LivePerson, Inc. (LPSN) Q2 2018 Earnings Report, Transcript and Summary

Good afternoon. My name is Kathy, and I will be your conference operator today. At this time, I would like to welcome everyone to the LivePerson Second Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Matthew Kempler, you may begin your call.

Thanks very much. This is Matthew Kempler, VP of Planning and Investor Relations. Joining me on call today is Robert LoCascio; LivePerson’s Founder and CEO; and Chris Greiner; our Chief Financial Officer. Please note that during today’s call we will make forward-looking statements, which are predictions, projections or 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 release – press release, in 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. With that, I will turn the call over to Rob.

Thanks, Matt, and thank you for joining LivePerson’s second quarter earnings call. Revenue increased 14% year-over-year to a record $61.7 million in the second quarter. This marks our fifth consecutive quarter of sequential growth and the continuation of our double-digit year-over-year growth trajectory. With a strong first-half of the year and a robust pipeline of active opportunities, we’re once again raising revenue guidance for 2018. We now forecast revenue in a range of $245.5 million to $247.5 million, up from previous guidance of $239 million to $243 million. Our updated guidance implies year-over-year growth of 13% at the midpoint, demonstrating continued acceleration towards our 20%-plus growth target. I will now focus on three important elements that underpin our accelerated performance. Messaging is rapidly expanding our total addressable market by directly connecting brand to consumers, empowering a diverse set of used cases, we now have a great base of referenceable enterprise customers across each key geography and vertical. LivePerson is differentiated as one of the industry’s only enterprise great offerings that orchestrates the use of machine and human-based agents on a single platform. The front-end of conversational commerce are becoming pervasive, enabling consumers to connect with brands from whichever messaging app they prefer. For example, just today, we announced that we’re adding WhatsApp, the key participant in LiveEngage ecosystem. With 1.5 billion active users, WhatsApp is an important messaging channel for consumers, which creates more opportunities for LivePerson to grow traffic on our platform. Underpinning LivePerson’s record revenue and accelerating growth is a transformation of how consumers communicate with brand. Messaging with human agents and bots is disrupting their traditional channels that businesses have relied upon such as calling an 800 number, or visiting a website, or even downloading a brands app. With messaging, LivePerson power is an ongoing connection that bridges virtually every conversation between a brand and a consumer across care, sales, marketing and also retail. By our estimate, this transformation has created nearly $200 billion total addressable market, the vast amount of which is greenfield. The biggest component of a TAM today is derived from offering messaging in bots, a superior alternative to the estimated $270 billion phone calls that are made each year to 1800 numbers. Transforming these calls to messaging is the low-hanging fruit, because most people don’t want to call the 800 number anymore and be put on a hold. So the brand LiveEngage typically increases agent productivity by two to four times, while meaningfully increasing customer satisfaction. One customer, for example, quadrupled agent productivity in 30 days by using the capabilities of LiveEngage to merge human with automated intelligence. More than a 100 large enterprise customers are scaling messaging and bot deployments on LiveEngage. In fact, more than one dozen leading brands have already embedded our software into interactive voice response systems, or what we call, IVR. So that when you dial the 800 number, instead of waiting on hold, now you can choose to hang up the voice call and switch the message instantly. Based on the success of the strategy, we expect to more than double the number of IVR Deflection customers by year-end. Another approach seeing strong adoption has been to embed our messaging software into brand apps. So when a consumer opens the app, they see a messages button. In the second quarter, one of the largest banks in the world emailed more than 10 million of their consumer in North America now message the bank through their app. Messaging volumes for the site have been doubling each month and we expect them to soon be one of our top 10 customers by volume or shifting voice calls is our beachhead into the enterprise. Over time, we expect increasing portion of our TAM to come from taking a greater share of the sales and marketing interactions that occur through e-commerce and websites and app. I’m not sure Amazon, the website never really lived up to the promise, because