Let’s start up with the current stock price of Avaya Holdings Corp. (AVYA), which is $0.96 to be very precise. The Stock rose vividly during the last session to $0.9705 after opening rate of $0.821 while the lowest price it went was recorded $0.8208 before closing at $0.85.Recently in News on July 28, 2022, Avaya Appoints Alan Masarek as President and CEO. Industry Veteran Brings Over 30 Years of Software and Cloud-Based Business Experience to Lead Avaya’s Business Model Transformation. You can read further details here
Avaya Holdings Corp. had a pretty Dodgy run when it comes to the market performance. The 1-year high price for the company’s stock is recorded $21.6500 on 01/04/22, with the lowest value was $0.7900 for the same time period, recorded on 08/01/22.
While finding safe stocks with the potential for monster gains isn't always easy, we've found a few that could pay out well. In fact, within our report, "Top 5 Cheap Stock to Own Right Now", we have identified five stocks we believe could appreciate the most even if you just have $1,000 to invest.
Price records that include history of low and high prices in the period of 52 weeks can tell a lot about the stock’s existing status and the future performance. Presently, Avaya Holdings Corp. shares are logging -96.02% during the 52-week period from high price, and 20.94% higher than the lowest price point for the same timeframe. The stock’s price range for the 52-week period managed to maintain the performance between $0.79 and $23.98.
The company’s shares, operating in the sector of Technology managed to top a trading volume set approximately around 18955028 for the day, which was evidently higher, when compared to the average daily volumes of the shares.
When it comes to the year-to-date metrics, the Avaya Holdings Corp. (AVYA) recorded performance in the market was -95.17%, having the revenues showcasing -89.92% on a quarterly basis in comparison with the same period year before. At the time of this writing, the total market value of the company is set at 72.73M, as it employees total of 8063 workers.
During the last month, 0 analysts gave the Avaya Holdings Corp. a BUY rating, 0 of the polled analysts branded the stock as an OVERWEIGHT, 0 analysts were recommending to HOLD this stock, 0 of them gave the stock UNDERWEIGHT rating, and 0 of the polled analysts provided SELL rating.
According to the data provided on Barchart.com, the moving average of the company in the 100-day period was set at 6.6043, with a change in the price was noted -10.52. In a similar fashion, Avaya Holdings Corp. posted a movement of -91.68% for the period of last 100 days, recording 5,091,775 in trading volumes.
Total Debt to Equity Ratio (D/E) can also provide valuable insight into the company’s financial health and market status. The debt to equity ratio can be calculated by dividing the present total liabilities of a company by shareholders’ equity. Debt to Equity thus makes a valuable metrics that describes the debt, company is using in order to support assets, correlating with the value of shareholders’ equity The total Debt to Equity ratio for AVYA is recording 0.00 at the time of this writing. In addition, long term Debt to Equity ratio is set at 6.54.
Raw Stochastic average of Avaya Holdings Corp. in the period of last 50 days is set at 3.33%. The result represents downgrade in oppose to Raw Stochastic average for the period of the last 20 days, recording 8.75%. In the last 20 days, the company’s Stochastic %K was 4.64% and its Stochastic %D was recorded 2.91%.
Now, considering the stocks previous presentation, multiple moving trends are noted. Year-to-date Price performance of the company’s stock appears to be encouraging, given the fact the metric is recording -95.17%. Additionally, trading for the stock in the period of the last six months notably deteriorated by -94.33%, alongside a downfall of -95.91% for the period of the last 12 months. The shares increased approximately by 6.32% in the 7-day charts and went up by -62.53% in the period of the last 30 days. Common stock shares were lifted by -89.92% during last recorded quarter.
DURHAM – Jim Chirico, longtime CEO of cloud technology firm Avaya, is to be “removed” from his position as of Aug. 1 and also will resign his board seat, the company says.
Chirico is out as CEO of Aug. 1 and will be replaced by communications technology veteran Alan Masarek.
The company’s stock (NYSE: AVYA) plunged more than 53% today to less than a dollar a share. The management change was disclosed Thursday after the markets closed. Its stock has fallen steadily over the past year from nearly $24.
Avaya has more than 8,000 employees. Its corporate headquarters were moved to Durham from California in October 2020.
“We are thrilled to welcome Alan as President and CEO. Alan is a proven transformational leader, and after a rigorous search process, the Board is confident that Alan is the ideal choice to lead the company into the future. We look forward to benefiting from his decades of industry expertise as we take the next steps to position the company for long-term success,” said Avaya board chair Bill Watkins in the announcement.
Watkins said the board “and I thank Jim for his nearly 15 years of service to Avaya and wish him all the best in his future endeavors.”
Chirico will remain employed with Avaya through Aug. 16 and “will work with Mr. Masarek to ensure a smooth transition for all stakeholders,” the company said.
Masarek is a former executive with Vonage, where he was CEO. He also worked at Google after Google acquired Quickoffice, where he was co-founder and CEO.
In the announcement, masarek noted: “Avaya benefits from an industry-leading brand, world-class customer base and global reach, a rich history of innovation and strong partner ecosystem. I look forward to leveraging my background and years of cloud communications experience to propel Avaya to renewed growth and profitability as we build on the company’s strong fundamentals. At the same time, I intend to undertake a comprehensive strategic and operating review of all facets of the business with the goal of delivering industry-leading solutions to our global customers and enhancing value for all stakeholders.”
Avaya was forced into raising $600 million through funding and saw its share price dip by more than 90% since the beginning of 2021. For the third quarter, which ended June 30, revenue will likely hit between $575 million and $580 million. This is lower than the company’s original guidance of $685 million to $700 million.
The latest revenue uncertainty was the likely driving force behind the company removing Jim Chirico from his roles as president and CEO. Chirico also resigned as a member of Avaya’s (News - Alert) board.
Looking to turn things around for the oft-troubled organization, Avaya named industry veteran Alan Masarek as its president and CEO and as a member of Avaya’s board of directors, effective August 1. Chirico will remain employed with Avaya through August 16 and will work with Masarek to ensure a smooth transition for all stakeholders.
“We are thrilled to welcome Alan as president and CEO. Alan is a proven transformational leader, and after a rigorous search process, the board is confident that Alan is the ideal choice to lead the company into the future,” said Bill Watkins, chairman of Avaya’s Board. “We look forward to benefiting from his decades of industry expertise as we take the next steps to position the company for long-term success.”
Masarek is an industry innovator with a solid track record and expertise in enterprise communications and transformational operational experience bringing together UCaaS, CCaaS and CPaaS capabilities, which are key elements of the Avaya OneCloud Experience platform.
He served as CEO of Vonage (News - Alert) and a member of its board from 2014 to 2019. When Masarek joined Vonage, the company was not going anywhere. It had a stock price that was about $3.50 a share, and the company had revenue of about $850 million. He led Vonage through an era of transformation from a VoIP-based residential phone provider into a global enterprise cloud communications company.
Vonage completed eight acquisitions during his tenure, and market capitalization increased significantly. Masarek led a revitalization of Vonage’s culture, creating a talent-driven organization with a culture of agility, technology innovation and customer centricity.
Avaya hopes he can drive the same leverl of success at his new organization – one that once was among the best-known brands in business communications, but has since failed to capitalize on the cloud movement.
Before his time at Vonage, Masarek was director, Chrome & Apps at Google (News - Alert) Inc., from 2012 to 2014, following Google’s acquisition of his prior company, Quickoffice, where he served as co-founder and CEO. Quickoffice became an established embedded mobile productivity software solution, engaging more than 26 million registered users at the time of Google’s purchase.
“Avaya benefits from an industry-leading brand, world-class customer base and global reach, a rich history of innovation and strong partner ecosystem,” said Masarek. “I look forward to leveraging my background and years of cloud communications experience to propel Avaya to renewed growth and profitability as we build on the company’s strong fundamentals.”
Despite the revenue decline and the switch in CEO, Avaya is continuing to serve more than 100 million unified communications lines worldwide. Masarek, with his experienced background in the industry, is confident Avaya can be fixed and can provide the solutions customers need while improving stakeholder value.
“I intend to undertake a comprehensive strategic and operating review of all facets of the business with the goal of delivering industry-leading solutions to our global customers and enhancing value for all stakeholders,” said Masarek.
Edited by Erik Linask
RALEIGH-DURHAM, N.C.--(BUSINESS WIRE)--Jul 28, 2022--
Avaya Holdings Corp. (NYSE: AVYA) today announced that Alan Masarek has been appointed as its President and CEO and as a member of Avaya’s Board of Directors, effective August 1, 2022. Mr. Masarek will succeed Jim Chirico, who will be removed from his positions as President and CEO of Avaya, effective August 1, 2022, and is resigning as a member of Avaya’s Board. Mr. Chirico will remain employed with Avaya through August 16, 2022 and will work with Mr. Masarek to ensure a smooth transition for all stakeholders.
Mr. Masarek is an industry innovator with deep domain expertise in Enterprise Communications and transformational operational experience bringing together UCaaS, CCaaS and CPaaS capabilities, which are key elements of the Avaya OneCloud™ Experience platform. He most recently served as CEO of Vonage Holdings Corp., where he led the company through an era of transformation from a VoIP-based residential phone provider into a global enterprise cloud communications company. Prior to his time at Vonage, Mr. Masarek was Director, Chrome & Apps at Google, Inc., following Google’s acquisition of his prior company, Quickoffice, Inc., where he served as Co-founder and CEO.
Bill Watkins, Chairman of Avaya’s Board, said, “We are thrilled to welcome Alan as President and CEO. Alan is a proven transformational leader, and after a rigorous search process, the Board is confident that Alan is the ideal choice to lead the company into the future. We look forward to benefiting from his decades of industry expertise as we take the next steps to position the company for long-term success.”
Mr. Masarek commented, “Avaya benefits from an industry-leading brand, world-class customer base and global reach, a rich history of innovation and strong partner ecosystem. I look forward to leveraging my background and years of cloud communications experience to propel Avaya to renewed growth and profitability as we build on the company’s strong fundamentals. At the same time, I intend to undertake a comprehensive strategic and operating review of all facets of the business with the goal of delivering industry-leading solutions to our global customers and enhancing value for all stakeholders.”
Mr. Watkins continued, “The Board and I thank Jim for his nearly 15 years of service to Avaya and wish him all the best in his future endeavors.”
About Alan Masarek
Alan Masarek has over 30 years of experience leading communications, information technology and business services companies. Most recently, he was CEO of Vonage Holdings Corp. and a member of its Board of Directors from November 2014 to June 2020. As CEO, Mr. Masarek ushered in an era of transformation for Vonage, transforming the company from a VoIP-based residential phone provider into a global enterprise cloud communications company. During his tenure, Vonage completed eight acquisitions, and market capitalization increased severalfold. As importantly, Mr. Masarek led a revitalization of Vonage’s culture, creating a talent-driven organization with a culture of agility, technology innovation and customer centricity.
Prior to Vonage. Mr. Masarek served as Director, Chrome & Apps Google, Inc. from June 2012 until October 2014, following the acquisition of his prior company, Quickoffice, Inc. Mr. Masarek was Co-founder and CEO of Quickoffice, Inc. Under his leadership, Quickoffice became one of the world’s most embedded mobile productivity software solutions, engaging more than 26 million registered users at the time of Google’s purchase.
Mr. Masarek earned his M.B.A., with Distinction, from Harvard Business School and his B.B.A., magna cum laude, from the University of Georgia.
Businesses are built by the experiences they provide, and everyday millions of those experiences are delivered by Avaya Holdings Corp. (NYSE: AVYA). Avaya is shaping what’s next for the future of work, with innovation and partnerships that deliver game-changing business benefits. Our cloud communications solutions and multi-cloud application ecosystem power personalized, intelligent, and effortless customer and employee experiences to help achieve strategic ambitions and desired outcomes. Together, we are committed to help grow your business by delivering Experiences that Matter. Learn more at http://www.avaya.com.
