Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson’s Fourth Quarter 2020 Earnings Conference Call. My name is Matt, and I will be your conference 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 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. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Mrs. Idalia Rodriguez. Please go ahead.

Thank you, Matt. Joining me on the call today is Rob LoCascio, LivePerson’s Founder and CEO, and John Collins, our Chief Financial Officer. Please note that during today’s call, we will make forward-looking statements which are predictions, projections and other statements about future results. These statements are based on our current expectations and assumptions as of today and are subject to risks and uncertainties. Actual results may differ materially due to various factors, including those described in today’s earnings press release and the comments made during the conference call and in 10-Ks, 10-Qs and other reports we filed from time to time with the SEC. We assume no obligation to update any forward-looking statements. Also, during this call, we will discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today’s earnings press release. Both this press release and supplemental slides, which include highlights for the quarter, are available on the Investor Relations section of LivePerson’s website. With that I will turn the call over to Rob. Rob?

Thanks Idalia. Thank you for joining LivePerson’s fourth quarter 2020 earnings call. We had an awesome quarter with records across revenue, profitability and customer wins. LivePerson delivered one of the strongest quarters in our history. Revenue for the quarter was a $102.1 million making Q4 our first $100 million quarter. Year-over-year growth for the quarter was 29% which exceeded the high end of our guidance range and marked our third consecutive quarter of 25% plus revenue growth. For the full year we grew revenues 26% year-over-year exceeding our long-term growth of 25%. One year I had a plan. Our continued focus on internal automation and enhanced financial discipline also increased our operating leverage. Q4 adjusted EBITDA of $18.2 million or 18% margin exceeded the high end of our guidance range and translated to a second consecutive quarter of hitting the Rule of 40. We ended Q4 with 10 seven-figure deals, a new record four of which were new logo wins. We have seen the return of momentum in new logo acquisitions with new logo annual contract value doubling year-over-year which is complementing our strong growth within our existing customer base. Before going deeper into the key wins of the quarter I'd like to take a step back and share a few thoughts on what is driving our success. Four years ago we shifted our strategy to focus on Conversational AI and automation. The rise of the AI represents one of the greatest leaps forward in the technology across all industries. Because of its contribution to our success and its central role in the strategies we're executing against I'd like to unpack what AI really means to us. When we speak about AI there are several dominant categories. There's robotics from companies like Boston Dynamics GPU makers like Nvidia and software…

Thank you, Rob. We closed 2020 with exceptional business and financial performance surpassing previous records across several key metrics in the fourth quarter including revenue and profit the quantity of seven-figure deals average revenue per customer and billable platform usage. We exceeded the high-end of our guidance range for the top and bottom line once again demonstrating our ability to enhance operating leverage while aggressively growing the business. Overall these results reinforce our position as a clear market leader for Conversational AI and demonstrate the ease with which our platform can be adapted to meet accelerating demand across a broad spectrum of use cases industries and geographies. Building on the latter point the world has been undergoing a steady digital transformation for decades but the pace of that transformation as we've all observed accelerated significantly in 2020 including usage of the Conversational Cloud the agility of our platform and developer tools enabled our largest enterprise customers to expand from saving costs and enhancing customer service experiences to generating new revenue streams from Conversational Commerce. In total as Rob mentioned we estimate that the gross value of Commerce on our platform has increased from several hundred million to approximately $5 billion in 2020. With our long-term vision taking shape and significant forward momentum I'm excited to expand on our 2020 results and plans for the year ahead. Before shifting to the fourth quarter numbers I think it would be helpful to put our 2020 results into perspective On the fourth quarter call one year ago we issued guidance of 21% at the midpoint for full year 2020 revenue growth and reaffirmed our long-term plan to reach 25% in 2021. With that context top of mind exceptional execution by teams across the company drove 2020 full year revenue to $367 million or…

We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Richard Baldry with ROTH Capital. Please go ahead.

Thanks. Given your growth is accelerates beyond and faster than you had expected. Could you talk a bit about the status of your organic growth engines? And I heard the 80 grows to 110 figure for headcount but how do you feel about how mature that group you've gotten is? Do you feel like there's some catch-up to do because deals are outperformed you faster than you thought? Is there something that would spur a gate early year growth given outperformance you had sort in the second half of 2020? Thanks.