at best only 5% of visitors will convert into paying customers. With messaging, we are seeing conversion rates up to four times higher, while once again, driving high agent productivity and customer satisfaction. For example, we built a box for a major home improvement retailer is now autonomously selling outdoor grills on the website and driving a meaningful contribution of revenue for the product category. Other customers are placing Apple, Google Chat buttons on their website to shift consumers off to web and into messaging. Once a consumer engages through messaging, they have a secure QA connection with the brand and they never need to return back to the website or app. The strength of our advanced platform and deep industry domain expertise are critical differentiators spanning all segments of our business. Giving us a sizable read in the market, I project today where somewhere between 12 and 18 months ahead of where our competitors would be. LiveEngage offers brands the power to connect with consumers to whatever messaging [indiscernible] they prefer, SMS, Apple Business Chat, Facebook Messenger, LINE, branded apps in the IVR system on the desktop and mobile web. We’re steadily expanding this reach. Over the last few months alone, we added connection in Google RMB, Alexa, Google Home, and as of today, WhatsApp. LivePerson also has AI bots front-end center at core competencies of its platform. In fact, in June, greater than 40% of messaging conversations on LiveEngage were handled by a bot, which is more than doubled the attach rate of a year ago. This success is being fueled by the incredible roster town and technology that we are developing. In January, you may remember, we acquired BotCentral, which provides strong bot offering tools, agent assist technology and the expertise to drive enterprise scale deployments. In March, we recruited Alex Spinelli, who run the tech TV high in Amazon Alexa to be our global CTL. Under Alex, we’re building out an Advanced Technology Center in Seattle, with seasoned engineering, machine learning in AI town from world-class companies such as Amazon, eBay, Nike and Target joining us. In addition to the heavy internal investment, we also work with leading third-party bot in AI company, including Amazon, IBM, Google and Microsoft. LiveEngage is a platform that’s built on a set of standard application interfaces called API, in which the technology groups now and our customers can access conversational data and real-time operational services. When we first reached the platform, we do not have many of our APIs exposed, because we’re still maturing many parts of the platform. We now have over three dozen APIs available, enabling greater integration into our customers core back and systems like analytics, context center operations, billing and CRM. Used cases are now evolving with customers using our real-time data to APIs analyze customer sentiment on imply and to even evaluate the health of their own core services. This unique combination, a robust platform in an open API’s stack was a key factor behind one of our existing customers signing a new $30 million multi-year agreement, the largest in the company’s history. This customer is delivering messaging sprinters to a diverse set of consumer front-end, they’re also using our rich set of APIs manage real-time services within their own operations groups. As an example, they’re using our messaging API to monitor real-time messaging conversations with agents flagging internal key with keywords start coming to about service quality on their network. These real-time conversations queues are providing even better data points than normal network monitoring tools. I have this really clear vision a few years back of how messaging and the conversational commerce space would evolve. We’re still lot engaged with the foundation to go after it at scale. Our execution has positioned LivePerson strategically, [where the power] [ph] continues to go. I’ll wrap up by reinforcing a few key takeaways. First, LiveEngage is allowing us to access new markets and with it, our TAM is rapidly expanding. Second, AI in bots are core competencies of our platform, we’re seeing rapid customer adoption of these parts of our platform. We will continue to focus our investments here and accelerate our hiring of the industry’s bright talent to execute on our overall platform vision. Third, the open nature of our APIs are tracking developers to build their own solutions on top of LiveEngage, which is getting us even deeper into the enterprise. And last, we’re just beginning to tap into the potential of this new market. In the fourth quarter of 2017, we announced the largest deal in our history, a $20 million-plus three-year contract. Just six months later, we set a new record with $30 million-plus three-year contract, we’re looking forward to what comes next. I will now hand the call over to Chris, who will give a deeper dive on our overall financial outlook. Chris?

