LivePerson Inc. (NASDAQ:LPSN) Q3 2020 Earnings Conference Call - Final Transcript
Oct 29, 2020 • 05:00 pm ET
Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Third Quarter 2020 Earnings Conference Call. My name is Gary, and I will be your conference operator today. [Operator Instructions]
I would now like to turn the conference over to Mr. Matthew Kempler, the company's Senior Vice President of Investor Relations. Please go ahead, sir.
Thanks very much, Gary. Joining me on the call today is Rob LoCascio, LivePerson's Founder and CEO; and John Collins, our Chief Financial Officer. Please note that during today's call, we will make forward-looking statements, which are predictions, projections and other statements about future results. These statements are based on our current expectations and assumptions as of today 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 the comments made during this conference call and in 10-Ks, 10-Qs and other reports we file from time to time with the SEC. We assume no obligation to update any forward-looking statements. Also, during this call, we will discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release. Both this press release and supplemental slides, which include highlights for the quarter, are available in the Investor Relations section of LivePerson's website.
With that, I will turn the call over to Rob.
Thanks, Matt. Thank you for joining LivePerson's Q3 2020 Earnings Call. In the third quarter, LivePerson once again delivered peak performance in many key metrics, including setting records of revenue, contract signs, adjusted EBITDA and positive cash generation. Revenue in Q3 outpaced guidance, climbing 26% year-over-year to $95 million, fueled by 29% growth in our B2B-hosted software business. Our focus on internal automation and employee productivity yielded another step function of operational efficiency as record adjusted EBITDA of $15 million widely -- wildly outpaced guidance and generated a multiyear high profit margin of 16%. Our cash position increased by $26 million quarter-over-quarter to $199 million as we pivoted to positive cash generation. As we've shared on recent calls, consumers are driving a massive structural shift to remote digital engagement in the wake of COVID pandemic. Website and app traffic have risen sharply as consumers go online rather than visit brick-and-mortar banks, telcos, retailers and food service establishments. In fact, a recent LivePerson survey found that two out of three consumers are planning to do most of their 2020 holiday shopping online rather than in stores. Brands are struggling to meet this increased digital demand. Consumers often face frustratingly long hold times on 800 numbers due to the closing of physical contact centers and reduced global capacity of contact center agents who can actually take calls in a work-from-home environment during COVID. Likewise, the typical 1% to 2% website conversion rates means that most brands are failing to sufficiently monetize their increased online traffic. LivePerson, a leader in conversational AI, benefiting from the powerful market dynamic. In order to improve