Q4 2023 LivePerson Inc Earnings Call
Speaker Change: [music].
Operator: Good afternoon, ladies and gentlemen. Thank you for standing by.
Good afternoon, ladies and gentlemen, thank you for standing by welcome to life Parsons for fourth quarter 2023 earnings Conference call.
Operator: Welcome to LivePerson's 4th Quarter 2023 Earnings Conference Call. My name is Danae, and I will be your conference operator today. At this time, all participants are in listen-only mode.
Denise: My name is Denise and I will be your conference operator today.
Denise: At this time, all participants are in listen only mode.
Operator: After the prepared remarks, the management team from LivePersonal will conduct a question and answer session, and the 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 over to Mr. Jon Perachio, Senior Director, Investor Relations. Please go ahead, sir.
Denise: After the prepared remarks, the management team from life personal we will conduct a question and answer session and the conference participants will be given instructions at that time.
Speaker Change: To give everyone the opportunity to participate please limit yourself to one question and one follow up.
Speaker Change: As a reminder, this conference is being recorded.
Denise: I would now like turn the conference over to Mr. John <unk> Senior director of Investor Relations. Please go ahead Sir.
Jon Perachio: Thank you, Denae. Joining me on today's call is John Sabino, CEO, and John Collins, CFO, and COO. Please note that today's call 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, February 28, 2024, and are subject to risk and uncertainty. 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 with the SEC. We assume no obligation to update any forward-looking statements.
Denise: Thank you today joining me on today's call is John <unk> CEO.
CEO and John Collins CFO T O.
John Deneen Collins: Please note that today's call will make forward looking statements, which are predictions projections and other statements about future results.
John Deneen Collins: These statements are based on our current expectations and assumptions as of today February 28, 2024 and are subject to risks and uncertainties.
John Deneen Collins: 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-K 10-Qs other reports, we file with the SEC.
John Deneen Collins: We assume no obligation to update any forward looking statements.
John Sabino: Also, during this call, we'll discuss certain non-GAAP financial... 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 in the Investor Relations section of LivePerson.org. With that, I will turn the call over to you. Thank you all for joining us.
John Deneen Collins: Also during this call, we'll discuss certain non-GAAP financial measures.
John Deneen Collins: Reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release.
John Deneen Collins: Both the press release and the supplemental slides, which include highlights for the quarter are available on the Investor Relations section of life persons website.
John Deneen Collins: With that I will turn the call over to John.
John Deneen Collins: Thank you all for joining us today I'm excited to lead lives person as its new CEO.
John Sabino: I am excited to lead LivePerson as its new CEO. The past 20 years of my career have been focused on leading organizations through challenging transformations and unlocking growth through operational excellence, product alignment, and focused go-to-market expertise. My experience in scaling software adoption for customers and, in turn, driving significant double-digit improvements in renewals, product consumption, expansion, and new logo acquisition is directly aligned to my priorities for LivePerson in the short term and the long term. We are refocusing our go-to-market strategies, product development, and strategic partnerships to unlock a new phase of growth. In the 50 days since joining LivePerson, my focus has been on assessing how our company operates and engages with customers and aligns its product development efforts to meet the needs of the market. As part of this process, I've had many conversations with the management team, board members, employees, investors, and with dozens of customers. What I've discovered from all of these interactions validates my hypothesis for joining the company.
John Deneen Collins: The past 20 years of my career has been focused on leading organizations through challenging transformation and unlocking growth drop ratio excellence product alignment and focus go to market execution Mike.
John Deneen Collins: My experience in scaling and scaling software adoption for customers and in turn driving significant double digit improvements in renewals product consumption expansion and new logo acquisition.
John Deneen Collins: It's directly aligns my priorities for life person in the short term and the long term.
John Deneen Collins: We are refocusing our go to market strategies product development and strategic partnerships to unlock a new phase of growth.
Denise: And the 50 days since joining life person my focus has been on assessing how our company operates and engages with customers and our largest product development efforts to meet the needs of the market.
Denise: As part of this process I've had many conversations with management team board members employees investors and with dozens of customers.
Denise: What I've discovered from all of these interactions validates my hypothesis for joining the company, we have a tremendous opportunity with the products. We provide the customers we serve in the market we compete in.
John Sabino: We have a tremendous opportunity with the products we provide, the customers we serve, and the market we compete in. This is because we have three fundamental strengths. Number one, we have a product that provides real value to our customers and opens the door to an AI-driven future that is still unfolding. Number two, we have an impressive list of Fortune 500 customers that value our strategic partnership and are willing to provide excellent, thoughtful input on how we can continue to best support their needs. And number three, our employees are passionate about our core enterprise offering and excited to deliver the vision to fully unlock enterprise digital conversations at scale. But to capitalize on these strengths and unlock our full potential value, LivePerson needs to set clear priorities and execute a rigorous transformation strategy to improve our financial performance, reinvigorate our go-to-market capabilities, and achieve operational excellence.
Denise: This is because we have three fundamental strengths number one we have a product that provides real value to our customers and opens the door for an AI driven future that is still unfolding.
Denise: Number two we have an impressive list of fortune 500 customers that value our strategic partnership and are willing to provide excellent thoughtful input and how we can continue to best support their needs and number three our employees are passionate about our core enterprise offering and.
Denise: And excited to deliver that vision to fully unlock enterprise digital conversations at scale.
Denise: But to capitalize on these strengths and unlock for our full potential value.
Denise: <unk> person makes a set clear priorities and execute a rigorous transformation strategy to improve our financial performance reinvigorate our go to market capabilities and achieve operational excellence.
John Sabino: All of this will take investment in our product, people, and customers so we can return to profitable growth. It is this transformation plan that I will share with you today. Before I transition the call to our CFO and COO, John Collins, to discuss our financials, LivePerson's strategy is to act as a bridge for companies looking to manage their customer conversations digitally while orchestrating new and existing conversation channels for the most optimal customer experience. This is a multi-billion dollar market opportunity that LivePerson is currently exposed to and can win with the right operational and commercial risk.
Denise: All of this will take investment in our product people and customers. So we can return to profitable growth.
Denise: It is this transformation plan that I will share with you today.
Denise: Before I transition the call to our CFO and CFO, John Collins to discuss our financial results.
Speaker Change: Life person strategy is to act as a bridge for companies looking to manage their customer conversation digitally.
Speaker Change: While orchestrating new and existing conversation channels, the most optimal customer experience.
John Deneen Collins: This is a multibillion dollar market opportunity a live person is currently exposed to and can win with the right operational and commercial rare.
John Sabino: Furthermore, this strategy will allow us to assist companies in preparing for an AI-driven future by orchestrating various customer conversations across their enterprise without being locked into one vendor or platform. By becoming the bridge to the future of digital conversations, LivePerson will continue to be an integral part of our customers' digital transformation strategies well into the future. To execute on this strategy and capture the opportunity within our reach, we'll focus on three key areas. The first is strengthening our capital structure.
John Deneen Collins: Furthermore, this strategy will allow us to assist companies preparing for an AI driven future by orchestrating various customer conversations across their enterprise without being locked into one vendor a platform.
Speaker Change: It would be coming to bridge to the future of digital conversations live person will continue to be an integral part of our customers' digital transformation strategy well into the future.
Speaker Change: To execute on this strategy can capture the opportunity within our reach will focus on three key areas.
Speaker Change: The first is striking our capital structure.
