Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Third Quarter 2025 Earnings Conference Call. My name is Irene, and I'll 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. 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 Mr. Jon Perachio, Vice President, Investor Relations. Thank you, Irene.

Joining me on today's call is John Sabino, CEO, and John Collins, CFO and COO. Please note that during today's call, we will make forward-looking statements, predictions, projections, and other statements about future results. These statements are based on our current expectations and assumptions as of today, November 10, 2025, and are subject to risks and uncertainties. Actual results may differ materially due to various factors, including those described in today's earnings press release, and the comments made during this conference call, as well as in 10-Ks, 10-Qs, and other reports we file with the SEC. We assume no obligation to update any forward-looking statements. Also during this call, we'll discuss certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release. Both the press release and the supplemental slides, which include highlights for the quarter, are available on the Investor Relations section of LivePerson's website, ir.liveperson.com. With that, I'll turn the call over to LivePerson's CEO, John Sabino. Thank you so much, Jon. And thank you all for joining us today.

I will begin by briefly reiterating the decisive actions we took to the company this quarter. Then I will cover our results and key business updates. First, the debt refinancing agreement we discussed on our last call is now closed. This is a pivotal achievement and most importantly, resolves a concern we heard from our customers and partners. Second, we executed a cost restructuring to reduce our cash burn. This ensures we can operate efficiently and allows LivePerson to retain cash on the balance sheet. Together, these actions address a primary headwind of renewal hesitation and slower bookings and indeed, the tone of our customer conversations has started to change. They recognize that our cost and capital structures have been stabilized and are looking to us for continued strategic partnership. Now turning to our operational performance for the third quarter. We delivered results that were above the high end of our guidance ranges for both revenue and adjusted EBITDA. Revenue came in at $60.2 million, exceeding the high end of our $60 million guidance. Adjusted EBITDA was $4.8 million. This significantly exceeded our high end of our guidance range, demonstrating our continued financial discipline with the cost reductions made during the quarter. Turning to our product. We're seeing strong momentum and validation from both our customers and the market. Our customers' adoption of our Generve AI suite continues to grow, with nearly 20% of all conversations on our platform now using generative AI. At the same time, Gartner recently recognized LivePerson as a niche player in their 2025 Gartner Magic Quadrant for conversational AI platforms. One of only 13 vendors. We were also recognized in the 2025 Gartner report for digital customer service. Building on our previously announced partnership with Google, we were honored to join them on stage at…

Thanks, John. In the third quarter, we continued to deliver on the plan we committed to at the start of the year. We closed the previously announced debt refinancing agreement and significantly reduced our cost structure. Together, these milestones give LivePerson the financial foundation needed to succeed in the market. In addition, we began migrating customers to our public cloud infrastructure and we launched a new product innovation, as John discussed, Conversation Simulator, for which we already have paying customers and a growing pipeline of opportunities. While it's early, we are seeing indications of meaningful demand. In terms of deals and significant wins, in the quarter, we signed a total of 28 deals including two new logos and 26 expansions and renewals, translating to a sequential increase in total deal value of 14%. Key themes for the quarter included continued traction in regulated industries, mainly banking, healthcare, and telecommunications, where there is demand for compliant, centralized, and AI-agnostic orchestration to securely deploy and manage a variety of AI agents. Significant renewals and expansions included a 7-figure deal with a leading US health plan provider, a leading amusement park and entertainment company, and Sanlam, a leading South African financial services group. We also added a global industrial company as a new logo. In addition, with the debt transaction behind us, we began proactively educating customers on our improved financial foundation, which has already resulted in the renewal status of certain customers changing from cancellation or short-term extension to full renewal. As for our third-quarter financial results, total revenue was $60.2 million, above the high end of our guidance range. Note that the upside relative to guidance, which resulted in a slight sequential increase in revenue, was driven by variable overage revenue and the timing of revenue recognition for certain deals. Adjusted…

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, one moment please while we poll for questions. The first question we have is from Geoff Henry of Craig Hallum Capital Group. Please go ahead.

Hey. Good evening. This is Daniel Hipschman on for Jeff Van Rhee. Maybe just Hi, could open with giving a little bit of color on the upside to the core and what drove that. I mean, sounds like a few factors perhaps, you know, customers getting some additional confidence in the finances. And a few other factors to test out. But maybe if 80/20, you could point us to what drove the upside this quarter. John, do you wanna talk about revenue? And I'll talk to bookings afterwards. Thank you. Yeah.

No problem. Good to hear from you, Daniel. In terms of the upside, we characterize it as timing, which means there's some deals that were to otherwise taken place in the fourth quarter than that are now in the third. And there's variable revenue that we recognized in the third. That drove the balance of the upside in the quarter. The timing is the larger factor there. For your 80/20.

Okay. And then on bookings is Daniel, as you can imagine, the conversations around financial stability and other things not only impeded renewals, but it also had to do with our ability to expand in some of those accounts. And we're starting to see those conversations have some forward progress. Positive progress. Okay. And then on the competitive landscape for conversational simulator, maybe just walk us through. You know, I'm not familiar with the landscape there. What are some of the key peer products that are out there for this already?

You know, what's the differentiation that LivePerson is looking to bring to the market? What's the right to win? Just anything about the tiers there.

Yeah. There's a few things with that. There are quite a few folks that are in the space, but no one that really addresses both sides of the equation, which is both human and bot. We're one of the few that we can find that do that in the market. Additionally, our experience around the verticals and the businesses we plan give us the dataset and the unique knowledge in which to train certain scenarios, personas, for our customers that separates us quite a bit from some of our competition. But the interesting thing around this is that the approach that we're taking, the ability to actually inject a training scenario or evaluation of a human agent's performance right into their daily work stream or messaging queue, is something that's pretty unique to us. So we're not you know, you're not training in an out environment. You're there doing your job, and the ROI is still there in place. And when it comes to bots, we're able to do this in a way that really does allow you to simulate at scale how that full orchestration is going to perform. And so because we have both sides of the equation, our product is pretty unique in that regard. Additionally, it's an open product, meaning that we can test any LLM that's out there, any CCaaS platform in addition to activity on our own. So what I think really does separate LivePerson here is that we're not looking at one side of this in isolation. We're looking at it from a complete CX perspective, and we can do a continuous improvement in training loop compliance and governance, in a way that is pretty unique in the market. So those are the things that we think differentiate it. And we haven't really seen someone else doing exactly the same thing as us. Or being in a position to because we are both human and AI in how we, how we address an agent and a CX experience for a brand.

Okay. Thanks, John. That's helpful. Then just one last one for me on the modeling. Just, I think, John, you mentioned a little bit on restructuring and some additional costs coming out. Just anything is that something that happened here in Q3? Is that in reference to something that's layering more so in Q4? And then just anything on the scale of that, I see the EBITDA here guide is a Should we take, you know, something in that scale is what A few million ahead of the street for Q4. You know, the few million, maybe sequential change in OpEx is what driving that beat in Q4? Just any thoughts on that.

And to answer your earlier question, Yeah. That's correct, Daniel. That's what's driving the beat in Q4. The timing was Q3, so we shouldn't begin to experience the full effects of the cost restructuring during Q4 and for full year '26.

Okay. Great. Thanks, guys.

Thanks, Daniel. Good to hear from you.

At this time, there are no further questions. And with that, this concludes today's teleconference. Thank you for joining us. You may now disconnect your lines.

Thank you.