Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Third Quarter 2021 Earnings Conference Call. My name is Hector and I will be your operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, the management from LivePerson 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 only. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Ms. Idalia Rodriguez. Please go ahead.

Thank you, Hector. Joining me on the call today is Rob LoCascio, LivePerson's Founder and CEO; and John Collins, Chief Financial Officer. Please note that during today's call, we will make forward-looking statements which are predictions, projections and other statements on our 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 of the quarter, are available in the Investor Relations section of LivePerson's website. And with that, I will turn over the call to Rob. Rob?

Thanks, Idalia. Thank you all for joining LivePerson's third quarter 2021 earnings call. I'm thrilled to report strong results for the third quarter. Revenue was in the top half of our guidance range and increased 25% year-over-year to $118.3 million. Our adjusted EBITDA of $6.9 million at a 5.8% margin was also in the upper half of our guidance range and reflects planned investments in the business. And as I will discuss more in a moment, during the quarter, we also signed the largest contract in LivePerson's 20-year history as a public company. Reflecting on what we've achieved, I'd like to note that in 2019, we set a long-term target to grow at 25% in 2021. We exceeded that target in 2020 a full year ahead of schedule and have now grown at 25% or greater for the sixth quarter in a row while we continue to focus on adding more quota-carrying capacity and evolving our strategy for conversational AI and voice. We're very focused on creating the next set of foundational layers that will enable us to become a multi-billion-dollar revenue company within the next several years. What powers our big ambitions is our singular focus on being one of the leading AI companies in the world. The raw material to AI leadership is a rich dataset. This provides a foundation to build a very powerful platform to deliver high-quality automated conversations. In this quarter, we hit a new milestone of 1.5 billion conversations on our platform, demonstrating the breadth and depth of our data assets and further strengthening our moat for delivering high-quality conversational AI. In the world of AI, the Holy Grail is to have the machine learn and then correct itself without human intervention. And we are now about 12 months out from having self-healing AI on our platform. This is where the bot knows that it's not delivering a positive experience with the consumer, and then will make some small talk and then take a different path to correct the conversation. The bot uses historical conversational data to learn and correct itself. And this is why our massive dataset is so important to our platform vision. As our innovation continues at a very high pace, we need to match that with sales and marketing capacity. During the pandemic in 2020 and into the beginning of this year, we focused most of our field resources on demand from our installed base. The installed base continues to take most of our capacity, which is a really good thing, but we must continue to ramp additional capacity, so we can go after new logos and opportunities. We hired Tony Owens as President of Worldwide Field Operations at the beginning of Q3. He was previously the President of Americas for Salesforce, and he is building momentum and adding new hires and leaders. We are attracting top leadership talent and scale-focused roles across the company like Mary Fratto Rowe, our new Executive Vice President for Customer Success. Mary previously held executive leadership roles at Yext and Salesforce and has a proven track record in scaling businesses and customer-facing operations; she reports to Tony, who shares with Mary the experience of being a leader at Salesforce when they were growing at a very high rate. Our field leaders stand alongside our outstanding tech leadership, including Andrew Hamel, who joined us two years ago from Amazon, where he led the development of Tier 1 services and tech initiatives related to Amazon's core search platform and other machine learning-powered experiences. In the past two years at LivePerson, Andrew has worked closely with our technology and field teams on critical cross-functional initiatives, supported our ongoing build-out of our world-class AI team, and focused on key strategic and operational goals. With Andrew's technology strength and focus on scaling, operations, and innovation, we're confident that we're the right team to capture the go-to-market and innovation opportunities ahead of us. You may have heard me speak about our desire to eliminate contact centers' voice support when we first launched our messaging platform 4.5 years ago. I still don't believe in traditional contact centers or voice platforms, cloud or no cloud; let's say we're perpetuating the old customer care model that is expensive and creates a poor consumer experience. In this day and age, contact center agents are mostly used because the brand does not have an interface or API between the legacy backend system and the consumer intent. Voice is the most natural interface for people to express their intent, and our goal is to give every brand their own voice AI system to deliver high-quality conversational automation. High-quality conversations require the machine to have a real-time understanding of consumer sentiment and other markers of conversational quality, and also deep integration into legacy backend systems. This is why we recently acquired VoiceBase and Tenfold. These acquisitions will dramatically accelerate our vision to have our AI-based services span across the channels customers care about, inclusive of voice and messaging. As we bring together the expertise and technology of our three organizations, we'll create a uniquely unified, deeply integrated voice conversational AI platform. VoiceBase, a world-class voice analytics platform for the enterprise built on advanced speech recognition technology, transforms voice conversations into easily interpreted data and actionable insights. By unifying it with LivePerson's conversational AI, we expect to give brands unparalleled visibility and understanding of customer intents, sentiment, frustrations, and successes for a much wider set of conversations across both messaging and voice channels, as well as traditional third-party contexts in our systems. Connecting messaging and voice data insights makes it easy to improve customer experience, capture sales opportunities, and understand agent productivity and utilization. Tenfold is a leading enterprise-grade customer experience integration platform, enabling enterprises to modernize customer experience tools without having to replace legacy backend systems. Beyond legacy integrations with Tenfold, LivePerson messaging will be available to agents embedded in their CRMs for legacy voice agent desktops or even in the brand's proprietary contact center systems. This will provide unparalleled flexibility for brands to work with any voice vendor and complement LivePerson messaging by enhancing agent experience and productivity. These two strategic acquisitions open up new horizons for us. First, they make it possible for brands to have complete visibility and insights across conversations in messaging and voice, and deliver them with AI and automation. They also bring voice intelligence and AI technologies to support LivePerson's upcoming voice capabilities within our world-class conversational cloud. All told, we expect VoiceBase and Tenfold to accelerate our strategy in helping brands create high-quality engagements within their customer conversations on every channel, including voice. We anticipate bringing AI-powered voice offerings to the market in the first half of 2022. Returning to our third quarter results, the metrics reflect a very positive growth trajectory. We signed seven seven-figure deals in the quarter, as well as an eight-figure expansion with a long-standing customer, one of the biggest telecom companies in the United States. I’m proud to say this renewal, our fourth with this customer, is the largest contract in LivePerson's history. The customer was one of the first to share a vision