Thanks, Richard. Yeah I mean we feel good about the current team obviously they performed very well last year. Remember we the year before we did a lot of hiring of that team. And it takes six months or so to get them or a little bit longer to get them up to the capacity. So the team we have is I feel very strong in season and now where we're ready to add another group to expand because of the demand in the market. As you know also we have partners. So we got very focused on partners last year. And that's also showing good results especially on a new logo side. So I think we feel good about the current team. The leadership is doing a great job and we just see this demand out there right now that we want to be able to go out and land and sell.

In addition Richard I would add that as -- from a productivity perspective measured in terms of credit payment per rep we've seen that increase every quarter in 2020 and that's driven by automations that allow reps to focus more on selling and less on data entry and pipeline analysis. And in addition we have fully automated an accurate sort of bookings prediction model that allows management to course correct early in the quarter and optimize the playbook with machine proscribed actions that increase our win probabilities. So with that machine starting to take shape we have confidence to continue increasing in our go-to-market capacity.

Okay. And can you maybe look at the partnership side a little deeper about how that works in terms of economics maybe and how far the partners can take you through a sales cycle and or even into an implementation deployment cycle. So how much burden is on you guys versus them. And what's the rewards to kind of keep them motivated? Thanks.

Yeah. So in terms of the economics, we typically will have a presale of credits to the partner that the partner receives a discount. They then resell those to their installed base. In terms of later question on who does most of the work upfront? Right now we're putting most of our PS work through these partners. And our goal is to put all of our PS work especially for those industries which we've a well-established playbook into the hands of our partners. So right now there's a healthy balance of LivePerson helping with implementation and the partners running with that themselves. Our goal is for the partners to be fully self-service on our platform our goal is for the partners to be fully self-serviced on our platform in order to serve those end customers.

Great. Thanks and congrats on a great close to the air.

Our next question will come from Zach Cummins with B. Riley. Please go ahead.

Hi. I was wondering -- this is Danny on for Zach. I was wondering if you guys could comment on any changes you've seen in the messaging landscape especially as peers like Zendesk are investing to [indiscernible] I know you guys mentioned that you guys started investing pretty early on. But I was wondering if you could comment on the competitive environment?

Yeah I mean we pioneered the business messaging platform is four years ago we released it. And so -- and pure messaging platform is the best in the world. The AI capabilities as I explained because as you scale conversations what the customers want is automation. And so if -- a lot of them are treating messaging as a channel and yet the majority of the interactions they have for instance on this cryptocurrency exchange one of the largest in the world they use what they actually use that one. And we're replacing it because they're predominantly strong with ticketing and email and then they've added messaging capabilities. But if you look at a customer like that that's has millions and millions of conversations they need to power. They can't power them with humans doing messaging and some base level automation. They want to create an asynchronous communication strategy with messaging but they want all the power to automate those conversations at scale. And that's really where we're winning the business and that's where we continue to be. As I said my opening remarks sort of unmatched because of our data stats and then all the IP now we have on that side and we continued to invest in the tens of millions of dollars into it in a every year. So we've got a strong leadership position right now there, but I expect a lot more to come in. I mean messaging is -- it’s hot. Now we knew that years ago we went into the business and we made a big bet but now it's like hot and there's a lot of people entering but it's mostly I see small business and market stuff SMS but doing the real scale automation where the real money is that's -- that we are owning that area right now.

Got it. Thank you. And I was wondering if you could speak about some of the opportunities that you're seeing outside your core verticals?

Yeah I mean that it's really interesting that the focus -- so this year just I mentioned in the March that the retail sales and marketing is where we're going this year where we definitely have laid a lot of ground in the care operations and we will continue doing that. But we are seeing a lot of opportunity in the retail area and retail is definitely transformed because of the changes in stores and stuff like that but there's just a real focus on digital and we're you know we have one of the biggest jewelry companies in the world and they're doing amazing things I saw their CEO on the Cramer last quarter and talk about how their whole online business is booming we're powering that. So we see a lot of opportunity on the retail side. I talked about like we have the gaming side and in this cryptocurrency exchange that the one of the largest COVID testing in-home one of our customers and one of the largest banks came to us and said we want to get our branch employees back to work they were doing PCR tests which are slow take three days to get they want it in home antigen test. But they needed an AI that the employee could be in their home, open up the mobile device. They instructed how to take the test with high efficacy, get a result, report that result and then get a health pass. And we built all the connective tissue for that. And that launched last week. And so we're seeing -- we're bringing branch employees back to work. So there's always cool things going on right now that we can power because it’s really AI and automation, some of its messaging. But it's really around all these different things. So it's interesting. This year is going to be interesting especially on the retail side.