Cautionary Note Regarding Forward-Looking Statements
This document contains certain “forward-looking statements.” All statements other than statements of historical fact are “forward-looking” statements for purposes of the U.S. federal and state securities laws. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “our vision,” “plan,” “potential,” “preliminary,” “predict,” “should,” “will,” or “would” or the negative thereof or other variations thereof or comparable terminology. Avaya has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While Avaya believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. The factors are discussed in Avaya’s Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”) available at www.sec.gov, and may cause Avaya’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Avaya cautions you that the list of important factors included in the company’s SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this press release may not in fact occur. Avaya undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
View source version on businesswire.com:https://www.businesswire.com/news/home/20220728006008/en/
CONTACT: Tyler Chambers
Avaya Investor Relations
Corporate Communications, North America
KEYWORD: UNITED STATES NORTH AMERICA NORTH CAROLINA
INDUSTRY KEYWORD: TECHNOLOGY NETWORKS OTHER TECHNOLOGY VOIP
SOURCE: Avaya Holdings Corp.
Copyright Business Wire 2022.
PUB: 07/28/2022 05:05 PM/DISC: 07/28/2022 05:06 PM
Let’s start up with the current stock price of Avaya Holdings Corp. (AVYA), which is $0.90 to be very precise. The Stock rose vividly during the last session to $1.36 after opening rate of $1.36 while the lowest price it went was recorded $0.79 before closing at $2.09.Recently in News on July 28, 2022, Avaya Appoints Alan Masarek as President and CEO. Industry Veteran Brings Over 30 Years of Software and Cloud-Based Business Experience to Lead Avaya’s Business Model Transformation. You can read further details here
Avaya Holdings Corp. had a pretty Dodgy run when it comes to the market performance. The 1-year high price for the company’s stock is recorded $21.6500 on 01/04/22, with the lowest value was $0.7900 for the same time period, recorded on 07/29/22.
While finding safe stocks with the potential for monster gains isn't always easy, we've found a few that could pay out well. In fact, within our report, "Top 5 Cheap Stock to Own Right Now", we have identified five stocks we believe could appreciate the most even if you just have $1,000 to invest.
Price records that include history of low and high prices in the period of 52 weeks can tell a lot about the stock’s existing status and the future performance. Presently, Avaya Holdings Corp. shares are logging -96.41% during the 52-week period from high price, and -50.63% higher than the lowest price point for the same timeframe. The stock’s price range for the 52-week period managed to maintain the performance between $1.82 and $25.01.
The company’s shares, operating in the sector of Technology managed to top a trading volume set approximately around 64721472 for the day, which was evidently higher, when compared to the average daily volumes of the shares.
When it comes to the year-to-date metrics, the Avaya Holdings Corp. (AVYA) recorded performance in the market was -95.46%, having the revenues showcasing -91.01% on a quarterly basis in comparison with the same period year before. At the time of this writing, the total market value of the company is set at 188.71M, as it employees total of 8063 workers.
According to the data provided on Barchart.com, the moving average of the company in the 100-day period was set at 7.1888, with a change in the price was noted -11.38. In a similar fashion, Avaya Holdings Corp. posted a movement of -92.68% for the period of last 100 days, recording 4,148,875 in trading volumes.
Total Debt to Equity Ratio (D/E) can also provide valuable insight into the company’s financial health and market status. The debt to equity ratio can be calculated by dividing the present total liabilities of a company by shareholders’ equity. Debt to Equity thus makes a valuable metrics that describes the debt, company is using in order to support assets, correlating with the value of shareholders’ equity The total Debt to Equity ratio for AVYA is recording 0.00 at the time of this writing. In addition, long term Debt to Equity ratio is set at 6.54.
Raw Stochastic average of Avaya Holdings Corp. in the period of last 50 days is set at 2.19%. The result represents downgrade in oppose to Raw Stochastic average for the period of the last 20 days, recording 5.69%. In the last 20 days, the company’s Stochastic %K was 26.52% and its Stochastic %D was recorded 29.84%.
Considering, the past performance of Avaya Holdings Corp., multiple moving trends are noted. Year-to-date Price performance of the company’s stock appears to be encouraging, given the fact the metric is recording -95.46%. Additionally, trading for the stock in the period of the last six months notably deteriorated by -94.57%, alongside a downfall of -96.36% for the period of the last 12 months. The shares increased approximately by -59.15% in the 7-day charts and went up by -62.08% in the period of the last 30 days. Common stock shares were lifted by -91.01% during last recorded quarter.
During the past few years, business leaders experienced a crash course of invaluable lessons. While there was plenty to learn throughout the pandemic, perhaps the most important takeaway was the value of being agile and flexible in the face of fast-moving changes. The businesses with the resilience to roll with the punches have fared measurably better than those lacking a fast-acting ability to protect operations, technology, and employees from crisis and chaos. According to McKinsey, the most resilient companies were 11% more profitable in 2020 than in 2019, highlighting the importance of flexibility as a key driver of value-added growth.
As change continues to shape the future of business, flexibility remains essential for long-term success. In its World Business Telephony Forecast, MZA has gone as far as naming flexibility one of its key business communication trends in 2022 — specifically calling out the need for greater flexibility in working environments, technologies, and licensing and payment models.
Table stakes for survival
Why will flexibility remain a vital trait in the post-COVID era? It boils down to higher expectations. Whether a business is facing hardships or striving to increase competitiveness, consumers and employees now have higher expectations than ever before.
Today’s customers know what they want, and they expect that businesses will “get” them and deliver. They’re also increasingly paradoxical, wanting to be connected but left alone, and treated equally but served uniquely. They expect experiences to be fully featured, effortless, and consistent. Yet, they’re still delighted by the unexpected. Gartner has termed this the “Everything Customer” mindset, and it’s propelling us to want the services we use and the experiences we have to “be composed” around us.
This mindset has also spilled over into the workplace. The experiences that we now expect as consumers are driving similar aspirations for the way we work. Employees want to work for employers that maximize their potential to make a difference. This requires journeys to be consistent across personas, modalities, and touchpoints. In other words, business experiences must be effortless, exciting, and rewarding across all personas of both employees and customers.
Delivering the “Total Experience”
Supporting the “Everything Customer” means delivering a personalized user experience and multi-experience digital journey that’s contextual, intelligent, consistent, and connected. This “Total Experience” combines and elevates employee experience, customer experience, multi-experience, and user experience into a single, integrated, workstream collaboration experience. Yet, delivering this heightened level of experience requires the flexibility to serve narrow use cases that simply can’t be created by single, purpose-built applications. A cloud-based, platform approach is fundamental to overcoming silos between roles and personas and achieving the flexibility necessary to deliver a total experience.
Cloud as a toolset, not a destination
The cloud plays an essential role in achieving this heightened level of flexibility, but it requires more than “moving to the cloud.” Greater flexibility means leveraging the cloud as a set of tools to drive greater intimacy with customers and employees. And creating and delivering the Total Experience requires using cloud as a platform to modernize and reimagine business communications.
With a cloud-based experience platform, businesses are empowered with the exact tools they need to orchestrate the Total Experience and accelerate innovation. This is a giant leap forward from the old monolithic approach to business communications. With a single cloud-based architecture, businesses can quickly pivot to meet customer and employee needs and deliver personalized experiences that target very specific, granular use cases.
Faster time to value
A cloud-based platform allows unified communications as a service (UCaaS), contact center as a service (CCaaS), communications platform as a service, and workstream collaboration to act together to accelerate innovation — allowing projects that once took months or years to be completed in weeks or even days. Even AI applications, such as green screening, upscaling, translation, transcription, and noise cancellation, can be quickly added and updated across any endpoint or mode. This heightened level of flexibility and speed to value offers a distinct competitive advantage for businesses as they compete for customer time and attention.
Enhancing virtual learning with an experiential learning platform
Clearly, greater flexibility offers a host of benefits to businesses, but it is also an advantage for other organizations, including educational institutions.
In the case of Clemson University, the pandemic propelled the need for a rapid transition to online courses. For Dr. Alex Feltus, Professor of Genetics & Biochemistry, this meant a rapid conversion of a traditional face-to-face Bioinformatics course with labs into a unified, digital course. Leveraging the Avaya OneCloud™ platform, he soon discovered that his digital program resulted in more engaged students, improved performance, and an all-around better experience than traditional methods.
“I wanted to take my course outside the classroom to have a more experiential component,” says Professor Feltus. “I wanted something where I could do what I was doing in my lab and classroom and really scale up.”
Since Fall 2021, students and faculty have been required to physically return to the classroom. However, Professor Feltus will never go back to full-time face-to-face teaching because of the heightened level of collaboration and communication his class has gained with the OneCloud platform. And thanks to the inbuilt analytics capability, he is even benefitting from actionable insights that he can now access to see who has not been logging on often and may need additional help.
“It’s a much better experience, and I firmly believe it has made me a better teacher 50 times over.”
Businesses that were flexible and agile have survived the pandemic. Those that were not only able to quickly adapt to changes, but also reimagine the experiences with the right toolset, fared even better. Focusing on business resilience and increasing flexibility has and will continue to enable businesses to succeed in an expanding, shifting work environment, as well as to be better positioned for when the next unexpected disruption comes our way.
To learn more about Avaya OneCloud, visit us here.
Avaya Holdings Corp. (AVYA) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended June 2022. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.
The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 9. On the other hand, if they miss, the stock may move lower.
While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.
Zacks Consensus Estimate
This company is expected to post quarterly earnings of $0.50 per share in its upcoming report, which represents a year-over-year change of -33.3%.
Revenues are expected to be $691.78 million, down 5.5% from the year-ago quarter.
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 17.24% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more latest version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.
Thus, a positive or negative Earnings ESP memorizing theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.
A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.
Please note that a negative Earnings ESP memorizing is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).
How Have the Numbers Shaped Up for Avaya Holdings Corp.
For Avaya Holdings Corp.The Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no latest analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%.
On the other hand, the stock currently carries a Zacks Rank of #4.
So, this combination makes it difficult to conclusively predict that Avaya Holdings Corp. Will beat the consensus EPS estimate.
Does Earnings Surprise History Hold Any Clue?
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.
For the last reported quarter, it was expected that Avaya Holdings Corp. Would post earnings of $0.62 per share when it actually produced earnings of $0.53, delivering a surprise of -14.52%.
Over the last four quarters, the company has beaten consensus EPS estimates two times.
An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.
That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
Avaya Holdings Corp. Doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.
Expected Results of an Industry Player
Kaleyra (KLR), another stock in the Zacks Communication - Network Software industry, is expected to report earnings per share of $0.24 for the quarter ended June 2022. This estimate points to a year-over-year change of -2,500%. Revenues for the quarter are expected to be $81.41 million, up 50.8% from the year-ago quarter.
Over the last 30 days, the consensus EPS estimate for Kaleyra has been revised 20% down to the current level. Nevertheless, the company now has an Earnings ESP of 0.00%, reflecting an equal Most Accurate Estimate.
When combined with a Zacks Rank of #3 (Hold), this Earnings ESP makes it difficult to conclusively predict that Kaleyra will beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates two times.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can get 7 Best Stocks for the Next 30 Days. Click to get this free report
Avaya Holdings Corp. (AVYA) : Free Stock Analysis Report
Kaleyra, Inc. (KLR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
RingCentral, Inc. (NYSE:RNG) Q2 2022 Earnings Conference Call August 2, 2022 5:00 PM ET
Will Wong - Vice President of Investor Relations
Vlad Shmunis - Founder, Chairman & Chief Executive Officer
Mo Katibeh - President & Chief Operating Officer
Sonalee Parekh - Chief Financial Officer
Conference Call Participants
Kash Rangan - Goldman Sachs
Terry Tillman - Truist Securities
George Sutton - Craig-Hallum
Meta Marshall - Morgan Stanley
Samad Samana - Jefferies
Peter Levine - Evercore
Ryan McWilliams - Barclays
Will Power - Baird
Matt Niknam - Deutsche Bank
Taylor McGinnis - UBS
Matt VanVliet - BTIG
Michael Funk - Bank of America
Matt Stotler - William Blair
Hello, and welcome to the RingCentral Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please limit yourself to one question. Please note, this event is being recorded.
At this time, I would like to turn the conference over to Will Wong, VP of Investor Relations. Please, go ahead.
Thank you. Good afternoon, and welcome to RingCentral's second quarter 2022 earnings conference call. I'm Will Wong, RingCentral's Vice President of Investor Relations. Joining me today are Vlad Shmunis, Founder, Chairman and CEO: Mo Katibeh, President and Chief Operating Officer; and Sonalee Parekh, Chief Financial Officer.
Our format today will include prepared remarks by Vlad, Mo and Sonalee, followed by Q&A. We also have a slide presentation available on our Investor Relations website that will coincide with today's call, which you can find under the Financial Results section at ir.ringcentral.com.
