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Liveperson Inc (LPSN) Q3 2018 Earnings Conference Call Transcript

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Liveperson Inc  (NASDAQ: LPSN)
Q3 2018 Earnings Conference Call
Nov. 08, 2018, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's Third Quarter 2018 Results Conference call. My name is Deidre, and I will be your conference operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, the management from LivePerson will conduct a question-and-answer session and conference call participants will be given instructions at that time. As a reminder, this conference call is being recorded.

I would now like to turn the conference call over to Mr. Matt Kempler, the Company's Vice President of Investor Relations. Please go ahead, sir.

Matthew Kempler -- Vice President of Planning and Investor Relations

Thanks very much. Joining me on the call today is Robert LoCascio, LivePerson's Founder and CEO; and Chris Greiner, our Chief Financial Officer.

Please note that during today's call we will make forward-looking statements, which are predictions, projections or 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 certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in today's earnings press release. Both this press release and supplemental slides, which include highlights of the quarter, are available in the Investor Relations section of LivePerson's website.

With that, I will turn the call over to Rob.

Robert LoCascio -- Founder and Chief Executive Officer

Thanks, Matt. Thank you for joining LivePerson's Third Quarter Earnings Call. Revenue increased 14% year-over-year to a record $64.2 million in the third quarter. This marks our sixth consecutive quarter of sequential growth and the continuation of our mid-teens year-over-year growth trajectory. We are once again raising revenue guidance for 2018, and Chris will share those details shortly.

Our results reflect another strong quarter for demand generation, contract signings increased 12% over the second quarter and nearly 40% year-over-year. We signed three seven-figure contracts; one of which was with T-Mobile, which is the largest in our history.

I want to take this quarter call to spend some time reflecting on the past two years of progress. Many of you know, T-Mobiles are our first messaging customers when we launched in 2016. At that time, messaging wasn't even on the radar of executives overseeing digital customer care. Strategically, we started with the idea that consumer behavior shifted to platforms like messaging, that the days of calling were over; no more IVR. Then T-Mobile went live and none of us knew what to expect. Results were phenomenal, consumers loved being able to message directly to T-Mobile agents instead of being forced to call. And we realized it wasn't a simple communication channel, it was a new way to do all things digital.

A few weeks ago we hosted a conference with T-Mobile in Charleston, South Carolina, with over 100 executives and some of the largest brands in the world. This event was T-Mobile's showcase for brands to see up close their un-carrier move called Team of Experts, which eliminates the need for voice IVR. Team of Experts is foundationally built on the power to the LiveEngage platform and the work we have done with T-Mobile over the past 24 months. It is rare in the world of B2B software that you have the chance to develop a partnership with a customer reaches a level they're willing to acknowledge publicly with a nationwide advertising campaign the work you've done. It was really meaningful for myself and for the entire Company, it was a recognition of all the great work we've done over the past 24 months.

T-mobile did it their way for customer care, but there are over 200 other businesses on the LiveEngage platform done it in a totally different way for customer care, sales and even marketing. Seven of these companies presented at the conference in Charleston and each showed not only amazing operational results, but also unique digital conversational commerce experiences. Let me share some of those companies stories.

The CEO of buddybank, a subsidiary one of Europe's largest banks, Unicredit, talked about how they made life easier for customers by launching a conversational, messaging-only bank, that is built 100% on the LiveEngage platform. They offer a concierge service, wrapped around checking accounts and credit cards and have created a unique consumer experience for banking.

Aramark, one of the largest food service providers in the world, shared how they reinvented stadium concessions with an in-seat experience called Brew to You, which gave baseball fans the ability to order food and beverages via messaging in their seats using Apple Business Chat and Apple Pay.

The final example is a Cosmopolitan Hotel in Las Vegas, which deployed an AI-powered bot called Rose, that rolls out the red carpet for guests when they check in, playfully helps them find restaurants, order unique cocktails and even skip the line at the club at the hotel. Rose is changing the game in guest services, driving higher wallet share and peak bookings for the Cosmopolitan.

Also since we launched T-Mobile something really transformational happened, the leading consumer technology companies like Apple, Facebook and Google began reaching out to us about wiring LiveEngage into their messaging front-ends. This gave us access to billions of consumers and we also recently extended our reach to WhatsApp, Alexa, Google Home and new ad format from Google called Google AdLingo and Line, Japan's leading messaging platform.

