Good afternoon, everyone. Thank you for being here. Welcome to LivePerson's Third Quarter 2020 Earnings Conference Call. My name is Gary, and I will be your host today. As a reminder, this call is being recorded. I will now hand it over to Mr. Matthew Kempler, the company's Senior Vice President of Investor Relations. Please proceed, 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 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 the 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 2 out of 3 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 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, is benefiting from this powerful market dynamic. In order to improve agent efficiency, increase sales conversions, and fuel higher customer satisfaction, brands are turning to our Conversational Cloud and deploying personalized consumer career and sales journeys over mobile messaging endpoints. All this is being led by the ability to use AI automation instead of human agents. As a result, we've seen volumes on our platform served since the pandemic started in February, now up nearly 50% and led by a nearly 60% increase in AI-based conversations. We expect this strong tailwind to only intensify over the next 5 years as traditional retail shopping, web and in-app based e-commerce shifts to c-commerce or conversational commerce. The shift to conversational commerce requires a new set of technologies beyond web, social and other traditional e-commerce type platforms. The shift from e-commerce to c-commerce has arrived. And because LivePerson took an early bet on this massive change 4 years ago, we're clearly the leader in transforming some of the largest brands in the world. Conversational commerce is powered by a consumer's ability to have an always-on asynchronous connection which can be delivered over messaging platforms like WhatsApp, Apple Business Chat, Facebook Messenger, Instagram, and SMS. Over that messaging connection, we run rich conversations, either automated with the use of AI or live agent or both simultaneously. We started out with a focus on customer care use cases with the goal of reducing contact center costs, and we are now expanding into sales and marketing in brick-and-mortar retail with the goal of driving sales and commerce. To drive a better commerce journey for consumers, we're also introducing a digital payments platform that enables users to conveniently make purchases with any brand or any messaging endpoint. For example, a consumer enters their credit card information to purchase a ticket from an airline, and then we securely tokenize that credit card so it can be used at a later date with some other company. Similarly, consumers can make purchases across different endpoints, for example, use a website for one purchase and then use WhatsApp for the next without reentering their credit or debit cards. Our first few brands are now live, and we'll steadily expand this program into 2021. Adoption trends confirm that our vision of conversational commerce is resonating more clearly than ever. Nearly every single enterprise customer is now using our AI capabilities within our platform. Automations power two-thirds of our messaging conversations today, and our goal is to automate over 80% of conversations at scale. Our AIs have eliminated the need for any human involvement in approximately half of all conversations where they are deployed. In other words, our customers can use the Conversational Cloud to power a virtually unlimited number of conversations at a fraction of the costs required by human agent-based conversations. Another testament to the transformational power of the conversational cloud is the first of a global strategic partnership we just signed with Infosys, a world leader in next-generation digital services and consulting. This new strategic relationship will help LivePerson keep pace with surging demand for Conversational AI by joining our Conversational Cloud with Infosys Cobalt Transformation Cloud services and public cloud. Infosys will be creating a practice around our platform, and we will conversely have them manage our move to the public cloud. Our move to the public cloud will enable us to handle the increased demand for our services with the ability to auto scale capacity and also allow us to enter new geographical markets quickly. Infosys joins other partners, including IBM, GTech, and Accenture in building a channel that is strengthening our go-to-market reach and sales distribution. In fact, three of the eight 7-figure deals we closed in Q3 came from our partners. Noteworthy is that three of our eight 7-figure deals were new logos, demonstrating LivePerson's ability to win new customers, even with the change from physical to virtual marketing events. I'll highlight one of these new logo wins we did with a multimillion-dollar jewelry retailer. They were virtually sold over a 3-month period, and they moved very quickly because of the impact COVID had on