LivePerson (LPSN 4.54%) is gaining market share, and all of its engagement metrics are going in the right direction. In this Motley Fool Live segment from "The Virtual Opportunities Show," recorded on May 10, Fool.com contributor Demitri Kalogeropoulos evaluates the potential for this small AI stock.
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Demitri Kalogeropoulos: Really interesting stock there. Ticker symbol is LPSN, and they are in digital communication. Well, they use AI to help companies communicate with their customers. Basically, I could think of like AI chatbots. If you can picture that in your head. Obviously a very valuable service if you can make it work, because the wages you would have to pay for that kind of work can be expensive. Really good. Gross numbers this quarter sales were up 21 percent, beat the high-end of management's forecast back in February. They signed lots of new big contracts, including like big airlines, they've got a very global enterprise there, even though the sales flipper is small there on the small side, just about $1.5 billion company. Usage of their platform was up a lot. Messaging volume was up 34 percent. All good signs there in terms of engagement, like we just said, average contract values are above 105 percent. They didn't give, I guess, an exact number. They tried to keep that range. They say between 105 and 115. They said they are well within that range for the 19th consecutive quarter. That's all good news.
The stock is up today about eight percent on that news, but you can see in this chart it's down 60 over 60 percent so far this year. Some of the worrying signs, I guess you might say, is that they didn't raise their guidance for 2022 even though they outperformed a lot in this quarter, and that suggests that might be slower growth over the next few quarters just because of the timing of a few of these big contracts. The company is still, isn't profitable. It is not even on an adjusted basis, they're losing money although that number is getting really close to zero.
I think it's worth watching because the LivePerson is gaining market share, it's growing. Like we talked about, all those engagement metrics are going in the right direction. They are shifting, they do shifting into more of a focus on those numbers as a lot of companies are right now in this new environment. They have upgraded their earnings outlook and they think they might cross into adjusted profitability this year, which is exciting. If they can continue growing the way they are with a little bit more of a focus on that, I think some of their margins could look really good, like in 2023 and beyond. Worth watching. This is on the smaller side. Like I mentioned, just about a billion dollars. But if they can make these things, put all that stuff together the next year or so, could be really good for the business and the stock.