These are just some of the amazing changes that have been happening in our market, but there is a broader theme to what we're seeing in the overall market. 1995 is where we got started and also Amazon. But we have to ask ourselves why only recently did Amazon become one of the largest companies in the world. I would say a lot of it has to do with the fact that in 1995 there were no digital natives. It was people like myself who grew up on phone calls and retail stores that had the buying power. But today millennials are the largest population and their influence on all consumers and their collective buying power is now driving a seismic change in the world. They grew up dating on an app versus going to a bar club, and shopping online versus going into a store, and more importantly messaging their friends and family versus calling them. The massive change we are seeing in our business over the past 24 months is being driven by them, and it feels like we're just at the beginning of the demand cycle.

There are some key metrics that are showing the momentum that we are building. By the end of 2018 we'll have over 30% of our enterprise customers using messaging on LiveEngage. The very strong adoption curve is driving greater ARPU as we shift more voice calls to our platform within each of our customers. ARPU has grown from about $200,000 in 2016 to more $270,000 in the third quarter. The ARPU for customers who have adopted messaging is more than$0.5 million, which is more than double what we're seeing with chat even after 20 years. And overall, when you segment our enterprise revenue, it's forecasted to grow more than 20% in 2018.

Underlying our messaging adoption is a very powerful statistic as nearly 50% of all interactions are automated in some fashion. AI and machine learning is not a feature of our platform, it is what powers it. At the conference, we introduced a new set of AI capabilities in our platform that include an AI-powered agent workspace called conversational builder, AI-powered intended analysis that enables a brand to better understand what are the key things that consumers are asking for and what conversations to automate. We're also introducing shortly out-of-the-box vertical-based AI solutions that will help customers successfully scale conversational commerce with minimal effort and expertise. This is all possible because of one of our most powerful assets, which I would venture to say is our modes, are the hundreds of millions of end-to-end business-to-consumer conversations that we have access to on our platform. This is a priceless asset when developing AI and creating machine learning algorithms.

Also at the conference we launched LivePerson Studios. This is where we will do the highest form of conversational commerce not only for our customers, but also for well-known personalities. We kicked it off by launching Deepak Chopra, a few weeks ago on Amazon Alexa. We developed a skill on Alexa, and by simply saying, Alexa, open Deepak's reflections, you can hear a daily meditation that last about 30 seconds. We develop a portable way in which everyday you can share an idea and upload it to LiveEngage and then to Alexa. We have a video on our website, if you're interested in hearing Deepak's perspective on what it is like to work with LivePerson and developing something like this.

I've seen the Company through many different cycles over the past 20 years and this feels very different than what I've ever experienced when we scaled even our chat business. The past two years were about doing the foundational work with our product, our people and our customers, so that we can prepare to really scale the business. We definitely have a pole position on conversational commerce today and now we need to aggressively attack this market and this great opportunity.

I will now hand the call over to Chris who will do a deeper dive on our financial outlook. Chris?

Chris Greiner -- Chief Financial Officer

Thanks, Rob; and good afternoon to all of you. I too couldn't be more pleased with the pace of which we're bringing leading technological capabilities to our customers. I'm also excited by our consistent execution, especially as we build the go-to-market engine that scalably addresses a rapidly expanding opportunity.

I'll focus my commentary on the leading indicators continuing to guide our investment decisions. These are the same ones that also underpin the strong results we delivered in the quarter and support our continued growth outlook for the business. Specifically in the third quarter, we generated record revenue of $64.2 million, up 14% year-to-year and 4% sequentially. Both of our segments delivered double-digit year-over-year growth with B2B rising 14% and consumer 12%. Our industry expertise in telecommunications and financial services once again translated into strong growth contribution, with both of those verticals generating greater than 30% and 15% respectively.

Let me highlight two of the many key wins in these industries where we continue to win share. The first was a seven-figure expansion with a Fortune 100 multinational financial institution. This customer will be deploying Apple Business Chat as they seek to modernize consumer interactions to new engagement methods. The second was another seven-figure win with a leading telco in Germany. It began working with us under an accelerator pilot program in the first quarter. And after seeing strong consumer preference for messaging, they signed an expanded contract with us to add many new consumer endpoints, including Apple Business Chat, WhatsApp, in-app and web messaging.

From a geographic perspective, our international markets once again delivered an excellent quarter, posting year-over-year growth of 30% and accounting for 42% of revenue. Overall, our US revenue grew 4% year-over-year, which was in line with our expectations and worth breaking down further as a market.

First, the US enterprise business is already growing faster than the overall Company's growth rate, as we've made this our main focus over the past 24 months. This quarter we even had one of the largest telcos return that had left us during the transition a few years back. We're now going to add capacity to this market where we see growing demand and leverage a great base of referenceable customers.