Got it. Thanks for the color and congrats on the quarter.

Our next question will come from Arjun Bhatia with William Blair. Please go ahead.

I was wondering if you could share a little bit about some of the early success you may have seen with rolling out the payments offering and then if you can give any color on when we might expect to see that laying in into revenue? Thanks.

Yeah I mean we're seeing some good usage of the platform right now. We have not given any bacon of how that's impacting the revenues this year. There will be some -- some of that I think next quarter we'll talk a little bit more about it and give some examples because we're seeing some good usage of the platform. But yeah, I mean our whole strategy around commerce starts with payments and the ability to take payments. And that's why going after these retail opportunities in the Conversational Commerce opportunities this year is predicated on that platform. So as we once can sign more and more of those types of customer we will talk about how the payment platform is driving up. But we feel -- we feel really good about it.

Awesome. Thank you. And then I just wanted to check in to see if you could have some color around where you stand on the migrating customers to CPI contracts and if you've experienced any pushback on that so far?

Hey Arjun its Chris. No pushback in that front we migrated about 15% of the base in 2020 which was ahead of what we expected and we have about two thirds up for renewal in that respect in 2021.

Awesome. Thank you and congrats again on the quarter. Thanks a lot.

Our next question will come from Mohit Gogia with Barclays. Please go ahead.

Hey guys. Thanks for taking my questions and I'll offer my congrats on a really strong end to the year here. So my question is on the land and expansion motion. I mean it's great to see that the new logo ads are sort of like I think it was mentioned that it's back to pre-pandemic levels and obviously the new logo ACV Dublin game is quite a good parameter. My question was on the expansion which I think you have been coming ahead of the target range here for the last few quarters right and if you look into 2021 and beyond I was wondering if you can talk with the sustainability here right I mean obviously we know that COVID accelerated the secular adoption but it just woke customers up to the reality here right so if you can speak to the sustainability of growing that usage growing that expansions and retentions among the customers in 2021 and beyond it was very helpful and then I have a follow-up question?

Sure. The way we see it is that the pandemic was kind of a forcing function for adopting digital solutions and because as we discussed automation is so key to powering those digital solutions at scale. It really is very sticky. So in a post pandemic world or years from now, when you built a machine to solve a problem for a customer or a brand and it does so effectively at a high level of customer satisfaction, you're not going to reverse and put that problem back into the hands of human labor, which is more expensive and less efficient for that problem that you've solved. So, from that standpoint our automation, our increased usage is highly sticky. And on top of that, I would say that from a -- expansion perspective we're only penetrated today lastly the beginning of last year, we were penetrated into our base in terms of the fraction of total conversations across voice messaging, chat that we service on the platform approximately 10%. Our latest estimates have that number more in the range of 15% to 20% again on average across our entire base. So, that leaves a lot of room for further expansion.

That's very helpful color. And the second question -- I was just to follow-up of the CPI question of earlier. Can you can give us an idea of when you migrate these customers or over to the CPI contract. What -- what's the change you see in terms of the customer spend? And that’s it from my side.

It varies of course but typically we see upsell. There are some where there's an initial period of lighter revenue coming off and then as they ramp into the high-end of the usage that we've contracted with them we see better results in the form of upsell and outages. But in general these are upsells that take place and to cite an example from last year very rapidly we converted a topping from any latest CPI contracts and within just a couple of months we had a seven figure upsell because of how much volume they routed to our platform. And of course because of the CPI structure. So in general it's a very good tool for ourselves.

Thanks, guys.

Our next question will come from Siti Panigrahi with Mizuho. Please go ahead.