their physical stores. The stores where they are open are now adding QR codes next to the merchandise so that consumers can socially distance by chatting with AI and remote-based human agents while shopping. Human sales associates use a special messaging app on their mobile devices that will enable them to maintain a continuous connection with the consumer after they purchase and leave the store. Finally, the jewelry retailer will offer appointment setting, payments, and curbside pickup over messaging. This example shows how conversational commerce's deep multidimensional integration enables the merger of physical store operations with digital. Another new logo win was with one of the largest dental insurance providers in the country. In the vertical of insurance, healthcare is becoming very active for us. We saw a few different logos in the quarter beyond this one. The driver of this deal was that the insurance company recently lost a deal with a potential customer who has thousands of employees because they only offered voice as a customer care channel. Think about it. Consumers will no longer accept being forced to call 800 numbers as messaging and AI have become a must-have consumer offering. We were chosen over several competitors because we don't treat messaging as just another channel of communication. We're highly differentiated because of our comprehensive approach to Conversational AI, our broad messaging capabilities, operational expertise, and ability to offer an unmatched 6x ROI in the first year alone. In addition to the strong rebound in new logo activity, LivePerson also continued to expand with existing customers during the quarter. As highlighted on our last earnings call, we're seeing two key drivers of revenue uplift: the first being strategic upside following initial demand during the COVID crisis, the second involving upsells as customers on all-you-can-eat enterprise license agreements now transition to cost-per-interaction or usage-based models. A win with one of the top 20 global banks is a great example of this shift. This customer signed a 7-figure upsell with us at the end of Q1 when the pandemic drove them to use messaging and automation to maintain business continuity as their contact center agents and in-store associates were sent home. After seeing the successes of these expanding use cases and a roughly 10x increase in messaging volume, the bank doubled down on their long-term commitment to the Conversational Cloud. In Q3, only six months later, we signed another 7-figure upsell with them. Another example of increased usage driving growth is a win with one of the largest online lenders in the U.S. Like many of our customers, they saw a spike in volumes on our platform in the first half of 2020. LivePerson initially recognized no revenue benefit from the spike as customers locked in under an enterprise license agreement. That changed in Q3 when the customer came up for renewal. We transitioned into a cost-per-interaction model and captured the value of those higher volumes by signing the 7-figure upsell that doubled our annual recurring revenue from this customer. We expect to repeat this successful formula when many of our ELA customers come up for renewal over the next two years. Record contracts signed, accelerated revenue growth, a new landmark partnership with Infosys, expanding customer use cases, and broad adoption of our AI cloud are indisputable signals of LivePerson's leadership in conversational commerce. We are executing with precision in this new remote work environment and once again are in a position to raise guidance for the year. We're now targeting 2020 revenue growth of 25%, achieving our long-term growth target one year ahead of plan. We have also built a strong discipline around capturing operating efficiencies through internal automation and tightened controls. A scalable financial model is now emerging where we can invest in key growth drivers while still delivering bottom-line improvements. As a result, we are increasing our 2020 adjusted EBITDA guidance to a range of $29 million to $31 million, which brings us back to peak historic profit levels. I'll close with three key points: LivePerson's third quarter results, which follow an equally strong second quarter, reinforced that consumers are driving a permanent structural shift to Conversational AI as the preferred means of communicating with brands. LivePerson's Conversation Cloud is setting a new standard for the technology required to support this shift. We believe that the unique combination of our platform, expertise, and services will extend our industry lead. As we execute on our vision, our financial outlook is sharply improving with revenue growth now on a path to accelerate to 25% in 2020 from 17% in 2019 and 14% in 2018, while adjusted EBITDA margins have firmly moved into the double digits. With that, I'll turn the call over to John to provide an operational update and more color on our guidance.