The SMB group wasn't a strategic imperative 24 months ago and naturally we didn't see growth which put a lag on overall US growth rates. But that said, in January, we started to invest in this group as we also believe there will be demand by SMBs for messaging. We are also seeing good traction now and we expect this quarter to be a record in contract signings. We are also looking at increasing capacity into this market segment. The combination of these results translate into great deal flow this quarter, with total deals signed increasing nearly 40% to over 105 wins. This is a good illustration of the momentum we're seeing from our investments to expand our channel ecosystem and the early success of our accelerator pilot programs. You recall that these accelerator packs are designed entirely around making it easier for our customers to deploy LiveEngage and immediately realize the benefits of our platform.

Recent wins in the US include one of the leading telcos, top 10 bank and a Fortune 500 insurance company. On the back of its early successes in the US, we began expanding the strategy globally. In fact, since the first quarter, we've gone from 25 of these accelerator opportunities to more than 65 today and growing. In terms of revenue retention, for the seventh straight quarter of mid-market and enterprise customers generated retention rates over our 100% target.

Another metric that you heard from Rob that we're encouraged by is ARPU, which accelerated to a record $270,000, up 25% year-over-year. And in terms of profit, we saw solid gross profit leverage accompanying our growth in the third quarter, with gross margins increasing 130 basis points year-over-year to 75.6%. On a per share basis, GAAP net loss of $0.12 adjusted net income of $0.02 and adjusted EBITDA of $0.09 were all within our issued guidance ranges. And at the end of the quarter, cash on hand was $66.4 million or approximately $1.06 per share. All-in we delivered another very strong quarter and we are seeing compelling proof points and of healthy returns to which we're reinvesting our profits.

With that I'd like to take a moment here to give a shout out to the sales organization. We placed a lot that team shoulders, mostly in the form of executing on a rapidly increasing demand environment where total quota-carrying headcount is actually below 2016 levels. So it really just done an awesome job of executing.

Now you recall at the beginning of the year I conveyed our intention to direct investment in two primary areas: the first in advancing our platform capabilities. Think of these in two principal areas of globalizing our technology capacity in advancing our leadership in automation. And the second, increasing our go-to-market capabilities and capacity through ramping our top of funnel activities in building out a channel ecosystem. Starting with our investment in the top of the funnel over the past few months, we've seen the pace of pipeline creations double on the back of powerful sales use cases, marketing programs, investments in demand generation teams and globally scaled customer summits. Further, the increased diversity from where these opportunities are being generated has also expanded. We believe this is a clear reflection of the significant opportunity, our unique platform capabilities and our strategy for creating demand.

Second, our conversion rates from our hosted customer summits, in which nearly 250 unique brands have participated in over the last two years has been over 40%. In fact, as you heard from Rob, we just concluded one of our most successful events in our history with T-Mobile, more than 100 of our customers and prospects spread over an entire week learned firsthand how they can leverage LiveEngage to connect with consumers conversationally through messaging. These customer summits are a critical component of our industry creation strategy, providing LivePerson the opportunity to showcase its leadership and differentiation.

Third, since investing in our channel capabilities, which really up until recently was largely exclusive to EMEA, we've seen a growing pipeline contribution from a diverse mix of strategic partners. In all, we've created more than 30 million of partner-influenced pipeline this year and it's ramping. The volume of partner-created pipeline in the third quarter was nearly three times higher than in the first quarter. In fact, in the third quarter, a partner helped us secure a mid six-figure deal in Europe with one of the largest insurance companies in the world. And we also signed our first partner-related deals in Japan and Singapore.

And fourth, from a product perspective, in July, we opened our Advanced Technology Center in Seattle and have ramped up quickly to over 70 engineers and counting. With that investment, we further globalized R&D across key development hubs and with it bolstered our technical infrastructure a as well. This added capacity, as you just heard from Rob, is enabling us to release new AI technologies that we can aggressively bring to market.

I think in recapping this is worth reiterating that these investments have been pointed toward advancing our product leadership along with the creation of a new market that is now seeing pipeline opportunity increase rapidly. All this translates to updated guidance in the following ways, we're once again raising guidance for 2018. We now forecast revenue in a range of $248 million to $250 million, up from our previous guidance of $245.5 million to $247.5 million. Updated guidance implies year-over-year growth of 14% at the midpoint, demonstrating continued acceleration toward our 20%-plus growth target. We're also updating 2018 adjusted EBITDA guidance to a range of $18 million to $20 million from $22 million to $25 million.