John Sabino: The second is focusing on our go-to-market operations, which include renewals, pricing, and packaging, and partnerships. And third, is leaning in on our advantage with strong product integration and orchestration capabilities to improve time-to-value and increase customer flexibility to avoid vendor loss. First, let me address our capital. We're currently reviewing our capital structure with an eye towards refinancing our convertible notes due in 2026.
Speaker Change: The second is focusing our go to market operations, which include renewals pricing and packaging in partnerships and.
Speaker Change: And third is leaning in on our advantage with strong product integration and orchestration capabilities for improved time to value and increased customer flexibility to avoid vendor lock in.
Speaker Change: First of all let me address our capital structure.
Speaker Change: We are currently reviewing our capital structure with an eye towards refinancing our convertible notes due in 2026.
John Sabino: We want to ensure our customers have confidence in us as a long-term partner. As such, strengthening our capital structure is a key priority for me in order to successfully implement our strategic initiatives to unlock the value of LivePerson for our investors, customers, and partners. Second, as it relates to our go-to-market option. There have been headwinds in the company's expansion and retention efforts that have slowed our ability to attract new customers to our product.
Denise: We want to ensure our customers have confidence in us as a long term partner as such striking our capital structure is a key priority for me in order to successfully implement our strategic initiatives to unlock the value of live person for our investors customers partners and stakeholders.
Denise: Second as it relates to our go to market operations there've been headwinds and the company's expansion and retention efforts that have slowed our ability to attract new customers to our product.
John Sabino: I have significant experience in this area, and I'm already seeing opportunities to improve. First, improving go-to-market starts with addressing renewal. The guidance given today is significantly driven by renewals that have root causes and events that occurred nine to 12. There was a lack of focus on our core business that led to changes in leadership and brought us to the situation we are in today.
Denise: I have significant experience in this area and I'm already seeing opportunities to improve.
Denise: First improving go to market starts with addressing the renewal much.
Denise: The guidance given today's ignite is significantly driven by renewals issues that had root causes and events that occurred nine to 12 months ago.
Denise: There's a lack of focus on our core business that lead to changes in leadership and brought us to the situation. We're in today.
John Sabino: That being said, we're now in a better position to make key changes to improve results going forward. I believe in a strong customer success organization that allows the sales team to focus on hunting new business. Customer success should be like an engine that runs reliably to support the renewal base while ensuring each customer receives the utmost value from our product. This is an area that I have extensive experience in as a former chief customer. I have a track record of bringing several organizations with low renewal rates to industry bests above 90% GRO. The improvements needed are not capital.
Denise: That being said, we're now in a better position to make key changes to improve results going forward.
Denise: I believe in a strong customer success organization that allows the sales team to focus on hunting new business customer.
Denise: Customer success you'd be like an engine that runs reliably to support the renewal base, while ensuring each customer received the utmost value from our products.
Denise: This is an area that I have extensive experience and as a former chief customer officer I have a track record of bringing several several organizations with low renewal rates to industry best above 90%.
Denise: The improvements needed are not capital intensive and with the appropriate rigor and focus it can be achieved over the next few quarters.
John Sabino: And with the appropriate rigor and focus, it can be achieved over the next few quarters. Second, there is an opportunity to improve our pricing and packaging strategy to make it simpler for brands to do business with us, and to standardize our offerings to unlock our differentiated value proposition across our products. I know our clients will respond positively to extracting more value from their spend, and this will reinforce LivePerson's position as a strategic partner. Third, we need to drive partnership to a greater velocity.
Denise: Second there is an opportunity to improve our pricing and packaging strategy to make it simpler for brands to do business with us and to standardize our offerings to unlock our differentiated value proposition across our product.
Denise: I know our clients are responding positively to extracting more value from their spend with us and this will reinforce live questions position as a strategic partner.
Denise: Third we need to drive partnerships with greater velocity.
John Sabino: While I believe that the digital management of all customer conversations will lead to better customer outcomes and experiences, voice engagements will remain an integral part of the foreseeable future. Accelerating and deepening partnerships with voice providers will enable us to deliver the full impact of our orchestration, automation, and analytics capabilities across voice and digital channels, enhancing customer value with a 360 view of conversational data and improved customer experience.
Denise: Believe that the digital management, all customer conversations will lead to better customer outcomes and experiences voice engagements will remain an integral part of the foreseeable future.
Denise: Accelerating and deepening partnerships with voice for riders will enable us to deliver the full impact of our orchestration automation and analytics capabilities, our price voice voice and digital channels enhancing customer value with a 360 view conversational data and improved customer experience.
John Sabino: Integrating with one or more strong voice partners, many of whom have reached out to us directly seeing LivePerson as a potential value partner, will greatly enhance the multi-channel customer experience. Lastly, in order to help execute these commercial transformations, we'll need to bring in new talent with experience in managing these turnarounds at scale. We recently hired our first chief customer officer, Kevin Meeks, who will focus on our existing customers to ensure they not only get value from our software but renew and expand their budgets. I am confident that under his direction we will improve our NRR and create greater strategic value. Kevin has already hit the ground running to implement operational changes that have proven successful in delivering double-digit improvements in renewal rates at other companies.
Denise: Integrating with one or more strong voice partners, many of whom have reached out to us directly seen live person has potential value partner will greatly enhance the multichannel customer experience.
Denise: Lastly in order to help execute these commercial transformations will need to bring in new talent with experience in managing these turnarounds at scale.
Denise: We recently hired our first chief customer Officer, Kevin Meeks, who will focus on our existing customers to ensure they not only get value from our software, but they renew and expand the black person.
Denise: I'm confident that under his direction, we will improve our IRR and create greater strategic value.
Denise: Kevin has already hit the ground running to implement operational changes that have proven successful through delivering double digit improvements in renewal rates to other companies.
John Sabino: We've also hired a skilled VP of sales operations, Eric Jonson, who has made a career of implementing data, systems, and operations to ensure commercial excellence and optimal go-to-market execution. Eric brings with him over 30 years of experience in the space, and we'll ensure we create the capabilities that can scale and create profitable growth. So this brings me to our third and final area.
Denise: We've also hired skilled VP of sales operations, Eric Johnson.
Denise: Who's made a career of implementing data systems and operations to ensure commercial excellence and optimal go to market execution, Eric brings with him over 30 years of experience in the space.
Denise: To ensure we create the capabilities that can scale and create profitable growth for the company.
Denise: So this brings me to our third and final area of focus.
John Sabino: We need to lean on our differentiated product strengths and our ability to integrate and orchestrate across our customers' current architecture and extend our current advantage. One of LivePerson's greatest strengths is our ability to integrate a variety of systems and orchestrate customer conversations across many different third-party channels. [inaudible] Customers love this tape.
Denise: We need to lean in our differentiated product strengths and our ability to integrate and orchestrate across our customers' current architecture and extend our current advantage in that space.
Denise: One of live persons greatest strengths is our ability to integrate a variety of systems and orchestrate customer conversations across many different third party channels.
Denise: Our tango capabilities been orchestrating conversations among agents agents and customers and customers in box per years.
John Sabino: But given that we primarily serve large enterprise brands, we need to offer these features within a well-integrated product. Today, we connect to a range of third-party data, services, and AI to power the orchestration of our customer care conversations across channels. But the underlying integrations often require customization, which can extend the time to value and delay ROI.
Denise: Customers Love this capability.
Denise: But given that we primarily serve large enterprise brands we.
Denise: We need to offer these features within a well integrated product.
Denise: Today, we connect to a range of third party data services and AI powered the orchestration of our customer care conversations across channels, but the underlying integrations often require customization, which can extend the time to value and to lay out a lot.
