What happened

Shares of LivePerson (LPSN 2.10%) were taking a dive today after the conversational artificial-intelligence company missed the mark in its second-quarter earnings report and lowered its guidance for the year.

As of 11:17 a.m. ET on Tuesday, the stock was down 21.9%.

So what

LivePerson, a software-as-a-service company that powers chatbots and other messaging tools for businesses, said that revenue in the quarter increased 11% to $132.6 million, which was below estimates at $135.6 million.

Revenue growth was sluggish in part because of the company's efforts to eliminate "low-quality sources of revenue" in order to focus on larger deals with high-value customers to expand its margins.

The company signed five seven-figure deals in the quarter and 104 deals total, 45 of which were for new customers, showing that it continues to expand its customer base. Average revenue per enterprise (large customers) and mid-market customers increased 23% to $660,000, which might be a better reflection of underlying revenue growth. 

Higher spending on marketing, salaries, and other corporate overhead led LivePerson to post an adjusted EBITDA loss of $5.5 million in the quarter, which was at the high end of its previous guidance, but worse than its year-ago result of a profit of $13.4 million. 

Its adjusted operating loss was $12.6 million, or $0.16 a share, which compared to estimates of a loss of $0.17 per share. On the basis of generally accepted accounting principles (GAAP), LivePerson lost $0.95 per share.

CEO Robert LoCascio said: "We continue to make substantial changes to our [profit and loss] -- focusing on the most differentiated, high value components of our business -- intended to drive high gross margins, strong operating margins, and high quality revenue growth. We believe we are putting the right operating framework in place to drive innovation and grow the company in a strong and sustainable way."

Now what

The company slashed guidance as part of its plan to improve its margins. For the full year, it now expects revenue of $507.1 million to $518.3 million, or 8% to 10% growth, down from its previous forecast of $544.8 million to $563.3 million, or 16% to 20% growth. For the third quarter, it sees top-line growth of just 1.8% to 4.5%. As it plans to cut costs, management maintained full-year adjusted EBITDA guidance at $1 million to $10 million.

LivePerson stock has plunged over the last year, and its turnaround strategy has yet to pay off. Given the guidance cut and the wide GAAP loss, it's not surprising to see the stock dive again today.