This update reflects three new investments not previously in our guidance. The first two account for the acquisitions of Conversable and AdvantageTec. Although these acquisitions will impact EBITDA near-term and they don't contribute materially to revenue this year, they do offer tremendous strategic value. Conversable added a team of highly skilled AI and bot developers, brought deep vertical expertise in the quick service restaurant industry, as well as social marketing capabilities.

We also made an investment in the automotive space with the acquisition of AdvantageTec, bringing us the only industry solution that supports the entire automotive lifecycle from research, sales to aftermarket service and parts. AdvantageTec doubles our TAM in the automotive space and provides significant cross-selling opportunity to our roughly 14,000 automotive dealer customers. The balance relates to the cost associated with the significant upsizing of our customer event with T-Mobile in Charleston, which we did not have in our original plan, because it was driven by T-Mobile's August launch of their un-carrier move. It was well worth the investment and as I just discussed, these customer summits are a proven method of driving higher conversion rates and creating market momentum. You can refer to our earnings release for additional details on our full-year 2018 assumptions.

As we close our comments and move to take your questions, I'll quickly wrap up with a few summarizing points. First, our execution remains really strong as evidenced by both our operational and financial results in the quarter. Second, we're here to expand our lead and to win the conversational commerce market, not just participate in it. As Rob discussed, in just the past 24 months, we've transformed how brands communicate with consumers and we've just begun to scratch the surface of the opportunity in front of us. And third, we have strong conviction in the areas with which we've been investing and the early results demonstrate the opportunity for significant returns.

With that, I'll turn the call back to the operator to take your questions. Deidre?

Questions and Answers:

Operator

(Operator Instructions) And our first question comes from Ryan Macdonald with Needham & Company.

Ryan Macdonald -- Needham & Company -- Analyst

Good afternoon, everyone. Congrats on the quarter. Just quickly, I guess, first question on the acquisitions you made with AdvantageTec and Conversable. Is this sort of a, I guess, a shift in strategy as we're seeing a -- as we're driving toward that 20% growth target that you're going to kind of continue to look for some of these additional acquisitions that can add value or help accelerate you toward that target?

Robert LoCascio -- Founder and Chief Executive Officer

It's not really a shift, it's just we're adding in with the car automotive vertical right now. We had all the parts to discover -- do discovery, search for cars and then actually buy them through messaging. This gives us the next -- the last part of the process, which is all the servicing post-sales, oil changes and all that. And they have about 500 customers. We've got north of 10,000, so it gives us an area to really sell into that, but it creates the end-to-end journey in that vertical.

Conversable, on the other side, we have some very good technology and they're very focused on the quick casual restaurant vertical, we have OnStar, they have retailers. So it gives us a foothold in that area, they have outbound targeting capabilities for marketing and that will accelerate some development on our platform versus us building it organically. So we picked up about little over 20 engineers in Austin and gives the hub in Austin now for our developers.

So it's not really a shift, it just is an acceleration that we're trying to get more technology and then it creates an end-to-end vertical. You should start to see more, and I said it in my speech, which is we are getting very focused on filling out verticals when it comes to the consumer experience. So we're looking at areas to invest in to organically and non-organically to sort of fill that out.

Ryan Macdonald -- Needham & Company -- Analyst

Got it. And then just a quick follow-up on sort of the Apple Business Chat and the updates we saw during the quarter. It seems like, obviously, there's some really nice and strong success here in signing up additional customers. Do you think longer term, I guess, strategically as customers look at this, that this would be an area where Apple Business Chat is adding incremental chat lines or do you think it's more replacing volumes from other channels? Thanks.

Robert LoCascio -- Founder and Chief Executive Officer

If you look at Apple's strategy from a year ago when they launched it, it was really about what aligned to ours which is replacing the phone call, so to customer care operations and sales. So I think we have -- we are very aligned in that area. The ability to on-device securely and this is an encrypted communication channel to message through our platform to a brand is a very powerful thing. We also have Google with RCS and Google Rich Business Messaging, which is the other obviously big device and a big operating system. So these two, I think, will drive a tremendous amount of adoption. This seven-figure deal is like predicated on Apple Business Chat.

So we right now, I think, it's little bit north of 50% of the customers on Apple Business Chat are riding on our platform and we are obviously doing very big deals and we are doing more importantly great consumer experiences. And so like I said, even the Aramark deal that we did with the Brew to You experience was purely on Apple Business Chat. And so we see it as just -- it's another way to drive consumer demand, which then drives business adoption.

Operator

And our next question comes from Mark Schappel with The Benchmark Company.

Mark Schappel -- The Benchmark Company -- Analyst

Hi. Good evening. Thank you for taking my questions and nice job on the quarter, especially the topline. Chris, starting with you, I appreciate your comments about your channel programs in your prepared remarks. I was just wondering if you could just provide us some additional details around maybe some of the initiatives that are taking place or that are under way at the Company regarding building up your channel ecosystem and building up that pipeline?

