Why LivePerson Shares Got Crushed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of customer service provider LivePerson (NASDAQ: LPSN  ) plummeted 34% today after its quarterly results and outlook disappointed Wall Street.

So what: LivePerson's first-quarter revenue rose a solid 16%, but a bottom-line miss -- adjusted EPS of $0.06 versus the consensus of $0.07 -- coupled with the loss of a major client is forcing analysts to seriously lower their valuation estimates. While the client's exit represents a lost revenue stream of just $5 million, it could be a more serious sign of waning demand for real-time assistance.

Now what: Management now sees full-year adjusted EPS of $0.18-$0.21 on revenue of $174 million-$179 million, well below the consensus of $0.32 and $183.8 million. "We're adjusting full year guidance based on the full year impact of Q1 attrition and the softening European market and increased investment necessary for the additional resources behind sales marketing and R&D to support the rollout of the LiveEngage platform," said CFO Daniel Murphy on a conference call. Of course, when you couple today's massive plunge with LivePerson's still-solid financial position -- $95 million in cash and no debt -- the downside might be limited enough to take a closer look.  

Interested in more info on LivePerson? Add it to your watchlist.

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