Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Second Quarter 2025 Earnings Conference Call. My name is Diego, and I will be your conference operator today. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Mr. John Perachio, Vice President, Investor Relations.

Thank you, Diego. Joining me on today's call is John Sabino, CEO; and John Collins, CFO and COO. 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, August 11, 2025, 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 in the comments made during this conference call as well as in 10-Ks, 10-Qs and other reports we file with the SEC. We assume no obligation to update any forward-looking statements. Also during this call, we'll discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release. Both the press release and the supplemental slides, which include highlights for the quarter, are available on the Investor Relations section of LivePerson's website.

Thank you so much, Jon. Thank you all for joining us today. Before discussing our results and business updates, I'll be outlining the refinancing agreement with the 2026 noteholders announced today. Let's start here because strengthening our capital structure has been a top priority since I joined the company. Building on last year's successful transaction with Lynrock Lake, I am pleased to share that this refinancing agreement represents a decisive step in strengthening our capital structure. It meaningfully deleverages our balance sheet and extends debt maturities to 2029, providing a runway to execute our strategy. Equally important, it reinforces confidence in our customers and partners that LivePerson remains a long-term strategic partner. The refinancing is also intended to shift a greater proportion of enterprise value to equity holders by significantly reducing total indebtedness. Now let me turn to our operational performance. We delivered revenue of $59.6 million, which was above the midpoint of our guidance range. Our adjusted EBITDA also came in at $2.9 million, exceeding the high end of our guidance range. John Collins will provide more detail about our financials shortly. Now I want to provide some color on our product strategy. In the second quarter, we experienced a 45% sequential increase in conversations powered by our Generative AI Suite. In fact, over 17% of all conversations on LivePerson's platform leverage at least one form of Generative AI feature, up 5 percentage points from a quarter ago. This increased adoption reflects a clear and measurable value that we are delivering by helping customers improve efficiency and elevate their customer experience. We're also seeing exciting new customer use cases emerge, which further validates our product strategy. As we continue to evolve our platform to be a true system of action and intelligence, we're empowering enterprises to transform customer interactions into real business outcomes. Our vision is to embed AI into every interaction, and we achieved this with an open, flexible workspace powered by our leading tools and automation, real-time transcription, and agent assistance. The true value of our platform is demonstrated by our customer success. So let me share a few examples of what they're achieving. First, a premier diagnostic provider deployed our routing AI agentic bot and within 3 weeks, saw a significant decrease in call volumes while increasing messaging volumes by 7x, demonstrating rapid adoption and scalability, while achieving a 97% routing accuracy and an 86% CSAT score. We're also using AI-powered summarization to automate CRM updates, improving agent efficiency. Second, a major media technology company is using our Agentic AI-powered routing to fully contain 20% of conversations without human intervention while achieving an 86% first contact resolution rate and an 89% CSAT score. And third, a leading technology services organization dramatically cut escalations and decreased resolution times by using our AI routing. This was possible because our AI is now far better at understanding what customers are asking for, reducing errors by 38% and resolving 62% more unique requests on the first drive. These are examples with industry-leading brands and are not isolated cases. They are clear proof that our AI is delivering mission-critical business outcomes. Next, I want to highlight that our product strategy