Thanks, Rob. In Q3, we continued to capitalize on rising demand for our Conversational AI, setting records across a range of key financial metrics, including contract value, revenue, adjusted EBITDA, and free cash flow. With the strong demand backdrop and improving operational efficiency, we are once again raising guidance on the top and bottom line and targeting our first $100 million revenue quarter. Starting with demand generation, after making strategic investments in our go-to-market and product organization in 2019, we continue to see meaningful returns. Our field organization generated record contract values and closed eight 7-figure deals in Q3. As expected, following the focused effort to help existing customers navigate the pandemic, we began to rebuild momentum with new logos. Specifically, new logo annual contract values returned to pre-pandemic levels, which translated to an increase of more than 300% quarter-over-quarter, yielding a more even balance of deal values across existing customers and new logos. Reflecting this strong demand capture, our key metrics hit new highs in Q3. Revenue retention, for example, for enterprise and mid-market customers, was well above the high end of our 105% to 115% target range. ARPU growth for enterprise and mid-market customers accelerated in Q3, up nearly 30% year-over-year to approximately $425,000. Total revenue of $95 million increased 26% year-over-year, marking the second consecutive quarter of 25%+ revenue growth. The $3 million of upside, relative to the midpoint of previously issued guidance, was driven primarily by the favorable timing of contract signings, overages, and modest overperformance by our consumer segment. Within total revenue, B2B grew 27% year-over-year, led by a 29% increase in hosted software. Consumer revenue increased 18% year-over-year, and gain share was in line with expectations at nearly 15% of revenue. From a geographic perspective, the U.S. grew 33% year-over-year and accounted for 62% of revenue, while international grew 17% year-over-year and accounted for 38% of revenue. Significantly, our execution in EMEA continues to improve following the appointment of new leadership in the region earlier this year. Revenue in EMEA increased for the second consecutive quarter as did contract signings, which were up approximately 50% quarter-over-quarter. These results are encouraging indicators of future growth in the region. We also continue to gain leverage from our channel partners, which have influenced more than 30% of contract signings over the past year and contributed three 7-figure deals in Q3. As Infosys invests in integrations to build a global practice around our Conversational Cloud, we expect even greater returns from our partner model over the coming quarters. Ultimately, our goal is to generate 50% of deals from channel partners, which will not only materially expand our reach into key verticals and geographies but also drive significant scalability for our go-to-market organization. In terms of industry contributions, all verticals posted higher conversation volumes in September than they did pre-pandemic, and year-over-year revenue growth was led by consumer and retail, followed closely by financial services and technology. Moving on to the bottom line, Q3 adjusted EBITDA of $15 million marked an all-time high for LivePerson and exceeded the midpoint of our guidance range by $10 million or 74%. Our adjusted EBITDA margin increased 24 percentage points year-over-year to a multiyear high of 16%. The profit upside can be attributed to the following drivers, each with about equal contributions: Higher-than-anticipated revenue, the continued deferral of hiring in non-core growth areas as internal automation takes over repetitive jobs and enhances employee productivity; the deferral of infrastructure spend as we solidified our plans around the public cloud migration with Infosys; and the onetime impact from the write-off of leases and the accelerated depreciation of fixed assets after officially transitioning to an asynchronous work-from-anywhere model. Expanding on the latter point for a moment, back in May, like many other companies, we felt forced to leave our physical offices because landlords could not guarantee the safety of our people, which was our highest priority. In addition, as a technology company specializing in AI and asynchronous communication, our employees were primed for the new work model, allowing us to maintain our culture and high levels of productivity. Note there's some one-time charges associated with leases, I'll talk about in a few moments. In terms of cash, we ended the third quarter with a cash balance of $199 million, which was $22 million greater than our 2020 beginning balance and a $26 million increase quarter-over-quarter. We generated positive free cash flow year-to-date through Q3, positioning us to greatly exceed our initial 2020 goal of cutting cash burn in half. I think most significantly, we achieved the rule of 40 in Q3 on both an adjusted EBITDA basis and a free cash flow basis. The achievement of this long-term goal is a testament to the adaptability and scalability of LivePerson's operating model and our strategy to control the P&L in a manner conducive to both margin expansion and revenue growth acceleration. In addition to heightened registry vigilance, the successful execution of this strategy is significantly dependent on the AI and automation we're deploying across our internal operations. Building on the examples I shared on the last quarterly call, we turned on a wide array of automation in Q3, ranging from algorithms for revenue and billing reconciliations to HR reporting and usage forecasting. We also built critical modules to power an automated rolling planning process that will provide more timely financial insight and free up weeks of work previously performed by the finance team each quarter. In terms of top-line impact, we're launching a new sales rep capacity model which enhances cycles and increases quota attainment by optimizing the routing of leads to qualified reps with capacity. Finally, and perhaps most significantly, we launched a modern-day lake architecture that provides the foundation of clean connected data to automate nearly any business process. Migrating our platform to the public cloud is another key milestone on our path to maximum efficiency. In addition to enabling us to match global demand for conversational AI, we also expect meaningful cost savings in 2022 and beyond to positively impact gross margin and cash generation. Finally, before talking about guidance, I'll note that we recorded $28 million in nonrecurring charges, covering the write-off of leases and fixed assets, the public cloud migration, employee home offices, IP litigation, and various legal expenses. In terms of guidance, we're entering Q4 with strong momentum. Platform conversation volumes continue to build month-over-month since the peak of the crisis. Contracts have set a new record, and our revenue run rate is off the charts. Considering these positive dynamics, we are raising guidance for 2020 to a range of $362.5 million to $364.5 million or 24% to 25% year-over-year growth, up from previous guidance of $357 million to $361 million or 22% to 24% growth. Our Q4 guidance range of $98 million to $100 million also implies 25% growth at the midpoint. As Rob said, we're now on track to achieve our long-term growth target of 25%, one year ahead of plan. As for profitability, we continue to anticipate strong year-over-year margin improvements as we maintain budgetary vigilance and benefit from the rapid adoption of internal automation. As a result, we are raising 2020 adjusted EBITDA guidance to a range of $29 million to $31 million, which is more than 70% higher than the midpoint of our prior range of $16 million to $19 million. Our Q4 adjusted EBITDA guidance of $9.3 million to $11.3 million targets a year-over-year margin expansion of nearly 900 basis points and a continuation of our double-digit margin trajectory. Finally, I'll close with a few key points about the business. LivePerson is capitalizing on a global demand inflection for conversational AI, which is powering a sharp acceleration in both revenue and profit growth. The investments we've made in our product and go-to-market organizations are yielding impressive returns. Key financial metrics are reaching record highs, and we are driving strong demand generation across key geographies through our direct sales force and channel partners. In less than one year's time, we pivoted from $100 million cash burn to cash generation, which again, is a testament to the adaptability of our operating model and the extensive vigilance of our business leaders and the unique ability to leverage internal automation to enhance productivity. So with that, I'll hand the call back over to the operator to take your questions.

