Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Second Quarter 2024 Earnings Conference Call. My name is Irene 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 team from LivePerson will conduct a question-and-answer session and conference participants will be given instructions at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference call over to Mr. Jon Perachio, Senior Director of Investor Relations. Please go ahead.

Thank you, Irene. Joining me in 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, July 31, 2024, 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 four looking statements. Also during this call, we'll discuss certain non-GAAP financial measures. The 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 at ir.liveperson.com. With that, I'll turn the call over to LivePerson's CEO, John Sabino.

Thank you so much, Jon. Thank you all for joining us today. Before providing a detailed update on our business and strategy, let me briefly touch on where we are today and what we have delivered since our last earnings call in May. On our last call, we reiterated that addressing our 2026 convertible notes remained a key priority. We have since announced our deal with Lynrock Lake, which closed in early June. This transaction has significantly improved our capital structure and has given our customers and partners confidence that LivePerson will be a long-term strategic partner. Moving on to conversations with customers, I have now met with over 200, doubling from the time of our last call. And I continue to hear that they value our product and want to partner with us in their digital transformation. I've also heard from select groups that we have an opportunity to serve them better, validating our focus on customer success, which has contributed to improve with added rigor and process installed over the past two quarters. Customers have also expressed their excitement about our strategic partnership with Avaya, which I am pleased to report is on track with addressable opportunities building in the pipeline. More importantly, customers are excited about our pivot to embrace voice in omni-channel, which aligns with our strategy to improve our go-to-market motion with strategic voice partners and other strategic partnerships. Supporting our activity with customers and partnerships, we've also been able to roll out new pricing and packaging as GA well ahead of schedule, which I will discuss in greater detail later on the call. Finally, I want to acknowledge Sandy Hogan joining LivePerson as our new Chief Revenue Officer, who started in early June. With decades of go-to-market experience and a proven track record of…

Thanks, John. I'll begin with a brief operational update followed by a discussion of our financial performance and guidance. As previously announced, following the May earnings call, we closed the transaction with our largest node holder, Lynrock Lake. That significantly improved our capital structure by enabling us to capture some of the discounted current market price of our 2026 convertible nodes, extend debt maturity schedules, and raise new capital to facilitate further deleveraging. With a stronger balance sheet, we are better positioned to meet the needs of our customers and partners for the long run and to accelerate value creation for shareholders. To this end, as John alluded to, the transaction with Lynrock Lake reinforced customer confidence to renew and expand business with us in the second quarter. I would also like to provide a brief update on Wild Health. In the second quarter, we divested Wild Health, consistent with the expectations we set previously. Because the business was operating at a significant loss, the timing of this divestiture was accretive to earnings, saving an estimated $3 to $5 million in full-year expenses, which we previously accounted for in guidance. Note that LivePerson did not retain any interest in or obligations to Wild Health, which materially limits the potential for liabilities tied to future patient claims. In terms of deals and significant customer wins in the second quarter, we continued to build momentum. We signed over 37 deals, including 9 new logos and 28 expansions and renewals. While the number of deals was down 8% from the first quarter, the value of these deals was up 58% sequentially. Expansions and renewals included a seven-figure upsell with a global financial services company and an upsell with a global audio streaming company. New logo wins included a large New Zealand-based telecommunications company…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question we have is Jeff Van Rhee of Craig Hallam. Please go ahead.

Hi, guys. A couple for me. So just maybe if you start and either of the Johns, I guess, take your pick, but on the net new ARR, just expand a bit more on bookings and churn relative to expectations in the quarter. I heard them mentioned in passing, but I'm trying to deconstruct there. Did churn meet expectations? Was churn a bit higher than expectations? I think I heard you say the bookings were ahead, but just retouch on that for a second, if you would.

Yeah, Jeff, I'll start here. Broadly speaking, we were a little better on churn than we previously expected. And on the new deals, while we were up 58% sequentially, that was a little lower than what we had previously expected. All in all, though, new ARR improving considerably from the first quarter to the second.

And on the new deal front, obviously there's some changes going on. New CRO, you're obviously pushing harder into partners, but with respect to the direct sales motion and win rates you're seeing, just talk a bit about the observation over the last six months and how that's trending.

I'll start, John, and if you want to add more detail, please feel free. So when it comes to new business, part of the reason we brought in Sandy Hogan is really to improve that partner motion and to rebuild our ability to acquire new logos. And it's also a structural improvement with pricing and packaging so that we can be more competitive. So the win rate has actually improved quarter-over-quarter. We still have some ways to go, and it's going to take a few quarters for Sandy to fully ramp it up. But the initial indications is that quicker rollout of pricing and packaging, engaging with our customers with a stronger CF motion, and some of the new capabilities that we're releasing on the A-front are attractive to new logos, and we're looking to see further improvement there. And the win rate has been improving quarter-over-quarter.

That's helpful. And on the churn, you said it was a bit better than expected. I know you're rolling out new pricing and packaging, but it seems I think that just hit. So just curious what you would attribute the improved churn to.

The improvement. John, I'll jump on that one too. Again, feel free to add some extra commentary here. So this goes back to the initial conversation that we had with Jeff with having to improve on exactly how we engage with customers, getting additional value out of the platform. We spoke about being able to use more of what a LivePerson offers versus just isolated use cases or messaging in and unto itself. So all of these motions now have had a few months to move forward with our CS organization. We spoke about the frameworks and conversational value paths that we use with customers to do that. So the improvements that we're seeing in retention really is being driven by some of the additional value that we're seeing being driven by our AI capabilities, opening up more of our portfolio to customers and the activities that Kevin Meeks [ph] is driving with our CS organization. And of course, the transaction with Lynrock Lake is also playing into this as well. I think it removed some of the concern customers may have had in strategically partnering with us longer term.

Thank you. With that, we have reached the end of the call today. And thank you for joining us.