Questions Over Debt, Shrinking Revenue Advise Caution On LivePerson

seekingalpha09-30

LivePerson offers AI-powered digital customer conversation solutions aimed at improving user experience, with their main product being the Conversational Cloud platform.Despite reporting its first net...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nQuestions Over Debt, Shrinking Revenue Advise Caution On LivePerson\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-30 04:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4724073-liveperson-stock-questions-over-debt-shrinking-revenue-advise-caution><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>LivePerson offers AI-powered digital customer conversation solutions aimed at improving user experience, with their main product being the Conversational Cloud platform.Despite reporting its first net...</p>\n\n<a href=\"https://seekingalpha.com/article/4724073-liveperson-stock-questions-over-debt-shrinking-revenue-advise-caution\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LPSN","symbol_name":"LivePerson","start_time":0,"source_url":"https://seekingalpha.com/article/4724073-liveperson-stock-questions-over-debt-shrinking-revenue-advise-caution","article_id":"2471862108","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/669888302/image_669888302.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2471862108","pubTimestamp":1727641847,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Debt Is a Medium-Term Concern       Cash and Equivalents $146 million   Total Current Assets $220 million   Total Assets $704 million   Total Current Liabilities $162 million   Convertible Senior Notes $469 million   Total Liabilities $637 million   Total Shareholder Equity $66.6 million   Click to enlarge  LivePerson has a pretty good amount of cash on hand, and a current ratio of 1.36. That suggests that in the near term of 12-18 months they are n","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"LPSN":"LivePerson"},"translate_title":"债务问题、收入萎缩建议对LivePerson保持谨慎","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"LPSN":0.9},"content_text":"LivePerson offers AI-powered digital customer conversation solutions aimed at improving user experience, with their main product being the Conversational Cloud platform.Despite reporting its first net income, LivePerson faces significant medium-term debt concerns, particularly with convertible senior notes due in 2026.Declining revenue since 2022 and expected losses per share in the coming years raise concerns about the company's growth and profitability.Given the financial risks and competitive market, I recommend holding LivePerson stock, closely monitoring debt and revenue trends for future viability.   Morsa Images/DigitalVision via Getty Images Imagine you have to make a call to some company for some relatively minor issue. It’s ringing, and you’re dreading what is likely coming next. The phone answers, and immediately a recorded message begins, starting a clunky conversation of half-understood generic answers and repeated requests to press keys before maybe getting some help, and more likely having to speak to someone directly to resolve the matter. There’s got to be a better way, right? LivePerson (NASDAQ: LPSN) certainly hopes so. They are offering various digital and AI-powered digital customer conversation that are designed to be significantly better and more user friendly than what callers are commonly subjected to today. The experience is familiar, and this is a ‘build the matter mouse-trap’ sort of scenario, which could be very lucrative for LivePerson if they pull it off. Today we will be looking at LivePerson, which in the first half of this year is reporting its first net income, and examining whether their hopes for a future of better conversations are worth getting into, or if this is just a promise that is long time from coming to pass. What Is LivePerson As mentioned, LivePerson offers an array of digital and AI-powered digital customer conversation solutions. This includes efforts to try to help businesses integrate AI conversations with the inevitable use of human agents, and efforts to personalize conversations with those businesses’ customers. Their main offering is an enterprise digital customer conversation platform called Conversational Cloud. This offering aims at both voice conversations and text messaging. The company also offers managed services to their customers to both implement their offerings and to optimize the AI involved with them. This is potentially a very lucrative market, but how is this related to the current balance sheet? Debt Is a Medium-Term Concern       Cash and Equivalents $146 million   Total Current Assets $220 million   Total Assets $704 million   Total Current Liabilities $162 million   Convertible Senior Notes $469 million   Total Liabilities $637 million   Total Shareholder Equity $66.6 million   Click to enlarge (source: most recent 10-Q from SEC) LivePerson has a pretty good amount of cash on hand, and a current ratio of 1.36. That suggests that in the near term of 12-18 months they are not in immediate danger, and can continue to try to grow the company. The medium-term is a different story. I emphasize the convertible senior notes in the above chart because many of them are coming due in 2026. The company managed to refinance some of them in May, strengthening their near-term capital structure, but at the expense of issuing some warrants which are offering 10-year warrants at 75¢ per share. That’s potentially pretty dilutive, and if that turns out to be the answer for the rest of the convertible senior notes, value of current stock will definitely be effected. The more positive news comes in the form of the price/book ratio, which at present comes in at 1.68. That’s almost half the sector medium, and isn’t asking us to pay a bad premium at all for the company, which has definite potential. The Risks Obviously the big risk for LivePerson is what is going to come of their senior notes. The company had no choice but to fund its operations that way, so I’m not faulting them for doing so. That said, LivePerson is still not cash flow positive, and the days of them having to amass debt are simply not over. I have concern that the dilutive nature of the likely resolution of the senior notes issue may leave the shares worth a lot less. The become cash flow positive, and reliably profitable going forward, LivePerson needs to attract new customers for their offerings. That’s sort of obvious, but they are far from the only company offering such solutions and services, and the competition will only grow as the expectation for better digital conversations grow. Another matter, important to discussion of their revenues, is that LivePerson’s sales cycle is quite lengthy. That means that operating results are inevitably going to be quite variable, so a quarterly growth or decline of revenue here or there is not necessarily indicative of a general trend. Where’s the Revenue Going?           2021 2022 2023 2024 (1H)   Revenue $470 million $515 million $402 million $165 million   Operating Income ($93 million) ($222 million) ($111 million) ($66 million)   Net Income ($125 million) ($226 million) ($100 million) $6 million   Diluted EPS ($1.80) ($3.03) ($1.28) 7¢   Click to enlarge (source: most recent 10-K and 10-Q from SEC) It is very important that LivePerson has managed a positive net income in 2024. That they are able to have done so is the only reason the company is to be worth serious consideration at all. What I’m more concerned about immediately is that the revenue, which trended upward into 2022, has been declining ever since. Estimates are suggesting that’s going to continue. This year they are expected to come in with revenue of only $307 million, and next year that number is expected to drop to $289 million. That’s not a good sign for a growth company which is trying to grow it’s acceptance on the market. The estimates also suggest the earnings are going with them, with this year LivePerson expected to lose 16¢ per share, and next year the loss per share continues at 7¢. That’s very concerning for a company that is facing such large refinancing issues going forward. Conclusion: The Risks Are Too Great LivePerson has a very interesting collection of offerings for businesses, and I wholeheartedly endorse the vision of improving telephone conversations with those businesses. That said, I have to view the company as merely a hold at this time. Data by YChartsLivePerson looks cheap on the surface, and with a lower than sector price/book there is temptation to try to play for the rebound here. I just feel that with the declining revenue since 2022 and the substantial convertible senior notes issue that they still have to deal with, we could be looking at a very different, and much weaker, proposition when all that gets sorted out.  Investors need to keep a close eye on the debt situation, but more important the general trend of revenue going forward, because without substantial growth in the revenue, there is simply not a path to making money here.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2471862108"}