Thank you, Rob, and good day to all of you. We delivered another strong quarter underpinning our growing confidence and improved outlook for the year. The company delivered its second consecutive quarter of mid-teens revenue growth. We generated record average revenue per user of greater than 255,000, up more than 20% year-over-year and up from 240,000 hundred last quarter. Revenue retention rates once again, were well above our 100%-plus target. Mobile hit a critical milestone, accounting for approximately 50% of interactions in the second quarter, and the number of customers using more than one interaction type on LiveEngage continue to climb, reaching a record 37%. My focus has been on improving operational excellence and we’re making great progress on many fronts in accordance with the priorities I outlined last quarter, mainly, we’re leveraging data to improve execution and decision-making, unlocking insights in areas ranging from customer profitability to sales operations to investment strategy and we’re prioritizing for growth through a new organization framework that invest in go-to-market and technology resources first, thereby strengthening quality, increasing speed and driving productivity. You can see progress here playing out in our P&L. We’re excluding non-recurring items, our combined R&D and sales and marketing ratios are up 370 basis points year-over-year, while G&A is down 70 basis points. And finally, we’re transforming the G&A function using the same AI technology we provide our customers to generate greater leverage. But overall, the strength of our results is directly correlated to customers adopting messaging and automation strategies in place of voice, websites and app. This transformation and how people communicate with brands has opened up a significantly larger total addressable market. Many exciting wins demonstrate our momentum on this front. As you’ve heard from Rob, we recently signed a customer renewal that resulted in a mid-7 figure up-sell and a record total contract value of greater than $30 million. We also signed a low-7 figure deal, multi-year contract with one of the 25 largest banks in the world and successfully expanded scope with an existing cable company customer in North America, just 30 days into a pilot project. Customers are selecting LivePerson due to our depth of expertise, our platform sophistication and security, our strong references, product vision, broad partner ecosystems and proven quantifiable ROI used cases. But beyond our direct sale successes, we are seeing our partnership yield investments, yield strong results. In partnership with IBM, we want a six-figure contract with one of Europe’s largest telco. We also signed a formal partnership with Accenture in Europe and quickly secured a six-figure contract with another large telco in the UK. This is especially gratifying, because we won back a customer that has moved half our legacy chat offering a couple of years ago, but now saw a great strategic value in the conversation of commerce capabilities of LiveEngage. With respect to small and midsized customers in May, we launched a new program geared specifically towards making it easier for managed service providers, value-added resellers and digital agencies saw LiveEngage. We’ve seen great success in this effort and year-to-date we have roughly tripled the number of SMB partners working with LiveEngage. LiveEngage is an open architecture provides a broader distribution opportunity that allows us to vastly expand our pipeline with these partners and others. In addition to a distribution ecosystem, LivePerson also continues to strengthen its technological ecosystem, which was most apparent during our second quarter customer summit, one of which was with Google in San Francisco. Together with Google, we hosted a private briefing to more than 80 customers and prospects and featured customer workshop with Facebook, WhatsApp, Microsoft, IBM Watson and Apple Business Chat. Ultimately though, our summits are about creating a stage for our customers and partners to first showcase their success utilizing our platform; second, the references, which helps us progress opportunities to closure; and third, serve as a vehicle for creating new pipeline. An illustration of this is a banking win, I described earlier, which closed in the second quarter after attending our first quarter summit in London. In fact, in the second quarter alone, nearly $18 million of pipeline was created or influenced on the back of our San Francisco event. With that, I’ll turn your attention to more detailed review of our second quarter financial results. As mentioned, in the second quarter, revenue increased 14% year-over-year and 5.9% sequentially to $61.7 million, exceeding our guidance range of $59 million to $60 million. Both of our segments delivered double-digit growth, with B2B revenue rising 14% to $56.7 million and consumer revenue rising 11% to $5 million. Total deals signed in the quarter once again increased, driven by the number of new customers added year-over-year. Increased market penetration, combined with rising ARPU is a powerful combination, demonstrating our ability to tap into significant white space opportunities. The telecommunications vertical continued to lead overall growth, increasing 45% year-over-year to 20% of revenue from 16% in the second quarter of last year, financial services at 20% of revenue and consumer retail at 24% of revenue also delivered double-digit growth, auto was a 11% of revenue, technology 6% and other 19%. With respect to our geographic revenue distribution, our international operations posted another record, accelerating to 31% year-over-year growth in the second quarter and accounting for 42% of revenue. We made solid inroads in APAC signing a six-figure deal with one of the leading e-commerce companies in Japan. U.S. revenue grew 4% year-over-year, and it is anticipated to accelerate over the next 12 months, as our recently added new logo hunters brand in productivity. In fact, we are seeing strong leading indicators of their anticipated impact with newly created pipeline in the second quarter of 140% compared to a year ago. In addition, nearly half of the attendees of the Google event in San Francisco were prospects, a record mix of new versus existing customers attending our summit. In terms of profit, gross margin increased 200 basis points to 74% in the second quarter from 72% a year ago. Media made 70% long range target. Adjusted net income, adjusted EBITDA or non-GAAP measures that excludes $3.7 million, or $0.06 per share of expenses in the second quarter of 2018 tied primarily to non-recurring litigation, severance, organizational consulting as we fine-tuned the organization around our closer to code and closer to customer framework that I spoke too earlier. You can refer today’s press release for a full reconciliation of GAAP to non-GAAP measures. At the end of the second quarter, our cash on hand, including restricted cash was $70 million, or approximately $1.15 per share. LivePerson used cash from operations of $1.3 million in the second quarter and spent $5.1 million in capital expenditures. Now let me transition to our improved 2018 outlook. With strong first-half results in a robust pipeline of second-half opportunities in place, we are raising our revenue guidance for the year to a range of $245.5 million to $247.5 million, up from $239 million to $243 million. At the midpoint of revenue guidance, growth for the year is now 13%, an increase from our previous deal of 10%. We’re maintaining our adjusted EBITDA range of $22 million to $25 million, as we’re seeing a clear payback on our growth investment and we will continue to prioritize the growth, directing capital towards marketing programs, partners, sales capacity and capability, and product resources that enhance our market position. For the third quarter, we expect revenue of $62 million to $63 million; GAAP net loss per share of $0.12 to $0.10; adjusted net income per share $0.02 to $0.03; adjusted EBITDA $5.1 million to $6.1 million, or $0.08 to $0.10 per share. For the full-year, our expectations are as follows. Revenue of $245.5 million to 247.5 million; GAAP net loss per share of $0.38 to $0.32; net income per share of $0.10 to $0.14; and adjusted EBITDA of $22 million to $25 million, or $0.36 to $0.41 per share. You can refer to LivePerson’s earnings release issued earlier today for additional details on our full-year 2018 assumptions. In summary, we’re winning the conversational commerce market with scaled customers and groundbreaking used cases, and we are investing in go-to-market and technology resources to capture the expanding TAM. We’re also building the industry’s most robust ecosystem, where our technology is a connected tissue for brands to strike new and meaningful relationships with their consumers, whether it’s through Apple Business Chat, Google, WhatsApp, IBM, Accenture and others, our integrations make it seamless for customers to rapidly pivot and leverage conversational commerce as a competitive differentiator. With that, I’ll hand the call back to the operator to take your questions. Operator?