for messaging, and we're excited to continue partnering with them. Our vision of putting AI at the center of scaling conversational commerce also continues to be validated, as we saw customer adoption of AI driving platform usage in the third quarter. Volume on our conversational cloud continues to rise, increasing 5% sequentially and 18% year-over-year to a new high watermark. Total AI-enabled volume increased 50% year-over-year. Messaging volume has particularly increased 40% year-over-year as we accelerated migrating customers away from traditional synchronous chat into asynchronous messaging experiences, which are better for today’s customer preferences. Among the many interesting items in Q3, I'd like to highlight some trends we observed in healthcare. Back in 2019, we set our sights on healthcare as a key new vertical. Today, we have partnerships with several significant customers in the industry. In Q3, we signed a first phase of a new contract with one of the 10 largest healthcare companies in the world. The brand plans to improve consumer experience and agent efficiency by utilizing web and email messaging to serve its customers, currently driving 250 million calls per year into its call center. We also plan to lead toward automation, leveraging our conversational AI tools to create highly scalable self-service journeys. There's another trend in healthcare around testing. Brands across the industry are looking for solutions to match COVID-19, with spreading variants and the Biden administration's vaccine and testing mandate; testing is becoming an even more routine part of daily life. We continue to see a major opportunity for conversational AI in testing, an opportunity already evident in telehealth. LivePerson is helping brands deal with the challenges of bringing employees back to the office through BELLA Health, which has already been used by 25,000 employees at 750 locations across the U.S. With our turnkey technology testing solution, we can source, deliver and help manage workplace rapid testing programs, all powered by very supportive conversational AI. All these trends in healthcare demonstrate our potential in this vertical, which has a very large total addressable market. Third-party research estimates that the American telehealth market is expected to grow to over $43 billion by 2026 at a compound annual growth rate of over 28%. As evidenced by BELLA Health, AI is critical for any strategic initiative to scale in the healthcare space. At LivePerson, we have both the flexibility and AI expertise to quickly capture this massive opportunity. We're allocating more technology and go-to-market resources in healthcare as a result. I'd like to highlight a new customer in the retail vertical. One of the largest sporting goods retailers in the world signed a seven-figure multi-year deal in Q3, and we recently launched our Conversational Cloud to enhance the sales experience. It started with web messaging and automation, and we plan to expand to additional messaging channels as well as expanding further into commerce. This brand will also be using our Maven Pay platform to make it easier, secure, and seamless for customers to make payments directly within messaging conversations. Maven Pay embeds conversational commerce within the conversation itself, rather than forcing customers to go outside the messaging interface to complete their transactions. Our success and experience with large retailers, along with our innovation and AI capabilities, helped us close the deal to transform the digital channels and accelerate growth. In addition to exciting new customers in key verticals, we are also seeing continued strength in our relationships with our long-time customers, many of which expanded their partnerships with LivePerson in Q3. These deals also point to an important trend: customer brands that signed with us for our strong customer care solutions are increasingly moving into commerce with us as well. In a post-pandemic world, we expect brands to move away from just coping with the crisis toward long-term planning for digital transformation, shifting volume to messaging and automation as soon as possible. They will increasingly bring care and commerce together to let customers enjoy natural, conversational experiences, carrying context and continuity across all channels. Let me shed some light on this theme with our existing customers. A notable occurrence this quarter was our strategic, multi-year expansion with our long-term customer, The Home Depot, the world’s largest home improvement retailer. Over the course of our ten-year partnership, we have worked together to continually increase The Home Depot's messaging volume on our conversational cloud. This renewal was fueled by the growing volume and our proven ability to help drive revenue and reduce operational expenses for the brand. As our strategic partnership grows, we plan to continue to support The Home Depot’s focus on digital customer experiences, using automation to drive more efficiency and scalability and offering industry-leading shopping and customer service experiences on channels including web messaging, SMS, Apple Business Chat, and Google Business messages. We’ve also expanded in Q3 with one of the largest beauty and cosmetics companies in the world. We’ve implemented automations driving conversion rates up to 22% on their website. They are continuously leveraging our AI tools and sales and marketing solutions to streamline the shopping experience for online and mobile consumers. Additionally, in another win for the quarter, we expanded our ten-year plus long relationship with one of the world's largest entertainment and media companies with a seven-figure, multi-year contract. We're helping them unify the consumer journey across channels by shifting calls to messaging and empowering their in-app experience. Over the long term, our predictive analytics are expected to help them diagnose the health of their conversations, and our proactive messaging and embedded commerce capabilities are expected to help them re-engage and take payments seamlessly within in-app experiences. Finally, evidence of our strength and our long-term relationships has also been seen in our Gainshare offering. In Q3, we launched a strategic playbook for Gainshare, customizing it around brands' desired outcomes. One of our biggest Gainshare customers is one of the world's largest home improvement retailers. We have been leveraging the program and our expertise for everything from automation to deployment to agent training. Within a year, we've seen the automation rate rise to 60% of all conversations. We trained 600 messaging agents during the pandemic to support the brand, saving the retailer an estimated $100 million in expenses while simultaneously building and scaling their personalized connections with consumers, doubling their average online shopping cart value and generating more than $520 million in incremental revenue in a year. We strongly believe this tremendous success can be replicated across other brands. A notable Gainshare deal in Q3 was our expansion with ANZ Bank, one of the three largest banks in Australia. ANZ aims to increase the percentage of digital transactions over the next 12 months. Our team plans to help manage mobile app messaging, accelerate automation across the banking platform. As a longstanding customer, ANZ trusts LivePerson for our comprehensive conversational AI capabilities, our ability to provide the right talent, and our expertise to help upskill their workforce, enabling them to transform toward a digital first customer care approach. In closing, LivePerson is very well positioned for continued strong growth with great execution. Our team continues to focus on go-to-market initiatives and capitalize on the demands in the market. We have a tremendous market opportunity with only 20% messaging penetration to date. Moreover, we see the opportunity to expand our current total addressable market through the introduction of voice AI and automation technologies within our platform. Our acquisition of Tenfold and VoiceBase is a first step to realize this massive opportunity, and given our proven ability to execute, we believe we will continue to achieve strong results in Q4 and meet our growth target for 2021. With that, I'll turn the call over to John to provide more details on our financials and guidance. John?