John Sabino: To mitigate these constraints, we are prioritizing the following product initiatives in 2020. First, in order to bridge the divide between traditional synchronous call centers and fully digitized and automated customer care experiences, LivePerson will put a renewed focus on integration into the voice, where most of our customer conversations take place. By unlocking the data in the voice, customers are able to identify the intense ripeness for digitization and automation. We do this today for many brands, but growing the breadth and depth of these integrations through partnerships will empower more brands to leverage their voice conversational data to accelerate their digital transformation. This is an area where we intend to expand strategic partnerships alongside our product development. We will announce such partnerships in the coming months.
Denise: To mitigate these constraints we are prioritizing the following product initiatives in 2024.
Denise: First in order to bridge the divide between traditional synchronous call centers fully digitized and automated customer care experiences I first of all put a renewed focus on integration into the voice channel, where most of our customer conversations trap today.
Denise: By unlocking the data and the voice channel customers are able to identify the intense rightness for digitization and automation.
Denise: We do this today for many brands are crawling the breadth and depth of these integrations through partnerships will empower more brands to leverage their voice conversational data to accelerate their digital transformation.
Denise: This is an area, where we intend to expand strategic partnerships alongside our product development.
Denise: We will announce such partnerships in the coming months.
John Sabino: Second, customers want to extract value from the technology they have in use today, and we have experience and capabilities to help. Many customers use our products with conversational orchestration across multiple channels, six to eight different automation platforms, including Amazon Lex, Google Dialogflow, IBM Watson, and others, underpinned by our orchestration. We will bring more CDP, CRM, and third-party consumer data into our platform to dynamically personalize conversations in real time based on user profiles and behavior.
Denise: Second customers want to extract value with the technology. They have in use today, and we have experience and capabilities to help them.
Denise: Many customers use our products with conversational orchestration across multiple channels.
Denise: Six to eight different automation technologies, including Apple Amazon, Lex Google dialogue flow, IBM, Watson and others underpinned by our orchestration layer.
Denise: We will bring more CDP CRM and third party consumer data into our product to dynamically personalized conversations in real time.
Denise: First on user profiles and behaviors.
John Sabino: This will allow us to orchestrate with greater precision and purpose and help customers extract greater efficiencies from their operations. Furthermore, this will generate more ROI from the technologies clients currently own and in which they've already invested. Third, while LivePerson can accommodate almost any channel, web and in-app remain the most widely adopted and where the greatest volume of conversation takes place.
Denise: This will allow us to orchestrate with greater precision and purpose and help customers extract greater efficiencies from their operations.
Denise: Furthermore, this will generate more ROI from the technologies clients currently out and in which they've already invested in.
Denise: Third well life person can accommodate almost any channel web and remain the most widely adopted and where the greatest volume of conversation takes place as such we will improve the messaging experience with these within these channels increased usage and stickiness.
John Sabino: As such, we will improve the messaging experience within these channels and increase usage and thickness. Lastly, customers often use multiple AI vendors and LLFs; we want to orchestrate all bots within our. As such, we're enhancing third-party bot connectors to incentivize the quote-unquote bring-your-own-LLM strategy, which will further accelerate the return on AM. Invest.
Denise: Lastly, customers often use multiple AI vendors and LLS, we want to orchestrate all box within our product as such we're enhancing third party bought connectors to incentivize the quote unquote bring your own LLM strategies.
Denise: Will further accelerate the return on AI and <unk>.
Denise: <unk>.
John Sabino: Speaking from my experience in leading customer care and experience organizations, customers do not want to be locked into a single product, platform, or venue. They want to extract more value from the technology they have already invested in without going through the costly and risky strategy of a rip and replace, and LivePerson's strategy is to be the integral partner who seeks to lower our customers' TCO for all conversational technology while leaving open possibilities of further improvements through generative AI. We are the preferred strategic partner to execute this strategy because we have the enterprise capabilities to manage customer conversations at scale, and we are product-neutral. By improving our product integration and orchestration, it allows enterprise customers to use the best of breed technology seamlessly on our product and always have the freedom to evolve in the changing digital conversation space without risky vendor lock. In summary, I am confident that the transformation plan I have laid out will lead to a future of profitable growth for LivePerson. The challenges we face today are solvable, and at a much lower cost to solve than products, which are more difficult to unravel or require significant capital expenditure to improve.
Speaker Change: Speaking from my experience in leading customer care and experience organizations customers do not want to be locked into a single product platform of value. They want to extract more value from the technology. They have already invested it without going through the costly and risky strategy of a rip and replace.
Denise: A live person our strategy used to be the integral partner seeks to lower our customers' tcl for all conversational technologies.
Denise: <unk> opened possibilities of further improvements to regenerative AI in the future.
Denise: We are the preferred strategic partner to execute the strategy because we had the enterprise capabilities to manage customer conversations at scale.
Denise: We have product neutral.
Denise: By improving our product integration and orchestration. It allows enterprise customers to use the best in breed technology seamlessly on our product and always have the freedom to evolve in a changing digital conversation space without risky vendor lock in.
Denise: In summary, I am confident that the transformation plan I have laid out lead to a future of profitable growth for life person.
Denise: The challenges we face today are solvable and a much lower cost to solve than product issues, which are more difficult to unravel all require significant capital expenditure to improve.
John Sabino: Throughout my career, I've stepped into organizations in similar situations. Circumstances demand we execute with a sense of urgency and accuracy, and that is exactly what we're doing. With that in mind...
Denise: Throughout my career I've stepped into organizations in similar situations.
Denise: Circumstances demand, we execute with a sense of urgency and accuracy and that is exactly what we're doing.
Denise: With that in mind as you can see from the guidance, we issued we have taken a hard reset.
John Sabino: From the guidance we issued, we have taken a hard reset. We believe this is a prudent decision, given the significant transformation we are under. And we look forward to sharing our progress quarter after quarter with all of you. Now, before passing the call off to John Collins.
Denise: We believe this is a prudent decision given the significant transformation, we are undertaking and we look forward to sharing our progress quarter after quarter with all of you.
Speaker Change: Now before passing the call off to John Collins, I would like to thank John for all he did as interim CEO and CFO, leading the company.
John Sabino: I would like to thank Jon for all he did as interim CEO and CFO leading the company. He has focused the company on our core digital messaging and voice business. He's continued to right-size the cost structure while providing strong leadership in a time of significant transition. Lastly, and most importantly, I would like to thank the entire LivePerson team for their dedication and commitment during this time of change and for their passion for the next chapter of LivePerson's success. And with that, let me hand the call over to Jon. Okay?
John Deneen Collins: He is focus the company on our core digital messaging and voice to messaging business.
John Deneen Collins: He has continued to rightsize the cost structure, while improving strong while providing strong leadership at time of significant transition.
Speaker Change: Lastly, and most importantly, I would like to thank the entire life person team for their dedication and commitment. During this time of change and for their passion for the next chapter of life person success.
Denise: And with that let me hand, the call over to John John.
John Deneen Collins: Thanks, John. I'm excited to partner with John on the path ahead, and I share the board's confidence that his leadership and go-to-market expertise are a powerful complement to LivePerson's leading digital product and Fortune 500 customer base. The rapid growth in our market, coupled with repeated validation of our product by our customers, investors, and by third-party research, makes it clear that LivePerson has a compelling growth opportunity following the rebuild of its sales and customer success team. Before I share an update on the quarter, I'd like to emphasize a few broader themes for 2024. First, as we have discussed and our guidance implies, we are at the beginning of a multi-quarter rebuild. While we are already observing a positive operational impact from recent changes to our go-to-market strategy, considering the length of our sales and renewal cycles. It will take time for these changes to translate into significant improvements in key financial metrics.