We are driving strong demand generation across key geographies through our direct sales force and channel partners. In less than one year's time, we transitioned from a cash burn of $100 million to cash generation, demonstrating the adaptability of our operating model and the diligence of our business leaders, as well as our unique capability to use internal automation to boost productivity. Now, I will turn the call back over to the operator to take your questions.

I'll shift to Skype because my normal connection is not good. So I'll switch over to Skype. It's Robert.

Can you hear me all right?

We can hear you.

Perfect. I would like to start by discussing the new IT customers and the current situation in the field. It appears that while the existing customer deals remain strong, new deals have decreased compared to last year. Could you help us understand what is happening in this area and what we might expect for Q4 and 2021 regarding new customers?

Arjun, I'd reiterate that from a value perspective, we're up significantly, as I described. And within the enterprise, contract signings are actually up year-over-year as well. So we are seeing continued improvement in the ability to capture new logos. As we've previously signaled, that's an area that we continue to build on through the pandemic.

Got it. And then I just want to maybe dig into the Infosys partnership a little bit more. Can you just give us some more details on what the growth opportunity is that this partnership unlocks and maybe the size of the practice that Infosys is planning to roll out with LivePerson? And any thoughts on the cadence of when we should expect this partnership to start driving results? That would be great.

Sure. Infosys is a large organization and a systems integrator with many Fortune 500 clients. They also focus on rebuilding infrastructure for e-commerce and other sectors, including financial services, where we are already collaborating. Integrating the Conversational Cloud with those services is a natural fit that will help us access their customer base. We have existing deals with Infosys, and we also have a significant pipeline of business that we expect to start closing in the fourth quarter. For example, on the e-commerce side, Infosys provides technology that assists customers in integrating product catalogs and other back-end systems, which facilitates the integration of the Conversational Cloud and the delivery of conversational commerce. This serves as a strong example of a successful collaboration that highlights the benefits of our partnership.

The last question, the beginning of it was a little hard to hear on my end. So hopefully, this isn't a complete repeat. But with the new customers, the 48 new customers that you brought on board, can you help us understand exactly the profile of these new deals versus what you've seen, let's say, maybe a couple of quarters ago in terms of size, scope that they're looking to do? And just as important, how should we think about the revenue ramp in those new customers as we move forward?

I think as a general matter, during the pandemic, we are seeing, at least on the new logo side, smaller-sized entry points than perhaps we saw in 2019. But I think that fits very well into our very successful strategy of landing and expanding. In terms of the expanding, I think that the process will proceed just as we've highlighted in previous calls where we might start with one endpoint and add others that gradually grow volume. It also works the same with perhaps one department or one segment and expand across segments within the enterprise to grow volume. So I think, once landed, the expansion strategy is more or less consistent with what we've seen historically.

And then just as a follow-up, along those lines, a year or two years later?

Well, we don't give specific numbers to that dynamic. But I would note our ARPU at over $425,000 is at an all-time high, up 30% year-over-year, as an indicator of how successful our expansion strategies are actually to land a new OVA.