Thank you. Congratulation, that's a great quarter but also I just want to dig into the guidance very impressive guidance for 2021. So you talked about ELAs converting to a CPI contract. But what are your other assumptions in terms of that when you guided 25% to 27% mainly gain share. Do you expect that to be at this 15% level? And then what sort of trends are you seeing on those CPI contract that coming up for renewal in terms of growth coming from there?

Sure. So as you've pointed out gain share is certainly part of the equation as a variable source of revenue. We don't have as much visibility into it as we do with recurring revenue, but nonetheless we have a large pipeline that we're chasing right now. Another core factor here are all the new use cases that have been driving revenue for us in 2020. We're expanding on those use cases in almost every industry which again is a major factor. And then overlaying that is commerce, conversational commerce. And our vision for that as I said is truly taking root in the market and the demand for our solutions. The demand that consumers have to simply have a conversation with friends before they purchase a product is driving adoption of the platform. And in part it's driven by the consumer and in part it's driven by the revenue and incremental revenue that we're generating for our customers. So because of those trends we have confidence that we will continue to accelerate from where we were.

Okay. And then on the investment side you talk toward that go-to-market investment. So are you planning to add more headcount in quota carrying sales rep or is there any other areas you're investing?

So yeah we obviously we've got partners. We have our direct sales quota carrying reps. We have a part of our business cohort we’ve started calling marketplaces where we are working with partners that already have a bunch of merchants, a bunch of small businesses. And we've put an overlay on top of that. And we can fire up thousands of small businesses on to our platform. So there's some -- there's areas that we're investing in those key areas today. But it's those are kind of the three areas that we're looking at. John if you want to expand on that?

Sure. I mean I would say that there is -- as we highlighted throughout the remarks there's certainly folks on AI and we're making some significant investments there. Not to get too technical but probably [indiscernible] management is an area of focus for us as is natural language generation which we think collectively will dramatically enhance the consumer experience and our overall automation capabilities. We're also focused on making implementation faster and easier both for us and for our partner network. And that includes or necessitates the addition of many more out of the box integrations for the enterprise.

That's good. Just want to clarify also that what sort of efficiency you're seeing in terms of on your initiative of is on leveraging data and merely on the back of his site and also any kind of benefit from now that you're working from you know remote working permanently?

Yeah so us being efficient I mean the -- from working from home I mean we're obviously not traveling and then -- obviously that was a strategy around sales but things have changed so if you see some sales cycles have come down because you don't need to see somebody face-to-face and all that. I mean so I think we're obviously seeing a lot of efficiencies on marketing and travel and all of that. And we're also just rethinking how we're selling and there’s some things we're doing with video like all the reps are using video and there's a lot of stuff that we're rethinking because we've got to continue having a certain level of engagement with prospects and customers but obviously we -- that the old model is one of the big conferences and direct sales folks flying on planes and obviously I think this year it's going to be like that and it just maybe the way it is for the future. And obviously we're doing more on our platform to make it self-serviceable that our customers can use the platform that they don't need people to go in and solve them or implement them -- we can do everything remote as we've shown and scale the business quite nicely. So right now we're in a good place with -- and we're going to stay like this where we're not going to go back to offices and we've given up our offices we’re in the middle of it so we're building a new way to work but it's definitely not back in offices.

Okay. Great. Thank you.

Our next question will come from Sterling Audy with JPMorgan. Please go ahead.

Hey, guys. This is through on [indiscernible] for Sterling. I was wondering if you could clarify the commentary around the $5 billion of annual transactional value is that the GMV equivalent of moving across the platform or what is that exactly?

Yeah that’s correct GMV yeah.

Yeah so that’s the GMV.

Got it. Thank you.

Our next question will come from Ryan MacDonald with Needham & Company. Please go ahead.

Hey. Good evening gentlemen. Thanks for taking my questions and congrats on an excellent quarter. Rob are you curious you know you mentioned how sales cycles have continued to come down. I'd love to know do you think that's driven more by sort of increased demand in the end market or an improved sales productivity I guess as you're looking between the mix? And I noticed the success that you're seeing -- seeming to have more outside of the core customer service use case do you feel like we're hitting an inflection point in terms of the sort of knowledge and understanding in the end market of different applications for Conversational AI? Thank you.

