So I think the second SaaS app I ever purchased was LivePerson. The first was Salesforce, to get our CRM going (today, we would likely have gone with HubSpot). And the second was LivePerson, to handle chat and support.
Back in the day, it was a magical app. It tracked tickets, shared personas, and provided analytics. All in the Cloud!
I fell so in love with support automation, when I invested, I did a ton in support, from Talkdesk (first VC), to Front, to Gorgias (#1 e-commerce contact center) to MaestroQA, and more.
But the space is competitive, and LivePerson didn’t keep up, even as the product suite did more and more. While today they are still at a stunning $480m in ARR … they aren’t growing any longer. In fact, they shrunk 1% last quarter, and are losing money.
As a tough result, their market cap is $335m. Less than 1x ARR.
A cautionary tale of being innovative, but over time … not keeping up.
5 Interesting Learnings:
#1. Revenue Down 1%, More and More Reliant on Services as Part of their Enterprise Customer Base. LivePerson is very enterprise-focused today, but as part of that, they have to do significant customization. As a result, Services is growing as a percent of revenue, driving down gross margins.
#2. Customer Count Down, But # of Bigger Enterprise Deals is Up. LivePerson is all-in on bigger deals, and closing more of them, including one seven-figure deals. But overall customer count is down.
#3. Slowly driving up ARPU core metric at scale, but challenging with low NRR. Without any net new customers, LivePerson is focused on driving relatively mediocre NRR up past 105%. LivePerson’s low NRR is unusual for enterprise sales.
#4. “AI” alone isn’t a magic improvement to their product. Their AI messaging volume is flat.
#5. About 30% of their Revenue from Outside U.S. While hardly unusual, it’s just a good reminder to put outside of North America if your product is in the contact center or similar space. Everyone can use it, especially if you localize your product at scale.
The LivePerson of today isn’t the early grab-and-go SaaS app I used back in the day, but I still have some positive emotional attachment to the brand from then.
And look … it had its Covid Moment. For a brief window, at Peak SaaSmania in February 2021, it had a market cap renaissance and was briefly worth almost $6 Billion!
But today … well, today it’s a cautionary tale of what happens when you miss some cycles and no longer grow at scale in SaaS. Even at almost $500m ARR, you can be worth … less than 1x ARR. A lot less.