[Operator Instructions] And your first question is from Mark Schappel from Benchmark.

Hi, good evening. Thank you for taking my question, and a nice job on the quarter.

Thank you.

Thanks, Mark.

And – so, Rob, just starting off with the large $30 million multi-year deal. I was wondering if you could just give us maybe a few more – just a little bit more color around that deal, maybe we competed within that engagement a little bit more details on the term of engagement, and I don’t recall the sector it was in?

So it’s a U.S. company in that telco area, so third contract with the specific company. So there was a regional contract three years ago. And then second one, and I know and this is a long-term multi-year three-year deal. So that’s pretty much the exciting one obviously, lot of opportunity there and it’s [off of the back what I said is the fared one that we’ve done along].[ph].

Okay, great. Thank you. And then also just a little bit more color on the win back customer that seem like a particular interesting deal?

Yes. So second one that we had in the UK region, remember, we had Sky that left us a couple of years ago for chat and then they came back and we did great things with them on the messaging side. There’s another telco there that – we had a similar situation and they then have come back now to get on the messaging on LiveEngage until they – it’s very similar to what we saw with the Sky opportunity. So it’s exciting that they were a great customer when they were a chat customer and then they went to a cheaper vendor. And then so they come back and it’s a good start and we’ve done it through a partner, which is also, I think, really important. I think, central is part of that and – because we’re shaping a bigger digital transformation deal and we’re part of that transformation.

Okay, great. And then despite the good quarter, I assume that, if I recall correctly from what Chris said, U.S. revenue only grew 4% in the quarter. And if I heard that correctly, if you could just talk a little bit about your prospects for the back-half of the year for the U.S.?

