What happened
LivePerson (LPSN 1.49%) shareholders beat the market Tuesday morning as shares opened 12% higher following the company's first-quarter earnings announcement. Gains moderated slightly after that, but the stock was still up 8% by 11 a.m. ET, compared to a 1% boost in the wider market.
The digital communications specialist, which provides an AI-powered messaging service, saw solid demand for its products through late March.
Image source: Getty Images.
So what
LivePerson grew sales 21% in the period that ended on March 31, the company said in a late-Wednesday press release. That increase translated into $130 million of revenue, which was comfortably above the top end of the guidance range that management issued back in late February. Earnings also came in higher than expected.
The company achieved several financial and strategic wins in Q1, including by closing several large contracts. Existing customers renewed at higher contract levels, too. These successes eased some investors' fears that a demand slowdown was underway in the enterprise software niche. "We continued to see robust platform usage," CEO Robert LoCascio said in a press release.
LivePerson generated another operating loss in the period, though, which helps explain why shares remain lower by about 50% so far in 2022 despite the positive growth trends.
Now what
LivePerson affirmed its wider 2022 outlook rather than raising it, which implies that the outperformance the company saw in Q1 was partly due to the timing of the closing of a few large deals. These customer acquisitions can create volatility in short-term sales trends, so investors shouldn't read too much into quarterly revenue variations.
The bigger picture is brightening around earnings, though, as LivePerson now expects to generate positive earnings on an adjusted basis. The company previously had called for margins to be negative and for a loss as high as 4% on that basis. The adjusted earnings margin range for 2022 now sits at between 0% and 2%.
Management credited "early signs of building leverage in the business," as a key factor pushing it toward profitability. Investors responded to that good news by pushing shares higher on Tuesday and erasing a small portion of the recent losses that shareholders have seen.
