Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's fourth quarter 2018 earnings conference call. My name is Ian 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 participants will be given instructions at that time. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Mr. Matthew Kempler, the company's Vice President of Investor Relations. Please go ahead, sir.
Thanks very much. This is Matthew Kempler, VP of Planning and Investor Relations. 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. 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.
Thanks, Matt. Good evening, thank you for joining LivePerson's fourth quarter 2018 earnings call. The fourth quarter was an amazing close to what has been an incredible year for LivePerson. Revenue in the quarter was at the high end of the expectations, hitting a record $65.7 million and accelerating with 15% year-over-year growth. Equally important, contract signings set a new record, and this was against a previous high watermark. It is worth calling out that we saw strength in both enterprise, where we signed several seven-figure contracts, and mid-market SMB, which generated record demand after we increased our focus on selling conversational commerce solutions to smaller businesses. The fourth quarter was one of those times where everything came together, reflecting strong momentum in our business. On our last earnings call, I shared the themes that have gone into reaching this point.
We are sitting on one of the richest data sets of conversational data in the world. Our data is our moat, it is what allows us to drive our AI strategy to power things like Maven, Conversation Builder, and LiveEngage as a whole. Within the past year, the major consumer technology companies such as Google, Apple, Facebook, and WhatsApp have all leaned into conversational commerce integrated into our platform, opening our reach to billions of consumers echoing that brands should engage with their customers through messaging. We now have a well-established referenceable customer base in key geographies and verticals who have proven the ROI scalability of conversational commerce on our platform. These customers are actively shifting voice volume to messaging, they are advocating on our behalf.
On this call, I want to shift our discussions to where LivePerson is headed because I firmly believe that these advancements have positioned conversational commerce at an inflection point. In the fourth quarter alone, three of the world's largest and most admired brands in travel, retail, and financial services took the leap to conversational commerce on LiveEngage. It's a good indication that the industry is now rapidly moving past early adopters and into the mainstream. We expect that over the next two years, just about every large brand will determine how they want to participate in conversational commerce. This digital adoption rate is going to be big, with the far reaching implications to society. Economists are calling the blending together of AI and business the fourth industrial revolution. Gartner just named conversational commerce the top trend that will impact the future of digital commerce.
They projected that by 2022, at least 5% of digital commerce orders will be predicated initiated by AI. We are leading this transformation when it comes to how brands engage with their consumers have been making the product and market bets to continue our momentum. Our aim is to be more than just a driving force in the industry. We want to dominate the marketplace become one of those esteemed technology companies that defines a generation. For us to achieve that goal, we need to have the best product the right sales capacity to get in front of every company in the world that wants to do conversational commerce. It's pretty easy to imagine now that most companies will want to be directly connected to a consumer through Apple Business Chat, WhatsApp, Facebook, SMS over the next few years.
2018 was a year of laying the foundation for this massive change. We are now ready to add the next level investments to accelerate our revenue. One of the areas we want to start ramping is in our sales teams. We ended 2018 with approximately 50 quota-carrying reps, which is actually down slightly from 2015 before we even launched LiveEngage. We've stretched the capacity of these resources as our pipelines have grown considerably over the past 12 months. We're going to close this gap in 2019 by nearly doubling our sales capacity, Chris will provide more details, we anticipate that this investment will accelerate LivePerson's momentum positioning to approach, if not achieve, 20% growth by the fourth quarter of 2019, to generate at least 20% growth if not better in 2020.
My conviction in these targets comes from two points that have been well established in 2018. First, conversational commerce is real and it's a substantially very large opportunity. Second, LivePerson is in a leadership position in this market. Let me elaborate a little further. We estimate that conversational commerce represents a $200 billion total addressable market, and we are seeing validation of large TAM manifest itself in several ways. Foremost is in our ARPU trends, which reflect net new revenue as customers adopt messaging and AI to shift volumes away from phone calls, and even the web and apps. For the trailing 12 months ending in the fourth quarter, our ARPU for enterprise and mid-market customers set a record, increasing by 25% to greater than $285,000. Another layer of drill-down provides further clarity.