Hey, Mark, Chris here. Yes. U.S. revenue up 4%. I’ll tell you that if we kind of expand the globe and look at where we’re most excited about the opportunity in North America, U.S. would be top of the list. And it’s been in area, where we’ve been continuing to invest new investment that’s been placed in that area. I think what we’re seeing is just the ramping of those resources. Now you look at what are the right leading indicators for when we’re projecting that growth to accelerate, we said that will happen in the next 12 months pipeline is a great leading indicator. We try to give you more color on this call related to the pipeline associated with summits. And in North America, we’ve seen, as you saw, just a significant growth in the amount of pipeline opportunities. And that’s being sourced not only from the hunters that we put in place recently, but really focusing on where the white space expansion opportunity is. In a lot of our blue chip accounts and that’s the untapped opportunity, we’ve got really powerful proven used cases. And we got to go to work with those customers and partner with them closely, and that’s our focus, but we’ll get accelerated growth back in the U.S.

Hey, Mark, it’s Matt Kempler. Just adding in, we’re leading in North America also with a lot more pilots in our approach. And so you’ve not necessarily seen an immediate lift. Let me go into the customers with the pilot. But then as they convert, you’ll see a subsequent up-sell tied to it. I mean, highlighted in the call, one of those that was in North American telco that started with a pilot with us. Within 30 days, they shifted into an up-sell, we got about six-figure contract out of it.

Great. Thank you. And then just one final question that has to do with cash flow from operations. Historically or traditionally, the last couple of years, the second quarter has been of a very strong cash flow from last quarter, that wasn’t the case this quarter. First, if you could just address what was going on there with cash flow?

I think – sure. I think, difference in history what you see and play largely is the globalization of our global product and technology groups and specifically, the build out of our Seattle location and the associated investments there. That’s primarily where the cash is being deployed right now and that difference in history now continue through the remainder of this year.

Great. Thank you.

Your next question is from Jeff Van Rhee.

Great. Thank you. Congrats, guys. Just a number of questions for me. Just maybe circling back to the bookings, obviously, this $30 million three-year deal is notable, as you said, following on the heels of the $20 million. Can you talk beyond that though about the breadth and depths? I know you’ve had a number of comments in past few quarters record all-time record Q1 giving a sense of the depth and breadth of the pipeline. So certainly, impressive this large deal. Talk about the remainder of the bookings and how the quarter fared?

Yes. So the bookings were strong in Q2. Actually, the deal that I mentioned is going to fall in Q3. Closer to like a week after the quarter, there was another six-figure deal in Q2. But yes, we had very strong and continue to see good bookings going into Q3 right now on the heals of that $30 million deal.

Yes. I think, Jeff, to give kind of an industry color and some geographic color, we continue to be white hot telco. Financial services has a very pipeline and is executing progressing well. International markets was awesome, and 31% growth, really strong bookings, we’re seeing terrific partner leverage also in Europe and APAC, which is still in its early, early, early days of investment and scale out had a really exciting win for us in Japan. So I think color wise it continued to have the right mix of international and industry exposure. International, Europe stood out as the highlight in North America that we talked about, but we like where the pipeline is in North America in terms of when it projects the future bookings for us.

Okay. And then I guess on the deal counts, I think you had referenced quite a few pieces where there were some records, but do you have that, actually the new deals, I think usually gives historically new and deals to existing?

Yes. So, in total the number of deals that we signed this quarter was 94 that compares to 91 a quarter ago. What was lumpy this quarter was the existing new, manage new customers we singed was up for the second straight quarter over 40%. Our existing customers was down this quarter, but in terms of the first-half it’s still up. But if you look historically kind of the sheet I’m looking at it’s been existing and is more lumpy in nature.

Okay And then it sounds like from an investment standpoint clearly Alex and team have been building out and you commented a couple times on the spend both area and sales. Can you just quantify or a maybe dial that in a little more to the extent of expansion in development capacity, expansion in sales capacity just sort of to get us in the ballpark of what kind of capacity in both areas you’re adding?