Yeah so on the cell cycle one -- yeah we had some very short sales cycles it's just -- there's -- it's really the companies that want to do very scaled automations and I mentioned a couple of them but that's where they just they come in and they're like I got to go and obviously there was some COVID stuff but we're kind of past that and now it's just that they've got -- they to go back to the this cryptocurrency exchange it's one of the biggest ones and that they're scaling massively right now and they're suffering. And so they just got to go they got to get automation quickly. So the messaging -- the messaging parts are very important as a delivery mechanism and there's definitely a maturity in thinking I can say that. Remember we launched four years ago and like T-Mobile is the only customer in the world. When we launched that actually did business messaging. And now that's radically changed. So it's definitely in people's minds that this should be the way that a brand can communicate with their consumers. So that kind of checks that box. The next level is how are you going to do that at scale and what tools are you going to use in automation. And we've gotten much better at this set of tools we have are really rich around how we can even bring. We just announced we can -- this whole agent annotator that if you have agents instead of them taking messages they annotate data. So they like data annotators and they can make that data and prepare it to be in a place to be automated. So I think is our toolset has gotten richer and it's easier and you can do more with it. It's opened up more use cases like the antigen in home test. And we've brought that to market pretty very -- pretty quickly in a matter of weeks because we have these really robust toolsets that we put together and then we can give a solution so that that's really what's happening in the market and I think this year is going to be a lot of other interesting use cases as automation and AI take hold in many different industries.

Excellent. And as a follow-up more general housekeeping I think historically as we've looked out over the past few quarters you've talked about total deal counts and mix between new versus existing. Obviously you saw some very strong metrics and the seven-figure deals. But could you provide the total deal counts in the mix between new and existing?

Yeah, I'll provide maybe some high level color in that regard. So I think one while deal counts overall were down. I think it's important to take a step back and consider our broader results, right. The significant beat that we have in the top line and bottom line is because of the deals that we did close. And while smaller in number those deals were far greater in value. So for example as I think we've mentioned already we closed 10 seven-figure deals in the fourth quarter and four of those were new logos. Overall average new logo contract values doubled on a year-over-year basis. And I think that's exactly the kind of trend we want to see in our new logo business and business in general. And within enterprise however new logo counts also double on a year-over-year basis. So we're seeing a lot of positive indicators of demand from that perspective as well as of course that the top line metrics that we've reported.

Excellent. Clearly some great momentum in the business. Congrats again. Thank you.

Our next question will come from Jeff Van Rhee with Craig-Hallum. Please go ahead.

There we go. Hey guys. So a couple from me and maybe Rob just to start with you. I'm curious that the sort of the higher level competitive landscape issues. You move down market get into smaller enterprises at what point is the messaging capability from somebody like Zendesk enough or you see some of CCaaS guys bring to varying degrees messaging. And I guess the question is, is at what point is the customers just say this is a platform we've got to do super innovative things here. And this is -- there's got to be very robust and we’ve got to go for best in breed versus its good enough if it's part of a suite. So embedded in there obviously is -- are you -- because your deal size is rising do you find yourself just seeing bigger and better win rates at the high end and these very complex deals and the further down market you get win rates go down or customer interest goes down?

No I don't think so. We’ve introduced this marketplace platform that allows us to go after firing up thousands of companies. For instance we have a -- we -- there's a company in the UK that the Yellow Pages of the UK the largest but they have all of these they have a digital property where there's tens of thousands of small businesses on there and because they've transformed the digital over the years. And we built this platform to enable all those businesses to create conversational experiences with automation so this isn't a plumber taking a message. This is I can message into that plumber and it gives me like where are they -- when will they open when -- it gives us like basic information and it's worked quite well then it goes to a live person from there. So I don't see it as any different obviously it's the automation capabilities even in the smaller businesses like they want to automate and that's where these companies kind of fall down but their messaging platforms they're not that good they're not a synchronous they don't scale very well and you know it took a long time even on this rollout it took a long time to build that. So we feel -- we feel like we still have got a world-class messaging platform and then we've got these really powerful tools on top and so we're going after that space and we're going to expand different product features and we went after social some of the social guys are saying no I want to get into messaging so we added the social capabilities and we're going to continue we have a full group on it and there we're taking social platform business away from those guys to get it into a single platform. All I have to do is add voice but by that's the last horizon. And that's it's basically we've got all everything else covered except I need the voice platform. And so we just may head in that direction and create more of an Alexa style voice just to bring that On to our platform and that’s something I wouldn’t be surprised if you saw something like that from us because I’m just kind of well, we like to take that volume and automated. I really want to automate that stuff. So that’s coupled. So, that’s the kind of finished off the care. And then we got all the sales and marketing components and all that stuff. So.