When we look at the same base of customers that have also adopted messaging, our ARPU jumps to $500,000 . This figure expands into the low seven figures once a customer has adopted more than one endpoint, like an Apple Business Chat or WhatsApp or SMS. A second validation point is in the pace in which adoption trends accelerated. At the start of 2018, approximately 20% of our enterprise customer base had adopted messaging. By the end of 2018, the adoption rate had doubled to over 40%. Demand for AI is burgeoning. At the start of 2018, just over 25% of messaging conversations involved automation. By year-end, it was greater than 50%. During that same time, monthly AI-based bot interactions grew fivefold.
All this success we've been hearing before even the benefit of Maven, our newly introduced patent-pending AI engine, which is custom-built to power successful outcomes in conversation, care, and commerce. By arming our field organization with Maven, we expect to achieve our goal of reaching a 100% messaging adoption among our enterprise customers by 2020, with automation as the driving force of those conversations. The third indication of the market opportunity comes from examining contract value. In 2017, LivePerson halted the sale of legacy solutions and shifted to only selling LiveEngage. Over the next two years, our ARPU for enterprise and mid-market increased more than 40%, and we added more than $150 million of total contract value during that time frame. Basically, 24 months ago, we had zero revenue in LiveEngage and messaging, and today it's $150 million in two years.
It's incredibly rapid adoption curve and a testimony to the value proposition and leadership position we have in the market. I'd argue that there isn't another company out there that can quantify as much demand being generated from conversational commerce. We had several powerful examples of this net new revenue generation in the fourth quarter. The first one highlights how our leadership in conversational commerce is opening up the travel vertical as a new opportunity. We are pleased to announce that LivePerson signed a multi-year deal with Delta Air Lines, which Fortune has named the world's most admired airline for six straight quarters. We are looking forward to supporting Delta in their work to connect with customers on their channel of choice through a new technology.
This new brand, along with three other top 10 U.S. airlines, joined our customer summit in Dallas last month, a great sign of things to come in travel. Imagine a world where you can make a flight reservation, upgrade seating, or reschedule a trip after weather delays, all through contacting through messaging on the way to the airport, in the airport, never picking up a phone call, never having to go into a counter and make that change. That's what we're talking about. We also had a major win with one of the world's five largest apparel retailers. What started out as a bot-only deployment to one brand quickly transformed into a planned rollout of web messaging and bots across every one of the retailer's brands.
This is a great example of how LivePerson goes deep and broad within the enterprise by combining the power of both humans and AI in a single platform and delivering a roadmap that fully transforms the way brands communicate with their consumers. Another example is a major win with one of the largest banks in Japan, which marks a new milestone in the Asia-Pacific region, where we are steadily building momentum. This new customer will work alongside our partner, IBM, to deploy messaging and bots to its more than 40 million consumers. Our addressable market also continues to expand in ways we had not previously considered when we built LiveEngage. One example is a seven-figure win we had with a telco earlier that will leverage LiveEngage to send personalized bulk outbound SMS and WhatsApp messages to consumers.
Unlike traditional outbound message notifications only, these can be fully enabled for two-way communication. Another telco deployed the largest WhatsApp Business implementation globally by volume on LiveEngage. After a successful pilot last summer, we also signed an expansion deal with Aramark, one of the world's largest hospitality companies, to bring in-seat beverage ordering to several professional sports venues and to deploy order-ahead capabilities in corporate, healthcare, and higher education dining. I love that one. From your seat, you can order a beer, a hot dog, water. You never have to leave your seat, right through Apple Business Chat using a QR code using Apple Pay. A wonderfully beautiful make-your-life-easy scenario. Finally, we signed a six-figure deal with a leading greeting card provider to enable consumers to search and select greeting cards using Amazon Alexa.
