After six quarters in which LivePerson Inc. (Nasdaq: LPSN); TASE: LPSN posted continued decline in revenue compared with the corresponding quarter in the preceding year, the company reported growth in the third quarter of 2017, possibly signaling that the company is emerging from a difficult time. Liveperson's revenue declined when it was developing a new platform and gradually transferring customers from the old platform - a process that took longer than expected, and also involved a loss of customers.
Signs that the transition period is ending have pushed the company's share price up 44% since the beginning of the year, but it is still 44% below its peak in 2012. The company's market cap is now $650 million, higher than it was when trading in its share first began on the Tel Aviv Stock Exchange (TASE) in 2011.
LivePerson provides software as a service (SaaS) solutions that facilitate management of connections between an enterprise and its customers. The beginning was chat software, but the company's solutions now also include a connection through websites, social networks, apps, and so forth. LivePerson is a US company, but its largest branch is in Israel (over the years, the company has acquired local startups), and it has 450 employees working in various spheres of development in Ra'anana. LivePerson is now expanding its business in Israel, and is opening a branch in Sarona in Tel Aviv that will work in artificial intelligence.
LivePerson CTO Eran Vanounou manages the company's activity in Israel. In an interview, he tells "Globes" about the process that the company has gone through. "It wasn't easy. Four years ago, we came to the point where a decision had to be made. The company grew. We could have gone on coasting, but we realized that a digital tsunami was coming, and if we wanted to prepare well, we had to rebuild the platform. In today's hurly-burly world, the shelf time of a technology product is getting much shorter."
Vanounou says that the company tried to understand what changes would take place in the digital sector, and looks that the technologies and trends of big data, cloud computing, analytics, digital, and mobile - actually, all the buzz words in recent years.
"Today, every startup with two servers on Amazon and three customers calls itself a big data-cloud-analytics company, but we're a real company in the sector. We carefully selected the technology and went to the work table to prepare the system with mobile in the center," Vanounou says.
Talking about the troubles of the transition period, he says, "Developing a new system while still supporting the old one, is like doing a split. We lost several customers, because in a process like this you emphasize what will happen tomorrow, rather than today's needs, and the competitors respond to this gap. We did it deliberately, and today, we can say that we've finished the process."
LivePerson's share rises
"Globes": Was it necessary to educate the market?
Vanounou: "On the contrary; the companies are narrowing the gaps with us - the consumers. Digital is a way of life. As consumers, we dictate to the companies. If we look at my father, at my, and at my son, for example, my father is almost convinced that only Israel Discount Bank (TASE: DSCT) in Kiryat Bialik watches over his money, and he's loyal to the bank. I was among the first customers of the first direct bank that has no branches. I have less loyalty than my father had, but I still have some tolerance, and I can understand why they ask me what my account number is when I surf using an app. My son is 18 years old, and his loyalty and tolerance are very low. He lives a digital life, and expects them to behave the way he is used to. He was born with it; it’s a given."
Vanounou believes that a wide gap has opened between the consumers and their expectations and the way that companies provide us with service. "We like hating them for the service they provide, but they invest a lot of money in it - simply in old analogue worlds - in which you dial and hear music while you are on hold. My son will switch to the competitor who gives him the service he expects. What will happen is that the gap will close, because everyone has seen what happened to companies like Nokia and Eastman Kodal, which didn't realize that their customers had changed."
LivePerson's platform enables service representatives of companies to be available to the customers through various digital means, while measuring the representatives. At the same time, it provides tools for understanding natural and analytic language, which makes it possible to test the customer's satisfaction and respond accordingly.
According to Vanounou, in contrast to previous chats, the new system offers the option of an open line, such as in a WhatsApp call, for example, in which each side answers when it is convenient for him or her, so the representative can handle several customers simultaneously. "Today, a representative answers calls at the service center, and frustrated customers who have been waiting a long time come in a mile a minute," he explains. "People working at the service center get worn down. Their turnover is 35% a year, and it costs the company a lot of money to train new representatives. A representative who enjoys what he or she does gives better service.
Who are your main competitors?
"There are yesterday's competitors and tomorrow's competitors. Yesterday's competitors, who provide digital solutions, mainly chats, include Oracle, Salesforce, Nuance Communications - mainly CRM companies that have added a digital connection layer.
"In the past year, we have been seeing Google, Facebook, and Apple entering these spheres and creating a really strong headwind."
Apple is launching an ABC solution (Apple Business Chat) - in which LivePerson is involved.
Even though growth has returned, LivePerson is still not making a profit according to GAAP accounting standards.
"There has been a positive trend for the past year, and we plan on becoming profitable. We believe that there is a good return on investment, and see movement in this direction."
Do the investors understand the change you have been through?
"I think so. I told them in advance that we're concentrating on upgrading in 2017, and the plan is to return to the growth rates we're used to seeing in the company. We've seen this beginning in the past two quarters."
As a US company, what keeps you on the Tel Aviv Stock Exchange (TASE) when so many companies have had themselves delisted?
"The main reason for registering for the TASE was to strengthen the brand name. A presence in Israel is important for us for recruiting employees and the pride of the local employees, and there were financial reasons, such as continuous trading, but these were secondary. Delisting is always a question. It's hard to measure effectiveness, but meanwhile we're here. This is a question that all dual-listed companies face."
Published by Globes [online], Israel Business News - www.globes-online.com - on November 19, 2017
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