And would that be with respect to that the voice capability something you've -- you're in process on developing. Is that a bill buy I guess is the question?

No, I think we'll talk more about that and then put it in the prepared remarks but we're looking at different alternatives. We already so obviously connect to the voice platforms that are out there. So even as Amazon Connect and all that we have integrations. But I think there's more we want to do that. Obviously our engineering team and Alex our CTO was -- these are the core engineering team from Alexa. So we -- when I brought out some three years ago the concept was one day we're going to power out like these types of things. And I think we're at a place where we want to start looking at it. And as we get more I'll talk more about it in the future.

Sure. If I could just -- I want to speak a couple of other quick in. And the deal counts Rob in that context obviously great quarter great guys. So no shadow over any of that but the deal counts being down, how would you think they behave in 2021? Should we start to see growth in both expansions as well as new logos total deal count starting to pick up? How do you think about that?

Yeah I mean -- we got very focused on the enterprise as you know. And you know I'd expect them deal accounts to go up but we don't really -- we don't really focus on it to say, we focus on our -- our overall revenue and our mix. And if I take the marketplace concept that counted as one customer but actually there's 10,000 businesses that are now powered on our platform but we count that as one. So, we so I don't know where the way we look at the business as we look at it from what's the bookings and the revenue impact of that and then we look at an overall mix obviously where we are still skewed towards high-end midmarket and enterprise, that's our sweet spot. That's because that's where the volume is. But I think these marketplace concepts will really fire up eventually if we return to reporting on the individuals businesses that are part of those marketplaces like [indiscernible] or something else. So we'll see. But I feel good about where we are with the revenue mix.

Okay. And last I guess just can you put a little finer point on the bookings I mean our appeals are somewhat helpful deferred not so much. I mean nothing really tells a holistic you talked about new contract value up to X and deal cuts up, but it's not a holistic bookings number. Can you tell us something more about the total value of bookings in the quarter or that give us a percentage year-over-year or maybe a little more qualitative?

I'll take that Jeff. So one, I would say you're right, right. Deferred is not an optimal proxy here for bookings or demand generally because of variance in contract structures and timing of invoicing and the like we had a lot of with several I should say large deals in the fourth quarter for which we didn't receive cash advance, right. So that means there's a direct impact to deferred or view I think is a better metric and we did increase 21% sequentially from that perspective. But even that, just doesn't include the benefit of gain shifts because of that all sorts of revenue. So, when you think about it from that perspective we have really strong indicators for the demand that we're generating and the momentum we’re trying yield with it.

Our next question will come from Brett Knoblauch with Berenberg Capital Markets. Please go ahead.

Hi, guys. Thanks for taking my questions. Maybe just one for Rob as you look down maybe three four years do you envision I guess LivePerson to be in a Conversational AI as a service provider where you have whole businesses being sell on top of your AI and I think what you're doing in the fintech space is a great example with the Body Bank? But do you think that is going to be a meaningful drive or development over the next four or five years and I guess just how should we think about that?

Yeah I would like to see one day and this is more of five -- five years I -- we plan pretty long-term but I'd like to put something one day in people's homes that are of course AI that people can trust and they can get things processed to intensify their life and obviously talk to it like an Alexa but something that they actually trust and it’s caring and you -- your -- you mentioned like we're powering Bella which is a bank and we built that platform -- we built that off of our platform to show how we can build this sort of a compassionate loving and trustful AI and we manifested it into a bank, which also by the way has payments in it. So if you look at Bella loves [indiscernible] shareholders you can see how we -- we've got this business and it’s doing quite interesting things and we're learning a lot but yeah I see these markets healthcare banking insurance as big market spaces for us to build a business on top of. And then ultimately we have this general purpose AI that you can really get your most important intents fulfilled. I want to buy a car to I need to check my health to I want to get a loan for buy a house. And the interesting thing is because we have this data we have this extraordinary data set which is just hard to quantify the shareholders that is so powerful because we understand how humans, how people ask for questions, how they asked to get a loan and that that's so -- and we get millions of those things so around that one use case. So that's where I want to go with the company. And I think…