To summarize, 2018 was an incredible year for LivePerson, characterized by a 16 percentage point year-over-year increase in our revenue growth rate, record contract signings, multi-year low revenue attrition, and accelerated messaging and AI adoption. Demand is beginning to surge as the industry enters mainstream adoption. We made significant investments over the past few years to position LivePerson with a first-mover advantage and product leadership when this shift happens. Now that the moment is here, we need to fully capitalize on these tailwinds by building out our sales capacity to ensure that we can showcase our leadership as each brand prepares to make their purchase decision. It's an incredibly exciting time for our company, and with each passing quarter, I become increasingly convinced of our ability not only to service but also lead this potentially massive and transformative industry.
I will now hand the call over to Chris, who will do a deeper dive on our overall financial outlook. Chris?
Thanks, Rob. The momentum you discussed is tangible, as evidenced by the 16-point swing in our revenue growth rate year-over-year, and it's building, as illustrated by the continued acceleration of key performance predictors across our business. In early 2018, we recognized the importance of investing ahead. We knew extending our product leadership through strong partnership with major consumer messaging companies and with innovations in advanced AI capabilities would be a differentiator. We also sought to capitalize by building a demand generation engine capable of tapping into the rapidly growing market of conversational commerce. In short, those investments are paying off. To start, we improved upon our initial 2018 growth outlook of 10% by four points, delivering mid-teens growth for the year. Peeling back on those results, our total B2B revenues were 15% in the fourth quarter and 14% for the year.
Within B2B, our enterprise business, which has been the focus of our investment, fueled our trajectory, increasing by more than 20% year-over-year. During the fourth quarter, we also began seeding investment in the mid-market SMB organization, which in turn generated record 4Q contract signings. We expect this part of our business to return to growth now that we have opened up a conversational commerce ecosystem for smaller businesses. Our consumer segment continued its trend of four straight double-digit growth quarters, posting a 12% increase for the year. Our ARPU set new highs quarter after quarter in 2018, driven by enterprise and mid-market customers as they replaced more of their voice calls with messaging. This resulted in trailing 12-month average revenue per customer of greater than $285,000 in 4Q, up 25% year-over-year and representing the third straight 20% plus growth quarter.
Compelling customer ROIs, high customer satisfaction metrics, rich agent experiences, and a stable platform is a recipe for stickiness. To that end, our revenue retention rate for enterprise and mid-market customers exceeded 110% in 2018 on the back of an expanding ARPU combined with multi-year low attrition. Excluding the benefit of upsells, our revenue renewal rate across our B2B segment was approximately 90%, and our enterprise base had an even higher revenue renewal rate in the mid-90s, which we think is a best-in-class measure. We also saw our enterprise and mid-market customer acquisition engines begin to ramp as we scaled our marketing and channel investments. These investments contributed to a 50% increase in new customer wins in 2018.
These wins allowed us to penetrate deeper into target verticals and geographies, as illustrated by new relationships forged with five of the largest financial institutions in the world, two of the largest telcos, Delta Air Lines, a top five global apparel retailer, and one of the leading online travel agencies. We also gained more traction with partners such as IBM and Accenture. In fact, the percentage of wins influenced by partners grew by more than 30% year-over-year in 2018 and accounted for nearly one-third of signed ACV. From a geographic perspective, total U.S. revenue accounted for 61% of sales in the fourth quarter and generated 11% year-over-year growth, the strongest showing of the year, driven by 17% growth in North America enterprise. Our total international revenue accounted for 39% of sales and delivered 21% growth, with international enterprise growing at 30%, even against toughening compares.
Our telco and financial services industries continued to lead growth in the fourth quarter, increasing at double-digit pace. Our largest vertical in 2018 was consumer retail at 25% of revenue, followed by telcos at 20%, financial services at 19%, auto at 11%, high-tech at 7%, and other at 19%. Finally, in terms of profit in the fourth quarter, on a per-share basis, GAAP net loss of $0.11, adjusted operating income of $1.4 million, and adjusted EBITDA of $0.08 while within or better than our issued guidance ranges. Cash on hand held steady quarter-over-quarter at $66.5 million or approximately $1.06 per share. With these metrics in mind, we believe we have a proven blueprint for investing in the capabilities and the capacity necessary to win the conversational commerce market.