Some of our discussions and responses to your questions will contain forward-looking statements, including our third quarter and full year 2022 financial outlook and our assumptions underlying that outlook. These statements are subject to risks and uncertainties. actual results may differ materially from our forward-looking statements.
A discussion of the risks and uncertainties related to our business is contained in our filings with the Securities and Exchange Commission and is incorporated by reference into today's discussion. RingCentral assumes no obligation and does not intend to update or comment on forward-looking statements made on this call.
Unless otherwise indicated, all measures that follow are non-GAAP with year-over-year comparisons. A reconciliation of all GAAP to non-GAAP results is provided with our earnings release and in the slide deck. Please visit our Investor Relations website to access our earnings release, slide deck, our GAAP to non-GAAP reconciliations, our periodic SEC reports, a webcast replay of today's call and to learn more about RingCentral.
For certain forward-looking guidance, a reconciliation of the non-GAAP financial guidance to the corresponding GAAP measure is not available as discussed in detail in the slide deck posted on our Investor Relations website.
With that, I'll turn the call over to Vlad.
Thanks, Will. Good afternoon, everyone, and thank you for joining our second quarter earnings conference call. While we are not immune from the current macro environment, we delivered a strong Q2.
Let me start by giving you five contexts. One, we are a $2 billion ARR company; two, contact center is now over $0.25 billion of ARR and is a key growth driver for us; three, we are now at more than 5 million paid seats in our base; fourth, we matched our quarterly record of $1 million, plus TCV deals, bringing the total to almost 500; and five, we delivered a record operating margin in the quarter of 11.3%, up 110 basis points year-over-year.
These results demonstrate RingCentral's leadership position in UCaaS, driven by our product innovations and unique go-to-market strategies. We have been able to achieve these milestones through consistent execution.
Q2 was no exception. Sonalee, who I'd like to welcome to her first earnings call as RingCentral's CFO, will share with you more details about our financial results shortly.
Let me first give you the highlights. Subscription revenue grew 32% year-over-year and 33% on a constant currency basis. Total revenue grew 28% year-over-year, and 30% on a constant currency basis. Both were above the high end of our guidance even taking into account the stronger dollar.
Operating margins of 11.3% were a quarterly record and well above our guidance, with free cash flow margins expanding 220 basis points year-over-year to 6%. Following solid margin expansion in Q1, these results give us confidence in our ability to deliver sustainable growth while expanding our margins.
Our success to date is grounded in four global megatrends. These are: one, the cementing of hybrid work in the post-COVID era, which in turn reinforces the need for cloud-based communications platforms; two, the ongoing adoption of mobility by businesses worldwide, which drives the need for solutions that enable work in any mode on any device from anywhere, Mobility is a friend, not a phone; three, Teams in the enterprise, which creates a meaningful opportunity for a well-integrated enterprise-grade UCaaS and CCaaS solutions. We believe Teams is a growth driver for RingCentral; four, preference from CIOs to purchase an integrated cloud-based unified communications and contact center from a single provider, consistent with historical on-prem buying behaviors.
Voice remains a key mode of communication for consumer to business interactions across a vast array of industries. This includes health care, professional services, such as insurance and finance; logistics, government and education, to name a few. We continue to win in all these verticals.
Another fun fact. We've recently engaged a third-party to conduct a survey of key technology purchase decision makers. 85% of respondents consider voice to be very to extremely important to customer engagement. 80% noted that voice is very to extremely important to revenue generation.
We continue to win because of our core corporate values, trust, innovation and partnerships. Third, trust for our customers, this marks the 16th consecutive quarter of five nines uptime, which is a key competitive differentiator. Our customers need to know with certainty that when their customers need to lease them or when they need to communicate with any of their stakeholders the technology will work.
Time and again, customers tell us that one of their top reasons for picking RingCentral is our proven reliability. And underpinning everything we do is our dedication to security and data privacy. Simply put, we treat our customers data like our own. We also embed state-of-the-art capabilities such as end-to-end encryption into our portfolio.
And speaking of trust, we are proud to announce that yesterday, we released our 2021 Impact Report, which highlights our commitment to our customers, our people, our shareholders, and the communities we operate in.
Second, innovation. RingCentral is committed to leading with innovation. Creating features and functionality that customers want and need. To highlight a few of our significant innovations in Q2, we launched new enhancements with our salesforce and hotspot integrations, making it easier for our customers to reach and engage with their prospects and customers.
For large international deployments, we introduced a Smart Dial Plan and a new bulk number management capability. These innovative features make it easier for international enterprises to connect their employees and customers across the globe. We have also enhanced RingCentral Rooms with new seamless integrations with hardware partners like Avocor, Jabra, and EPOS. This allows customers to enhance their ability to work from anywhere, whether in the office or remotely.
And last but not least, partnerships. We had a good quarter with our strategic partners, led by Mitel and Avaya. On that note, we would like to welcome Avaya's new CEO and reiterate our commitment to this unique partnership that paved the way for the world's largest installed on-prem customer base to move to the world's leading UCaaS solution. Our unique global partnership have contributed to our growth as customers transition from on-prem to the cloud and we're still relatively early in this journey.
Looking ahead, we're strongly focused on durable growth, improving profitability, and stronger free cash flow. We have the industry's leading UCaaS platform and a talented management team in place to drive our continuous success as we address the large untapped opportunity still ahead of us.
With that, let me hand the call over to our President and Chief Operating Officer, Mo Katibeh.
Thanks Vlad. Q2 was a strong quarter with strength from our direct business and our partners. We won close to 50 deals with a TCV of over $1 million. Our integrated market-leading UCaaS and CCaaS offering also performed very well with continued increase in the attach of CC on UC for our upmarket teams and we were able to achieve these results while driving revenue and operating margin growth. In short, we executed well.
Now, let me give you some examples of how we benefited from the four megatrends that Vlad outlined. First, hybrid work. Companies are enabling their people to work from anywhere and RingCentral helps them be productive wherever they are. As an example, C&S Wholesale Grocers, a US industry leader in supply chain solutions and wholesale grocery supply, recently selected RingCentral to replace their legacy PBX infrastructure. Here's what C&S had to say. "As we research cloud solutions to replace our PBX infrastructure, we saw that with RingCentral, we could integrate a whole suite of communication features in one platform, connect our dozens of offices across the country for the first time ever, empower our employees to communicate from anywhere and still save $1 million a year."
Second, mobility. One of the largest real estate brokerages in the United States needed a solution that seamlessly allowed their offices to back each other up and securely wrap calls to their thousands of agents, whether in the office, at home or in the field. And beyond creating a truly mobility-centric solution, the brokerage was able to recognize meaningful ROI by selecting RingCentral with $2 million of savings over five years via a transparent and predictable cost structure. As a bonus, this also freed up their IT teams to focus on other key initiatives.
Third, Microsoft Teams, which continues to be a growth driver for RingCentral. Second quarter was the single largest quarter of growth yet. Now, the vast majority of Teams customers are on E1 or E3 licenses, which do not include any sort of phone or telephony service, a key part of any business identity. This creates an immediate opportunity to complete the cloud communication suite by adding a well-integrated UCaaS solution like RingCentral. And as to the minority of Teams customers who have an E5 license, first, they still require an incremental calling plan to make calls outside of their company. And even more importantly, they often need a richer feature set 5 9s reliability and integrated contact center option and a larger geographical footprint, all things that RingCentral can offer.
In short, customers are benefiting both from a feature and cost perspective when adding RingCentral to their team's environment. For example, a global provider of professional services purchased Avaya Cloud Office this quarter. The customer use Teams for messaging and video, but required a telephony option that provided 5 9's reliability and global reach, in evaluating their different options, they concluded that adding telephony to Teams was more costly and offered less reliability and functionality, when compared to RingCentral. These cost savings are in addition to the ROI that the customer will realize as they reduce resources that supported several legacy systems.
And last but not least, customers want an integrated UCaaS with CCaaS solution. RingCentral is currently the only company offering a fully integrated solution, combining market-leading UCaaS and CCaaS on a single bill and leveraging a highly scalable and reliable global voice network. Preferred risk insurance, a professional services company highlights the benefits of our integrated UCaaS and CCaaS solution.
Preferred risk insurance encountered significant challenges during the pandemic, using legacy communications technology, which caused call quality issues and broken customer experiences. It became vital for the company to upgrade to a cloud solution that would allow their employees to call, message and meet in one app from the home or in the office. They also required a cloud contact center that would provide innovative features.
For example, with RingCentral Contact Center, they will now have the ability for their claims agents to take a recorded statement that can be added to the insurance claim, while also ensuring that they can still leverage end-to-end automated call recordings for compliance purposes. Net, RingCentral is continuing to benefit from the four megatrends that we've outlined, and we see this in our pipeline and our partnerships.
Regarding our pipeline, we saw three key trends this quarter. First, sales cycle times from opportunity to close has reverted to historical pre-COVID trends, which we expected. Second, a demonstrating demand, we saw an increase in leads quarter-over-quarter and year-over-year.
Third, opportunity size for small business has remained consistent. However, we are seeing cautiousness from larger customers in their buying decisions, focusing on smaller initial deployments. What is clear is customers ranging from small business to enterprise and across all verticals continue to see the value of our offerings, while also being mindful of broader near-term market forces that is influencing buying behavior.
As part of our diverse vertical go-to-market approach, we are focused on how moving to UCaaS from an on-premise solution generates a strong return on investment for our customers. In the current environment where many customers are looking more closely at their spend, we show value very quickly with an average customer payback of about nine months. Customers that move to RingCentral MVP on average are also able to reduce their telecom costs by 23%, their hardware costs by 20% and their IT spend by 16%.
Turning to our partnerships. We continue to see growth from our strategic partners and the GSP community. Seats from our strategic partnerships are up almost 100% year-over-year. Mitel continues to gain traction as endpoint compatibility remains on track, and we continue to onboard their channel partners.
Avaya also continues to consistently add seats to our growing base with another sequential growth quarter. We continue to believe that there is a meaningful opportunity for ACO as a destination for Avaya's customers, which represent the world's largest installed on-premise base. Partners remain part of our differentiated go-to-market strategy and are contributing to our $1 million plus wins in the enterprise market.
Last, international continues to be an area of opportunity. In addition to recently launching with Vodafone in Germany, we closed multiple million-dollar TCV wins outside of North America and launch services in new geographies. We continue to build up our efforts globally as we are still early in the opportunity.
To summarize, we had a strong quarter. We win because of our unmatched best-in-class product, go-to-market motion and our ability to address customer needs and pain points with clear value and ROI.
Now I'll pass it over to Sonalee to discuss financials and our guidance.
Thanks, Mo. It's a pleasure to be here on my first earnings call as RingCentral's CFO. I've met some of you since I joined in May and look forward to spending time with more of you in the coming weeks and months. I chose to join RingCentral, because I saw a compelling opportunity to join a category leader in a high-growth space, operating at scale.
Importantly, RingCentral is one of the few high-growth SaaS companies with a $2 billion revenue run rate, expanding operating margins and free cash flow. My first few weeks have reinforced my belief that RingCentral is still in the early innings of a tremendous market opportunity, and I look forward to sharing our progress with you in future quarters.
As RingCentral's CFO, my top priority will be driving efficient growth. This includes expanding operating margin and free cash flow, while investing in and driving our future growth. I will be firmly focused on creating value for our key stakeholders, which include our customers, our employees and our shareholders.
With that, let me turn to our Q2 highlights. Q2 was a strong quarter. All key metrics came in above the high-end of our guidance, and we delivered a record operating profit margin. Subscription revenue rose 32% year-over-year to $463 million, above the high-end of our guidance range of 28% to 29%. Adjusted for constant currency, which represented a roughly 1.5 point impact, subscription revenue rose over 33%. As we highlighted last quarter, balancing growth and profitability is one of our core tenets.
I am particularly pleased with the improvement in our non-GAAP operating margin of 11.3%, which was meaningfully above our previous outlook of 10.4%. This was up 110 basis points year-over-year and continued the expansion we delivered last quarter. Additionally, we ended the quarter with $306 million of cash on hand and generated non-GAAP free cash flow of $29 million. This represented a free cash flow margin of 6%, up 220 basis points versus last year.