I also am excited and maybe just one question for John. when you look at your -- I guess your 2019 Investor Day you guys said 2018 revenue is about 60-some-percent of it was coming from large enterprise. Could you maybe find an update on that and I guess how should you thinking of the mix now given you guys have tended to gravitate towards that the higher end of the spectrum?

Brett we're a little above that figure now but it's not -- it's not -- it's maybe 10 points above that figure, 5 to 10 so we're still predominantly enterprise but it's not overwhelming. We have a large -- a large base and in the small business segment which is still it remains about 15% of revenue and the mid-market which is another 15% or so. So we're approaching about 70% for enterprise.

Perfect. Thanks so much guys.

Our next question will come from Peter Levine with Evercore. Please go ahead. Pardon me Peter your line might be muted.

Hey. Sorry about that. Great. Thanks for taking my question. Maybe just one for me are you guys going after new buyers within an organization meeting guys think about the use cases with messaging across the company you would think you know it opens up your wallets or you guys to go after. So just curious to know how much of your enterprise deals that you won in Q4 and then throughout calendar 2020 was kind of department driven versus I think I mandate from the C-suite and curious to know how that mix shift has trended these past 12 months? Thanks.

Yeah I mean we -- I guess there's been some shifts it was originally care a couple of years ago and we are focused in those areas we definitely seen a shift to IT because we have this AI toolset and they want to use the tools set to look at data to build automations, to deploy the automations. So that's the IT via developers sitting on our platform using that tool set. We're seeing a lot of activity there. And now you know in the CMO areas and the marketing and digital areas, we're seeing more and more opportunity in that area and this year we had a lot on just the digital heads. We're running the websites and running sales. So, it's definitely been a mix, we're definitely putting out a massive focus this year. Our plan is to get very heavy in sales, retail, marketing use cases and so, there's going to be a big push for us on the product side there. But IT is become definitely a major player in our purchases because of the nature of the -- it's a technology platform that they can use to do a lot around AI and automation.

Our next our next question will come from Steve Enders with KeyBanc Capital Markets. Please go ahead.

Hi. Great. Thanks for taking my question. I just wanted to check in I know you give a little preview a few questions ago but you're thinking about the cash that you raised and potentially uses of that going forward?

Well, we the interesting thing is obviously we're inquisitive, we're looking out in the world and especially on the AI science side, is there's some technologies we'd want to buy and get talent? So, that's definitely an area for us to look at. We basically -- the voice stuff is kind of interesting. There's some interesting like I said more of the Alexa style voice. And obviously you can leave that over in the context and the interesting thing about voice is not to get too deep. But we already have an ancient console. It does everything that you would need as an agent. And we can you know put in another channel but then run it with all of our AI capabilities. So that's what makes voice kind of an interesting thing. So there's potentially some opportunities there. And then organically there's just a lot to do. Like we are very innovative company. We have a lot of things we want to build. We keep it within reason obviously. But there's just a lot of organically that we can do. We know there's markets we want to open. There's more technology we want to build. So I think -- I think that's -- that's we haven't quite dialed in 100% on what we'll do with the cash. But it's in those buckets is kind of where we're looking at.

Okay. Great. Thanks very helpful. And then just on the -- you called out social media win in the quarter just kind of wondering what was the differentiator of the LivePerson platform there that that went against an incumbent in social?

That the big thing is that we have a lot more. We would have a lot more volume than the social media player would have in the customer. And with that they want to integrate and they want to move all of that volume into a single consumer agent experience. So they have a set of agents out there that may be on the social platforms and they got a set of agents usually where at least where 10 times the amount of agents on ours. And they're like can you -- can you bring that, can you bring that over and that's what we did. So we got this big airline. There is another a big music company one of the digital music platforms streaming platform. So we're moving pretty hard into that area. And I think there's just a lot of low hanging fruit there because a lot of those guys they got acquired by private equity and there wasn't a lot of innovation and they don't have a lot of volume so we think there's an opportunity. We've put real focus and product on it and we have a team focused on it. So we expect to pick up more and more of that as we go forward.

