chart courtesy of StockCharts.com

One of LivePerson’s Strongest Quarters in History

On August 4, LivePerson announced that its revenue for the second quarter (ended June 30) increased 29% year-over-year to $91.6 million. (Source: “LivePerson Announces Second Quarter 2020 Financial Results,” LivePerson, Inc., August 4, 2020.)

Of that, business operations revenue advanced 30% to $84.0 million while consumer operations revenue increased 24% to $7.6 million.

LPSN reported a second-quarter net loss of $18.6 million, or $0.28 per share, an improvement from the second-quarter 2019 net loss of $24.0 million, or $0.38 per share.

Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) was $9.3 million, or $0.14 per share. In the second quarter of 2019, LPSN reported an adjusted EBITDA loss of $5.3 million, or $0.08 per share.

LivePerson, Inc. ended the second quarter with cash and cash equivalents of $173.2 million, up from $171.5 million at the end of the first quarter.

During the quarter, the company inked 134 deals, including seven seven-figure deals. That includes 47 new contracts and expanded business with 87 existing customers.

New customers include a multi-billion-dollar global beauty company, a top 10 global automaker, one of the largest exercise equipment manufacturers, a Fortune 500 consumer goods company, and a top 10 U.S. bank.

“LivePerson delivered one of the best quarters in its history as it helped leading brands navigate one of the most challenging events in history,” said CEO and founder Rob LoCascio.

John Collins, CFO added, “LivePerson’s solid execution during one of the worst macro environments in modern history demonstrated the strength and agility of our business model. … With these favorable operating tailwinds, our outlook is strengthening, and we are raising guidance for 2020.”

Business Outlook

For fiscal 2020, LivePerson, Inc. expects to report total revenue in the range of $357.0 to $361.0 million, up from previous guidance of $340.0 to $355.0 million. This new guidance represents full-year growth of 22% to 24%.

The company also expects to report adjusted EBITDA of $16.0 to $19.0 million, up from previous guidance of $3.5 million to $10.5 million. In 2019, LivePerson reported an adjusted EBITDA loss of $13.6 million.

Analyst Take

As mentioned earlier, LivePerson, Inc. recently announced one of the best quarters in its history, as pandemic-fueled demand for the company’s AI platform increased significantly. With traditional voice call centers almost a thing of the past, LivePerson expects to continue to report exceptionally strong financial results.

The company enters the second half of 2020 with strong tailwinds from robust year-to-date contract signings, better-than-expected conversation volumes, and a strong sales pipeline.

That signals a bright future for LivePerson stock.