is being matched by a focused evolution in how we go to market with our strategic partnerships playing a central role. Just last week, we announced that we're deepening our relationship with Google Cloud. This collaboration unifies our market-leading conversational platform and operations with Google Cloud's AI innovations, including their advanced large language models. This isn't just about integrating features. We're shifting to encompass joint global go-to-market initiatives and collaborative product innovation. This will allow us to jointly redefine enterprise customer experience and accelerate our mission to create a new era of highly efficient, personalized, and connected experiences worldwide. This strategic alliance is built on the foundation of our ongoing migration to Google Cloud. This long-term initiative is about optimizing our services on a state-of-the-art stable infrastructure. This not only improves resiliency but frees our engineers from managing underlying complexity to focus on delivering value to our customers. In fact, the partnership with Google and the high-performance AI technologies made available for Gemini and Vertex are added benefits, which we are now well positioned to take advantage of. Building on our work with Google, we will be expanding our relationship with Databricks, which is foundational for our critical innovations. By unifying our conversational data into a single extensible high-performance system deployed within Google Cloud. We will unlock 3 key advantages. First, we can deliver smarter, faster outcomes for our clients in analytics and automation. Second, we can speed how we build and iterate on Agentic AI use cases. And third, enterprises and partners can securely build their own Agentic AI solutions on top of our platform. Together, these partnerships make LivePerson's platform more intelligent, extensible, and attractive to enterprise buyers looking for proven AI capabilities. We believe these strategic partnerships will amplify our market presence and enable us to deliver integrated solutions to a wider range of enterprises, reinforcing our position as a strategic partner for all channels. Turning to our commercial results and our outlook for the rest of the year. Second quarter bookings improved sequentially over Q1, but the overall pace of new business in the first half was slower than anticipated. We have also experienced renewal hesitation from a few larger customers. Two primary factors have contributed to this. First, the broader macroeconomic uncertainty continues to extend enterprise buying cycles, especially for high-value AI solutions. These transformative deployments naturally require extensive customer due diligence, and this is what we see as extending these buying cycles. Second, uncertainty around our capital structure has been a clear headwind in our commercial process. Addressing that headwind was a top priority, and the refinancing agreement directly addresses consistent customer and partner feedback on this issue by providing reassurance on the company's financial stability. As a direct result of the commercial factors I've outlined, we're adjusting our financial outlook. Based on the slower bookings and renewal hesitation from select large customers, we are revising our full year revenue guidance to $235 million at the midpoint, a decrease of approximately 5%. At the same time, we're managing the business with financial discipline. Through significant adjustments to our cost structure and a focused approach to cash preservation, we are offsetting top line declines. We are, therefore, increasing our full year adjusted EBITDA guidance midpoint to a positive $2 million, an increase of $9 million. John Collins will provide more detail on this shortly. With a stronger capital structure in place, we will continue to focus on product innovation that drives business outcomes for our customers and our commercial progress. This quarter, that focus showed up in 45% sequential growth in Generative AI conversations and expanded strategic partnerships with Google and Databricks, creating new momentum and opportunities. We have taken decisive action to address our challenges and strengthen the company. I am confident that these steps have laid the groundwork for us to enhance our commercial performance and continue executing on our strategy.