I was just wondering if you can comment on sort of like the close rates and how they have evolved over the last couple of quarters. And also, as you look to Q4, what are you sort of like modeling in? Is it sort of like a sequential win in terms of close rate? And any comment on the pipeline and operational people will be helpful, please? And then I have a follow-up question.

Yes. So in terms of close rates, I would say that we're on track to be consistent with the pace that we had in Q2 and Q3 moving forward, with the exception that, as I previously highlighted, we're rebuilding demand on the new logo front and having success with that strategy. In terms of what we're modeling in, I mean, the overall pipeline is consistent with last quarter and the end of the quarter. So the generated pipeline so far is actually up quarter-over-quarter.

Understood. My follow-up question is about the payments platform. Can you provide more details? I'm not sure if the initial customers are beta users or actual paying customers. Can you explain how the revenue sharing works, what the monetization model is, and how you foresee adoption evolving in the upcoming quarters?

Yes. So they are testing right now. So they're actually testing live transactions on the platform. We haven't talked about the monetization strategy yet, but it goes aligned with our usage-based models. So every time you invoke and take a transaction, you're looking at some monetization for that. But right now, we've launched the first handful of customers, and they're using it. So we're seeing good results. Once again, the reason we went into that is we're seeing more and more use cases around sales and marketing, which is the broader concept of commerce. We need to have a unified way to handle payments across messaging endpoints, across customers, because right now, it's difficult, and you have to go to a web flow out of messaging. We're seeing some good results right now from our initial customers.

Congratulations on a successful quarter. I wanted to begin by discussing the transition from the ELA contract structure to a cost-per-interaction model. Could you provide an overview of what you anticipate the renewal pattern will be over the next 12 to 24 months? Additionally, what are you observing regarding the number of interactions being adopted? Are you noticing an increase, particularly in the adoption of AI-based interactions during this transition? I will have a follow-up question after that.

Sure. We've had really great success converting ELAs to CPI contract structures, the volume-based contract structures. I would highlight one in particular for this year, one of the global top 20 banks we converted from ELA to CPI in the first quarter. Then a mere six months later, after being on that volume-based model and seeing the power of Conversational Cloud and what it can do for their operation, we upsold them again, 7 figures because of that CPI structure. It's a powerful example of future revenue growth, given the demand profile that we've been sharing with you. In terms of the cadence, we have approximately 10% covered this year, and I expect that to accelerate into 2021. In terms of interactions and AI-based conversations, all of this is consistent with what we've signaled at the 60% increase in automation since February being equally applicable to these ELA to CPI upsells.

Excellent. And then just as a follow-up, John, I'm really impressed with the free cash flow generation in the quarter. Obviously, a lot of the work has been done, and pieces have been put in place to automate a lot of the back-office functionality. Given sort of the early gains you've seen there, how sustainable do you think that positive free cash flow is moving forward here?

Yes. I would just say that while hitting the rule of 40 on a free cash flow basis this quarter is an amazing achievement, again, a testament to our ability to control the P&L in strategic ways and really rapid ways, I don't see it right now as a new run rate for us. However, as I've consistently said, my #1 mandate is to move the company towards sustainable cash generation and profitability while maintaining our ambitious growth goals for the top line. I don't see that changing.

It's Peter Levine. Group credit for the good quarter. Great to hear the partnership with Infosys. If you are targeting 50% of deals coming from partners, how should we be thinking about service revenue going forward? And what investments are you making internally to support this kind of deal flow or perhaps any changes to your go-to-market motion?

Peter, in the longer run, we certainly see our Conversational Cloud creating a sort of derivative market where these partners come in to participate seeking profits. In that world, we would want to push most of our PS work, especially for those verticals where we have a really established playbook already and we've gone deep to create value in those verticals. We’d like to push the PS work for that profile to the partners. That allows us, of course, to be more transactional as a business, which is consistent with our desire to create enhanced operating leverage. So that's kind of a North Star for us with respect to PS work and channel partner strategy. In terms of investments, one of the key areas we’re investing in is to create the suite of self-service tools that enable our partners to work with monitor and assist the customers that they sell the Conversational Cloud to without human interaction on the LivePerson side. So that's a key area of investment that we think will drive enhanced leverage on that model going forward.

That's great. And then just a follow-up. With all the news of COVID and the second spike, for customers that may be deferring decisions, it would come as no surprise what this point inside? Yes. And maybe you're not seeing it, but how much of a pushback is budget related versus, I guess, more of the broader economic uncertainty? Curious now here in Q4 if what’s going on? We have an election. We have COVID, if that's impacting any decisions or extending sales cycles, just curious to know if there's any color on that.