John Deneen Collins: Thanks, John.
John Deneen Collins: Excited to partner with John in the past and I share the board's confidence that his leadership and go to market expertise are a powerful complement to life persons, leading digital products and fortune 500 customer base.
Denise: The rapid growth in our market coupled with repeated validation of.
Denise: All of our product by our customers investors and by third Party research makes it clear that life person has a compelling growth opportunity following the rebuild of it sales and customer success motion.
Speaker Change: Before I share an update on the quarter I'd like to emphasize a few broader themes for 2024.
Speaker Change: First as we have discussed in our guidance implies we are at the beginning of a multi quarter rebuild.
Denise: Well, we are already observing a positive operational impact from recent changes to our go to market motion considering the links of.
Denise: Of our sales and renewal cycles. It will take time for these changes to translate into significant improvements to key financial metrics.
John Deneen Collins: As John mentioned, and I'll discuss further in the context of guidance, the past lack of focus and multiple strategic pivots caused disruption to our sales and renewal cycle, which is reflected in our guidance for the first quarter and the full year 2024. Second, deleveraging our capital structure represents a strategic imperative for the company. Our leverage ratios have become a friction in our go-to-market efforts, and we need to ensure our customers have confidence in LivePerson as a long-term strategic partner in their transformation. To this end, we plan to settle the $73 million balance of the 2024 notes maturing later this week using cash from the balance sheet.
Denise: As John mentioned and I'll discuss further in the context of guidance.
Denise: It's like a focus in multiple strategic pivots caused disruption to our sales and renewal cycles, which is reflected in our guidance for the first quarter and the full year 2024.
Denise: Second deleveraging our capital structure represents a strategic imperative for the company.
Denise: Leverage ratios have become a friction in our go to market motion and we need to ensure our customers have confidence in my person as a long term strategic partner in their transformations.
Denise: To this end we plan to settle the $73 million balance of the 2024 notes maturing later this week using cash from the balance sheet and we expect to share more on our plans for the 'twenty 'twenty six notes.
John Deneen Collins: And we expect to share more on our plan for the 2026 notes soon. The third and final theme I'd like to emphasize before moving forward with the quarterly updates relates to transparency into the business. Considering the divestiture and winding down of non-core business lines over the last year and the multi-quarter rebuild we have just embarked on, we recognize the need for additional specificity on key performance indicators and revenue segmentation to better measure our progress. As I'll elaborate on shortly, we are now providing a value for net revenue retention and for B2B Corps recurring revenue. Regarding wild health, we are actively marketing a sale of the business, which is the only noteworthy non-core asset remaining.
Denise: The third and final theme I'd like to emphasize before moving forward with the quarterly update.
Denise: Relates to transparency into the business.
Denise: During the divestiture and wind down of noncore business lines over the last year and the multi quarter rebuild we have just embarked on.
Denise: Recognizing the need for additional <unk>.
Denise: Christie on key performance indicators and revenue segmentation to better measure our progress.
Denise: I'll elaborate on shortly we are now providing a value for net revenue retention.
Denise: <unk> recurring revenue.
Denise: Regarding warehouse, we are actively marketing the sale of the business, which is the only noteworthy noncore asset remaining.
John Deneen Collins: And we are now providing the revenue contribution from that. With that, I'll proceed with the quarterly update. We signed a total of 62 deals in the fourth quarter, 46 expansions and renewals, including three seven-figure deals and 16 new logos. Total bookings were the highest since the third quarter of 2022, up 33% year-over-year and 27% sequentially.
Denise: We are now providing the revenue contribution from that business.
Denise: With that I will proceed with the quarterly update we.
Denise: We signed a total of 62 deals in the fourth quarter, 46 expansions and renewals, including three seven figure deals and 16 new logos.
Denise: Total bookings were the highest since the third quarter of 2022.
Denise: 33% year over year and 27% sequentially.
John Deneen Collins: Continued momentum within the financial services vertical was the primary driver of the fourth quarter strong results. We signed renewals with one of the world's largest banks, a large UK financial services provider, a growing U.S. credit card issuer, a major U.S. credit union, and a large Australian retail bank. All five deals included material expansion, two in the seven figures and one in the eight figures in terms of ACB.
Denise: Continued momentum within the financial services vertical was the primary driver of the fourth quarter strong results.
Denise: We signed renewals with one of the world's largest banks, a large UK financial services provider a growing U S credit card issuer in major U S credit Union and a large Australian retail bank.
Denise: All five deals included material expansions.
Denise: Two in the seven figures in one of my figures in terms of ACB.
John Deneen Collins: In addition, we acquired a new logo and a leading personal loan provider through our partner network, which will equip over 2,000 contact center agents with an integrated voice experience through Tenfold, a business we acquired in 2021. Other selected deals included a new logo win through a partnership with a major telecom services provider in Southeast Asia, a renewal with a leading U.K. connectivity provider, and a new logo with a globally recognized designer. These deals also underscore the momentum we continue to build with our SI partner network. Three of our top five new logo deals in the quarter were driven by partners.
Denise: In addition, we acquired a new logo and a leading personal loan provider through our partner network.
Denise: Which will clip over 2000 contact center agents with an integrated voice experience through tenfold business, we acquired in 2021.
Denise: Other selected deals included in a new logo win through a partner with a major telecom services provider in South East Asia.
Denise: With a leading UK connectivity provider and a new logo with a globally recognized designer.
Denise: This deal also underscore the momentum we continue to build with our partner network.
Denise: Three of our top five new logo deals in the quarter were driven by partners and we moved three partners from on demand usage arrangements to fully committed contracts with our voice based analytics product, which was integrated into that person's core product following an acquisition in 2021.
John Deneen Collins: And we moved three partners from on-demand usage arrangements to fully committed contracts with our voice-based analytics product, which was integrated into LivePerson's core product following an acquisition in 2021. In addition to expanding our reach and efficiency through our SI partners, we are also actively building deeper technology integrations with voice providers. Considering cross-channel orchestration and analytics are among LivePerson's greatest strengths, it is clear that these integrations will enable our customers to seamlessly shift voice conversations to the most appropriate digital channels, accelerating time to value and obviating the need for costly, high-risk replatforming strategies. As for our fourth quarter financial results... Total revenue was $95.5 million, above the midpoint of our guidance. Note that WildHealth contributed $3.4 million to total revenue in the fourth quarter, inclusive of approximately $2 million received through Medicare reimbursement, which was consistent with the expectation we set last quarter. Adjusted EBITDA for the fourth quarter was $3.7 million, slightly above the midpoint of our guidance.
Denise: In addition to expanding our reach and efficiency through our partners. We are also actively building deeper technology integrations with voice providers.
Denise: Considering cross-train orchestration and analytics or among persons greatest strength. It is clear that these integrations will enable our customers to seamlessly shift voice conversations for the most appropriate digital channels accelerating time to value and obviating the need for costly high risk re platforming charges.
Denise: As for our fourth quarter financial results total revenue was $95 5 million above the midpoint of our guidance note that while <unk> contributed $3 4 million to total revenue in the fourth quarter inclusive of approximately $2 million received through Medicare reimbursements, which was consistent with the expectation we set last quarter.