Sure. Alex’s area, I think by the way we had it our way still faster just the talent that we’re looking to bring on board has got the higher caliber and it scares. So, I think on a run rate basis you would expect to see our hiring in technology matrix and for long I want say it’s always according to plan around $2 million on a run rate basis. Is that we can verify Jeff after the call, but I think that’s in the neighborhood. In terms of sales and marketing where we’re adding right now is the same areas that we commented on last quarter that you think you’ll see, because the payback we’re getting on our marketing programs in our summit you may see more directed towards programs and people. But in general, right now, it’s going towards hunters, it’s going towards elements of building on our solution team that covers IVR that covers Apple Business Chat, WhatsApp now for the announcement. And then looking at more micro level programs. I don’t think we’ll do more large customer summit than we have planned, but we might be more micro focused and selective in certain markets where we see opportunity and go do those as well.

Okay, great. And last one for me, then I guess, just, Rob, just if I can take you back to the large deal just in terms of, I think, the way it was described, it sounds like there were a number of unique aspects to this deal versus the prior iterations. But I was unclear, sounded like they’re using a lot of ways very different maybe than what other customers are using, or what they were using your technology before. Can you just talk a little bit more about the used cases now versus what you were doing for that telco prior?

Yes. It’s just – it’s their advancement. So if I look at them as a customer, they were one of the first out of the gate, like I said, the third contract. So there obviously, there are many different front-ends from Apple Business Chat to other ones apps. But many that they’re pretty much very aggressive on the front-end, where they’re getting traffic. Second part is, there’s – I mentioned, they’re using the APIs that are on the platform to power business operations. So they’re doing a deeper level of development on the platform and building their own platforms on the platform to use the real-time datasets hat come off to generate intelligence and to get a sense of like, once again, I said it like, that will gouges or issues with things that are happening with products that they’re selling. So they definitely are in an advanced stage. We have a lot more to go beyond care of care with sort of the beachhead. Theirs is detail. There’s sales. There’s many different opportunities. So that’s why that contract is – got to that place because of the work we’ve done over the last three years.

Okay, great. I’ll leave it there. Thank you.

Thank you.

We have a question from Ryan MacDonald of Needham & Company.

Hi, guys. Congrats on a great quarter. I guess, one question around the U.S. business and I know Matt comment around sort of leading with pilots in that market. Given that focus in starting that and some of the success you talked about in the quarter with quick conversions, can you quantify at all there’s number of pilots, or maybe directionally talk how about how that number of pilots has grown over time or recently this year?

Yes. We’re not in a position to give specifics on it. But what I’ll tell you is, it’s really was born out of an acknowledgement that we want to put our technology against what’s in place today. And the best way to do that is to get a sample of the population and put it against the control group and then prove out the ROI used case. And what we’re finding is that, when we’re doing that, we’re successful. We’re making a very easy attracting process to their short-term contracts. We’re making the pricing attractive. But it’s all engineered to lead towards a longer-term relationship. And then as that client of ours goes along the journey of conversational commerce, you imagine getting into longer-term more of agent type closer to the value that’s being created. So that’s the design. It’s working. It’s going to continue to be a strategy of ours where it makes sense. But I think it’s a really good innovative approach that the enterprise came up with.

Just our – just to repeat one of the comments that Chris made earlier, we talked about the pipeline that’s being created behind our approach to the market and our pipelines will be created opportunities by our hunters in North America, it was up about 140% year-over-year.

Got it. And then just one quick follow-up. In regards to the WhatsApp announcement today, can you talk a little bit about how you compare that opportunity with the single integration to what you’ve seen thus far in Apple Business Chat, Facebook, et cetera? And how this might be expand your opportunity from a geographic perspective, given the larger number of users internationally on the product?