Now let me share with you some commentary around the key drivers of our results. Firstly, growth. During the quarter, we benefited from strong upsell into our base as customers continue to move to higher value and higher price points skews as well as expand their seats with us. Additionally, contact center continues to be a strong growth driver for us and is outpacing our overall growth. Many CIOs want to buy a unified communications and contact center as an integrated global solution from a single provider, and we are well positioned to benefit given our leading product and integration. Importantly, overall ARPUs remained stable quarter-over-quarter and year-over-year and are north of $30. Also, new customer acquisition ARPU remained steady over $30.
Customers buy RingCentral because they see the value in our global integrated message, video, phone and contact center platform with advanced features, including analytics and AI and our consistent five 9s reliability. We save customers money and Excellerate their productivity. Regarding new bookings, we saw a $15 million impact from the stronger dollar. Adjusted for currency, our implied new bookings would have been over $100 million and consistent with last year's sequential trend.
Now let me turn to profitability. Our solid operating margin starts with our industry-leading subscription gross margins of 82.7%. Additionally, margin improvement during the quarter was driven by realizing efficiencies such as more disciplined hiring and vendor consolidation well prioritizing investments in our core innovation and growth sectors. W will continue to take a balance view of investments insuring they meet return criteria. Additionally, we will be looking at all aspects of the business to evaluate further opportunities to drive efficiencies and continued growth.
Now turning to guidance. I will provide you with an outlook that is reflective of what we see in the market today. Regarding the current macro backdrop, as Mo stated, we saw three key trends in the quarter. These were: one, sales cycles reverting to pre-COVID norm. Two, sales leads increasing quarter-over-quarter and year-over-year; and three, more cautious buying behavior from larger customers, manifesting itself in smaller initial deployments.
We recognize that companies are navigating through a more challenging backdrop than what we saw even three months ago as well as the impact of a stronger dollar. Taking this into account, for the third quarter, we expect subscriptions revenue growth of 23% to 24%. Adjusted for constant currency, we expect subscription revenue growth of 25% to 26%. Total revenue growth of 21% to 22%. Adjusted for constant currency, we expect total revenue growth of 23% to 24%.
Non-GAAP operating margin of 12.5% and non-GAAP EPS of $0.50 to $0.51 per share. For the full year 2022, we are reiterating our top line guidance. We continue to expect subscription revenue growth of 27% to 28%. Adjusted for constant currency, we expect subscription revenue growth of 29% to 30%. We continue to expect total revenue growth of 25% to 26%. Adjusted for constant currency, we expect total revenue growth of 26% to 28%.
On profitability, we are raising our full year non-GAAP operating margin outlook to 12%, up from our prior outlook of 11.5%. This reflects 180 basis points of year-over-year improvement at the midpoint. And we are increasing our non-GAAP EPS outlook range to $1.91 to $1.95 per share, up from our prior range of $1.83 to $1.87 per share. We have guided to 180 basis points of margin expansion this year, despite the strong dollar.
Looking forward, we are committed to ongoing margin expansion and are reiterating our target of achieving at least a 20% operating margin with continued growth in our free cash flow. To summarize, we had a strong quarter marked by solid execution. We are well placed to navigate the current environment, and we will continue to invest in a disciplined manner where we see the highest return and potential for growth.
Finally, I'd like to thank RingCentral's team and our Board for their warm welcome and support during my first few weeks here as well as for their ongoing hard work and dedication to our shared vision. I believe we have a large opportunity in front of us and the right team to deliver sustainable, profitable growth and to create value for our stakeholders.
With that, let's open the call to questions.
Thank you. We will now begin the question-and-answer session [Operator Instructions] Our first question today comes from Kash Rangan of Goldman Sachs. Please go ahead.
Hi. Thank you very much. Nice improvement in operating metrics and good to see the Team's channel be prolific for you guys. I have two questions. One, you were very upfront about the macro environment and that you saw some level of caution. How do you think about the second half of the year? What are you incorporating with respect to macro assumptions? Is it smaller deal sizes or close rates, et cetera?
I did ask that, because in Q4 for you -- for RingCentral, is generally a nice pick up in ARR bookings. So, we should be still we expecting that sort of seasonality? And one for Sonalee, congratulations and welcome to being CFO of RingCentral. You talked about how you'd be looking for operating efficiencies while not compromising growth. What are the things that you've identified in the business model that should be sources of operating leverage in the future as you target the 20% growth? Thank you so much.
Thanks, Kash, for the question and also for your very kind remarks. I'm extremely, extremely excited to be here at RingCentral and to be partnering with this great team, this amazing leadership team. So I really do appreciate those comments.
Maybe what I'll do is start with your second question, just around how we manage or how we're intending to manage balancing both growth and our drive towards greater and stronger profitability. And what I would say is you can look at this quarter as a great example, because we managed to deliver pretty exceptional subscription growth and total revenue growth, whilst also expanding our OP margins significantly. It was a record quarter, as you know, 11.3% of OP margin.
And we really managed to do this by being quite deliberate in terms of running the business efficiently. And we specifically looked at areas such as sales and marketing, and also R&D as well as efficiencies around higher and vendor consolidation. And taken together, we were actually able to drive that OP margin efficiency whilst also delivering great revenue growth.
And if you think about where we're guiding for the full year and the fact that we've raised our OP margin guidance again, second quarter in a row, and if you think about the guide and the minimum OP margin aspiration that we put out there, what you can see is there's a lot more goodness to come there. And we will be evaluating all aspects of the business.
But what I can tell you is just being a couple of weeks -- or my second month into the job, I see opportunities in all three of these categories, so further opportunities to drive sales and marketing efficiency, R&D efficiency and D&A.
And the other thing I would just add there is, as we become a larger company, as we scale -- in my opening remarks, I mentioned being part of a $2 billion revenue run rate company. We're seeing the inherent benefits of that scale come through in the operating model and again, just expect to see more from us in that area.
In terms of the macro, and what we called out specifically, I think Mo in his remarks talks about the couple of trends that we saw in the quarter: one, with sales cycles reverting to pre-COVID levels; and the other one was slightly more cautious buying behavior from larger customers, and that was manifesting itself in smaller initial deal deployments.
And what I would say there is that our guide is reflective of what we're seeing in the market today, and that includes the current macro backdrop and those trends that we talked to in our prepared remarks.
But when you think about the guide, there's obviously several puts and takes. So on the one hand, we see those trends. And then we also have the impact of the stronger dollar, which will continue and is embedded into our guidance for the second half, that strengthening of the dollar. And what I would say there is we factor in about 1 to 2 points of revenue growth just from the dollar impact.
And then if you balance that against some of the other trends we talked about, which was extremely strong demand from our customers and strong pipe and most specifically talked about quarter-on-quarter increase and year-over-year increase. So, what we feel is that demand for our product is extremely strong. And I can say as a CFO, I think it's an easy decision to switch from PBX to the cloud because it's a positive ROI decision with a very short payback.
So, if anything we feel like we're more relevant than ever in this type of macro backdrop. So, in terms of the guide, we really are reflecting what we see today, including today's macro. I don't know if Mo has anything to add there.
Very comprehensive answer. Move on to next question.
Next question, please. Operator.
Our next question is from Terry Tillman of Truist Securities. Please go ahead.
Yes, thank you for taking my question. It's one question, but two parts. Sonalee also welcome to RingCentral. Congrats. And also, thanks for the color on the ARR, the exit subscription revenue ARR, that's very helpful. The two-part question. The first part is for Mo. I'm just trying to reconcile, it sounded though you still have pretty good productivity, though, $50 million or so or near $50 million-plus TCV deals.
So I'd love to just understand some more color in terms of they clearly are starting a little bit smaller? Is it less contact center seats, or is it maybe half the size of the deployments? And then the second part of this question, though is, for you Sonalee, is people do look at that exit subscription revenue ARR because it has implications into the next kind of 12 or 15 months. should we see it kind of ramp up though as we exit the year even with these puts and takes because of all the growth initiatives and channel partners? Thank you.
Okay, Terry. So let me take the first half of that question. And I think the punchline is, I articulated, leads were up in the quarter, both quarter-over-quarter and year-over-year. And as we discussed, what we are seeing is a degree of cautiousness in terms of our larger customers, generally going with smaller initial deployments.
You made a comment around contact center. I'll tell you that our attach rate of contact centers continuing to go up. So that certainly is not a factor in play. It's really just about I think the buyers are looking at any potential impact on their own business, what's happening with their own budgets, testing the technology, if you will, of deploying in smaller ways, seeing the value creation that we spend a lot of time talking about with our various customer examples and then bringing it to life. Okay. And Sonalee, do you want to take the second half?
Sure. So firstly, Terry, thanks for your kind wishes as well. So, with respect to ARR, as you know, we don't specifically guide to ARR. I am really proud of what we achieved in the quarter, 31% growth in the second quarter. We did have obviously an impact from FX and that obviously is a negative impact for this quarter. But we will continue to add healthy bookings and feel really confident in the way that we guided for both Q3 and the full year. So, hopefully, that answers your question.
Operator, next question.
Our next question comes from George Sutton of Craig-Hallum. Please go ahead.
Thank you. Sonalee, my great wishes as well, congratulations. So I'm curious, as a user of stock compensation with the stock decline, how are you using it perhaps differently today relative to retention and/or new hires?
Hey, George, I hope you're doing well. This is Mo. Look, we've guided that we expect to bring stock-based comp down year-over-year this year by a couple of hundred basis points. We're well on our path to achieving that, potentially even exceeding it by the end of the year. And what we're finding is frankly that our team and our talent is embracing the strategy. They're fully engaged on being part of this team.
We're utilizing SBC where it's required. Obviously, we think about our employee base, superstar talent, key contributors, et cetera. And as we bring that together, we're finding that we're able to find that balance of compensating appropriately, healthily while at the same time, ensuring that we're bringing down the comp as a percentage of revenue year-over-year. And frankly, I expect that we're going to continue to drive discipline in this space and Excellerate over time.
Our next question is from Meta Marshall from Morgan Stanley. Please go ahead.
Great. Thanks so much and congrats on the quarter. Maybe Vlad or Mo, just as you gave the disclosure on how big the contact center business had become kind of being over 10% of ARR, does that change how you guys think about partnering versus developing organically or just other feature sets that you would think on adding in addition to kind of contact center to expand the ARR of your customers or the ARPU of your customers? Thanks.
Yes. Hi, Meta. Yes, look here. Look, contact center is very important, obviously. And as we stated and reiterated, we are still in the unique position of being able to provide market-leading MQ leading UCaaS and CCaaS on the same paper and on the same network. So that is just a unique differentiator, not existing elsewhere.
Now clearly, customers are liking it. Historically, people have been buying from -- in the on-prem days, people have been buying UC and CC largely from the same vendor led by Avaya and Cisco historically. And we are now seeing similar behaviors repeat themselves in the software -- in the cloud software as a service world.
Okay. Now so top line growth is wonderful. Now clearly, it'd be nice to be able to own the whole stack, but it's a very, very heavy lift. So the strategy that we have seems to be working, and we think will continue working, whereby for those customers who require best of the best in UCaaS and CCaaS, our approach is unique and industry-leading.
For those customers with lesser requirements and, in particular, for smaller contact centers, we do, as a matter of fact, have our own product called RingCentral Engage. We have something called RingCentral Engage Omni, which has everything, but -- sorry, RingCentral Engage Digital, which has every channel voice.
And we also have something called RingCentral Engage Omni, which is a full-up integrated solution. It does not have every bell and whistle that, for example, inContact has as well as other industry leaders. But it is an up-and-coming product, and we expect that you'll be hearing more about it.
Our next question is from Samad Samana of Jefferies. Please, go ahead.
Hi. Good afternoon. Just a couple of questions. I guess, first, just I wanted to ask on the expense side. Obviously, it's been great to see margins really inflect here. Can you remind us Sonalee maybe how much of the OpEx is in USD versus in other currencies?
Hi, Samad, it's Sonalee here. I'll take that question. So OpEx is obviously a bit of a natural hedge to our revenues, but it's a much smaller proportion of overall and it would mostly be euro based. So it's about 5% that's outside of the US in the OpEx number.
The next question is from Peter Levine of Evercore. Please, go ahead.
Great. Thanks for taking my questions. Sonalee, welcome to the team. As we continue to hear more buyers wanting to bundle collaboration, video and chat with voice in a bigger way, maybe Vlad, in your view, like, how would you debunk those saying that video collaboration suite kind of take priority over voice?
And then maybe second, what are you doing today to evaluate -- to elevate, sorry, the RCV brand or the investments on the collaboration side to kind of better compete against some of the larger players in the space?