Denise: Adjusted EBITDA for the fourth quarter was $3 7 million slightly above the midpoint of our guidance.
John Deneen Collins: In terms of our reporting segments, within total revenue for the fourth quarter, hosted services was $78.6 million, down 7% year-over-year. Within hosted services, B2B core recurring revenue was $83 million, up 2% year-over-year, driven by customer expansion. Professional services revenue was $16.8 million, down 41% year-over-year, driven by the completion of the engagement with the Claire JV in the first quarter. Excluding revenue from the Claire JV, professional services revenue improved 8% year over year, again driven by customer expansion. From a geographic perspective, U.S. revenue was $68.3 million and international revenue was $27.2 million, or 72% and 28% of total revenue, respectively.
Denise: In terms of our reporting segments within total revenue for the fourth quarter posted services was $78 6 million down 7% year over year within hosted BTB core recurring revenue was $83 million up 2% year over year driven by customer expansions.
Denise: Professional services revenue was $16 8 million down 41% year over year, driven by the completion of the engagement with the clear JV in the first quarter.
Denise: Excluding revenue from the clarity of the professional services revenue improved 8% year over year again, driven by customer expansions.
Denise: From a geographic perspective U S revenue was $68 3 million and international $27 2 million or 72% and 28% of total revenue respectively.
Denise: For the fourth quarter RPC was 610000 up 12% driven in part by expansions with our largest customers.
Denise: Net revenue retention was 95% in the fourth quarter compared to 98% in the third quarter and two consecutive quarters of sequential improvement.
John Deneen Collins: For the fourth quarter, ARPC was 610,000, up 12%, driven in part by expansions with our largest customers. Net revenue retention was 95% in the fourth quarter, compared to 98% in the third quarter and two consecutive quarters of sequential improvement. Considering NRR is a new disclosure, we have provided values for the last five quarters in the supplemental materials on our investor relations website. Finally, RPO was $317 million in the fourth quarter, which was a slight sequential improvement over the third. In terms of guidance for the first quarter, we expect revenue to be in the range of $79 million to $83 million.
Denise: Considering our or is a new disclosure.
Denise: We have provided values for the last five quarters in the supplemental materials on our Investor Relations website.
Denise: Finally <unk>.
Denise: <unk> was 317 million in the fourth quarter, which was a slight sequential improvement over the third.
Denise: In terms of guidance for the first quarter.
Denise: We expect revenue to be in the range of $79 million $283 million.
Denise: This is a sequential decline of approximately $15 million at the mid point from the fourth quarter, which as discussed was primarily driven by customer cancellations.
Denise: While we previously expected to repeat the relative success of the fourth quarter.
Denise: After further evaluation and discussions with Carrefour and customers it has become clear that the.
Denise: Lack of a robust customer success motion has increasingly turned down sells into cancellations.
Denise: Note that down sales due to pandemic normalization and the onetime Medicare reimbursement of approximately $2 million also contributed to the sequential revenue decline.
John Deneen Collins: Note that this is a sequential decline of approximately 15 million at the midpoint from the fourth quarter, which, as discussed, is primarily driven by customer cancellation. While we previously expected to repeat the relative success of the fourth quarter, after further evaluation and discussions with cancelling customers, it has become clear that the lack of a robust customer success motion has increasingly turned downsells into cancellations. Note that downsells due to pandemic normalization and the one-time Medicare reimbursement of approximately $2 million also contributed to the sequential revenue decline.
Denise: Peter before recurring revenue is expected to be approximately 92% of total revenue in the first quarter.
Denise: And adjusted EBITDA for the first quarter is expected to be in the range of negative two to positive two.
Denise: And again the sequential decline here from the fourth quarter is attributable to the same factors driving the decline in revenue.
Denise: For the full year, we expect revenue to be in the range of $300 million to $315 million.
Denise: This range is heavily impacted by the concentration of cancellations in the first quarter.
Denise: Our full year revenue impact.
Denise: Considering the focus and substantial resources, we are committing to a customer success motion now and moving forward, we expect to reduce the impact of cancellations and done sales in subsequent quarters.
John Deneen Collins: B2B core recurring revenue is expected to be approximately 92% of total revenue in the first quarter, and adjusted EBITDA for the first quarter is expected to be in a range of negative 2 to positive 2. And again, the sequential decline here from the fourth quarter is attributable to the same factors driving the decline in revenue. For the full year, we expect revenue to be in the range of $300 million to $315 million.
Denise: As for BBB core recurring revenue consistent with the first quarter, we expect it to be approximately 92% of total revenue for the full year.
Denise: We expect full year adjusted EBITDA would be in the range of 15 million to $26 million.
Denise: We expect me to be the VW business to be free cash flow positive for the full year.
Denise: And with that I'll turn the call back to John for his final comments before we proceed with Q&A John.
John Deneen Collins: Thanks, John.
John Deneen Collins: While there are areas of our business, we need to address to approve the renewal challenges. We're looking at in the first quarter, we are taking action or improving.
John Deneen Collins: This range is heavily impacted by the concentration of cancellations in the first quarter, which has a full year revenue impact. Considering the focus and substantial resources we are committing to our customer success movement now and moving forward, we expect to reduce the impact of cancellations and downfills in subsequent quarters. As for B2B core recurring revenue, consistent with the first quarter, we expect it to be approximately 92% of total revenue for the full year. We expect full-year adjusted EBITDA to be in the range of $15 million to $26 million, and we expect the B2B business to be pre-cash flow positive for the full year. And with that, I'll turn the call back to Jon for his final comments before we proceed with Q&A. Jon?
John Deneen Collins: Improving the capital structure strengthening our team implementing new operational strategies and refreshing go to market and product integration and orchestration.
John Deneen Collins: Looking forward I want to thank the live person team for their commitment to this journey.
John Deneen Collins: While we are striving to accomplish is achievable and with a focus on executing the plan. We laid out today live person can begin on a path to profitable growth.
Speaker Change: With that let's open the line for Q&A operator.
Speaker Change: Thank you Sir.
Speaker Change: At this time, we'll be conducting a question and answer session.
Speaker Change: I would like to ask a question. Please press star and then one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue you.
Speaker Change: You May press Star and then two if you would like to remove your question from the queue.
Speaker Change: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
John Sabino: Thanks, John. While there are areas of our business we need to address to improve the renewal challenges we are looking at in the first quarter, we are taking action. Improving the capital structure, strengthening our team, implementing new operational strategies, and refreshing go-to-market and product integration and orchestration. Looking forward, I want to thank the LivePerson team for their commitment to this journey. What we are striving to accomplish is accomplishing.
Speaker Change: To give everyone the opportunity to participate please limit yourself to one question and one follow up.
Speaker Change: The first question, we have comes from Jeff Van <unk> from Craig Hallum Capital Group. Please go ahead.
Jeffrey Lee Van Rhee: Thanks, two quick ones and then one of them a little more in depth.
Jeffrey Lee Van Rhee: I missed the bookings growth commentary John could you just repeat that.
Operator: And with the focus on executing the plan we laid out today, LivePerson can begin on a path to profitable growth. With that, let's open the line for Q&A. Operator?
Jeffrey Lee Van Rhee: Hey, Geoff so with regard to total bookings in the fourth quarter, we were up 33% year over year or 27% sequentially and it was the highest bookings quarter since the third quarter of 2022.
Operator: Thank you, sir. We will be conducting a question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the queue.
Jeffrey Lee Van Rhee: There was the comments from the prepared remarks.