Thanks, John. I will cover a few key points on the refinancing agreement, followed by a discussion of customer wins, second quarter financial performance, and then guidance. To begin, I'd like to take a moment to recap our multiyear strategy to deleverage the balance sheet. As many of you will recall, in June 2024, we closed a transaction with our largest noteholder, Lynrock Lake that strengthened the balance sheet through a combination of deleveraging and maturity extension. We consider this transaction to be the first of 2 phases in our debt reduction strategy. Critically, Phase 1 also provided us with $100 million of cash and the ability to issue second lien notes, both of which we expected to be necessary to execute Phase 2 of our strategy. That is the refinancing of the remaining $361 million of notes due to mature in December 2026. Importantly, Phase 1 was also designed to address a growing friction in our commercial motion. Large enterprise customers making multiyear technology investments with LivePerson, in some cases, 3 to 5-year commitments, were increasingly hesitant to transact with the company because of its perceived financial instability. Phase 1 enabled us to demonstrate tangible progress on the execution of our strategy to strengthen the balance sheet and overall financial profile. Jumping ahead to the first half of 2025 with next year's $361 million debt maturity looming large in the minds of all LivePerson constituencies, our commercial progress slowed relative to our previous expectations. With the successful execution of Phase II, we have addressed a primary concern expressed by customers, employees, and shareholders alike. More specifically, as announced today, we have reached an agreement with our 2026 noteholders to exchange $341 million of notes maturing in December 2026 for $45 million in cash, $115 million in second lien notes maturing in 2029, and 39% of equity with part of the equity delivered at closing and the balance delivered through convertible preferred stock that is mandatorily convertible upon a shareholder vote. In total, this exchange captures $181 million of debt discount that accretes to shareholders and deleverages the balance sheet by $226 million, shifting a greater proportion of enterprise value to shareholders and providing the company with time to execute its strategy, which we believe will reinforce LivePerson's position as a long-term strategic partner to customers and further enhance value creation for shareholders. Turning to the quarter. In terms of deals and significant customer wins, we signed a total of 38 deals in the second quarter, including 3 new logos and 35 expansions in renewals, translating to a quarter-over-quarter increase in deal values of 15%, but a year-over-year decline of 9%. Consistent with recent themes, we observed continued demand for AI agents and AI orchestration within highly regulated industries such as health care, financial services, and telecommunications, which leverage our platform as a trusted AI-agnostic orchestration engine. Significant renewals and expansions included a 7-figure deal with a global financial services company, a major European retailer, one of Australia's largest retail groups, and a leading U.S. health plan provider. We also added a European digital marketing agency as a new logo. Despite the sequential increase in bookings in the second quarter, overall commercial progress in the first half of the year was slower than anticipated, which will impact our outlook for the second half. We attribute slower bookings and renewal challenges to 2 primary factors. First, increasing concerns from enterprise customers regarding the financial stability of the company, especially considering the $361 million debt maturity next year, which became a key agenda item for nearly every enterprise buyer in the first half. And second, macroeconomic uncertainty that continues to constrain budgets and extend buying cycles, especially for high-value AI solutions. Decision-making has slowed with the influx of new AI offerings and the establishment of AI committees and related compliance processes, which have introduced new decision-makers. Turning to our second quarter results. Total revenue was $59.6 million or just above the midpoint of our guidance range. Adjusted EBITDA was $2.9 million, which was above the high end of our guidance range, driven by ongoing cost discipline and operational efficiencies. Revenue from hosted services was $50.3 million, down 25% year-over-year. Recurring revenue was $55 million or 92% of total revenue. Further segmenting revenue, professional services revenue was $9.3 million, down 26% year-over-year. From a geographic perspective, U.S. revenue was $36.7 million, and international revenue was $22.9 million, or 62% and 38% of total revenue, respectively. Average revenue per customer was $655,000, up 4% year-over-year, driven in part by expansions with our largest customers and in part by customer retention. RPO declined to $197 million, consistent with the same factors driving declines in revenue. Net revenue retention was 78% in the second quarter, down from 80% in the first quarter. As a reminder, net revenue retention is a function of in-period revenue, but this metric will continue to decline until revenue begins to grow again. Finally, in terms of cash, we ended the second quarter with $162 million of cash on the balance sheet, inclusive of the proceeds from the transaction with Lynrock Lake last year. In terms of guidance, while the refinancing agreement announced today addresses a primary concern customers have consistently cited during commercial discussions, renewal friction and slower-than-expected bookings in the first half caused us to revise down our outlook for the second half. In terms of revenue for the full year, we are lowering our range to $230 million to $240 million, which translates to a decrease of approximately 5% at the midpoint. As for the third quarter, we expect revenue to range from $56 million to $59 million, representing a sequential decline of approximately $2 million at the midpoint relative to the second quarter. In terms of revenue mix, we expect recurring revenue to be approximately 93% of total revenue for both the third quarter and the full year. As for the bottom line, we continue to balance our cost structure and expected business performance with a focus on preserving cash and reallocating resources to both deliver on innovation for customers and modernize our architecture through GCP migration, which is also essential for our customers. As a result, we now expect to deliver positive adjusted EBITDA for the full year. Accordingly, we are raising our full year guidance to a range of a loss of $3 million to a profit of $7 million. This represents a significant improvement from our prior range of a loss of $14 million to 0. Finally, we expect adjusted EBITDA in the third quarter to range from a loss of $4 million to a loss of $2 million. Before moving to questions, I'll briefly emphasize that we are taking decisive action to address concerns expressed by customers, shareholders, and employees regarding our financial stability. While commercial progress in the first half of 2025 was impacted by customer concerns and macroeconomic uncertainty, the company remains focused on execution, innovation, and cost discipline, and we now have the runway for these strategic efforts to enhance value creation for shareholders and reinforce customer confidence in LivePerson as a long-term strategic partner. And with that, we can move to Q&A.