Yes. They're both important. B2B, especially within in the org, yes, many interactions -- not all, but many interactions are now over video or over internal conferencing, Microsoft Teams is pretty good at that. C2B, consumer interactions, consumer to business are still largely over voice and there doesn't seem to be any slowing down of that trend.
People tend to call businesses, they tend to call their providers by voice from phones and multi cellphones. So, I think, as we mentioned, we have -- we run a survey and vast majority of people, and these are our business customers and as well as other businesses called, not our customers, are saying that they believe voice will be important to extremely important, both for customer engagement as well as for margin expansion, okay, and their revenue. So this is voice is here to stay – to state the obvious, this call we're having now is via voice, okay? So that's how we would debunk it. It continues to be a tremendous market.
As I stated in prepared remarks, and this is not the first time, probably not the last time I'll say that, mobility, wireless, 5G, they're all tailwinds for us, they're friends and foes okay? And we continue redoubling our efforts in maintaining our leadership in this very, very warm means by which people communicate. People communicate in words, not just by science.
The next question is from Ryan McWilliams of Barclays. Please go ahead.
Thanks for taking the question. Just on the strategic partnerships in which RingCentral has made a significant investment. Should those strategic partners enter financial difficulties or were acquired, would you anticipate any changes to those relationships?
A – Vlad Shmunis
I will take that [ph] Vlad, here. Look, we have an absolutely unique GTM approach and the partner network. There is simply not another player of, I think, any size there that can both these close relationships with a number of leading GSPs as well as majority -- or people responsible for majority of on-prem PBX, okay? Now this is turbulent times. And obviously, some people are experiencing difficulties. And I assume the question behind your question is what about Avaya.
So let me just address that. Avaya has been a contributor. They have been a partner and a strong partner. They are also representative of the world's largest installed on-prem base which means what? It means that we always want more. We want it more, we want more and we will continue more. But they are, again, somebody that's been contributing to our success.
We expect them to continue doing that. We expect that they understand that RingCentral continues to be both a growth driver for them as well as the profit margin driver for them. They have a new CEO that they've announced a few days ago. It's a person we know extremely well. I have a good personal the relationship with Alan.
And we think that this, frankly, could be reinvigorating the relationship with very positive outcomes for both companies and very importantly for the customers, because remember, their customers still need to grow to get to the cloud, RingCentral and Avaya Cloud Office data center still continues to be the only through UCaaS mobile tenants global high-availability solution that is able to accept incoming Avaya's on-prem customers by leveraging -- with leveraging their multi-year investments into endpoints and other points of integration. We're simply in a unique position to do that, and we expect that new management will appreciate that fact.
The next question comes from Will Power from Baird. Please go ahead.
Okay, great. Yeah, thanks for taking the question. Just a question on enterprise ARR. We've seen, I guess, a deceleration in a couple of quarters in a row. And it sounds like FX is certainly a piece of that. But I guess I'm wondering how much of the slower growth there is macro? How much have you already seen on the macro side versus any other factors versus what -- how much more of the macro that you referenced in terms of smaller deal sizes or slower deployments among your bigger customers are still on the come? I guess, I'm trying to figure how much that macro is already impacting that ARR versus maybe expectations for Q3 and Q4?
Thanks. This is Mo. I'll take that one. I think the net here is two key factors. The first one is FX was a headwind. Sonalee talked about that one. And then the other one is what I brought up, which was called the three key trends that we saw in the quarter. Sales cycle times reverting the pre-COVID norms. Leads were up both quarter-over-quarter, year-over-year. And then the third one, while opportunity size for SMB remain very consistent, we did see some degree of cautiousness from larger customers and their buying decisions.
At the end of the day, I mean, I think I put all those things together, the lead growth continues to demonstrate to me the opportunity ahead is real, that we can create value for our customers, frankly, and especially so larger ones that have legacy telecom hardware, IT support costs, where the value creation that we can bring for them is actually a help when you're in these sorts of times.
The next question comes from Matt Niknam of Deutsche Bank. Please go ahead.
Hey guys, thank you for taking the question. Just a quick simple one. Just on churn. Any changes you're seeing? And how is this trending across SMB, mid-market and enterprise? Thanks.
It's Mo, I'll take that one. We saw sequential improvement in churn, both quarter-over-quarter and year-over-year, and that was generally true across all of our key segments.
The next question is from Michael Turrin of Wells Fargo. Please go ahead.
Hey guys, This is Austin Williams [ph] on for Michael Turrin. I just wanted to ask about premium SKU adoption as you push further up market? And is that potentially offsetting any volume-related discounts at those larger customers? And just as a follow-up to that, is -- our pricing dynamics in UCaaS more broadly, have you seen any change competitively that might be impacting the lower price SKUs? Thank you.
This is Mo. I'll jump on that one. So just to reiterate, our overall ARPUs were resilient. They were stable quarter-over-quarter, year-over-year. They remain north of 30. New customer acquisition ARPU, which really goes to the second part of your question, also remains steady and over 30%.
To your point, we're a multi-product company. As we think about ARPUs, we're looking across both our SKU base as well as the products that we're offering. And as we go further and further upmarket, we do see our customers buying more premium SKUs.
As I mentioned a little bit ago, we're seeing continued increase in the attach rate of our contact center. And all of those become factors in the dynamic that drives the strong and healthy ARPUs. Look, I think the heart of this is, we're creating value by bringing together messaging, video and phone as well as the ability to integrate market leading UCaaS solution, and this is a competitive advantage that we expect to retain.
The next question comes from Taylor McGinnis from UBS. Please go ahead.
Yes. Hi. Thanks so much for taking my question. So I know that FX is a little bit of at play here. So I know it's tough to parse out. But Sonalee, if you look at the difference between ARR last quarter, I guess, subscription revenue in 2Q, it seems that some of the net new business would have been late in the quarter. So can you comment on linearity or what you might have seen there? And then, I guess, as we look ahead into the guide, just to be clear, are you assuming a similar environment that you're seeing today in the guide, or are you assuming that things deteriorate imports or get worse?
Sure, Taylor. Thanks for the question. So firstly on FX, you're absolutely right. FX was a factor in Q1 and as well as in Q2. And what I would say is that the impact to bookings in Q2 was more exaggerated just given the dislocation of the dollar.
And in terms of what the guide is currently contemplating, what I said in my prepared remarks is that it's reflective of what we're seeing in the market today, including the trends that we've called out and also embedded within that, the guidance includes an additional one point to two points of headwind on growth from a stronger dollar, and that's for the full year 2022.
So just to recap, Q1 had an impact. The Q2 impact was stronger. And the full year, we're seeing -- calling out an impact of between one point and two points. And the other thing I would just say is in spite of that impact from the dollar in Q2 we still had $100 million -- or over $100 million booking quarter if you adjust for currency.
The next question is from Matt VanVliet of BTIG. Please go ahead.
Yes. Hi. Thanks for taking my question. I guess, as you look at the expansion of the Vodafone Germany deal that you announced recently in light of all of the strategic partnerships. Do you feel like you're getting to market a little faster? Is the initial reception stronger? How are you feeling as you continue to expand, sort of, the breadth of those relationships and even the depth within each of those partnerships? And how that's encouraging you to go out and seek other partnerships going forward? Thanks.
Thanks, Matt. So as you think about our global service provider community, we're continuing to see consistent revenue and seat growth. And I think the heart of your question and the way I'd answer it is, each of these relationships is allowing us to unlock new sales addressable markets and frankly, unlocking new markets for the foreseeable future. I expect the new revenue-producing GSPs will continue to grow both this year, as well as in 2023, and many of them internationally.
The next question is from Michael Funk of Bank of America. Please go ahead.
Yeah. Thank you for the questions. One for Mo, if I could. Mo, given your unique experience coming from AT&T and your first point about the point success for RingCentral part of that being the transition from PBX. Just wondering if you could comment on your TBV reported weaker business revenue this quarter, I think part of that probably is that transition that we’re seeking from legacy next-generation technology. So from your perspective and your history, do you think we're seeing acceleration in that transition? Is that what we're seeing in the Verizon results? Obviously, a lot in there, but I'd love to hear you unpack that a bit.
Well, I appreciate the question. I certainly can't comment on any other company's results and subtending drivers, if you will. What I will tell you is that, I do fundamentally believe and it's a core part of why I came to RingCentral that UCaaS and the transition of legacy UC on-prem seats as well as legacy CC seats to use CCaaS is something that is going to last for many years to come.
Businesses are not all ready to move to the cloud in any one given year. Frankly, as you look at the current macro environment, I think that that's going to be a factor that plays in. We've called it out several times throughout this conversation. But what I am comfortable and confident in is that the TAM is extremely large and that you're going to see consistent growth for many, many years to come.
The next question is from Matt Stotler of William Blair. Please go ahead.
Hey, team. Thank you for taking the question. Maybe just wanted to dig in on Microsoft Teams specifically, obviously, you guys are still seeing some notable success in the market alongside Teams. Any additional color you can provide, whether it's in terms of the portion of the installed base that either connected Teams or assist with Teams? Any kind of updated color on how to think about ARPU and Teams environments here? And then any thoughts on additional opportunities for collaboration with Microsoft as you think about go-to-market and further integration going forward?
Very good. So let me -- I'll address that slightly out of order. On the ARPU side, I'll tell you that our Teams' ARPU is consistent with our overall ARPU and quite strong. Our Teams' customers tend to skew up market and be larger and thus, they fall into the category of more premium SKUs and more likely to attach contact center. By the way, it's one of the key reasons along with 5 9's reliability, feature functionality, geographic reach that we're winning with that base.
And then I'd just reiterate a couple of points, which is we saw meaningful growth year-over-year. Second quarter was the single largest individual quarter of growth that we've seen with our MS Teams practice. And frankly, it's exciting for us. As we see them growing in the market, we're seeing success for ourselves as well. And then I can't comment on any potential future opportunities and how we're thinking about that. I will tell you, we're going to continue to execute on our own strategy, and it is one of the four megatrends and growth drivers for the company.
Great. Thank you.
This concludes our question-and-answer session as well as the conference. Thank you for attending today's presentation. You may now disconnect.
LivePerson, Inc. (NASDAQ:LPSN) Q2 2022 Earnings Conference Call August 8, 2022 5:00 PM ET
Chad Cooper – Senior Vice President-Investor Relations
Rob LoCascio – Founder and Chief Executive Officer
John Collins – Chief Financial Officer
Conference Call Participants
Arjun Bhatia – William Blair
Zach Cummins – B. Riley Securities
Peter Levine – Evercore
Ryan MacDonald – Needham
Siti Panigrahi – Mizuho
Ryan MacWilliams – Barclays
Good afternoon ladies and gentlemen, and thank you for standing by. Welcome to LivePerson’s Second Quarter 2022 Earnings Conference Call. My name is Claudia Gandit, and I will be your conference operator today. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded.
I’d now like to turn the conference call over to Mr. Chad Cooper, Senior Vice President of Investor Relations. Please proceed.
Thank you, Claudia. Good afternoon everyone, and thank you for joining us today. On the call with me are Rob LoCascio, LivePerson’s Founder and CEO; and John Collins, Chief Financial Officer.
Please note that during today’s call, we will make forward-looking statements which are predictions, projections, and other statements about future results. These statements are based on our current expectations and assumptions as of today and are subject to risks and uncertainties. actual results may differ materially due to various factors, including those described in today’s earnings press release and the comments made during this conference call and in 10-Ks, 10-Qs, and other reports we file from time-to-time with the SEC. We assume no obligation to update any forward-looking statements.
Also, during this call, we will discuss non-GAAP financial measures. Reconciliations of GAAP to non-GAAP financial measures are included in today’s earnings press release where applicable. Both the press release and supplemental slides, which include highlights for the quarter, are available in the Investor Relations section of LivePerson’s website.
And with that, I will turn the call over to Rob. Rob?
Thanks, Chad. Thank you for joining LivePerson’s second quarter 2022 earnings call. In 2Q, we generated revenue of $132.6 million, non-GAAP gross margins were up 500 basis points sequentially, and our adjusted EBITDA was at the top end of our guidance range at negative $5.5 million, a $12 million improvement sequentially. We’re still on track to deliver positive EBITDA on cash flow by year end.