Geoff: Got it and then I guess you gave the ER the revenue on Wild health can you share the EBITDA contribution.
Speaker Change: We it's a negative value.
Jeffrey Lee Van Rhee: And again, we are actively marketing the sale of that business and expect to.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To give everyone the opportunity to participate, please limit yourself to one question and one follow-up. The first question we have comes from Jeff Hunnery from Craig Hallam Capital Group. Please go ahead.
Speaker Change: I have more to share in that in that sense firsthand.
Speaker Change: Okay I'll come back to that later.
Speaker Change: The okay. So to the big the Big issue, obviously, not every day you see a recurring model missed by 25%. This this.
Speaker Change: Issue that you're talking about I mean, you got to expand on this what what did you not know that you suddenly found out about customer satisfaction or usage of the product.
Jeffrey Lee Van Rhee: Thanks. Two quick ones and then one a little more in-depth. I missed the bookings, growth, and commentary. John, could you just repeat that? Hey, Jeff.
Speaker Change: That was that dramatic and that sudden I mean that was there.
John Deneen Collins: Sure thing. So with regard to total bookings in the fourth quarter, we were up 33% year-over-year, 27% sequentially, and it was the highest bookings quarter since the third quarter of 2020. Those are the comments from the prepared remarks. Got it. And then I guess you gave the revenue on wild health.
Speaker Change: Recurring model, obviously, you can see the usage of your platform.
Speaker Change: Yeah, how help me understand the suddenness and the magnitude is something.
Speaker Change: Nearly seen here.
John Deneen Collins: Hi, John College do you want to start with just from November to now and then I'll jump in with what I'm seeing such joining for job.
John Deneen Collins: Sure.
John Deneen Collins: When we last spoke we were in the midst of successfully executing our strategy in the fourth quarter, which closed better than we had actually expected and given those data points, we expect to carry that momentum forward into the first quarter.
John Deneen Collins: Can you share the EBITDA contribution? We, it's a negative value, and again, we are actively marketing the sale of that business and expect to have more to share in that sense very soon. Okay, I'll come back to that later.
Speaker Change: The first quarter has been very fluid, we're observing customers, providing significantly shorter notice of intent to cancel than we've observed historically.
John Deneen Collins: The, okay, so to the big issue, obviously, not every day do you see a recurring model miss by 25%. This issue that you're talking about, I mean, you gotta expand on this. What did you not know that you suddenly found out about customer satisfaction or usage of the product that was that dramatic and that sudden? I mean, with a recurring model, obviously, you can see the usage of your platform. Yeah, help me understand the suddenness and the magnitude, something rarely seen here.
Speaker Change: And as we discussed in the prepared remarks, we're seeing previously expected down so risk manifest as cancellations.
Speaker Change: The full year guide clearly reflects the renewal dynamics, we're observing now in the first quarter.
Speaker Change: And obviously with the investments we're making in customer success, we expect to mitigate that risk going forward, but the guide does reflect what we're seeing in the first quarter.
Speaker Change: And I think to elaborate a bit it has become clear to us that.
John Deneen Collins: John Collins, do you want to start with just from November to now, and then I'll jump in with what I've seen since you joined in June? Sure. So Jeff, when we last spoke, we were in the midst of successfully executing the strategy in the fourth quarter, which closed better than we had actually expected. And given those data points, we expected to carry that momentum forward into the first quarter. The first quarter has been very fluid.
Speaker Change: For further discussions with customers the absence of a robust customer success motion is a primary reason for the lack of meaningful lead time to address cancellation risks and the perceived lack of value by certain customers.
Speaker Change: And so even in some cases, we're observing customer site a lack of specific capabilities that our product actually has today, including certain integrations most channel support and again from our perspective. This underscores the importance of a robust successful.
John Deneen Collins: We're observing customers providing significantly shorter notice of intent to cancel than we've observed historically. And, as we discussed in the prepared remarks, we're seeing previously expected downfill risk manifest as cancellation. And the four-year guide clearly reflects the renewal dynamics we're observing now in the first quarter. And obviously, with the investments we're making in customer success, we expect to mitigate that risk going forward. But the guide does reflect what we're seeing in the first quarter.
Speaker Change: And our confidence that the investments, we're making here will lead to a meaningful turnaround.
Speaker Change: And is there.
Speaker Change: Obviously, you're saying yeah. Sorry go ahead, John Collins really quick great to have a chance to chat with you today.
John Deneen Collins: Most renewal cycles that youll see start nine to 12 months out and that's precisely when there were some challenges within the company some corporate instability the financial profile. So when these this these decisions were being analyzed by our customers.
John Deneen Collins: And I think to elaborate a bit, it's become clear to us that, from further discussions with customers, the absence of a robust customer success process is a primary reason for the lack of meaningful lead time to address cancellation risks and the perceived lack of value by certain customers. And so even in some cases, we're observing customer sites a lack of specific capabilities that our product actually has today, including certain integrations and multichannel support. And again, from our perspective, this underscores the importance of a robust success function and our confidence that the investments we're making here will lead to a meaningful turnaround. I was going to say it's great to have a chance to chat with you.
John Deneen Collins: Ways out at.
Speaker Change: And this is where Acs function that is engaging with your customers moving the customer through a prescriptive value path on what they should be doing with your product and helping them grow and expand really needs to be taking place in that that's one of the things that I've identified since coming to the company that we really have to strengthen that motion.
John Deneen Collins: So this is if we look at what we're doing now in the reset. This is to ensure that we can be strong in this area going forward. So it really does have to do with that renewal cycle and some of the buying that was done during the pandemic with us remaining as in some in some cases, a point solution rather than a true platform.
John Sabino: You know, most renewal cycles that you'll see, start nine to 12 months out. And that's precisely when there are some challenges within the company, some corporate instability, and the financial profile. So when these decisions were being analyzed by our customers, you know, it was a ways out. And this is where a customer service function that is engaging with your customer, moving the customer through a prescriptive value path on what they should be doing with your product and helping them grow and expand really needs to be taking place. And that's, that's one of the things that I've identified since coming to the company that we really have to strengthen that motion. So this is what, you know, if we look at what we're doing now in the reset, this is to ensure that we can be strong in this area going forward.
John Deneen Collins: Digital conversation solution really just point back to these challenges we have around the customer success motion in the company.
John Deneen Collins: And I'm confident we can turn that around and we're already starting on that.
Speaker Change: Okay, Great I'll leave it there thank you.
Speaker Change: Thanks, Jeff.
John Deneen Collins: Okay.
Speaker Change: Thank you. The next question we have comes from CPE pennant graph of Mizuho. Please go ahead.
John Deneen Collins: Hey, Thanks, it's actually Dan on for Citi, I think John you hinted at it.
Speaker Change: The last answer, but maybe can you just elaborate on what exactly drove the renewal challenges over the past year or so I guess, what specifically was hindering your success with the renewals in the past and what are some of the steps you're taking to address those issues.
John Sabino: So it really does have to do with that renewal cycle and some of the buying that was done during the pandemic, with us remaining as, in some cases, a point solution rather than a true platform digital conversation solution. And I'm confident we can turn that around, that we're already... Okay, great. I'll leave it there.
Dan: John do you want me to take a quick jump at that and then you can talk to the history.
John Deneen Collins: So I've been talking with a number of customers many of them that are staying with us and some that have actually left.
Speaker Change: And what I'm seeing is that the the cancellations that we see really had to do with live person and the way that we were in a great supporting and engaging with our customers in many cases.