Thank you, Rob. The third quarter was a milestone quarter of 25% or greater revenue growth, with both revenue and adjusted EBITDA exceeding the midpoint of our prior guidance range. While we continue to deliver results, the central theme of the third quarter was executing on the investment strategy that we expect will unlock new vectors of growth in 2022 and beyond. First, we deployed some of the capital we raised last year to acquire VoiceBase and Tenfold, which represent strategic assets that accelerate our technology and go-to-market roadmaps. Second, we built both the recruiting machine necessary to accelerate hiring and our go-to-market organization, along with the support infrastructure and repeatable processes that will guarantee meaningful returns on our investments. And third, we deepened our relationships with strategic partners in healthcare to advance our vision for AI and automation to transform the industry. In terms of progress on our go-to-market investments, we ended the third quarter with 96 quota carriers. As of November 1, we have 115 quota carriers. While the organic increase was modest in the third quarter, we did not expect a linear trajectory toward our target of 200 quota carriers by the end of the first quarter of 2022. During the quarter, our primary focus was on increasing recruiting capacity and processes necessary to achieve our targets. To build on Rob's description of our strategic acquisitions, note that we estimate the addressable market for automated speech recognition (ASR) and speech analytics alone to be at least $5 billion, growing at a 30% compound annual growth rate. Furthermore, we estimate that most of our installed base of brands, which employs approximately 500,000 voice agents, either utilizes or is in the market for ASR and speech analytics, which creates a glide path to near-term revenue synergies. Acquiring VoiceBase and Tenfold was also central to our AI strategy; ASR and speech analytics, along with a broad spectrum of voice integrations, enable automated intent resolution and novel AI capabilities by leveraging what is currently the largest repository of customer service data in voice. In addition, deep out-of-the-box API integrations into CRM and business intelligence systems and a range of service and customer support systems allow us to capture contextual data and deliver seamless workflow automation. Generally, robust data capture and access to rich backends like these are the bedrock of great AI. Regarding market dynamics, while brands are broadly migrating to cloud offerings, the motion is complicated by legacy infrastructure and compliance, as well as high switching costs. As a result, brands are looking for plug-in solutions that drive improvements to the consumer experience while offering cost savings and greater ROI, without ripping out and replacing their legacy telephony systems. In combination, VoiceBase and Tenfold are responsive to these market dynamics and the increased demand from brands for consolidation and a unified experience. AI messaging coupled with robust data capture and deep API integrations throughout the communication and service tech stacks enables the compression of disparate workflows into a unified agent experience. These embedded agent experiences within third-party systems such as CRM and service systems, as well as other proprietary applications, are an expected capability for omni-channel customer experience and increasingly pure-play messaging. Yes, two vendors offer robust offerings to that. Strategically, these dimensions create the most immediate and disruptive opportunity with the combination of LivePerson, VoiceBase, and Tenfold. From an economic perspective, seamlessly integrating with all voice systems opens the revenue aperture to the full range of customer interactions. In terms of inorganic revenue in 2021, we anticipate that the positive impact from VoiceBase and Tenfold will be significantly less than 1% of LivePerson's total revenue. Note that we will provide additional financial details and 2022 guidance in our upcoming fourth quarter filings. With that strategic overview, I’ll transition to our quarterly financial metrics. In the third quarter, total revenue grew to $118.3 million, up approximately 25% year-over-year and within the top half of our guidance range. Upside in the quarter was driven primarily by professional services and continued demand for rapid at-home COVID-19 testing, both of which were partially offset by expected seasonality and Gainshare, which constituted 13.2% of total revenue. Note that these revenue sources, namely AI-assisted healthcare testing, professional services, and Gainshare, tend to exert pressure on gross margins. While we were in line with our expectations for the third quarter, we expect slight but continued margin compression for the full year driven primarily by continued COVID-19 testing and front-loaded investments across our Gainshare portfolio. On this latter point, note that we anticipate ramping costs faster than revenue in the initial phase of a new contract or existing customer expansion due to the need for infrastructure integrations and agent training. Over time, accelerating rates of automation have proven to expand margins. Moving on to our reporting segments, within total revenue, the B2B business grew 26% year-over-year while the Hosted Software segment grew 25%. Professional services revenue rose 27% year-over-year and the Consumer segment grew 16%. From a geographic perspective, U.S. revenue increased 37% year-over-year while international revenue grew 5%. Note that international growth was impacted by our comparables in the third quarter of 2020, upsells that rolled average