Early this year, we made a commitment to prioritize profitable growth. I’m pleased to report, we are delivering margin expansion faster than expected through a combination of OpEx discipline, the improving productivity of our salesforce and focusing on more high margin revenue. We continue to make substantial changes to strengthen our P&L by focusing on the most differentiated high value components of our business with the greatest capacity to drive high gross margins, strong operating margins, and high quality revenue growth.
In the short term, we’ll be intentionally trading some lower margin top-line revenue for substantial, sustainable near and long-term margin expansion and growth. Our goal is to achieve best-in-class operating and financial models, which would be near or above 80% gross margin and mid-teens or better operating margins.
Incredibly proud of the agility and innovation that allowed us to rapidly respond to the needs of our clients in the market and to drive growth during the past two years of the pandemic, but as pandemic driven trends normalized laser focused on our more repeatable and high margin growth engines.
As the industry leader in conversational AI messaging, we provide AI-powered customer engagement solutions to thousands of companies, including 450 enterprise brands worldwide, among them many of the world’s leading consumer businesses. Our solutions help brands cut costs while improving consumer experience and achieve measurable ROI. Our platform has reduced our brand’s customer care costs by up to 50% while increasing customer satisfaction equally important. Our commerce solutions have increased annual sales by hundreds of millions of dollars for some of our customers.
We do not simply automate labor intense tests. We help our brands optimize their engagement with their consumers throughout the customer life cycle. We’re proud to consistently deliver measurable ROI to brands through our care and commerce solutions. We’re also excited about new applications and our Conversational Cloud technology, including moving into voice and into expanding our healthcare vertical, which I’ll touch on in a moment.
First on three key actions to optimize profitable revenue growth, new logo growth, expansion within existing accounts and partnerships, and opening our AI, so they can be accessed on other third-party platforms.
So, let’s start with new logos. We’re seeing progress with our quota carrying reps and continue to expect them to be productive with bookings in Q4 and contributing to revenue in 2023, and beyond. In Q2, we delivered the most new logo wins we’ve had since 2020. We won 45 new logos in the quarter, which was a 55% year-over-year and 73% increase sequentially. These new logo wins are green shoots indicating that our enterprise salesforce are returning to historical rates of productivity after a change in field leadership, we made early this year that made great progress at generating new land and expand opportunities.
Second, we’re leveraging and extending our existing customer relationships by both cross-selling and upselling, and we’re seeing strong adoption of multiple AI and automation products. In Q2, we continue to see robust platform usage with overall Conversational Cloud messaging volume growing 32% year-over-year, and AI-based messaging conversations growing 20% year-over-year.
Third, we have continued our partnership momentum to unlock expanded and indirect revenue opportunities. We added 15 unique partners in Q2, and this channel produced nine new logo deals. Few weeks ago, we announced new partnership with Solunus, a technology has focused – technology company has been focused on improving business process for large enterprises. Our joint offering called Contact Center Conversation Mining combines the omnichannel conversational analytics from VoiceBase and customer journey mapping and back office execution management from Solunus.
I’m also happy to note that Q2 marked the return of our in-person executive community events with extremely successful events held in New York and London during the quarter. Pre-pandemic these events were a key element to our go-to-market strategy and we’ve historically accelerated our sales cycles because they educate brands about the power of conversational commerce and AI generally through our existing clients sharing their real world outcomes. In aggregate, the Q2 events directly influenced over 50 million pipeline.
From a product perspective, we are capturing incremental scale world revenue opportunities by opening up our platform. This will enable brands. Those agents primarily use a third-party CRM to have conversations within consumers driven by our Conversational Cloud. This has historically been a pain point for brands has been a key component of our product roadmap. Our acquisitions of VoiceBase and Tenfold have accelerated this initiative. VoiceBase is being integrated into the core analytics of our platform and Tenfold is driving the overall go-to-market probably work with CRM and other enterprise technology platforms.
We’re unifying our voice strategy from a standalone business unit to an integrated part of our broader portfolio. This provides a clear value proposition for our sales people as voice becomes a key channel within our Conversational Cloud. With VoiceBase, we’re digitizing the voice channel so we can extend the benefits of our conversational AI platform into it. This enables brands to not only meet consumers on voice, if that their preferred channel, but also extract AI-powered insights from this traditionally analog channel in real time. These insights can also be analyzed post conversation to help brands better serve their customers, Tenfold and VoiceBase, both play key roles in the strategy of enabled us to extend these capabilities to voice providers like Avaya, Cisco, Genesys to just name a few.
As I turn to some of our top customer wins in the quarter, I’d like to highlight how each reflects, how brands recognize LivePerson’s ability to deliver tangible value. Even as current economic conditions are driving brands to assess cost savings, consolidate technology, stacks, and deprioritize all projects that do not have direct impact on savings or revenue growth. These are some of the most innovative brands in the world. They’re working with us to cut costs while simultaneously improving the customer experience through automation and AI.
We signed five seven figure deals and achieve the total deal count of 104 deals in the quarter. Utilizing our rich data set, we also are able to target vertical industries with repeatable AI and automation strategies. In Q2, we signed one of the largest new logo deals in our history with Capitec, the largest retail bank in South Africa with approximately 19 million consumers Capitec originally came to us from initial use case with VoiceBase. However, we’re able to show them that they could go further automating their customer experience over WhatsApp, as well as take advantage of the power of VoiceBase for real time insights into their consumers experience and banking operations.
This is seven figure three-year deal, even more importantly provides us with a referenceable customer in an important new geography with a new use case. This is a great example of our new logo initiatives and rich product synergies. Following last year’s acquisitions, driving revenue expansion. As we execute on our plan of profitable growth. We also won a large multi deal with Canada’s largest bank being selected over two of our major competitors. The client chose LivePerson for our ability to reduce the cost of servicing customers and open the virtual doors of the bank to new account growth by managing the entire consumer journey by our messaging, AI and automation.
On the renewal front, we signed a large two-year extension with one of our major airlines using LivePerson first platform technology. This customer makes it easy for travelers to begin conversations on their app and directly from Apple Business Chat, SMS, IVR deflection, QR codes within airports and social media.
We also signed a multi-year renewal agreement with Verizon. Verizon’s been a client for us for three years. They started with messaging for customer care and sales. And now they’ve expanded to leverage our AI as well. In Q2 our GainShare division signed a three-year seven figure automation as a service contract with the largest automation OEM, automotive OEM finance companies in the world. This deal is great example of the type of higher margin contract structure for prioritizing going forward with the GainShare offerings. This brand wanted to transition from a 100% voice agent call center environment into AI-driven digital first contact center with the goals of supporting their consumers through automation while reducing OpEx and increasing CSAT.
And finally, we’re making excellent progress on our healthcare strategy, which is one of our largest verticals behind telecom and financial services. And it’s one of our fastest growing. We’re working towards delivering a very scalable solution for the healthcare market, especially around using machine learning and Conversational AI for improving patient experience and outcomes. This is a big opportunity and we are in a good strategic position to go after it. Specifically related to our Wild Health acquisition, the group is performing very well and is ahead of their revenue plan. And in Q2, we sign deals with Spartan Race and USA Boxing to bring our AI and telehealth capabilities to their athletes as their official healthcare partner.
As I mentioned at the top of the call, we continue to execute on our profitable growth plan announced at the start of the year and we’re ahead of schedule delivering results faster and previously forecasted.
As we embarked on these initiatives, we have found other areas of the business that we can further Excellerate our margins and profitability and lay the groundwork for future growth. While some of these initiatives are anticipated reduced total revenue in the near term, as we deprioritize lower margin, non-repeatable areas of the business. We continue to expect to generate positive and free cash flow in the fourth quarter position as well for profitable growth in 2023 and beyond.
And with that, let me now turn the call over to John to discuss the detailed financial results and our revised outlook for the rest of the year. John?
In the second quarter, we continue to execute on the plan. We announced on our fourth quarter call to adopt a balanced approach to profitability and growth. Revenue grew by $2 million sequentially to $132.6 million or 11% year-over-year. And within our guidance range. Despite the lower revenue adjusted EBITDA increased by $12 million sequentially matching the top end of our guidance range. The improvement in adjusted EBITDA was driven by a $9.7 million sequential reduction in operating expenses, which exceeded the top end of implied guidance.
The cost reductions were associated primarily with post M&A integration and consolidation non-quarter carrying sales and marketing and research and development reduced costs coupled with the wind down of COVID-19 testing drove expansion in non-GAAP, gross margins from 69% to 74% sequentially, which also exceeded the top end of our, we expect continued gross margin expansion for reasons I’ll discuss in a moment. This year discuss during last two quarterly calls, we are focused on adapting our operating model to ensure a sustainable framework for profitable growth in a post pandemic world.
To this end, optimizing our cost structure will continue to be a primary strategic imperative for the remainder of 2022, in order to position the company to deliver long term profitable growth and to generate positive cash flow throughout 2023. In addition to expense reductions, we have begun purposefully eliminating low quality sources of revenue in order to further enhance the overall of the P&L. While we expect both the magnitude of the expense reductions and the elimination of low quality revenue to impact near term growth. We are confident that these - will set a long term foundation for best in class gross margin, significant free cash flow generation, and a return to the Rule 40 framework.
Before proceeding with the standard financial update. I’d like to elaborate on the largest sources of low quality revenue, that we’ve begun to purposefully wind down. Last quarter, we shared two significant changes impacting our revenue stack.
First COVID-19 testing revenue would be minimal in the second quarter and would roll off of the P&L entirely going forward. Second, we converted over 90% of our gain share revenue from variable to recurrent secured, primarily by multi-year contracts that increased revenue, stability and transparency. Approximately half of this revenue is high margin revenue derived from scalable usage of the conversational cloud.
The other half is low margin revenue derived from agent labor that we supply to our customers via contractual arrangements with BPO partners. Consistent with our goal to optimize the overall of the P&L. We have begun eliminating this labor based revenue from both our sales pipeline and existing customer agreements, which we expect to contribute to a temporary slowdown in revenue growth in the second half of 2022, while turning down growth, accretive revenue sources in Denver and easy decision.
This move will simplify the business model materially, expand our gross margin and enable us to focus management and resource allocation on our most strategic and scalable sources of revenue growth, such as automation and messaging. In the second quarter GainShare represented 11% of total revenue, which was in line with the expectations we set previously. However, going forward, we expect this percentage to contract. As we wind down labor based revenue. Over the long term, we expect bees and related change to the business model to drive expansion of non-GAAP gross margins to at least 80%.
Turning to our reporting segments for the second quarter within total revenue, B2B grew 12% year-over-year – hosted software was approximately unchanged year-over-year and professional services grew 95% year over year within revenue from hosted software, lower revenue from gain share. And COVID-19 testing offset, increased revenue from other customers relative to the comparable period last year. As a reminder, COVID-19 testing was expected to be minimal in the second quarter and going forward. In terms of professional services, recall that PS revenue declined 3% year-over-year, last quarter because several large projects pushed into the second quarter. This dynamic is driving the substantial year-over-year increase. The largest PS project relates to the eight figure healthcare deal we signed last quarter and is focused on automation as a service for healthcare delivery companies.
Traffic perspective, U.S. revenue group, 12% year-over-year, and represented 68% of total revenue while international revenue grew 9% year-over-year and represented 32% of total revenue. Finally revenue from the consumer segment declined 7% year-over-year, which was a function of a hard comparison to pandemic driven growth in the second quarter last year. As Rob mentioned, we signed five seven figure deals in the second quarter, two upsells and three new logos. RPO increased 18% year-over-year to $409 million and net revenue retention was just below our target range of 105% to 115%.
Driven primarily by lower variable revenue and labor based down sales in the GainShare portfolio. Consistent with the strategy for GainShare, that I described a few moments ago. We expect modest pressure on net revenue retention in the short term. Given last year’s large revenue contributions from variable revenue and labor based GainShare customers. Average revenue per user improved to 660,000 up 23% year-over-year. Total messaging volume on the Conversational Cloud increased 32% year-over-year and AI-powered messaging volume increased 20% year-over-year. Our strongest verticals this quarter were retail, financial services and telecommunications.
In terms of new logos, we signed 45 in the second quarter, which was an increase of 55% year-over-year and 73% over the first quarter. The traction in new logo acquisition validates the progress we’ve made on rebuilding the foundation of our go-to-market motion. Including the strategic focus on acquiring new logos, considering our robust ability to rapidly expand with our base, which has been a primary growth driver over the last two years. New logos represent an exciting leading indicator of future expansion in revenue.