Chris Greiner -- Chief Financial Officer

Sure, Mark, and thanks for the kind words. So let's start with how channels are evolving at the Company. So our channel prowess was really isolated to Europe. We're about on average 50% of our bookings have been partner-generated. So what that's given us, we believe, is a very good blueprint for how to replicate it in North America and Asia-Pacific. The results you're seeing right now in the newly created pipeline is heavily in North America. We have not yet started with the same level of capacity in Asia. What we've done is we've brought in a terrific team, a partner leadership. And if you look at how we're partnering with very valuable strategics like IBM and Accenture, we're not just pushing LivePerson, we're increasingly being pulled. And I think it's a combination of the capacity in North America, a really good blueprint from Europe. And as Rob mentioned, this theme of conversational commerce is pulling us toward those engagements rather than us having to push and emphasize our capability.

Mark Schappel -- The Benchmark Company -- Analyst

Great. Thank you. And then also on your prepared remarks, you noted, if I recall correctly, a telco customer that left the Company years ago, but has kind of now returned to the LivePerson fold. I was wondering if you just give us some details around how that deal progressed. Obviously, I'm sure your sales -- one of your sales reps or even sales teams have been calling on that customer for a while, but maybe just give us a few more details on that.

Chris Greiner -- Chief Financial Officer

Rob can give some color, but this was all about creating an opportunity for the customer to take a bite at the capabilities in an easy way. We went direct with it. It had been, as you correctly point out, a pretty long engagement cycle, but for good reason, right, as it's a large telco, but they are already on the platform and we're excited about the opportunity to grow it.

Operator

And your next question comes from Koji Ikeda with Oppenheimer.

Koji Ikeda -- Oppenheimer & Co. -- Analyst

Great. Congrats on the quarter, guys. Just a question on the EBITDA guidance here going forward. I know the guidance you're taking it down for the two acquisitions here and the upsizing of the T-Mobile event which makes complete sense. And I know you're not giving out any 2019 guidance today, but just thinking about some of the commentary that you've had with the investments, that you're making in the go-to-market strategy in the technology too, curious if you could talk real high level on how to think about EBITDA margin expansion going forward here as we set our models. Thank you.

Chris Greiner -- Chief Financial Officer

Yeah, hey, Koji. Thanks. Things are going well with the new one. Let me start with, we thought it was really important and you've seen us add it to the last two scripts that we have obviously increased our rate of investment as we've seen the market continue to expand with opportunity, but it's been important for us that to be very clear and transparent as to where that investment is going. And as you saw in this call, point directly back to the proof points as to why we believe they continued to be the right places to put our reinvested profit. If you think back for the year, I'll use rough numbers, for the year, we will have reinvested about 8 points of adjusted EBITDA margin. If you go back to the initial growth rates on the topline that we expected this year right around 10% at the midpoint, we currently see ourselves at 14%. So already within the course of the year from a ramping set of investments an 8 points of margin, we've gotten back already 4 points of incremental growth. And most of those investments at this point have been directed toward enhancing our product capabilities and building out our top of the funnel.

There is a logical next step now to as we have a great pipeline to go close the heck out of it and progress the heck out of it, that will require some capacity. I think you're going to continue to see the Company in an investment mode. The demand in the market right there, right now compels that we do that; not ready to obviously give future guidance on margins, but the theme of growth and market demand outstretching our current capacity right now will continue for the foreseeable future and it's organic, to make that point, these are organic capabilities we're going to deliver on.

Koji Ikeda -- Oppenheimer & Co. -- Analyst

Got it, Chris. Thank you for that color. And next question for either Rob or Chris, just real high level here, a question on the work that you're doing with Google and its Rich Communication Service initiatives, how is that progressing? And at a very high level, I'm not too familiar with it, so how does it compare to say Apple iMessage or Facebook Messenger and what does that potentially mean for increased interactions for LiveEngage?

Robert LoCascio -- Founder and Chief Executive Officer

So, yes, we took one of the first banks live here in the US. Was it announced, the bank, or no?

Chris Greiner -- Chief Financial Officer

Not I guess.

Robert LoCascio -- Founder and Chief Executive Officer

It was one of the big banks, not announced yet publicly, but we did that with them, we've done some other launches with them. So, when you look at our RCS globally, there are basically two parts to it. One is, they've got to upgrade all the carriers to the RCS service and then they've got a client that fits on the mobile device, which they've gotten Samsung now to commit to and they've got out Rich Business Messaging, which is the business part of that. So they are definitely have to do a little bit more work to scale up, but the bottom line is, every telco around the world wants to increase SMS.