Yes. That’s really the – what you’re going to see is, internationally, India, Europe, there is Caribbean actually has a lot. We’re rolling out a broadband provider right now. One of the Caribbean country uses WhatsApp a lot. So internationally, it’s going to allow us to do a lot of, I think, a lot of things with that. You’ll see the launch customers will be predominantly international customers is the ones that will take live shortly. And so that’s really in South America also. Brazil is a big user of WhatsApp. So there’s some stuff down there, but that – that’s going to expand that. Obviously, Apple Business Chat and Google Rich Business Messaging are device level Android and iOS devices, you’re covering most devices on earth. Those have, I think, a broader implication on adoption in the market, and then you have Facebook and WhatsApp and LINE and WeChat and others that are downloadable. But these are, I think, still Apple Business Chat and Google Rich Business Messaging are going to have a significant adoption rate in the market, because there are on devices you want to do anything of downloading and they’re global.

Thank you, very much.

Thank you.

Thanks.

And you have a question from Kevin Liu from B. Riley FBR.

Hi, good afternoon this is actually Zach, coming on for Kevin today. Sticking with the Apple business chat theme, can you give us any indication of how many of your customers are live on Apple business chat right now? And of the thousands of brands in retailers that have registered for an Apple business chat account, what’s your sense on how many of those are choosing LivePerson as their launch partner?

Today, we have there are still just a handful of brands that are on Apple business chat. We have – 40% of them are ours. And so, like you said there’s a lineup, if you get on there, I think customers thought was Apple, but they are keeping it pretty controlled. So, we get the quality and we’re learning as we get quality with them. .: And so, even if you look at the experience of those customers that on competitive platforms, it is a very different experience, in specialty as in if you stop messaging you go back, you start over again. With ours you don’t do that there’s no session there’s no ongoing connection. So, I think working with Apple we’re providing a pure platform to support the enterprise and small business you are going to go live shortly also. But I think we’re in a strong position there.

Great, that’s helpful. And for customers like T Mobile that are already using messaging prior to the launch of Apple business chat. As the addition of Apple business chat as another channel to engage with consumers had a meaningful increase on the number of interactions or store has it been more of a shift in interactions from say their own app to the iMessage interface?

No. I commented a little bit on it. It is a new customer, so they have – it is like a new channel. They’ve had some really some really good successes with taking consumers off the web. Apple business chat has an extension that goes on to a website and then when you click on it with your mobile device. So, if you show up you’ve an IOS device on their website, you will be offered a messaging – you click on it then it opens up a Vchat and we’re seeing some very good success there. It still [indiscernible] because to get to a brand T-Mobile or anyone else. You have to put in the brand name when you’re searching on theory or spotlight search, but you can’t yet find a brand by intent, like I want to buy a phone. And okay here’s T-Mobile. So, there’s a lot of opportunity and today it’s really you find the brand. So, they’re finding other unique way, also their apps, their website, other things you are doing to generate a lot more volumes, but it’s a strong start.

Great, that’s really helpful. Thanks for taking my questions.

We have a question from Mike Latimore of Northland Capital.

Hi, this is Vjay here for Michael Latimore. Congrats on the new win. If you look at pipeline and the current pipeline and do you since see any prospect for even larger complex and what kind of confidence do you have of winning such larger contact than anyone larger?

Yes, I think we’re – I think, I said this many quarters ago. Some more out there there’s a $100 million deal. And, I’m not saying it is tomorrow. But if you look at the impact we’re having on these organizations and the work we’re doing, and the transformation we can do, some of these organization spend over $1 billion a year on calls and the contact center. So, you can think about, if we can reduce that volume cost there by 60% there’s huge savings. So, I think we are really at the beginning. We think we’re like two years into this. And we do at least the size deal because we built the platform that allows us to provide that type of value to our customers. I think there are bigger deals out there. And the deals we’re working on is definitely deals in the pipeline that are big deals that we’re working on there.

Okay. And with regards to such large wins, how does the deployment timeframe look like?

The good thing is, this is a customer going on their third year, so they are deployed. There’s many more used cases that we will deploy with them. So, we have a full team – a big team that’s on that account and working with their internal resources. But that’s a – it’s a big opportunity, transformative opportunities for sales, care, retail and operations. So, I think that’s really the opportunity with them. And once again, they’re leading the pack, I think, in many ways, but there’s other brands. We have that are right behind them on what they want to their system for.

Thank you.

[Operator Instructions] And you have a question from Koji Ikeda of Oppenheimer.