As discussed last quarter, integrations with strategic partners is another foundational component of our scalable sales motion going forward. By increasing the breadth and simplicity of open APIs and third party integrations, we’re ensuring that customers on other have rapid and seamless access to LivePerson best-in-class capabilities, across automation, messaging, omnichannel, conversational analytics, and other unique innovations that Excellerate customer engagement and reduce reliance on human agents.
As Rob mentioned, we recently announced a strategic technology partnership with Solunus to integrate conversational analytics into its data processing and execution management platform. In addition, Contact Center operations that primarily depend on third party CRM platforms can now leverage messaging and automation capabilities through scalable integrations with the Conversational Cloud. Of course, VoiceBase and Tenfold are at the core of this strategy.
Moving down the P&L adjusted EBITDA was at the top end of our guidance range at a loss of $5.5 [ph] million in the quarter. The upside as per described, was driven by solid execution on our profitable growth plan, including expense reductions, which are part of a broader restructuring plan focused on the following areas, post M&A integration and consolidation, non-quota carrying, sales and marketing and research and development.
Turning to full year [Audio Dip] with a focus on adapting the business model [Audio Dip] for and profitable growth. We are making [Audio Dip] offs that will slow growth in the short term, in order to materially Excellerate our unit economics profitability and overall financial profile in 2023 and beyond. Critically, these moves will also enable us to focus strategy and resource allocation on scalably, delivering the automation messaging and related customer engagement outcomes that set LivePerson apart from other platforms. As a result, we are revising down our guidance ranges for revenue from to $507 million to $518 million or 8% to 10% year-over-year growth.
As for full year guidance on adjusted EBITDA, despite the lower revenue we remain committed to generating positive adjusted EBITDA in the year and positive free cash flow in the fourth quarter. These outcomes are made possible by swift and thoughtful decisions in the first and second quarter to right size our expenses. I think it would be helpful to recap how execution on our profitable growth strategy has manifested in our results and expectations.
We, when we initially set guidance for the full year, we expected a loss of $10 million adjusted EBITDA at the midpoint, which implied $560 million in operating expenses. Last quarter, we improved the outlook to [Audio Dip] positive and adjusted EBITDA implying [Audio Dip] in operating expenses. Now by reaffirming guidance for adjusted EBITDA in the range of $1 million to $10 million we’re margin of zero to 2% for the full year. The implication for operating expenses is approximately $507 million at the midpoint.
Committed execution on our profitable growth strategy is transforming our business model to generate meaningful profit and cash in 2023. As I discussed earlier, the elimination of low quality revenue coupled with continued optimization of our cost structure are expanding our gross profit margin. Our initial guidance for non-GAAP gross profit margin for the full year 2022 was 67% to 70%. We raised that guidance to 70% to 72% last quarter, and we were raising, it began to 72% to 74% for the full year 2022. In the long-term, we expect continued expansion of non-gross margin to at least 80%.
For the third quarter, given the purposeful P&L optimizations. We are driving together with continued ramping of our sales force. We expect revenues to be in the range of $120 million to $123.6 million or 1.8% to 4.5% year-over-year. As for adjusted EBITDA in the third quarter, our guidance range is $0 million to $4.3 million or [Audio Dip] to 3%. We’re also expecting non-GAAP gross margin in a range of 72%, 74%. Before taking questions, I’d like to quickly emphasize several key themes for 2022 and how continued execution on our profitable growth strategy will position us for 2023.
We have made strong demonstrable progress on rebuilding our sales motion, including a 73% sequential increase in new logo acquisition. We’ve also taken concrete steps to expand our partner strategy and open the platform to create new sources of indirect revenue and ensure our best-in-class customer engagement solutions are driving differentiated treated outcomes in the wider CX ecosystem, consistent with our previously announced profitable growth plan and the goal to further strengthen our P&L for the long-term, we are continuing to optimize our cost structure and purposefully trading some term lower quality revenue for stronger financial profile with sustainable, higher margin revenue in 2023 and beyond.
Collectively solid execution on our profitable growth strategy is transforming our business model, positioning us to generate meaningful cash in 2023, expand non-GAAP growth margins to a best-in-class long-term target of at least 80% and focus resource allocation on more strategic, differentiated and scalable sources of revenue growth.
And with that operator, we can proceed the Q&A.
Thank you very much, sir. [Operator Instructions] First question comes from Arjun Bhatia from William Blair. Please proceed with your question Arjun.
Yes. Thank you. John, can you just help us understand maybe how much of the revenue reduction that we’re seeing in the full year guide is coming from reducing investments that you’re making versus eliminating some of the lower margin revenue that you’re talking about? Like the labor portion of GainShare revenue?
Hi, Arjun. Yes, for sure. So first – just given the magnitude of that change, I want to emphasize that our proactive strategy to strengthen the P&L is playing a large role. We have a medium to long-term goal to generate 80% gross margins, as I described in the prepared remarks. And we want to do that through highly scalable and repeatable software revenue derived from what we do best, which is of course, AI automation messaging. And in order to get there, eliminating the lower quality revenue we described specifically that labor based piece in the GainShare portfolio is key that equates to approximately half of the revenue change.
The other half of the change is associated broadly with the continued ramp of our newly hired sales force and, broadly rebuilding the go-to-market momentum following the leadership transition that we previously discussed. So in order, I think to reiterate some of the key measures though, that we’ve made is the new logo acquisition, 73% increase sequentially is a, a very strong leading indicator of the additional build, rebuilding of the momentum that we had lost previously that we are gaining back now. And while new logo acquisitions represent a lower near term revenue goal or revenue contribution for in the long term, they’re the fuel that our sales force uses for expansion.
Understood. That’s helpful. And then I think Rob, one of the things that you mentioned as, a goal of yours going forward is to open up your AI and provide access to it to third parties. Can you just help us understand how those partnerships would work in practice and how you would be able to monetize some of the, providing some of your technology? What’s the plan on that front?
Yes, the part obviously that’s the very high valued part of our platform is our AI and automation technologies. Today, it runs solely on our messaging platform and soon to be voiced, but what our customers want is sometimes they’ve got voice investments and other platforms they’re running and they, but they want our AI running on it. So we want to kind of free it from our own walled garden and then move it out into the ecosystem of other CRM players and other contact center software.
And do those integrations, Tenfold allow the acquisition, allows us to do a fair amount of that. Like we now can take our agent console and it can be – it’s sitting in salesforce, like our messaging console now can sit within salesforce if someone’s a salesforce user. So we’re kind of at place in the evolution of the market to be much more platform centric than product centric. And that’s what we’re doing then the other part is we do run other AIs on our platform as we’ve been doing for years, but we don’t allow our automation tools like our analytics tools to optimize those AI.
So we’ll also be doing that, whether it’s Google Dialogflow or Lex or Watson, they can use our, all of our tool sets on the analytics side to optimize their, those bots too. So we’re becoming more of a hub for the AI and that, that’s where we’re moving with our investments this year.
Okay. Got it. Perfect. Thank you.
Thank you. The next question comes from Zach Cummins from B. Riley Securities. Please proceed with your question, Zach.
Yes. Hi, good afternoon. Thanks for taking my questions. Yes, John can you talk about if there’s been any sort of changes to the commission structure for the sales force, now that you’re really prioritizing higher margin revenue sources? So I’m just kind of curious if any sort of changes on that front to incentivize the behavior?
Broadly. I think we would want to ensure that our reps are made whole during the year despite the change in strategy for the lower margin GainShare piece of the portfolio. So that’s, that’s something we’re evaluating, but we would ensure that the, the overall structure is fair and equitable for everyone.
Got it. And another question for me, is really just around the net revenue retention number for the quarter. I mean, I think you touched on this a little bit in your script, but can you give us a sense of maybe some of the factors that drove that slightly below your targeted range of 105% to 115%?
Yes. In fact, the variable revenue from GainShare and some labor based revenue that we slowed down and some that was a downfall were the primary in the aggregate primary contributors to the myths of the range of a 105% to 115%, I’ll note though that even with those factors, we’re still a 100% net revenue retention.
Understood. Well, thanks for taking my questions and best of luck in the coming quarter.
Thank you. The next question comes from Samad Samana from Jefferies. Please proceed with your question Samad.
Hi, this is Nathan on for Samad. Thanks for taking our questions. Wanted to circle back to your guidance. Can you help us understand what you’re embedding from a macro perspective? Are you assuming the environment stays the same its worse or perhaps improves from what you were expecting previously?
Yes, I mean, right now it’s, it’s kind of hard to tell for us because of the rebuild that we have, change in leadership back to, the person who ran it for many years. So I can’t really tell yet whether there’s a macro impact or not. I mean, the new logos is a good green shoot that the team is starting to really perform. There’s a lot of landing and expand in there. So they’re, they’re smaller deals, but they’re landing and they’re going to grow.
But it’s, we can’t see it right now. Our value proposition is cost takeout, like the Solunus, if you know, Solunus. They’re all about cost takeout too. And so we form this partnership with them because that’s kind of what the world wants right now. And especially contact center labor. It can be, in some cases the big brands have 40,000 people on payroll, and there’s an opportunity to really, change the cost structure using AI automation. So, but it’s hard to tell for us just because of the, the building up of our sales force. So, I think in a couple quarters we’ll know where, where we stand with that on the macro side.
Understood. And then on – this quarter, but that was down a little bit from, from where you were tracking previously, just talking about kind the factors impacting this and where you stand on that ELA to CPI transition?
Yes, I think ARPUs in a range we would expect considering, as I described in the guide in the build to guide, there is some step down from customers that were previously contributing to that value. Namely the larger customers in our GainShare portfolio. In terms of ELA to CPI, we we’re tracking pretty close to where we were last quarter. We didn’t have a very large number to convert this quarter. So that’s around 70% and I would expect it to, to be in that ballpark in Q3 as well.
Understood. Thanks for taking our questions.
Thank you. The next question comes from Peter Levine from Evercore. Please proceed with your question, Peter.
Great. Thanks for taking my question, I guess. Robert, John, if you look at the top of the funnel, were you not as successful at converting leads or adding leads at a similar level versus kind of expectations or plans?
No, I don’t think it’s about the top of the funnel. Like we were saying, it’s been a rebuild, we lost a lot of our capacity during, when we had the leadership change last year. So when we look at the bookings capacity, it’s definitely a build, it was trending nicely and then it went down and now it’s trending back up. But I don’t think its top of the funnel. And we did, we started the marketing events, which did definitely created some closes in the quarter that we saw in the new logos.
So but it’s a built, I mean we’re rebuilding a lot of what was kind of unbuilt, so it’s but I don’t see anything on the top of the funnel right now and we have very good attendance to the events. So we’re seeing demand for what we’re offering in the market.
Then you prepared remarks, you kind of mentioned voice as a preferred channel for customers, can you kind of outline to us what differentiates your voice Contact Center offering versus what’s in the market today? When that product will go, GA, I believe you said if I missed it on the call. Sorry, but I think you said the second half, but any updates on when that product goes live and kind of what differentiates you versus some of the competition out there?
Yes, I don’t think voice is a preferred channel. It’s still the largest channel, but it’s predominantly non-digital. And so most of the world, whether it’s contact center or digital heads at the companies want to convert as much analog into digital as they can. So, as we know, messaging still as a growth channel is still the growth engine over voice. What that said is, is voice, people still want to sometimes talk to a machine like an Alexa type thing. And so we’re already out in beta, there’s a handful of customers using our voice AI platform. And by the, we said second half of the year, we’ll have it out in GA in Q4, we’ll be when it hits a GA.
So what makes it different is that, when you create an automation on our platform, you can deliver it through any endpoint, including a voice endpoint. And so you kind of write once and deploy. And then, and then with VoiceBase, which is a very powerful product and it competes with the likes of other voice analytics, but it’s, it’s very powerful. We also can do the voice analytics around, how is that automation performing. And even today, our guys, our sellers are baking in the VoiceBase into sales opportunities, because it’s the start of a relationship on the voice side. We can analyze the voice channel and see how it’s performing. And then we can layer in our voice automation and then live agent.
We’re not trying to build, become a CCaaS player. And so we can – we want to do voice automation. And then we do have live agent abilities to take a voice call, but we’ll also be integrating into all the major voice platforms. And you also could bring your own voice, or we will have voice on the platform. Also if you don’t have your own voice, but we’re more or less looking to integrate into all the voice platforms that are there, but you get a single way to make an automation and deploy to all endpoints, whether it be messaging or voice.