Yes. I don't have a value that's very precisely quantified. But clearly, the pandemic and the election and just the macro uncertainties that have persisted throughout the year are a weight factor, especially when it comes to a new logo, making a large commitment to a new partner like LivePerson. But I don't have a specific value that I would quantify for you. Rob, are you going to jump in there as well?

Yes. I was going to say, as you can see, the demand for our services, I mean COVID is driving a lot of our demand, and the shift from offline retail to digital, the shift from contact centers being shut down and the agents still at home. So there's still a lot of stuff going on. Our gain share will start to pick up, obviously, in Q4 around, especially our large customers who are gearing up for the holiday season. So right now, you still see a lot of strength, and COVID is giving us a lot of wind in the sails.

When we look at your profit and loss being significantly better than expected, how do you balance that with your sales capacity? This means you could be hiring much more quickly if desired while still meeting earnings expectations. How do you feel about your current capacity? When do you anticipate seeing substantial increases in that? Perhaps you could discuss other automation initiatives you're implementing that are helping you achieve greater leverage.

Yes. From a productivity standpoint, we're seeing more productive reps now than we have in the past. Some of that is attributable to just the ramping of the sales force after sizable investments in 2019. And as you suggested, there's a portion of that productivity also attributable to the decision support tools and the automation that we've built for the global revenue organization. I highlighted in the prepared remarks one of these projects that really tries to get very quantitative and data-driven about how to smartly route leads and opportunities to those reps who are best suited to pursue them and importantly have the capacity to do so since nothing is lost in the mix there. That's a system that we're building and testing as we speak and expect to drive additional productivity on a per-rep basis. In addition, I would say that we do have plans to continue to invest in core growth drivers, one of which, of course, is our go-to-market capacity. I think we can see increased quota carrier counts moving forward.

And also, how far through sort of your internal automation efforts do you feel like you are maybe with a backdrop to what types of further restructuring might we see throughout this year or maybe throughout 2021?

Yes. The short answer there is we're really just getting started. Despite the high ROI that we've already seen in the year, the team is still pretty lean and really only ramped about 10 engineers and data scientists in Q3. I think we hired 50% or 60% of our total team size in Q3. The amount that we've delivered already this year is really just scratching the surface of what's possible. As I suggested in the prepared remarks, the data lake that we've just brought online is a really key instrument to provide the foundation for clean and connected data to rapidly automate and build efficient support tools across the organization. The key barrier to getting that kind of leverage is not so much the code writing, but access to data and clean data at that slows everything down. So that's a really important milestone. While there's more to do there, it's already being leveraged by the automations that we're building internally. So again, I think there's a lot more to come on those dimensions.

Lastly, given the strong cash balances, what are your thoughts on any sort of tuck-in M&As, maybe on the technology side? Do you feel like you can still do that even though it's hard to do deep due diligence or certainly in-person due diligence? Or do you think they sit on the sidelines until that gets to be a bit easier?

Actually, go ahead, Rob.

We want to significantly enhance our efforts in AI. We have explored various options in the market, and if we identify promising technology that can boost our go-to-market strategy, we will consider companies for acquisition. From a shareholder perspective, we've invested a considerable amount of resources in building the company organically, rather than relying heavily on acquisitions to reach our current position. That's reflected in our improved margins and cash generation, resulting from substantial investments. Now, we're focused on selling a lot of our developed technology while continuing our organic development. If we come across something intriguing, we will evaluate it. Currently, we have a strong team and are attracting talented engineers and data scientists drawn by our ongoing success. We're competitively engaging with major players like Google, Amazon, and Microsoft in data science, and we're succeeding. While they may occasionally outperform us, we're still able to recruit and bring in top talent, which allows us to concentrate on our organic growth as well.

I just want to get a better sense of how you're thinking about the sustainability of the EBITDA margins that you put up in the quarter and what I guess potential opportunities for further investment be to continue that decline from here.

Sure. First, I would say that we do intend to continue to expand margins going forward. Without putting a guide out for 2021, that's again a key mandate that I have as CFO and the strategies that we devised will be consistent with that. In terms of investments, we are obviously continuing to invest in the core growth drivers. I mentioned go-to-market earlier, which we're moving forward with, in addition, on the AI side. And then importantly, on the infrastructure side. The migration will require some investment. For a small period of time, we'll need to maintain two stacks as well, which will require some investment.