Hi, this is actually Tyler Page on for Koji. Thank you for taking my questions. Over the last few quarters, the business has clearly shown some improving fundamentals. You can see that in deal commentary, the ARPU gains, mobile usage and really in the top line growth. Can you may be call out one or two key drivers there? And where you see those key drivers going on a fundamental strength?

Yes. I think, look, the biggest driver is in the minds of enterprises today, I don’t care if they’re CEO, or CMO, or Chief Digital Officer, or Chief Credit Officer. Everyone is speaking about bots AI messaging. So, if you think about the transformation of their way in which they are communicating connecting with our customers. And so, things like even Amazon Alexa, it’s out there and that’s part of conversational commerce. And so just in the [indiscernible] is conversational commerce, even how do we power that. Obviously, bots in AI captures the imagination every day like we automate and we automate those conversations. So, I think that alone is just driving brands to put their hands up and say, I’m interested about that. Now, the second thing is tack on that Apple, so the Apple Business Chat and Google Rich Business Messaging, you’ve got WhatsApp now, you’ve got Facebook Messenger, then you’ve got Google Home, we’ve got Alexa – Amazon Alexa, LINE WhatsApp, because you can integrate with them, it is basically all those big companies are out there, too, saying, we think the future of communicating with the customer is through messaging and we’ve opened up our systems to securely provide that to you. So I think that’s a second part. And the third part is and I think the most important is, we have customers that we can prove value that are out scale. And in the world right now, we are one of the only company that has that. We’re not taking customers’ lives that are doing small little things. They’re trying to transform their business and they trust us, because we had referenceable customers. We have over 100 enterprises right now that are alive and that are scaling at some real rate. And when you can show that you can remove 40% or 50% of call out of a contact center and move it on to something else like messaging and then you can reduce the cost so that by at least 50%, if not more with automation, you’ve got sort of a winning formula. So, I think it’s – that, that whole vision of the world and bots and we’re talking to our cars and talking to our homes in our home devices. And then the idea that we can change the way we’re communicating and connecting with our customers and then the ability to show true ROI. That combination is helping us grow our company today.

That’s a great color. Thank you very much. Pivoting a little bit to the pipeline, if I can dig in a bit there. Do you – when you look at your pipeline, do you still see a lot of low-hanging fruit within the installed base to be harvested, or is this majority of future growth coming from new business at this point?

We’re still – if you look at by numbers, the majority of the people of modern age are chat customers. It’s funny. It’s like we have a lot in the base. So, there’s a lot of activity to move that base and I think there’s a lot of opportunity there. There’s also – we’ve been looking at – we have a slide here like all the verticals and then all the players and like the top 100 companies needs vertical, and we have five or 10…

Fraction.

…fraction and we look at that on the greenfield slide. And so that’s really an opportunity on both sides of the business. And so that’s really what we’re focused on is, how do we really get the market shaking. I feel like if everyone knew about what we’re doing, I can only wonder what our growth rates go to – and that’s our goal and that’s what Chris was saying. The marketing events are working quite well. We do one a month. Can we do these big things one a month? So, there’s a lot of investment we’re looking at to really drive the demand that we know is out in the market today.

And I think, Tyler, I think, there’s a really important point of color and I should have been mentioned that even more thoroughly. I don’t want to give the impression that we’re throwing salespeople in the field just to go selling around, I mean, we’re – if anything, we’ve been very focused recently on building robust repeatable training enablement program for them. Rationally, increasing the sophistication of how we look at our town. So what Rob is speaking off, we’ve got, I think, the picture in your mind’s eye, the grid of every customer the company has and then what they’re buying and what they’re not buying. What they’re not buying is what capabilities exist that the company can offer on our platform and being so prescriptive with our installed teams on here’s the opportunity. Here’s a specifically, can go build their temperature for the used case and pointing them in the direction and helping them along the way in that journey and we’re excited about that. And most of that’s in North America right now, which is why we’re so optimistic on why we see really great growth from North America.

Great. Thank you very much. That’s all from me.

Thank you.

And you have no other questions in queue.

Okay. Thank you for being on the Q2 call, and we’ll see you next quarter. Have a good night. Thanks, everybody. Bye.

This concludes today’s conference call. You may now disconnect.