And our first question comes from Jeff Van Rhee with Craig-Hallum Capital Group.

So a couple for me. Just maybe on the new logo capture, John, John S. Yes, new logo capture for the quarter, understood on the macro. But in the deals that you're getting into, talk to the win rates and how it is going, if you're able to get into those deals and deals that are closing, how are your win rates trending?

Jeff, it's great to hear from you. We're maintaining a consistent performance from quarter to quarter. We've noticed that RFPs are experiencing delays in decision-making in some instances. Additionally, we haven't encountered competition from platform providers surpassing us, but we are seeing the anticipated closures for several deals being pushed further into the future due to rewrites of the RFP or changes in scope. As a result, some opportunities we expected to secure in Q2 have now been deferred to Q3 and beyond. Currently, we aren't being outperformed by competitors. The situation remains consistent with our previous experiences, and it appears to be more about ongoing delays in decision-making or adjustments to project scope specific to Q2.

Yes. I think John Collins mentioned some new AI-based competitors emerging and lengthening cycles. Can you talk to me about what you are observing in that regard?

Yes, we are noticing newer and smaller competitors providing AI bot capabilities. This is part of our effort to expand with customers and explore new opportunities, and we are encountering increased challenges in that area.

Okay. Regarding renewals, it seems like there is some pressure related to large customers. Are you noticing that the challenges with renewals are primarily coming from these big customers? If so, what do you think is causing this situation?

Yes. We have observed that some of our largest customers are making enterprise buying decisions 24, 36, or even further months in advance. The financial concerns have prompted us to ensure we are proactively managing this debt deal to eliminate it as a hurdle in renewing these customers. We are optimistic that this will positively influence those discussions moving forward.

And your next question comes from Ryan MacDonald with Needham & Company.

Congrats on the deleveraging transaction. Maybe just to double click on the renewal side or the pressures you're seeing. Can you talk about sort of what the greater impact is, whether it's macro uncertainty relative to the sort of balance sheet issues? And I guess on these concerns that you're now sort of alleviating and finding a resolution for. Do you still have opportunities with those customers that shared those concerns on that sort of capital structure that you can kind of get back into the conversation or are those sort of lost opportunities and sort of improving moving forward?

Yes, Ryan, thanks for the question. I'll start, John, if you want to add some context, please feel free. Those comments specifically refer to some of our customers that we're looking at for renewal and expansion. The positive news there is that this allows us to improve and continue those conversations versus a churn at this point. So we're hoping that putting together the debt deal that we've announced today will help us improve those conversations. So those two are connected. And we think that, that is going to help us. So these have not been outright losses or churns at this point, but it has impacted decision-making. It has allowed for other solutions to be looked at, and it has compromised our ability to close some of our longer-term contracts with some of our enterprise customers. And we're hoping that, again, going back to this debt deal and why we think it's important and we think it's good for our customers and shareholders. It removes that uncertainty and it gets back to the technology where we're engaging with customers, which is where we excel.

I'll just add, Ryan, that you asked about the concerns regarding the balance sheet compared to the macro environment. I would simply say that they are not necessarily independent. In our case, the balance sheet and the overall perception of financial instability make us more vulnerable to competition. So they are connected in that way. I would also like to emphasize what John said, which is that there are several specific deals with large customers that we believe this deal will keep us engaged in.

Thank you for the information. It's great to hear about the strengthened partnership with Google Cloud and the expansion of your relationship with Databricks. Could you please share when you anticipate the migration will be fully completed with both partners? It seems that this development will significantly enhance capabilities and functionality for LivePerson and its customers. When should we expect to see the full completion and begin reaping the benefits from a buying cycle and adoption perspective?

For some of our customers in some regions, they'll see that this year around the October timeframe, and we should be complete by early next year with most of the migration. That being said, we're already working with Google, creating the capabilities with Vertex and Gemini and conducting robust testing on those tooling capabilities within those integrations. So customers will start seeing benefits from that, hopefully, even before the end of the year.

Ladies and gentlemen, there appear to be no additional questions at this time. We have reached the end of our call today. Thank you for joining us, and all parties may disconnect.