Operator: Thank you. Thank you. Thank you. The next question we have comes from C.P. Panagraia of Mizzou.
Operator: Please go ahead. Hey, thanks. It's actually Dan on for Citi.
Dan: I think, John, you hinted at it in the last answer, but maybe can you just elaborate on what exactly drove the renewal challenges over the past year or so? I guess what specifically was hindering your success with renewals in the past? And what are some of the steps you're taking to address those issues? John, do you want me to take a quick jump on that, and then you can talk? So I've been talking with a number of customers, many that are staying with us and some that have actually left us, and what I'm seeing is that the cancellations that we see really had to do with LivePerson and the way that we were supporting and engaging with our customers. In many cases, we were just providing core messaging support when, in fact, a platform can do a lot more.
Speaker Change: We were just providing core messaging support when in fact, the platform can do a lot more than that and that's where our customers are looking for more.
Speaker Change: In the cases, where we just are a point solution. There is an opportunity for a voice provider and others that are extending into the digital space to provide a good is good enough capability.
Speaker Change: In the in the digital space and.
Speaker Change: And so where this customer success motion is critical and what we need to work on going for here is establishing truly the integration and orchestration, enabling conversation across the entire enterprise, which is what customers who are moving into a digital transformation and are looking for and those are the ones that are staying with us and expanding and so we have to bring that to me.
John Sabino: And that's where our customers are looking for more. In the cases where we just are a point solution, there's an opportunity for a voice provider and others that are extending into the digital space to provide a good is good enough capability. In the digital world, where this customer success motion is critical and what we need to work on going forward here is establishing truly integration and orchestration enabling conversation across the entire enterprise, which is what customers who are moving into a digital transformation are looking for. And those are the ones that are staying with us and expanding.
Speaker Change: More of our customers than just an isolated few here and there it has to be a much more structured way to engage with the John.
Speaker Change: John calls if you want to add anything on the history of what you saw prior to me joining happy to have that commentary.
John Deneen Collins: No I think your answer captures most of the history that he said the.
John Deneen Collins: Motions that were seeing manifest and cancellations they began nine to 12 months ago.
John Deneen Collins: Yes.
John Deneen Collins: Thank you for the question Dan.
Speaker Change: Thank you, Sir ladies and gentlemen, just a reminder, if you would like to ask a question. Please press star and then one now to.
Speaker Change: Everyone the opportunity to participate please limit yourself to one question and one follow up on.
John Sabino: And so we have to bring that to more of our customers than just an isolated few here and there. It has to be a much more structured way to engage with them. No, I think your answer captures most of the history. As you said, the movements that we're seeing manifest and cancellations today began nine to 12 months ago.
John Deneen Collins: The next question we have comes from Jeff humans of B Riley Securities. Please go ahead.
Jeffrey Lee Van Rhee: Yes, hi, good afternoon.
Jeffrey Lee Van Rhee: Welcome aboard John and Thanks for taking my questions.
Jeffrey Lee Van Rhee: My question is really geared towards potential changes towards your pricing and packaging for some of your solutions can you talk about maybe some of the issues you saw with the old go to market motion and maybe what are some easier kind of.
John Deneen Collins: Thank you for the questions. Thank you, sir. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then 1 now. To give everyone the opportunity to participate, please limit yourself to one question and one follow-up. The next question we have comes from Zach Cummins of B. Reilly Securities. Please go ahead.
Jeffrey Lee Van Rhee: Blocking and tackling things that that can be done to improve that here over the next couple of quarters.
Speaker Change: Yes, I'm glad you asked that question because I do want to elaborate on this this is one of the things that I observed soon as I stepped in to the company both in talking with our customers looking at third party information that we have from investors and consultants.
Zachary Cummins: Yep. Hi, good afternoon. Welcome aboard, John, and thanks for taking my questions. My question is really geared towards potential changes to your pricing and packaging for some of your solutions. Can you talk about maybe some of the issues you saw with the old go-to-market motion and maybe what are some easier kind of blocking and tackling things that can be done to improve that here over the next couple of quarters? Yes, I'm glad you asked the question, because I do want to elaborate on this. This is one of the things that I observed soon as I stepped into the company, both in talking with our customers and looking at third-party information that we have from investors and consultants. And I do believe that, historically, LivePerson made it a little bit difficult to do business with us.
John Deneen Collins: And I do believe that historically.
John Deneen Collins: <unk> person made it a little bit difficult to do business with us, we either sold or engaged with our customers more on a selling of functionality or capability and truly providing a full solution sale that enables a digital transformation. So going forward. Our intent is to package our our capabilities.
John Deneen Collins: And our pricing.
John Deneen Collins: Pricing and packaging around enabling customers to use the full suite of products and capabilities that we have today. This is what we know customers want. This is what we know retained customers and helps them expand.
John Sabino: We either sold or engaged with our customers more on a selling of functionality or capability than truly providing a full solution sale that enables a digital transformation. So going forward, our intent is to package our capabilities at our... Pricing and packaging around enabling customers to use the full suite of products and capabilities that we have today. This is what we know customers want. This is what we know retains customers and helps them expand. And what I've observed in my 50 days from some of our larger customers and the ones that are having a great experience with LivePerson is that that is how they're using the product.
John Deneen Collins: And what I've observed in my 50 days from some of our larger customers and the ones that are having a great experience with live person is that that is how they're using the product so our pricing and packaging needs to make it easier to get that off the ground from the very beginning lastly, I'll point back at the C. S motion once you've sold to a customer in that way, it's imperative that you walk.
John Deneen Collins: Walk them through that valley path of how to leverage the whole platform and so we're gonna engaging on both fronts pricing and packaging to make it easier to buy the full suite and get them and get the most value out of it and a C. S team that actually much more consultative way, leading a customer through a digital transformation for their conversation than just looking at product feed.
John Sabino: So our pricing and packaging needs to make it easier to get that off the ground from the very beginning. Lastly, I'll point back to the CS. Once you've sold to a customer in that way, it's imperative that you walk them through that value path of how to leverage the whole platform. And so we're gonna engage with it on both fronts. Pricing and packaging to make it easier to buy the full suite and get the most value out of it, and a CS team that acts in a much more consultative way, leading a customer through a digital transformation for their conversation rather than just looking at product features and functionality.
John Deneen Collins: And functionality both of those things together really should help us out in the marketplace.
Speaker Change: Understood that's helpful. Mike.
Speaker Change: One follow up question is really just around the cost structure.
Speaker Change: Can you talk about where you sit right now in terms of head count and any potential changes that you need to make to execute upon on this multi quarter transformation for the business.
John Sabino: Both of those things together really should help us out in the market. Understandable. That's, that's helpful.
Zachary Cummins: And my one follow-up question is really just around the cost structure. Can you talk about where you sit right now in terms of headcount and any potential changes that you need to make to execute upon this multi-quarter transformation for the business? Yeah, I'll start with that one.
Speaker Change: J C. You want back Oh, Yeah, I'll start with that one is that because you know we've gone through more than a year of more or less continuous restructuring we've taken additional costs out of the business in the first quarter and I think we have a.
John Deneen Collins: Zach, as you know, we've gone through more than a year of more or less continuous restructuring. We've taken additional costs out of the business in the first quarter, and I think we have a reasonable cost structure given the guidance that we have today. And we're obviously very conscious of the capital structure and the need to produce cash.
J C: Reasonable cost structure.
J C: Given the guide that we have.
Speaker Change: Good day.
Speaker Change: We're obviously very conscious of the capital structure and the need to produce cash and we'll be continuing.