We hear from our customers how much they value expertise and innovation. In 2018, we delivered meaningful impact in each of these areas. Let me expand on that. From a technology standpoint, our investments were pointed towards innovation and operational excellence. We recognize that scalability, stability, and availability can be a focus not at the expense of innovation, but alongside it. The fruits of our investments can be seen through many lenses. To begin, we hired a world-class leadership team with deep AI and data science expertise, who leveraged their leadership to more than triple the number of messaging endpoints integrated on LiveEngage, adding Apple Business Chat, WhatsApp, Google Rich Business Messaging, Google AdLingo, and Alexa in just eight months. This is important to our business model because each endpoint brings new cross-selling opportunities to our expansive customer base.
Our added engineering capacity allowed us to launch Maven, our groundbreaking patent-pending AI engine, which promises to scale messaging with even more efficiency and maintain, if not extend, what we estimate is a 12- 18-month technology lead. Our continued focus on quality is paying off. That's illustrated by a 20-point increase in our most recent Net Promoter Score survey. Turning to our go-to-market investments, in 2018, we focused on building market awareness and creating a scalable demand generation engine. To achieve this, we doubled the number of large-scale customer summits across the globe and expanded the ecosystem from which new opportunities can be sourced. This combination had an immediate and substantial impact. Since June 30th, 2018, the aggregate contract value of our enterprise pipeline has increased 25%. While impressive, it doesn't tell the whole story.
Over that same period, the number of enterprise pipeline opportunities is up approximately 80%, driven by strong demand for our accelerated pilot program. These data points echo Rob's comment earlier that demand is surging. Thanks to our investment in technology and channel, we have more products to sell, more partners to sell with, more references to support our selling efforts, and an industry that is moving into mainstream adoption and ready to make purchase decisions. Combined, the demand in our pipeline is outpacing our sales capacity, which presents a great opportunity as seen on page 13 of our supplemental earnings deck. To illustrate this, LivePerson had approximately 50 global quota-carrying reps at the end of 2018, which was below the 55 we had in 2015. As Rob said, that was even before we launched into conversational commerce.
Compared to industry benchmarks, our average sales rep is currently handling two to three times the number of opportunities than would be ideal. This is why we're confident that the time is right to invest in go-to-market capacity so we can go even deeper with our existing customers and have sufficient scale to pursue the enormous green space opportunity in front of us. This is a good opportunity to transition to guidance, focusing first on the specificity and timing of our investment profile, and second on its return and contribution to our ramping growth rate and operating leverage during 2019 and into 2020. First, with respect to investment, our plan is to increase sales capacity by 90% in 2019. In order to maximize in-year productivity, hiring will be heavily weighted towards the first and second quarters and is anticipated to be allocated as follows.
We'll emphasize quota-carrying reps, sales development reps, and partner managers. Approximately 80% of the spend will be directed to enterprise and 20% to mid-market and SMB. About one-third of the investment will be in North America and 2/3 internationally. From a program perspective, our marketing calendar suggests that front-end loaded 2019, with about three-quarters of the spend on customer summits taking place in the first half of the year. First quarter in particular is active, with events in Dallas, New York City, Berlin, and Barcelona, along with multi-city tours throughout Europe with our technology partners. From an in-year payback standpoint, we expect our new sales reps and customer event activity to produce an initial revenue contribution by the third quarter of 2019, a more meaningful contribution in the fourth quarter, and then full contribution by early 2020.
More specifically, we're issuing revenue guidance for 2019 in the range of $285 million-$293 million or 14%-17% year-over-year growth. The linearity of our growth in 2019 is perhaps more important than the full-year range itself, as it best demonstrates the ramping of investment returns and our exit rate going into 2020. We expect continued mid-teen growth in the first half of 2019 as we build out sales capacity and drive more initial opportunities through low-priced accelerator pilots. As these convert and new sales reps become productive, we anticipate an acceleration in the second half towards high teens to 20% by the fourth quarter. On the back of that momentum, we expect to generate at least 20% growth for the full year of 2020.
