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LivePerson Idea Proposal (LPSN)

LivePerson Idea Proposal (LPSN)
 

Can LivePerson sustain and build on its growth driven by digital transformation and the work-from-home trend?

Report Available: November 24, 2020

 

Blueshift’s initial research found LPSN, a leading global SaaS company offering conversational commerce and messaging solutions, benefiting from the ongoing digital transformation of businesses and the work-from-home trends driven by COVID-19. In the past, a sustained growth trend has proved elusive for LPSN which missed earnings estimates for the five quarters prior to COVID-19. However, in the last two quarters the company has posted record revenue gains and landed multiple seven-figure deals. Determining whether this new trend is sustainable or whether competition and/or a COVID vaccine could derail the company’s trajectory is important to understanding LPSN’s prospects for growth.

 

Observations

  1. LPSN has evolved into a cloud-based software company that uses artificial intelligence (AI) to help companies with customer relations management, sales, and brand messaging. LPSN offers conversational AI solutions for internet businesses, online merchants, small businesses, automotive dealers, universities, libraries, government agencies, not-for-profit organizations, and Fortune 500 companies.
  2. The conversational commerce market is fueled by digital transformation and recently by the COVID pandemic. ResearchAndMarkets estimates that the global conversational AI market is expected to grow from $4.8 billion in 2020 to $13.9 billion by 2025, a CAGR of 21.9%. LPSN sees the market for its products as much larger, estimating a TAM of $60 billion.
  3. LPSN has had a spotty history regarding growth and profitability, however Q2 and Q3 produced record-setting results which has motivated the company to raise full year revenue guidance from 22% to 24% growth to 24% to 25%. Q2 highlights include 29% year-to-year revenue growth as brands turned to LPSN to navigate voice call center disruption, signing 7 seven-figure deals and 134 deals in total in the quarter, including 47 new and 87 existing customer contracts. Q3 highlights include 26% revenue growth behind a consumer-led shift to Conversational AI, signing 8 seven-figure deals and 133 deals in total in the quarter, including 48 new and 85 existing customer contracts.
  4. LPSN has also fortified its product offering, business model, and partnerships. In August, the company announced its enterprise-grade Conversational Cloud where hundreds of the world’s largest brands build and run AI-powered automations over popular messaging channels such as SMS, WhatsApp, Apple Business Chat, Facebook Messenger, Google RCS, LINE, WeChat, and native messaging on brand websites and mobile apps. LPSN has also partnered with Infosys to help drive penetration of LPSN’s offerings across Infosys’ worldwide client portfolio in digital marketing, e-commerce, contact center, employee engagement, and shared services. Finally, LPSN is shifting its pricing model from a subscription model to a transaction-based model which provides a customer with its entire suite of products while only charging for its actual customer/consumer transactions.
  5. Challenging LPSN’s quest for sustainable growth is a crowded and competitive landscape with tech heavyweights and messaging/conversational support specialists including AAPL, GOOG/GOOGL, ORCL, CRM, TWLO and NUAN to name a few. In addition, it remains to be seen if demand for conversational AI will be subdued if and when a COVID vaccine becomes available and workers return to offices.

 

Will LPSN sustain and build on its Q2 and Q3 growth? Can LPSN achieve its Q4 and full year growth expectations? Does LPSN have the talent to execute its growth plans? How is LPSN going to market? How do customers learn about LPSN? How do LPSN’s partnerships with the likes of TTEC, Digital Management, and INFY impact its go-to-market strategy? How do LPSN’s products compare to the competition? Where do LPSN’s Live Engage and Conversation Cloud fit in the market? Who are LPSN’s primary competitors? How are customer’s responding to LPSN’s change in payment terms to a volume-based usage contract? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Customers, Resellers/VARs, Partners, Competitors, and Industry specialists. 

 

Companies: Alphabet Inc. (GOOG/GOOGL), Apple Inc. (AAPL), Artificial Solutions International AB (publ) (ASAI.ST), eGain Corp. (EGAN), Facebook Inc. (FB), International Business Machines Corp. (IBM), LivePerson Inc. (LPSN) Microsoft Corp. (MSFT), Nuance Communications Inc. (NUAN), Oracle Corp. (ORCL), RingCentral (RNG), Salesforce.com Inc. (CRM), SAP SE (SAP), Twilio Inc. (TWLO), Zendesk (ZEN)

 

Research Begins: November 9, 2020

 

To see other ideas Blueshift Research is currently working on, please click here.

 

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