Yes, Instagram is expected to generate a significant amount of activity because there is substantial engagement and commerce happening on the platform. We are optimistic about Instagram's potential. Outside the U.S., WhatsApp continues to be the largest contributor, while Apple Business Chat is the leading force within the U.S., and both are performing well. There is strong demand for these services as we enter new markets like Brazil, where the appetite for these types of offerings is enormous. All these platforms contribute to our volume and interactions, which in turn fosters revenue growth. We are confident about our current situation. Our partnerships are robust, especially in terms of driving volume from enterprise customers.

Great. Great quarter. I think you gave a sales force productivity kind of percent number last quarter. Do you have that for this quarter?

Yes. That productivity number was really a function of time, meaning we expected 80% of our sales force to be ramped by the end of the second quarter. We would expect that, given attrition rates, to hover around 80-or-so percent going forward rather than moving that productivity number up to 100%.

Okay. Got it. And then on gain share, are some of the sort of big new deals or even upsells, I guess, in that kind of gain share amount?

Yes. Game share continues to deliver, although at 15% of revenue, it's consistent with last quarter.

A while back, you gave an investment amount for digital payments. I guess, how far of the way through that are you? It sounds like you're almost done.

Yes. We're on track for that and then some other innovations that we built. We're pretty much on track on the spending. We didn't exceed it. We were under what we thought we would spend for the year. But yes, that we're right on track there.

This is Brian Schwartz sitting in for Koji Ikeda. Congratulations on a very strong top line guide here. I thought I'd ask a different question that hasn't been asked so far. I don't know if it's Rob or John to take it, but just a question on the competition. From your perspective, who are the main competitors that you're seeing for the big Conversational AI vision that you're projecting in the market? Who are you competing against most often?

Salesforce has a significant presence in many accounts, particularly in relation to Genesis and contact centers. They view messaging as just another channel, similar to email. Messaging serves as the essential link for asynchronous communication. Additionally, we leverage AI and automation, which helps us secure substantial deals. Enterprises will struggle to succeed with less effective solutions, as many lack a genuine messaging technology. What they offer is essentially a version of chat that attempts to be asynchronous, which is ineffective. This is why we developed an entirely new platform. Our performance in the enterprise sector is exceptional. We're observing our competitors, and there's considerable investment currently flowing into messaging startups, focusing solely on messaging. Most companies in that area are generating revenues between $5 million and $20 million. In contrast, we achieve more bookings in a single quarter than many of them do in one or two years. We entered the market early and possess an ambitious vision. We've invested hundreds of millions into our technology, positioning us significantly ahead of the competition. We will continue our advancements and have many innovations on the horizon. Currently, we are at the forefront of the market, having defined its parameters, established pricing structures, formed key partnerships, and set the highest standards for market sales.

If you are targeting 50% of deals coming from partners, how should we be thinking about service revenue going forward? And what investments are you making internally to support this kind of deal flow or perhaps any changes to your go-to-market motion?

Our Conversational Cloud will create a derivative market where these partners come in to participate seeking profits. We’d like to push the PS work for verticals where we have a really established playbook already. We’d like to push the PS work to the partners. This allows us to be more transactional as a business, consistent with our desire to create enhanced operating leverage. That's a North Star for our PS work and channel partner strategy.

The last two quarters have been impressive. You began 2020 with about 20% to 21% growth, and you have a goal of around 25% growth this year. Perhaps you have benefited from the COVID-19 crisis. Rob, as you look ahead to the next one or two years, what are the key drivers for sustaining this kind of growth?

The key drivers for our growth include the expansion into more vertical markets. Currently, healthcare is emerging as a significant area for us, similar to how travel and hospitality were last year. We anticipate that government will also become a major vertical. Additionally, we are focusing on international expansion in regions like Southeast Asia, Asia overall, and South America, which are just beginning to develop. The rise of various consumer-facing platforms similar to Instagram is contributing to this growth, creating a demand for solutions like ours to manage increased activity. We are still at the early stages of this journey, and our existing customer base offers many opportunities for expansion. Furthermore, advancements in AI will enhance our capacity and improve our collaboration with agents. We plan to integrate these innovations more deeply into enterprise operations as we continue to progress, viewing ourselves as being in the early part of this development, having completed the initial phase of messaging and now moving into the AI phase while continuing to broaden our reach.

