Asset Manager Investing in Global Technology Sector

We're an asset management firm allocating our capital into asset classes benefiting from technological innovation and applications globally. We serve as a family office of a tech professional who has spent over a decade as an entrepreneur, operator, and venture investor across Asia and the US.

Our small team is made up of diverse investment professionals who research, identify, and execute relevant opportunities. We occasionally share some of our investment memos, insights, and analysis here.

Friday, June 26, 2020

Q2.2020 - LivePerson: Still Difficult To Draw A Conclusion

  • A strong increase in messaging volume will translate to higher revenue, given the company's mix of usage-based and license-based pricing.
  • The disciplined approach in expense management will also drive EBITDA margin expansion by ~100-200 bps.
  • The overall long-term outlook remains mixed, considering the challenging landscape and the limitation of its AI-based offering.

The near-term outlook for LivePerson (LPSN), the conversational commerce AI company, looks a lot better than we expected despite the COVID-19 situation. The company beat the Q1 revenue guidance while top-line growth accelerated to 18%, ~100-200 bps higher than the TTM growth at the end of last year. The company's commitment to achieving more cost-saving by leveraging automation, coupled with the increase in demand for a messaging-based solution, further suggests that there may be a near-term upside opportunity. On the other hand, we still have a mixed long-term view. The business model scalability and the competition are still long-term risk factors that concern us. Since our first coverage on the stock last November in which we discussed some of these concerns, the stock has been down ~4.5%. We will maintain a neutral stance on the stock for now.

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