volume into 12-month contracts, plus a large delayed deal in EMEA that we expect to close this month. Expanding our go-to-market capacity in our international theaters is a key strategic focus within our broader go-to-market investments and was also one of the primary motivations for the e-bot7 acquisition. We see a significant opportunity to take market share in the region, particularly in the mid-market. In its inaugural quarter as part of the LivePerson family, the e-bot7 team delivered double-digit mid-market new logos. We expect material revenue synergies from this acquisition to continue as we continue training the e-bot7 team to sell the conversational cloud to its enterprise customers. Furthermore, we’re also extending the e-bot7 product suite to deliver instant automation for downstream customers of our partner marketplaces. We continued to both retain and grow relationships with our existing brands. As Rob mentioned earlier, a key theme of the third quarter was our extended partnership with many long-standing customers. Six of the seven-figure deals this quarter were multi-year expansions with existing customers, which we see as a strong testament to the staying power of our platform. Consistent with this theme, revenue retention was once again within our target range of 105% to 115%, marking the 17th consecutive quarter that revenue retention was within or above this range. Average revenue per customer was $570,000, up 34% year-over-year, driven primarily by continued expansion from care to commerce, which translates to increased platform usage for both our CPI and Gainshare business models. Total billable volume on the conversation cloud increased 18% year-over-year and 5% sequentially in the third quarter, reaching a new record high in advance of our seasonal peak later this quarter. AI-powered messaging volume increased 60% year-over-year and accounted for 75% of all messaging. We have also seen significant growth from large existing accounts over the past 24 months; for example, volume for our top 20 brands increased 25% year-over-year and 175% over the third quarter of 2019. With the majority of our top 20 now on CTI or Gainshare pricing models, we are benefiting from a tighter connection between usage and revenue. While we’re pursuing many new sources of growth, we continue to capitalize on opportunities within our installed base of brands, a trend we expect to accelerate with VoiceBase and Tenfold now on board. In terms of usage and revenue trends by vertical, we continue to see significant growth within retail, financial services, and increasingly healthcare. As for new logos, while we saw a slight sequential increase over the second quarter, new logos are lower year-over-year. Once again, the go-to-market investments we made in the third quarter, which will continue into 2022, are laying the foundation for materially accelerating new logo acquisition. Moving down to P&L, adjusted EBITDA in the third quarter was $6.9 million or a 5.8% margin, which reflects the sizable go-to-market investments we made during the quarter. As for the balance sheet and cash flow highlights, we closed the quarter with $633 million of cash and cash equivalents, a decrease of $32 million from the second quarter, which was driven by planned investments and the e-bot7 transaction. In terms of guidance, with the third quarter results landing at the upper end of our range and solid execution on our strategy, we are raising our 2021 revenue guidance to a range of $468 million to $471 million, representing 27.7% to 28.5% year-over-year growth, relative to previously issued guidance of $464 million to $471 million, or 26.5% to 28.5% year-over-year. Our revenue guidance range for the fourth quarter is $122.2 million to $125.2 million, or 19.6% to 22.6% year-over-year. We are also updating our 2021 adjusted EBITDA guidance to a range of $11.9 million to $16.3 million, or 2.6% to 3.5% margin, down from a range of $14.8 million to $22.8 million, or 3.2% to 4.8% margin. This revision primarily reflects incremental operating expenses for VoiceBase and Tenfold and acceleration of our go-to-market investments. The fourth quarter adjusted EBITDA loss is expected to be in a range of negative $21.7 million to negative $17.3 million or negative 17.8% margin to negative 13.8% margin. Before taking questions, I’ll summarize several key themes for the quarter and our strategic positioning for future growth. In the near term, the acquisitions of VoiceBase and Tenfold create glide paths to new logo acquisition and expansion within our existing base. They seamlessly integrate voice, messaging, and backend systems to deliver a unified agent experience and improve consumer engagement. Our organic go-to-market investments initiated in the third quarter will continue through the first of next year as we set ourselves up to accelerate new logo acquisition with a focus on the mid-market. We view care and commerce as two sides of the same coin and our goal is to sell both without prioritizing one over the other. Further, the diverse and rapidly expanding uses of the platform, driven by advances in AI and automation, make it stickier than ever, which is a key factor in securing the largest eight-figure deal in our history and six seven-figure multi-year expansions with our base. These use cases are also extending our reach within high-growth verticals, especially healthcare, where we strengthened our relationships with key partners who share our vision for AI to transform the industry. With these new growth vectors, our 2022 targets are well within reach and represent only the beginning of a new phase of AI-led growth. Operator, with that, we’re now ready to take questions.