I wanted to start by discussing the ACV commentary and the recent rebound. Could you help us understand the comparison on a nine-month basis? If we normalize for the second quarter being slow for new customer bookings and the third quarter potentially seeing some pent-up demand, what does that comparison look like? The 300% figure is quite significant, so we're trying to evaluate year-to-date performance against last year's year-to-date.

Yes. The way I would think about that, Samad, is that we've brought new logo contract values up to the pre-pandemic levels. So that pre-pandemic level, thinking back in February, January, and December, is what we've achieved in the third quarter. Obviously, the growth rate is only as meaningful as its base. But I think the former commentary I gave is really what I would think is more structured.

Okay. That's helpful. And then, I guess, as I think about companies that are new logos, especially as you think about the new contract signings. Given that they're trying to solve for a problem that's ongoing, is there a difference in how quickly customers are trying to get online? Or are they changing maybe their ramp cadence? As in, hey, let me solve for problem X or get my first 100 agents on sooner. I guess, just how are they handling the implementation schedules, given that they have a surge in customer issues right now?

On my retail example I gave about the jeweler, it was a 3-month sales cycle to go live and then go live very quickly because of the demand right now and the impact on stores during COVID. So we're seeing a lot of movement there. We have very, very large brands. There's a process you go through with them. There are some healthcare companies we're trying to close right now that are just so massive. There’s a process. We just got certified for Hitrust, by the way, that allows us to go after the healthcare sector. It’s like the highest level of security required. That may take a bit longer. But the retail sector is moving quickly. Everything seems to be a little bit quicker as showing up in the numbers. We're kind of a year ahead. I don’t know if people realize that. We're going to have a $100 million quarter coming up in Q4. If you look at your models, that wasn't going to happen until somewhere probably towards the third quarter next year. We hit our 25% growth rate this year, so all of that is about speed and need. People want to move fast and get onboard.

Congrats, it looks really good. Rob, how do you balance the need to make the product easier to deploy and use right out of the box? How do you balance that with the desire to include all the additional features? Clearly, there is a focus on accelerating adoption. Can you share where you think you currently stand in terms of ease of consumption versus having the complete feature set?

It's definitely a balance. We have initiatives that have been in place for the past year or two to make the platform easier to use and expand without requiring a sales or implementation process, which is happening now. If we want to target the mid-market and small businesses, we need the platform to be more advanced, and we're working towards that quickly. We’re close to delivering a solution where users can just enter their credit card details and get started. This intense automation will be available soon. We're doing well with the deep intent-based learning that large brands need for high-level automation. We can adapt to the large data sets they manage, which involves significant technology. This capability has fueled substantial business growth in the enterprise sector. As I mentioned, it’s a balance, and I think we’ve managed it effectively. The marketplace we’ve established is for a customer who can activate 1,000 of their clients on a conversational front end with the push of a button, alongside automated processes. We're planning to invest more in this marketplace because it will enable us to scale other initiatives. For instance, if we integrate Shopify, pressing a button could allow every Shopify customer to have a conversational commerce experience. These are the developments we’re focusing on because I see great potential for scalability there.

One dimension here that we've discussed before is the lack of our in-person marketing events. We've addressed that, to a large extent this year, with digital events. We’ve seen both the demand for those events and the pipe generated from those events increased throughout the year, including quarter-over-quarter in Q3. It’s a positive sign that we’re adapting to this new normal and finding ways to grow despite having the same option for in-person marketing as we did last year.

I just want to end the call to reemphasize a few key points. We've had two consecutive quarters of accelerated revenue growth, highlighting how coronavirus has exposed the inadequacy of legacy voice contact centers while compressing adoption curves of customers wanting the Conversational Cloud. We believe conversational commerce is going to replace, not only voice calls but a lot of traditional e-commerce, and we're seeing that start today. The voice calls already left the gate on that one a couple of years ago. But converting e-commerce to c-commerce is just starting and that’s exciting for us. We’re also focusing on internal automation, and the reason we brought John on is doing a great job there. You can see some of that is falling due to our increased EBITDA margins, and we’ll continue to put a focus on that. I want to thank every employee at the company, working with the work-from-anywhere model and delivering these types of results and meeting the increased demands of our customers in the market. They’ve just done an exceptional job. We look forward to another strong quarter in Q4 and continuing to execute on our vision as the leader in conversational commerce space. Thank you.

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