- A strong increase in messaging volume will translate to higher revenue, given the company's mix of usage-based and license-based pricing.
- The disciplined approach in expense management will also drive EBITDA margin expansion by ~100-200 bps.
- The overall long-term outlook remains mixed, considering the challenging landscape and the limitation of its AI-based offering.
The near-term outlook for LivePerson (LPSN), the conversational commerce AI company, looks a lot better than we expected despite the COVID-19 situation. The company beat the Q1 revenue guidance while top-line growth accelerated to 18%, ~100-200 bps higher than the TTM growth at the end of last year. The company's commitment to achieving more cost-saving by leveraging automation, coupled with the increase in demand for a messaging-based solution, further suggests that there may be a near-term upside opportunity. On the other hand, we still have a mixed long-term view. The business model scalability and the competition are still long-term risk factors that concern us. Since our first coverage on the stock last November in which we discussed some of these concerns, the stock has been down ~4.5%. We will maintain a neutral stance on the stock for now.
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