SMS is an old technology. They want to use RCS, because it makes it very much in parity, if not better than WhatsApp or Facebook Messenger. So, they're very aggressively pursuing this and we're seeing them as a great partner. Obviously, with Apple and iMessage, users get it, they don't have to go to a carrier, it's there, it's closed system. So, Google has to do a lot more work, but the bottom line is more people are on SMS Today. There are 5.3 billion people who use it. It's 60 billion messages a day. It's larger than any single OTT over-the-top messaging services like WhatsApp or Facebook Messenger.

So once that thing hits, it's going to create a tremendous amount of impact in the world. And so, we are just working with our customers and we are creating services around RCS and obviously doing that with Google's version and also working on other versions like in Japan, they don't use Google's version and we have KDDI. They have their own version of RCS that the Japanese provided. And so we're integrating into these services. So, that's how it's playing out today.

Operator

And your next question comes from Jeff Van Rhee with the Craig-Hallum Capital Group.

Robert LoCascio -- Founder and Chief Executive Officer

Jeff? Hey, Jeff. We can't hear you. If you are there?

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

Yeah, trying again, how's that?

Robert LoCascio -- Founder and Chief Executive Officer

There you are. We can hear you.

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

There we go. The old mute button. All right. Sorry about that. So a couple of quick ones from me. So as I look at the $4 million EBITDA reduction for Q4, can you dial that in at least a little bit more, so we have a sense of what is Conversable and Advantage versus the T-Mobile event? I mean, we're not giving forward guidance. I think it's important to understand what's really driving that.

Chris Greiner -- Chief Financial Officer

Yeah. Hey, Jeff. I'll take that one. Obviously, we didn't go into the specifics of it. Both Conversable and AdvantageTec are very early stage sub-scale companies. So as a result, you can imagine what the P&L profile of it looks like. And then the T-Mobile event, as you've heard us say in the past, we typically spend on these events in the neighborhood of $1 million. That's over a 1.5 days and at 50 to 70 of our customers and prospects. We did this one over a week. We included a heavy presence of our technologies and a demonstration of them and we increased the size of it to well over 100. So, I'll let you deduct a math from there, but roughly speaking, the change in EBITDA is pretty evenly associated with the combination of Conversable and AdvantageTec and the significantly up-sized T-Mobile event.

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

Got it. Thank you. That's helpful. And then, you talked about the couple of things on pipeline. I just want make sure I got this right. So I think you said signings were up 12% sequential, 40% year-over-year. Is that count or value, and is there a meaningful difference between the both?

Chris Greiner -- Chief Financial Officer

That's value. So what Rob spoke to in his prepared remarks was the dollar representation of growth. What I spoke to in my remarks, in terms of deal count. So we did 105 deals this quarter, which was up almost 40% year-over-year.

Operator

And your next question comes from Glenn Mattson with Ladenburg Thalmann.

Robert LoCascio -- Founder and Chief Executive Officer

Hey, Glenn. You may be on mute.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Sorry, I'd heard the last caller do that. And I said I won't make that same mistake, and there it is. So interesting about Rob's comments on ARPU and the guys using messaging on LiveEngage and what a significant difference that was. I missed though the figure as to when you get the 30%. I'm just curious about the growth rate of that. I guess as you see it over the next few years, where you can get bigger in that to drive that number higher?

Robert LoCascio -- Founder and Chief Executive Officer

Yeah, so by year-end we'll be over 30% of the enterprise customers that are on LiveEngage will be using messaging. So we're already going to be at 30% or -- we're actually, we're already 30%, we're going above it by year-end. And so, what that tells us is a couple of things. One is, we still have a lot of room, we've got a lot of customers out there, large customers that we can move to messaging and obviously up-sell -- cross-sell.

The other thing is we can go very deep with them. So once we get them on, then we spent a lot of time just kind of getting very deep, which drives the ARPU number. And so, as Chris said, we didn't really add capacity in the last couple of years of headcount, because we kind of were focused on in the last two years of doing it right, spending time with our customers to get a T-Mobile where they were to do this big launch a couple of weeks ago. It took us going very deep with them.

Now with those learnings, we can really focus on bringing new people on to the platform, taking that 70% that's not there, accelerating that and with that we'll add additional capacity into the field group, because now we have sort of good -- we have good frameworks for growing and expanding the business.