Hey, great. Thanks for taking my question.

Our next question will come from Ryan Koontz with Rosenblatt Securities. Please go ahead.

Great. Thanks for the question guys. Could you update on your public cloud migration thoughts there with kind of sales surging. Is that a lower priority for you? And how should we think about the impact of that on gross margins kind of over the over the medium term? Thank you.

Hey, Ryan. It is definitely not a lower priority we’re full steam ahead there and in fact some of the investment that we're making early in 2021 is related to that migration on the [indiscernible] said. And in terms of margin we'll have some hit to margin in the early to medium term as a result of managing two stocks. But in I would say once we finish the migration at the end of 2021 going into 2022 we should start to see some expansion in that respect.

Super helpful. Thank you.

Our next question will come from Jonathan Kees with Summit Insights Group. Please go ahead.

Great. Thanks for squeezing me in and taking my questions. So I just have two make some quick. Rob you talked about at the beginning what AI means to a LivePerson and I guess you guys have made couple impressive executive hires in Q4 including one from Amazon. He has operations in AI background. According to news reports he canceled some of the AI projects that you guys were working on for some time. I guess, how does, what you use what you said during your prepared remarks was a tweet from before he came in and also said that stuff that he canceled was a material in terms of the projects, the AI projects? Thanks.

I have no clue what you're talking about.

Okay.

And not to be confrontational like. I know you're talking about Andrew Hamill.

Yeah.

Who came in. Who is running a lot of AI but I have actually. It is so interesting. I mean I don't know that he actually would have increased. He actually came onboard because we're expanding all we're doing. He was Alex's boss over at Amazon. But…

Okay.

…I have no idea what you’re talking about.

Well, I can send you the news articles that I read. I think it's unfortunate. I don't think it's fake news or even -- that's not.

I’m sorry to that I would, I mean obviously we are investing so heavy in all of that. There's nothing. So it's just this is kind of odd. So I just -- you can send it to me. I'll take a look. But there's nothing in the press nor I said or that's just the weirdest thing I've ever heard because of all the investment we're doing. So let’s work that first.

I think one of the things that was mentioned in the article was not so much decrease in investment but just making sure it's following the ethical aspect of AI making sure that relying heavily on the privacy, focusing more on the natural language which you guys talked about during your prepared remarks because there is that bias and there's been companies out there that have said we're not going to do AI in this aspect because of the inherent problems with AI in this aspect because of the inherent proms with AI with like bias or more privacy and that kind of stuff. So…

Yeah we started a patient called Equal AI skipping the real I think we started an organization called Equal AI which is what you're talking about so we funded it I think over two and a half two years ago and Mary and Vogel who worked under Obama in the Justice Department is the head of that and we're really proud of that so yeah that that's something we actually start a whole organization around it and it's a great board of directors now who are part of that but we've always prescribed to that obviously Andrew also prescribes to it but yeah that's pretty much or what maybe that's about it I don't know -- I didn't get the connection between that and discontinuing projects but not sure.

We have reached the end of the call today. I would like to turn the call over to Rob LoCascio for closing remarks.

Yeah. So obviously the rapid changes in everything that's happened globally has really accelerated our work on the Conversational Cloud. And obviously we have an amazing 2020 and I want to thank everyone in the company who just really delivered against a tough year in the middle of COVID rapid changes the amount of volume that hit our platform and keeping our platform scaling and delivering all the results and all of the implementations it just was awesome. So I'm really proud of what everyone's done. 2021 I think is going to be a really great year for us just not only the continued momentum but the vision we had four years ago it was actually seven years ago when we delivered the platform four years ago we were kind of waiting for what is this thing going to really really take off and we can see it going to 2021 the demand will continue but the connection to our vision and how we see AI in the world and how that can drive a real change in businesses is happening. So I'm looking forward to this year and everything we're doing and I will catch you on the next call. Thank you. End of Q&A:

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