LivePerson, Inc.: Under-the-Radar Tech Stock Up 80%, Shrugs Off Brutal Sell-Off

LivePerson, Inc. Raises 2019 Guidance After Record Q2 Growth

LivePerson, Inc. (NASDAQ:LPSN) is one of those great tech stocks that seems to go unnoticed by retail investors.

Wall Street, however, likes LivePerson. Blackrock, Inc. and The Vanguard Group, Inc., the two largest institutional investors, collectively own 22.8% of all outstanding LivePerson shares. (Source: “LivePerson, Inc. (LPSN): Major Holders,” Yahoo! Finance, last accessed August 7, 2019.)

That love has paid off in 2019. Even after the stock market suffered its worst week in 2019, LPSN stock is still up approximately 90% year-to-date.

In fact, thanks to the company’s record second-quarter financial results, strong earnings growth, and raised guidance, the recent epic broad-based sell-off was just a blip for this stock.

August has been the worst month for stocks in the last 30 years, but that hasn’t been the case for LivePerson stock. LPSN continues to be bullish, with potential 30%+ growth in the last two quarters of the year.

LivePerson, Inc. Overview

LivePerson, Inc. provides high-tech, conversational, customer support solutions to more than 18,000 businesses around the world. The company’s real-time messaging platforms (live, artificial-intelligence (AI)-powered bots, and call-to-message) for web sites and social media networks make it easier for companies to sell their products and answer questions. (Source: “About us,” LivePerson, Inc., last accessed August 6, 2019.)

Some of the company’s customers are Adobe Inc (NASDAQ:ADBE), HSBC Holdings plc (NYSE:HSBC), IBM (NYSE:IBM), and Home Depot Inc (NYSE:HD).

(Source: “LivePerson, Inc. (LPSN): Statistics,” Yahoo! Finance, last accessed August 6, 2019.)

As of this writing, LivePerson’s share price is up 82% year-to-date, fueled in large part by strong financial results. In the second quarter, the company raised its 2019 revenue guidance, which helped propel its stock price to a 52-week high of $35.09 on August 1.

That momentum was interrupted by the August 5 market swoon, which saw stocks suffer their worst one-day loss in 2019, the biggest losers being tech stocks. The selling of LivePerson stock was short-lived, and it rebounded the following day.

Chart courtesy of StockCharts.com

President Donald Trump’s ongoing trade war with China will have a huge negative impact on a large number of tech stocks, but LivePerson shouldn’t be one of them. Look for the momentum that LPSN stock enjoyed in the first seven months of the year to continue over the next few quarters.

LivePerson Reports Record Q2 Revenue and Raises 2019 Guidance

On July 31, LivePerson announced that its revenue for the second quarter ended June 30 increased 15% year-over-year to a record $71.0 million. The company ended the quarter with a cash balance of $224.7 million, compared to $66.4 million at the end of 2018. (Source: “LivePerson Announces Second Quarter 2019 Financial Results,” LivePerson, Inc., July 31, 2019.)

LivePerson reported a second-quarter net loss of $24.0 million, or $0.38 per share, versus a loss of $8.3 million, or $0.14 per share in the same period last year.

During the quarter, the company signed 142 deals. This included a record nine seven-figure deals, which matched the number of such deals signed during all of 2018.

“The second quarter marked an inflection point for LivePerson, as our momentum accelerated across industries and geographies, with both new and existing customers,” said CEO and founder, Rob LoCascio.

Thanks to strong financial results in the first half of 2019, a robust sales pipeline, and an expanded sales team, LivePerson raised its 2019 revenue guidance to a range of $288.5 to $292.0 million, up from the previous guidance range of $284.5 to $291.5 million.

This translates into full-year revenue growth of 15% to 17%. In the third quarter, revenue is also projected to grow between 15% and 17%. In the fourth quarter, revenue is projected to grow by between 17% and 21%.

“75% growth in contract values signed for the first half of 2019 versus first half of 2018, and nearly 75% growth in pipeline value since the start of 2019, are just two indications of the demand inflection we are seeing,” said CFO Chris Greiner.”

To meet the increased demand, LivePerson revised its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) for 2019 from the range of $10.0 to $15.0 million to the range of zero to $5.0 million.

Analyst Take

LivePerson, Inc. continues to be an excellent tech stock rewarding buy-and-hold investors. The company reported record financial results in 2018, record first-quarter revenue, and record second-quarter revenue.

The company expects that upward trend to continue, which is why it raised its guidance for 2019. That should help fuel LivePerson stock over the coming quarters. And if there’s a sell-off, LPSN stock should rebound quicker than most.