Thank you. We will now conduct a question-and-answer session. Our first question comes from Sterling Auty with JPMorgan. Please go ahead with your question.

Yes, thanks. Hi guys. So, you covered a lot in a short amount of time, and thank you for that. But I just want to make sure I have a really good understanding. So, the voice AI solutions that relate first half, specifically, what are the use cases? Is it customer support? Is it sales? What are the initial use cases you’re going to start with?

It’ll be customer support and sales. I mean, it’s riding off the same rails as the messaging platform. So, the same AI capabilities, so we can go after both. We’re not limited to just one or the other; a lot of our volume right now is still customer care on the messaging side. And we’ve been moving into commerce over the last couple of quarters. So, I would reflect that.

That makes sense. And my one follow-up would be still on this topic. Just after you made the acquisition, when you had some initial contact with your customers, what was the initial reaction? Do you think you’re going to have interest in terms of getting those first couple of lighthouse accounts that you’ll need to be able to drive traction?

Yes. Two interesting things. One is actually the companies VoiceBase and Tenfold received calls from their existing customers about each other’s products, asking if we would integrate them, which was kind of interesting. And then also we’ve been starting to talk to our customers about adding voice to the platform and have been discussing how this will accelerate the go-to-market strategy and enhance product depth. So, yes; actually, it’s interesting to note that we heard from these companies about their existing base. What this allows us to do is the rich conversations require backend integrations, just like what we do with our messaging today. So, Tenfold gives us the ability to do that and get into CRM systems and everything else in a much deeper way. We can also take our capabilities and integrate them into their current CRM systems and utilize our messaging and voice platforms within those systems. So, this is important. Additionally, VoiceBase is about understanding really what’s going on in the conversation in real time, so that automation can know if it’s performing well or poorly, along with all the analytics around that. This is what allows us to create rich conversations. Most conversations that we’re used to, and what they’ll call voice AI, are not truly conversational. They're typically command-based or structured as linear commands, like pressing one, two, or three, which are IVRs. We are building a unique true conversational AI system, which I think is different in the market.

Excellent. Thank you.

Our next question comes from the line of Arjun Bhatia with William Blair. Please proceed with your question.

Hi, this is Chris on for Arjun. So, I get that you mentioned, it’s – hiring isn’t linear in terms of hiring new reps. So far, you’ve hired just over 30. Where are these reps coming from? And what gives you confidence in your ability to hit the 200 target on time?

Yes. The reps are coming from a wide range of SaaS companies today and the open market. In addition, we’ve partnered with third parties, some of whom have dedicated practices just for LivePerson to scale our recruiting operations.

