Shares of LivePerson (LPSN 2.85%) tumbled 7% on Thursday after posting uninspiring financial results. The proactive chat support specialist is growing at a healthy clip, but problematic guidance tripped it up.
Revenue climbed 15% over the past year -- or 22% if we adjust for currency fluctuations -- to hit $60.8 million in the third quarter. That may seem like a respectable growth rate, but LivePerson's forecast back in August was calling for $60.5 million-$61.5 million on the top line. It landed on the low end of that range, and that's a concern since it has historically provided conservative outlooks.
LivePerson came through with an adjusted profit of $0.04 a share for the quarter, smack dab in the middle of its earlier guidance.
Source: LivePerson.
Mr. Market could've written this off as a reasonable quarter -- and with the stock trading much closer to its 52-week low than its 52-week high it's not a stretch to suggest that investor expectations were low enough that Thursday's wave of selling could have been prevented -- if the story ended there. It didn't. LivePerson's lowering its outlook for the entire year, and that includes guidance for the current quarter clocking in at $59 million-$60 million in revenue. That's less than the $60.8 million it just recorded in the third quarter, and that makes this a good time as any to discuss LivePerson's once enviable streak.
LivePerson had rattled off 51 quarters in a row of sequential revenue growth until that impressive run ended during the second quarter of this year. That's a streak that stretched all the way back to shortly after its IPO during the sudsy dot-com bubble era. Revenue went from $1.9 million to $1.7 million between the second and third quarters of 2001, according to S&P Capital IQ data.
The silver lining in August's gloomy streak ender was that its guidance at the time suggested that the streak would get back on track during the third and fourth quarters of 2015. The third quarter lived up to its end of the bargain, but LivePerson's going to have to land well ahead of its outlook for the fourth quarter to stretch that consecutive run to two periods.
LivePerson continues to sign up companies interested in its "intelligent engagement" offering that incorporates chat, voice, and content delivery support. It inked 126 deals during the quarter, and that includes 27 new accounts. It continues to make headway in getting existing customers to migrate to its updated LiveEngage platform. However, the sequential dip that it experienced during the second quarter and guidance suggesting that it will happen again in the current quarter is giving the market a good reason to be careful. This isn't a business with notable seasonality. How else do you think a company could've scored 51 straight quarters of sequential top-line growth? It will need to get back on track, and whether that means signing new accounts or getting existing ones to stick around and pay more the market has its doubts.