Chris Greiner -- Chief Financial Officer

Yeah. And we're motivated by how much more broadly our customers use the platform once they get on messaging. I think, there were some good data points that Rob provided. So at a total mid-market enterprise level, average portfolio ARPU right now is $270,000. We see ARPU greater than the $0.5 million when we have customers on messaging. And as we've conveyed in the past, as we bring our customers more and more endpoints, which again part of the strategy is expansion to Apple Business Chat, WhatsApp, Google Rich Messaging, the Facebook Messenger, the list will go on, as clients go from just messaging and then they expand with more and more endpoints, there's actually an exponential change in the revenue per customer to the point where when we have customers on three or more endpoints, it's a nice start to picture in your mind's eye how does the company continue to penetrate the white space in our account. When customers are on three or more endpoints, that average ARPU can be as high as $2.9 million, compared to the today average of $270,000. So our capacity has stretched between how do you go cross-sell and up-sell the base while also acquiring new logos, but we're motivated on both fronts. There's nice leverage with each.

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Great. Thanks. That's good color. And then, I guess, curious on the other -- your comments about the fact that there was less capacity added in the SMB space in the past, but maybe that's changing now as far as on the domestic side and helping to boost growth there. Can you give us -- could you remind us what the breakdown is, I guess, between enterprise and SMB and I guess like beside those two, help us understand what it's going to take to change the trajectory of the US growth rate overall?

Robert LoCascio -- Founder and Chief Executive Officer

We don't break it out today, but we want to highlight is, because actually last call when we said 4%, people are like what's going on with the enterprise and they kind of related that to the enterprise. And I want to break it out to just explain that. Obviously, our strategy was enterprise care and that's still our focal point. And we've grown that, which will be over 20% this year -- the growth rate. So that's our focus. We kind of didn't put any investment into the SMB space, because it's just just dollars. We want to invest and make a bet and focus that bet. As of January, we started to reinvest, and frankly we took a leader who did the migrations and now he is now running that SMB business. And so now he's focused on accelerating them, actually, we're going to have one of our biggest bookings quarter coming up. So we see now demand in that area and we've made -- we started those investments in January, we should start to see them forward and that should start to pick up the overall North American growth rate going into 2019. But if you look at enterprise, it's pretty amazing, it went from like zero, obviously, because we were migrating to 20%. And so I want to break that out for you guys, so obviously that business is flat to negative, it was flat to negative in the year and now it will start to pick up.

Operator

And your next question comes from Mike Latimore with Northland Capital Markets.

Mike Latimore -- Northland Capital Markets -- Analyst

Great. Thanks. Yeah, nice quarter there. Just wanted to clarify, so the deal count growth, is that a decent proxy for bookings growth?

Chris Greiner -- Chief Financial Officer

It's mixed, right, because the deal sizes are going to be a mixed bag, right. And what we specifically highlighted in the deal counts was just how impressed we were with the contribution of our channels and our accelerator packs, right. So these accelerator packs were something that we launched very early in the year. We had 25 opportunities, that's tripled in size and we are having great success in this type of an offering, making it very easy is the bottom line for customers to get on the platform and allow us to prove what our customers say at our events that we can drive real value for them.

Matthew Kempler -- Vice President of Planning and Investor Relations

Yeah. This is Matt. I mean, I agree with what Chris is saying. In this quarter, they were pretty closely related, but that's not necessarily always tied together. We actually had very strong deal value coming from existing customers, we had a lot of volume coming from new customers tied to the accelerator and our partner programs.

Robert LoCascio -- Founder and Chief Executive Officer

And we built out -- if you guys remember, we started to build out a hunter team a few months ago, so that hunter team, which is new logo-only has started to produce, you're going to see logos, just sure logo count probably move up, because we got a team focused on and they are expanding themselves too, there's opportunities out there.

Mike Latimore -- Northland Capital Markets -- Analyst

And then Rob, did you say that 50% of all Apple chat volume is going across the LiveEngage platform?

Robert LoCascio -- Founder and Chief Executive Officer

Yeah, close to it. It's going -- not volume, it's the customer count is riding on its those customers who are using the LiveEngage platform, yeah.

Operator

And your next question comes from Zach Cummins with B. Riley.

Zach Cummins -- B. Riley FBR -- Analyst

Hi. Good afternoon and thanks for taking my questions and congrats on the really strong 3Q results. But in terms of Apple Business Chat you had a press release out earlier talking about a new wave of customers coming on and going live with that messaging service. Do you anticipate that the adoption and the amount of customers going live is going to accelerate here over these next couple of quarters?