Great. Thank you. And then in terms of acquisitions, so you had two this quarter, one last quarter; they seem mostly to be technology and tuck-ins, but you still have over $600 million on the balance sheet. How are you thinking about your approach to M&A going forward as a long-term growth driver?

We see it as a means to execute on the strategy in a shorter distance. So, in the case of VoiceBase and Tenfold, we gain technology acquisitions that will accelerate our entry into the voice AI space. E-bot7 is more about wanting more feet on the street and capacity in Europe, as we know it's a big market. So, we keep looking at both of these continuums of technology and feet on the street. I wouldn’t expect a giant acquisition. We don’t need to; we've built everything ourselves that we need, and we’re filling in some of the pieces to accelerate our go-to-market efforts. But we’re not looking to undertake a significant step change in acquisitions. We're using M&A to accelerate what we already do organically.

Great. Thank you very much.

Our next question comes from the line of Peter Levine with Evercore. Please proceed with your question.

Great. Thanks for taking my questions. So, the first question is your bookings and pipeline commentary sound bullish, ARPUs up. But if I look at deal count metrics, they are trending down. With the current rep count that you have today, in 12 months, how do you expect to generate leverage? Where does the leverage come from? How are you tracking rep productivity? I’m trying to bridge the gap between your commentary and deal count metrics.

Yes. Hi, Peter. I think with regard to rep productivity, there’s a lot of packaging and pricing that we’re working on internally, so that we have playbooks and repeatable processes that our existing reps and the new hires can execute against. We believe that this repeatable playbook will allow us to bring reps to productivity faster, ensuring that our products hit the market in a consistent way with customers. We have very strong value propositions that resonate with existing customers, combined with a lot of surface area in the platform today. However, we need to package and price it in a way that resonates with our customers. That’s something we’re currently working on, as we ramp capacity.

Okay. And then, I apologize if I missed it, I jumped on later. Revenue was down sequentially, I think it was like 1%. Curious to know what the dynamics there are? Thank you.

Yes. We had a couple of large deals that were slated for the third quarter but were pushed into the fourth, and then we had some expected seasonal headwinds with Gainshare that will reverse into tailwinds in the fourth quarter.

Okay. Can you quantify the deals that got pushed out?

I’m sorry, could you repeat that?

Can you quantify the deals that got pushed out, meaning, if they closed in Q3, what would have their numbers looked like?

Yes. They were both large seven-figure deals.

Our next question comes from the line of Ryan MacDonald with Needham & Company. Please proceed with your question.

Hi. This is Alex on for Ryan. And I was hoping you’d give us some information on how the migration of the ELA contracts to the CPT contracts is going? I remember last quarter migration looked like it was around 45% with an end goal being around 70%. Where are you at in the process?

In the third quarter, we reached about 58%. So, we’re on target for what we previously guided, which is around 70% by the end of the year.

Okay, great. Thank you. And then could you give us a little bit more color on any developments within international?

Sure. I think in my remarks, we discussed some headwinds we faced in the EMEA region. One of the large deals I mentioned earlier was based there. We also had overages. If you recall with our CPI contracts, when the ceiling is reached, customers incur overages. We had overage revenue roll into longer-dated upsells. This is good for us in the long term, but in the quarter, it means less revenue. That was another headwind we experienced.

Great. Thank you so much.

I would say, though, generally, while we faced some headwinds in EMEA, the APAC region exceeded our internal expectations.

Our next question comes from the line of Siti Panigrahi with Mizuho. Please proceed with your question.

Thanks for taking my question. Just to follow up on your earlier comments regarding the deal slip, did you say that you already closed that?

One has closed, and one is to be closed this month.

Okay. And then when you look at your guidance, the midpoint implies 21% for Q4. What are the drivers there? Do you see any kind of Gainshare slowing down or any other factors that are impacting your guidance?

Certainly. Being a variable source of revenue, and somewhat campaign-driven during the seasonal peak, there may be some variance in Gainshare. However, we expect, as I mentioned, upside there as we move forward relative to Q3.

Okay. And then Rob, regarding competition, now that we're seeing multichannel communication heat up—particularly with players like Twilio and Microsoft who are both making moves in this space while also promoting their own contact centers—how do you see this competitive landscape evolving post-pandemic?

Yes, I mean, the way I see it is that we still have the best asynchronous messaging platform, because we built it over 4.5 years. Considering that surface area, we want everyone in the world to be using our platform. On top of that, we’re adding AI automation capabilities, along with our connective tissue to third-party endpoints like social and outbound marketing campaigns. From my perspective, I think we're going to be much more aggressive in the market regarding our messaging platform. We are transitioning from being early adopters to a general demand; thus, we can be more assertive in penetrating the market, especially in the mid-market where we have less presence because we had so many demands in the enterprise sector. What we see is that Twilio is more of an engineering-focused solution where users work with APIs to piece together their systems. Our focus is on delivering outcomes. We don't just provide a technology stack; we deliver tangible results like sales or reduced service costs through automation. Our AI capabilities distinctly set us apart from everyone else in the market. So, I believe we’ll be a lot more assertive this year in the asynchronous side of messaging and continue to capture value through our AI capabilities while introducing voice as another communication surface area. We do not currently offer a voice platform in the market, but we plan to; and we are approaching it from a fundamentally different perspective than traditional voice enterprise solutions.