John Deneen Collins: And we'll be continuously reevaluating, you know, our performance on the top line and what that might imply for the cost structure. But at this moment in time, we feel that we have a reasonable balance, and we have our sort of heads down to execute on the go-to-market side of the equation as described on the slide. Thanks for taking the time to be with us today. Bye.
Speaker Change: <unk> re evaluating you know art.
Speaker Change: Our performance on top line and what that might imply for.
Speaker Change: For the cost structure, but at this moment in time, we feel that we have a reasonable balance and we have our sort of heads down to execute on the go to market side of the equation as described on this call.
Speaker Change: Got it thanks for that.
Speaker Change: Thank you Sir.
Operator: Thank you, sir. The last question we have comes from Arjun Bhatia of William Blair. Please go ahead.
Speaker Change: The last question, we have comes from Andrew <unk> of William Blair. Please go ahead.
Chris: Hi, this is Chris on behalf of Arjun, and thanks for taking my question. One of the first things I wanted to touch on was, So, you know, looking at the transformation plan, there are a lot of pretty significant operational and strategic changes. There's been, you know, a number of changes at the senior management level over the past couple of quarters. Kind of wanted to get an understanding of your approach to help get everyone within the organization realigned around some of these new priorities and, you know, ensure that you execute on this plan. So the what I've laid out today really is in line with what I have seen in the market, and this really is around operational go-to-market, which is what is being impacted. So I'm confident that the transformation plan that we've laid out today for everybody will turn us back to growth. And these problems are very solvable. Again, they are all about our go-to measures. GoToMarket.
Speaker Change: Hi, This is Chris on for origin and thanks for taking my question.
Chris: One of them.
Chris: Things I want to touch on was looking at the transformation plan, there's a lot of pretty significant operational or strategic changes there's been a number of changes to the senior management level over the past couple of quarters I don't want to get an understanding for what your approach is to help get everyone within the organization realigned around somewhat.
Speaker Change: These new priorities and ensure that you execute on this plan successfully.
Speaker Change: So the what I've laid out today really is in line with.
Speaker Change: What I have seen in the past and it really is around operational go to market, which is which is what is what is being impacted.
Speaker Change: So I am confident that the transformation plan, we've laid out paper everybody will return us back to growth and these problems are very solvable again. They are all about our go to mentioned go.
Speaker Change: Go to market and we are already started bringing in leaders that we know can help us in scaling on that side.
John Sabino: And we've already started bringing in leaders that we know can help us scale on that. And the leadership team we have today really is aligned with where we need to go. We've been, you know, since the 50 days of joining the company, coming together to actually put together the strategy to execute with details behind the plan that I've laid out. Additionally, as with all transformations, about your communication strategy, setting your targets and your metrics and your systems and data to align to that. And that's the operational improvement that I've already mentioned in my prepared remarks that we're moving. So we are executing a classic transformation strategy that really has to do with setting where we're going, clearly communicating that to the customer, bringing in leaders, two of whom I've already spoken to, to help augment the current team that we have today through that transformation, and making sure that we have a robust set of capabilities in reporting, process, and operations to ensure that we're moving forward on these. And that's where I'd really like to highlight why I came to this.
Speaker Change: And the leadership team we have today really is aligned on where we need to go we've been since the 50 days of joining the company came together to actually put together the strategy to execute with details behind the plan that I've laid out here. Additionally.
Speaker Change: Additionally, as with all transformation is about your communication strategy setting your targets and your metrics and your systems and data to align to that and that's the operational improvements that have already.
Speaker Change: Mentioned in my prepared remarks that we're moving against so we are executing a classic transformation strategy that really just has to do with setting.
Speaker Change: Where we're going clearly communicating it to the customer bringing in leaders two of which I've already spoken to to help augment the current team that we have today through that transformation and making sure that we have a robust set of capabilities on reporting process and operations to ensure that we're moving forward on these transformations and that's where I'd really like to highlight.
Speaker Change: Why I came to this company.
John Deneen Collins: These things that need to be improved are the things I've seen in past companies, and over the course of quarters, we were able to make substantial improvements with them that had dramatic improvements on ARR consumption and value with the customer, and ultimately new logo growth and growth for the company overall. I'd like to add before we move on that we have had, as the investor base and the analyst community is very aware, a lot of non-core initiatives over the past few years that have caused substantial distractions to the wider employee base and the leadership. Over the last six months, however, we have become more focused than ever on the core value proposition this company brings to its enterprise customer base. And I think what we're seeing now in John's plan is that we're putting the meat on the bones of that newfound focus that we already have.
Speaker Change: These b E things that need to be improved or the things I've seen in past companies and over the course of quarters, we were able to make substantial improvements with them that had dramatic improvements to a R. R.
Speaker Change: Consumption and value with the customer and ultimately new logo growth and growth for the company overall.
Speaker Change: I'd like to add before we move on but we have had.
Speaker Change: The Investor base and analyst community is very aware a lot of non core initiatives over the past few years that have caused substantial distraction to the wider employee base and the leadership team over the last six months. However, we have become more focused than ever on.
Speaker Change: On the core value proposition this company brings to its enterprise customer base.
Speaker Change: And I think what we're seeing now and in John's plan is that we're putting the meat on the bones of the newfound focus.
John Deneen Collins: So I think the company and leadership team is very aligned with what we've laid out on today's call, and we're really putting the details in place for execution as opposed to just strategic thinking. So we're in a good place as a company and a team with respect to the direction we're highlighting now. Thank you. That's all really helpful to hear and refreshing. And then one other kind of logistic question for you, John. What is included in the guidance in terms of contribution from wild health, to the extent you can share? Sure, but very little in the guide from Wild Health.
Speaker Change: Already happened so I think the company and the leadership team is very aligned to what we've laid out on today's call and we're really putting the details in place for execution.
Speaker Change: As opposed to just appreciate you thinking so we're in a we're in a good place as a company and a team with respect to the direction, we're highlighting now.
Speaker Change: Yeah. Thank you that's all really helpful to hear and refreshing.
Speaker Change: I mean, what are the kind of like logistic question for for I guess for you John.
Speaker Change: What is included in the guidance in terms of contribution from Wild health.
John Deneen Collins: Anything you can share.
John Deneen Collins: Sure.
John Deneen Collins: Very little in the died from Wild health. There is a mid single digit expectation low to mid single digit expectation for full year that that would be baked in to the overall full year 'twenty forward guide.
John Deneen Collins: There is a mid-single-digit expectation, a low to mid-single-digit expectation for a full year that would be baked in to the overall full year 24 guide. And again, last year, just to ensure it's clear, we had more than $8 million contribution from Medicare reimbursement that occurred in the second half of 2023 that certainly will not reoccur in 2020. Thank you so much... Ladies and gentlemen, we have reached the end of our call today. Thank you for joining us, and you may now disconnect your lines.
John Deneen Collins: And again, we had last year just to ensure it's clear that we had in over a more than $8 million contribution from Medicare reimbursement that occurred in the second half of 2023 that certainly will not reoccur in 2024.
Speaker Change: Thank you Sir.
Speaker Change: Ladies and gentlemen, we have reached the end of our call today. Thank you for joining US and you may now disconnect your lines.
John Deneen Collins: [music].
John Deneen Collins: Okay.
John Deneen Collins: Okay.
John Deneen Collins: [music].
John Deneen Collins: Okay.
John Deneen Collins: Okay.
John Deneen Collins: Hum.
John Deneen Collins: [music].