Robert LoCascio -- Founder and Chief Executive Officer

Yeah, I mean, it's definitely -- if you are business in the world, you have the ability to be wired into an iOS device, it makes sense to wire in. And so I believe that it's going to drive tremendous traction it's really is that stage one, because there's so much more discoverability that Apple, I believe, we'll do on device right now. To find a brand, you have to search them and put them in, but I think in their OnMaps (ph) and there's some other areas, but I think there's going to be a lot more that even they're going to do in the future. So, Apple's very committed to it and obviously now Google with RBM and RCS and so there's going to be a lot of demand in the market for this type of stuff and they're driving it, they drive adoption and then they are recommending partners to work with and I believe we are preferred in many ways, because we do a very good job and we're focused on this, but there they are a great partner of ours.

Zach Cummins -- B. Riley FBR -- Analyst

Great. That's helpful. And then, last question for me is just around the new Google AdLingo opportunity, I know it's pretty early days, but have you seen any sort of indication of interest or potential demand for a lot of your customers to potentially be able to communicate directly with consumers through display ads?

Robert LoCascio -- Founder and Chief Executive Officer

It's definitely out. I don't want to give any stats that I don't have any data, it's definitely are on, we've got a handful of customers or a hand of customers, I'd say, not full, just one hand, but it's really interesting, display ad from the display ad, you can message. And so you can think about the possibilities. I really feel like and this is some stuff even with the Conversable acquisition if you sort of knitted together, there is an edge in advertising through messaging. We have seen much higher conversion rate, so if you take an ad unit on Facebook and you drive it to Facebook Messenger for business, we see a much higher conversion rate than you would if you clicked and sent it to a landing page.

And so, all of those messaging front ends and the ability to drive advertise, use advertising to drive to them, it's going to create a whole set of business opportunities. And I can feel like there's going to be brands that will just use it to build a business like you could get such an edge if you can do it right now. The flip side is it's a very, very, very creative process today. We can't stamp it out. So when we're using it, we got to -- how to create the ad, what is it look like, how to get people to click, it's very different and setting expectations but I think it's a pretty major step on the conversational commerce side to drive adoption.

Operator

(Operator Instructions) Thank you. We have reached the end of our call today. I will now turn the call over to Mr. Rob LoCascio for closing remarks.

Robert LoCascio -- Founder and Chief Executive Officer

Thank you, operator. I'd like to end the call by reemphasizing a few key points. LivePerson strengthening the outlook is directly proportional to our execution on the goal of being one of the biggest and most recognized companies in the world of conversational commerce. And as I said many times, I firmly believe that conversational commerce is going to be one of the biggest transformations in digital, it'll assume obviously voice calls, we can see it assume parts of the web and especially apps, these are things that are going to get pulled in. If you can simply go on an Apple device and say, I want to buy a car, and you get shown the car you want to buy and then you buy it and then it comes to your house and then you want to get your oil changed, you say, I want to get my oil changed and then you get it, that's what we're talking about.

And so it's simple and powerful. We also, I think we have a very very clear roadmap on how we can go after this multi-billion dollar industry and we have, I think, hired tremendous group of people in the last year. And then we have all the people who have been here to get here. And so we've got a platform that's powerful, and we've got people behind it to deliver on that. And we have this unique asset which is every month 50 million to 60 million new conversations happen on our platform end-to-end business conversation. And if you are creating AI, using AI or trying to create a machine learning algorithm and you look at a conversation like we could take a vertical like telco and we have biggest telcos around the world and we look at how do you do bill pay right. And we'll be -- I know we're going to be able to automate bill pay which is like 30% of all voice calls in telcos it's hundreds of millions -- billions and billions of dollars a year globally spent on how can I pay my bill. We're going to automate that. So that gives us a real edge in the market.

So I'm very excited and very bullish about where we are and now I feel like we just have this opportunity to bet-down on it, because we have the metrics, we know what makes us successful customer, we know how to take it AE and get them to sell and now we just want to bet-down for the next level. So I look forward to the next quarter and taking this journey with you as we build the business to the next level. Thank you.

Operator

This does conclude today's conference call. Thank you for your participation. You may now disconnect.

Duration: 47 minutes

Call participants:

Matthew Kempler -- Vice President of Planning and Investor Relations

Robert LoCascio -- Founder and Chief Executive Officer

Chris Greiner -- Chief Financial Officer

Ryan Macdonald -- Needham & Company -- Analyst

Mark Schappel -- The Benchmark Company -- Analyst

Koji Ikeda -- Oppenheimer & Co. -- Analyst

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

Glenn Mattson -- Ladenburg Thalmann -- Analyst

Mike Latimore -- Northland Capital Markets -- Analyst

Zach Cummins -- B. Riley FBR -- Analyst

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