Great. Thank you.

Our next question comes from the line of Mike Latimore with Northland Capital Markets. Please proceed with your question.

Yes. Great. Thank you. Can you just sync up the two separate volume growth numbers? You had 18% growth on the platform, then 40% in messaging. I guess I would have thought those would be a little closer together.

The volume growth in question—so, as you may know, chat volume is continuously declining and being replaced by messaging volume. The numbers we called out in the prepared remarks mainly concern automation of volume. In other words, AI-driven conversations, which rose by 60% year-over-year.

Okay. And then with regard to voice technology, as you think about the opportunity with voice, how much of the— I don’t know, what percentage does VoiceBase contribute vs. something else you may want to add over time?

We’ve been building the core of the voice platform organically, so that it’s native to our automation capabilities. That’s one part. VoiceBase gives us another level of capability through analytics and real-time insights into what’s happening in the voice channel, enabling high performance of automation. Additionally, Tenfold gives us integrations into traditional legacy systems that allow us to process data. So, it really wraps up providing us with all the capabilities required for very rich conversations. They will ride on our platform, utilizing our AI technology as well. Therefore, we are quite excited about this. The goal for the voice platform is to integrate it before traditional IVRs. Please keep in mind that we have agent capabilities in place. If a live agent is needed, we can route it on the platform for live handling. We also deliver with BYOC, which is Bring Your Own Carrier. So, if you look at Amazon Connect today, companies have to use them as a carrier. All our telco customers, if someone already has their own carrier service, they can integrate it. We’re being quite aggressive on the voice side. As we've mentioned, we view this as another surface area, similar to messaging.

Yes. Thank you.

Our next question comes from the line of Jeff Van Rhee with Craig-Hallum. Please proceed with your question.

Great. Thanks for taking my questions. A couple of questions—first on VoiceBase and Tenfold, you're moving quickly on this. What are your expectations concerning the contribution from revenue and EPS for Q4? Can you put this in broader context, how big are they; how many heads do they have? And what are your expectations in the future?

Yes. In the prepared remarks, I mentioned that we expect the contributions for 2021 to be significantly less than 1% of total revenue—so, possibly low single digits across both assets. In terms of their size, VoiceBase has about 40 people, while Tenfold has close to 80.

Okay. And roughly, what were their growth trajectories?

They're both high-growth startups, experiencing high double digits. Yes, they are accretive to LivePerson's growth.

Sure. And sorry, can you confirm the number for the rep count? Did you say 200 by Q2 is the target?

Correct, targeted by the end of Q1.

Okay. And what timelines are you assuming from hiring to productivity for those reps?

Yes. Nine months is the target; it may take as long as 12, but our target is nine months.

And we're firing up a mid-market group now, meaning the time to market will be shorter for those mid-market reps.

Okay. And one last question from me then. The COVID testing, I believe you mentioned this last quarter as an unusual source of revenue. How did the COVID testing trend sequentially?

So sequentially, it was consistent with the third quarter and definitely a component of our upside this quarter. Thanks, Jeff.

Our next question comes from the line of Steve Enders with KeyBanc. Please proceed with your question.

Okay, great. Thanks for taking my questions. To start, with Andrew coming on as CTO, is there any kind of change in the focus of either the product or the tech stack going forward that he will be overseeing?

Yes. I believe it's simply about Tony and Andrew working together. We have a lot of capabilities in the platform currently. We've been selling it as a flat menu where customers gain access to the entire platform for a certain cost per interaction. However, we have developed so much in the platform that we’re planning to package it a little differently, presenting bite-sized offerings based on use cases or entry points into sales, service, or marketing. Andrew will focus on that alignment as well as on scaling and stability by preparing for our transition to GCP as we run current clouds. One last important point I wanted to mention is that we are about 12 months away from self-healing capabilities, which means the bot can determine when it’s not answering questions effectively. During Q4, we’ll introduce our measurement tool called Max, which can handle small talk interactions—like, 'Hang on a second'—and will utilize previous data to correct itself and adjust the conversation. Our biggest bottleneck is human intervention, so we aim to enhance machine-driven tuning and scaling.

Okay, great. Really helpful. I think you mentioned in there that there's some new packaging coming and re-aligning some of those initiatives. How is that kind of augmenting the market perspective as you particularly hire these new reps in the next six months?