Okay. Thank you. The next question comes from Jeff Van Rhee from Craig-Hallum Capital Group. Please proceed with your question, Jeff.
Jeff Van Rhee
Great. Thank you. A couple from me, just guys on the retention, maybe you could address the retention rate X GainShare. I’m curious what you saw there? And then secondly, on the AI messaging, it looks like the AI messaging volumes were down a bit last quarter, and then down even sequentially on an absolute basis this quarter. And to help me sort of contrast that with what I think most people believe in that your leadership around the AI capability. So, why are volumes down there?
Hey, Jeff, I’ll start with the retention question. X GainShare we’d be in the range is the short answer.
Jeff Van Rhee
And your other question was on volumes?
Jeff Van Rhee
Yes. AI messaging volume has been down.
We typically – yes, I’ll start there. So typically following the first quarter, we do have our kind of seasonal low there, before it picks up again in August, September, and reaches our seasonal peak in the fourth quarter. So, I – we don’t, there’s some slight variation there. We don’t see anything in the trends that would suggest a problem though. It’s more or less consistent with how things have trended seasonally in the past.
Yes. Like we see…
I would also that, sorry, Rob, add one more piece here. That is that we have automated volumes at a very high percentage of total messaging. So the pace at which that continues to grow will lessen over time naturally.
Jeff Van Rhee
Okay. And then on the rep count need a little clarification there. I guess we ended Q4 2020 at 80 reps, I think in Q4 2021, you said you were around 144 and you were going to stop there. You went through the sales leadership change. But I think at that time, the expectation was that you you’d see some leadership churn where you probably retained a lot of those guys. So just the comments around sort of not having capacity and not having ramped reps at this point, where are you in terms of rep count and then just kind of recap that chronology for me if I have that wrong.
Yes. The rep count is pretty much where it was last quarter, but during at the end of last year, beginning of this year, there was a lot of – we overturned reps. So even though we added more reps. We lost a lot of season reps during the past leadership. So basically where we see then a buildup of capacity then where we were, if we kept all those old reps that were already baked in, we’d probably be – we now probably would be at a different bookings number during the quarter, but because we have a lot of new reps they’re just building up. Now, they’re showing new logos, which is good. So they’re showing that and there’s a little bit more than 50% of them all had a deal so far this year. So that’s good.
So, we’re seeing some good once again, green shoots on these reps starting to come out. We didn’t on the losing of the leadership. We kept our regional leaders. And then we hired a new set of leaders below them in that, in North America. So, we have that leadership team, some of the leadership team below the main leaders are new, and they were put in Q1. So, they’re also coming up to speed, and then they have their reps under them. But the actual leadership team that’s running, that was the one that was there previously. So…
Jeff Van Rhee
Okay. I’ll leave you there. Thank you.
Thank you. The next question comes from Ryan MacDonald from Needham. Please proceed with your question, Ryan.
Hi, thanks for taking my questions. Rob or John first one for you, as you think about ramping reps, can you talk about what the expectation is in terms of sales cycles? Or what they’ve historically trended as? And then is there any – are you seeing anything in pockets with whether it be an EMEA or APAC of an elongation of those sales cycles? I know you’re – I understand that you’ve got new reps that are ramping, but just curious, I guess, how those sales cycles and those time to productivity are trending versus historical, expectations and whether or not the macro could be playing any role in that?
Yes. I mean, there’re…
Yes, I think – go ahead, Rob.
I’m going to say they’re, we look at about nine – we model a nine month sales cycle. It could go out a little bit longer now, once again, it’s hard to tell on the macro, just because just to be transparent, just because of when you’re ramping a bunch of new reps, and they came at the end of last year, beginning of this year, it’s hard to see with the macro, but I’m assuming it’s playing into something. I mean, it would be foolish to think the macro doesn’t play into slowing down sales cycles and elongating sales cycles. But once again, we’re just monitoring like how well do these reps, like the new logo count once again, shows, okay, these reps are starting to deliver more than 50% of them have at least one deal under their belt.
So, I – it’s just hard for us to tell cycle yet. I think by Q3, Q4 will understand a little bit better and then understand the macro impact. What’s happening in the macro, just on the enterprise side is there’s a lot of layoffs going on in the enterprise customer base, they’re restructuring, and what they’re restructuring around is cost savings, obviously. So once again, we’re trying to play into what automation does. And that’s where we’re really we’re going. But I, once again, I think we need a couple of quarters to see if there’s a macro impact on what’s going on with – in the enterprise with the restruction, but as you can see, we sign, we even had renewals and some of our very large enterprise customers like Verizon and Starz [ph]. So far I feel pretty good about that, but I assume there’ll be an impact somewhere. It’s just – we it’s once again, with a bunch of new reps, a little hard to tell,
Understood, thanks for the color there. And then on the gross margin trajectory, can you give us a sense of the timeline it’ll be required to sort of get that labor component of the GainShare revenue out of the P&L and then how quickly you think you can start getting to the progressing to those 80% plus target margins? Is this a fiscal year 2023 expectation? Or is this more of like a 2024, 2525 expectation? Thanks.
Yes, so the gross margin expectation in that 80% range would be not just 2023, a little bit longer term broadly is the way we’re thinking about it now, but in terms of your first question on the lower margin GainShare components, we’re executing swiftly on that in the back half of 2022, and probably at least the first quarter of 2023.
Thanks for the color. I’ll hop back in the queue.
Thank you. The next question comes from Siti Panigrahi from Mizuho. Please proceed with your questions, Siti.
Thanks for taking my question. I just wanted to dig into the third growth driver you talked about today, is that opening your platform to third parties. Could you dive a little bit more, I understand you have partners from Tenfold and VoiceBase, but is it something you are opening up your AI messaging, and then who are the CRM vendors right now you targeting to a partner, is my understanding a lot of CRM has this solution messaging, so that will be helpful?
Yes. So, obviously we’re, we just put into salesforce, the app stores and integration of our messaging platform into it. What you find is most – it’s not a channel of communication. If you look at messaging at its core, it it’s a way to operate the business in a digital way. So yes, if you treat it as a channel and communication, it becomes like chat. And we used to be in the chat business, but messaging provides really this digital connection to the consumer. You can be proactive over it. There’s a bunch of technology around asynchronous operations, and that’s where we really shine.
With said, we know over time messaging, it may become like chat. It’s not there right now, but we knew that from six years ago when we launched it, and that’s why we got heavy into AI four and a half years ago, an automation, the value of it is an and if I can step back for a second, when you look at the contact center, the care software business, it’s it – and you add up Genesys and Five9s and everyone else in there, it’s about a $10 billion TAM, if you add their revenues. But if you step back, there’s close to $40 billion, $50 billion in labor. And so it’s not about the software. It’s really about how do you take the pot of money that’s in labor and move that and take that and we – and automate that. And that’s the value that it provides.
If we develop – if we deliver a messaging and have a human behind it, we are not reaching the goal. And so that’s what most of these companies are doing. They’re providing their platforms and basically you just put more humans on it, and it costs you the same amount of money where the world is shifting is, how do we take these agents and automate them? Even the GainShare part of our business, where we provide labor and we do automation as a service is a very high value thing. That’s why we got into it where we take the labor where we make them builders.
So that’s the pot of money we’re going after. And that’s why we look at this TAM is like a $60 billion TAM, but the majority of is getting rid of the labor. And that has to be the number one thing. So, if you look at most of the CCaaS players today and whether they’re hosted or on-prem, they’re primarily human agents, and that’s going to change radically over the next couple years. And that’s where we’re positioning ourselves.
The second part is, we may not just, we may not care about messaging long term, as in somebody may choose some other platform, but they’re going run our AI on it. And that’s the value and once again getting rid of the human labor. So that could be our goal. If you – six years ago, and we launched the platform messaging, we always said, we wanted to kill voice and make a channel shift, which we’ve done a pretty good job at. But obviously our goal is to get rid of the humans, and the human labor behind it. There’s no value in that today. And that’s where the majority of our investments have been in the last four and a half years. So, I think that that’s where we’ll continue to operate. That’s why we want to take REI [ph] and move it off of our platform and let it run in many different platforms.
Thanks for that color. And then John, follow up to your commentary and thanks for that color on gross margin. But if I look at a EBTIDA margin, you kept it same to your prior guidance, guidance. When should we think about EBITDA margin expansion and how much, is it mostly that when you see the revenue ramp up? When we should see the, if that’s going to float to margin or any cost cutting you’re going to do? And any kind of without guiding, like help us understand how the margin, EBITDA margin expansion we should think going forward?
Yes. I think if you look at the implied guide on [Audio Dip] expenses, the overall cost structure of the organization is improving marketly. And to sense for where we’re going, we think as Rob described, this can allow us to produce double-digit margins at least next year, for the full year, in addition to very healthy free cash flow. So, we’re – that’s the path we’re on, and the one that we started earlier in the year.
You. The next question comes from Ryan MacWilliams from Barclays. Please proceed with your question, Ryan.
Thanks for taking the question. Just to follow up on the last question, John. While things might look different now, given you’re exiting some of the lower quality revenues, how do you think about the normalized financials of this business? And as we’re working through our model, any guidance on how we could think about revenue growth expectations for next year? Like, could we expect to see improvement of the implied revenue growth rate exiting the fourth quarter?
Yes, I think, it’s interesting actually, to take a look at the business on a normalized basis without let’s say the pandemic driven COVID-19 testing and the pandemic driven GainShare that that helped benefit growth over the last two years. If we normalize for that, meaning, remove its impact from last year and remove its impact from this year. For the second quarter, we’d be mid-to-high teens, for example. And for the full year, we would also be mid-to-high teens. So, I think that’s a good way to think about our core business, and growth potential moving forward into 2023.
Excellent. And then Rob, I’d love to hear your thoughts around the agreement and partnership with Starboard that was announced in the quarter. What are some of the goals of the new operating committee that was announced as part of the agreement? Just love to hear your opinion there. Thanks.
Yes, we obviously made an agreement with them and we are going to put a new board member on, and then they’re going to put three people that we can select from. So we’re going to put one of their people and we’re going to start interviewing both people. So that’s what we’re going to do and then we had one of our board members retire. I’m not sure the operating committee, I mean, we haven’t defined it yet. I guess when we get together, we’ll do that. We’re just working on interviewing and try to find great candidates for the board.
Appreciate the color. Thanks.
Thank you. We have reached the end of our call today. I’ll now turn the call to Robert LoCascio for closing remarks. Thank you, sir.
Thank you so much for listening today. And I wanted to just reflect a little bit on what we’re trying to do with the P&L. We that back in the dotcom or we were one of the few survivors and we made some radical changes. Some of you were shareholders back then, and we went from burning a lot of cash to profitability in a matter of in three quarters. And that saved u, and we’ve been looking at the business as a leadership team. And what we’re looking to do now is, we feel like it’s growth is important. Obviously we’re a growth company, and this is a growth market, but I think one of the lessons we’ve looked at and learned is about growth on top of a P&L that doesn’t generate cash flow is not really a great company.
And we’ve generated cash for 20 years. That’s how we got here. So, we talk about it, even though we’re taking down top line revenue and we could just hold onto that revenue and keep it going. We just felt it’s time to kind of cut it loose and move forward, because this is a huge opportunity for us, as you can see all the new logos and stuff, but putting revenue on a weak company will not make for long term value. So, as shareholders, we’re all aligned with just making this a strong company. And when you look at even a lot of the peer set in cloud today, and it’s when you look at the P&Ls, they’re all not so great. And we just don’t want to be a part of that and we want to strengthen this up.
So, we’re going to make some broad changes to the company, continue to do what we’ve done. I think you’ll see a different company on the other side of this and over the next two quarters where we’re going to focus on delivering those type of results. And what’s in the leadership team at the company is really focused on this. Because we know we have this giant opportunity, Conversational AI is one of the biggest transformational technologies, but once again we chased a lot of revenue during COVID like everyone did, but it’s time now to just work on revenue that can help us build a stronger company in the future.
So, I want to thank everybody in the company, and also I’m looking forward to we’re going to add these two new directors, one from Starboard, one from us, and looking forward to also adding new blood on the board. And with that, thank you. And we’ll see you next quarter.
Thank you very much for [Audio Dip] this conference. You may disconnect your lines at this time. And thank you very much for your participation.