By providing new reps with dependable and repeatable playbooks for specific customer profiles such that they will have a purpose-driven approach to produce customer outcomes. This contrasts with the current sales method of targeting predominantly enterprise, which presents lots of capabilities. When working with the enterprise, there’s a greater desire to present all options. We’re taking a more methodical and purpose-driven approach to delivering outcomes for smaller companies in mid-market, ensuring easier access for our reps, and aligning pricing with customer needs. This will also facilitate a natural progression since we've successfully sold into early adopters over the last 4.5 years; these are high-vision customers like T-Mobile, who bought into the transformational customer care vision we had. However, now we are dealing with more conventional market players who benefit from simpler outcomes instead of visionary purchases. Consequently, we’re going to package down our offerings and market more effectively. The platform has extensive capabilities across retail, marketing, sales, and service, affording us plenty of avenues for growth.

Our next question comes from the line of Samad Samana with Jefferies. Please proceed with your question.

Hi. Good evening. Thanks for taking my questions. I guess I’m going to ask a high-level question. I’m trying to reconcile the benefits of the COVID testing and elevated messaging volumes, yet growth seems to be slowing back into the mid-20s. I understand the headwinds related to Gainshare, but I'm trying to understand industry demand and the tailwinds we see in messaging alongside this growth slowing again for the second consecutive quarter, especially with easier comps. Can you help me unpack those declines outside of Gainshare? It seems that if I took out the impact of COVID testing, it would indicate that the underlying rate is even slower. Could you provide clarity on this?

Yes. Samad, as a point of reference, the first quarter and the second quarter took place with easy year-over-year comparables, resulting in high rates. In the second quarter, we pulled in revenue pertaining to AI-assisted healthcare testing. As a result of that unexpected revenue, it was inevitable that we would decelerate as a consequence of pulling that healthcare-related revenue forward. Relative to the second quarter, as I indicated, healthcare testing revenue remained approximately the same, but the base of revenue is now larger. This explains the dynamics behind the deceleration we are observing from the first half of the year into the second.

Additionally, if we could go back in time, which obviously we cannot, we might have facilitated hiring and investments during the previous September. We were primarily focused on fulfilling our current base's demand, which was substantial and has continued into Q1. That growth in usage continues to rise. In retrospect, it would have been advisable to ramp our marketing spending and sales headcount back to 2019 levels. Now that we have opened up this capacity and increased our marketing efforts, we believe that the existing demand coupled with new logos will potentially create a considerably different growth profile. Consider, over 25 years in this business, it's a series of S-curves in demand; we successfully utilized the current messaging S-curve. Initiating changes now, will facilitate the transition toward building the next S-curve for future growth. Without doubt, if we could attract more new logos, we would see much higher growth rates than even the mid-20s.

Additionally, as we understand, our business primarily caters to enterprise clients in the sector, which means the revenue will yield irregular peaks. This quarter, we have positively opened up a few new verticals, with significant growth observed. Although unexpected, these fluctuations may lead to occasional deceleration going from Q1 to Q3, which is expected with significant client swings reflected in higher rates and the top end of our anticipated projections to be 28.5%. Overall, despite the inconsistency in quarters, we still expect a solid growth year.

Understood. And then maybe, John, just to ask—what did e-bot add in Q3? I think the deal closed in July. If I recall, I’m not sure if I heard that mentioned within your cloud projects?

Yes, it was a very tiny amount of revenue; we’re not in the seven-figure range here.

Okay. And then maybe just one more question, I apologize for asking a third one. As I consider the existing sales headcount and the big ramp that's approaching, can you remind us whether there will be incentive structures in place for driving new logo growth? Is that something in play for the existing sales representatives? How should we view priorities as new reps are added?

Yes, they’ll be predominantly focusing on that. However, we also recognize that there’s much more we can do with our larger customers as well. Therefore, the account coverage model is changing; heightening headcount within the base is paramount. The incentive structure will primarily emphasize acquiring new logos in new market segments while acknowledging that we also need to focus on existing customer growth. Additionally, we’re increasing our marketing spend, as it has been fairly flat, but it will rise significantly during Q4. The front-line pipeline needs to expand; we can’t rely solely on sales reps—they need a robust pipeline. We are also reinstating face-to-face events, which were a critical component of our marketing strategy; since we excelled in early adoption and understanding customer needs, it's essential to showcase new technology and the successes of leading brands to create excitement in our offerings, which will naturally drive customer engagement.

Great. Thanks for taking my questions. Appreciate it.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to Mr. Robert LoCascio for closing remarks.

Thank you. In closing, I just wanted to mention that we were recently named one of the top 100 most loved workplaces in the United States by Newsweek. Additionally, today we were recognized in Inc. magazine's best-led companies list. I want to thank everyone on the LivePerson team for all their hard work and for achieving recognition as one of the best places in the world to work. There's still so much more to be done, and it’s a wonderful journey to be part of this team. As a shareholder myself, I am extremely proud of the work we’re doing, and of the future we are creating. So, with that, thank you, and enjoy the holidays. We won’t see you until next year, thank you.

Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.