From a 2019 profit perspective, our hiring activity will be heavily front-end loaded for both sales capacity and the continued build-out of our global product organization. We expect the vast majority of our hiring in both areas to be complete by the end of the second quarter and anticipate minimal headcount growth in the second half. Likewise, due to the planned pacing of our customer events, our marketing spend in the second half should trend modestly lower than in the first half. With these revenue and investment dynamics in mind, we are guiding to a 2019 adjusted EBITDA range of $10 million-$15 million, which implies a margin of 4%-5%. The pacing of adjusted EBITDA is expected to be as follows.
Given the immediate emphasis on hiring quickly and heavy volume of first quarter and second quarter customer summits, we anticipate modest losses in the first half of 2019 with a double-digit margin in the second half as hiring abates, marketing spend slows, and our go-to-market investments begin to drive higher revenue. We expect renewed year-over-year margin expansion in 2020. We look forward to expanding significantly on 2020 and the long-term financial model at our upcoming Analyst Day, planned for May 8th in New York City. You can refer to our earnings release for additional details on our full-year 2019 assumptions. As we wrap up and take your questions, I want to close with a few overarching points of emphasis. First, our disciplined test-and-learn approach to investing in technology and demand generation in 2018 worked, and we executed well on the full-year 2018 plan, exceeding even our own expectations.
Second, we're applying those learnings as a blueprint for how to fully scale out our technology, demand generation, and sales teams. Our emphasis on completing those investments in early 2019 will create an exciting escape velocity for our financial business model as we look into 2020 and beyond. Third, we're committed to capitalizing on our leadership position, continuing to bring exciting innovations, new use cases, rich experiences for our customers, and increased value for our shareholders. With that, I hand the call back to the operator to take your questions. Operator?
Ladies and gentlemen, as a reminder, if you'd like to ask an audio question at this time, you may do so by pressing star followed by the number one on your telephone keypad. Again, that's star one to ask an audio question. Our first question is the line of Koji Ikeda from Oppenheimer.
Oh, great. Thanks for taking my questions and a great finish to the year. I had a question for either Rob or Chris on proof of concepts here. We really think proof of concept is a pretty strong indicator of what you're seeing out there. I guess any sort of commentary on the proof of concept trends entering 2019 versus 2018 would be helpful. Thank you.
Hey, Koji. Good to hear you again. Sure. Let me interchange proof of concept with what we introduce as our accelerator packs. I think they're one and the same. As we've talked about on prior calls, we began the year, I think we launched our accelerator trials in late first quarter with around 25 opportunities. That grew in the third to 65. We have well over 100 now in the pipeline, and we're closing them. More importantly than just closing them, we're finding that they translate into bigger engagements down the road. They continue to be a great selling tool to just make it easier to complete a transaction, get the customer to experience the returns on the platform quickly, and then work with them down the road on how to adjust it and the scope of our platform to the services that they need.
We had a couple wins this quarter that fell into that category.
Great. Thanks for that. I guess I had a question, Chris. In your commentary, you gave the revenue renewal rate was about 90%, and enterprise was in the mid-90s. Looking at my model here, I recall back in 2016, you gave a customer renewal rate of 83%. Is that pretty much an apples-to-apples comparison to that metric, or is this a brand-new metric and something new to think about?
Yeah, that predates me a bit, and Matt's got the gray hair to answer the question. He really doesn't have gray hair, but you're right. It's a new metric, by the way, so different from our total revenue retention, which was 110%. We previously discussed it being greater than 100, so we're quite happy with where that is. The revenue renewal rate, also a new metric. When we say 90% for the total company and then mid-90s for enterprise. Matt, you want to make a comment on, I guess, pre-LiveEngage?
Yeah, I think pre-LiveEngage, we were going through the migration, and we were trying to just give indications around what customers were moving over to LiveEngage and what we were seeing in the churn as we forced that into life on the product. Now we're obviously focused on the revenue build and accelerating growth, and so the metric that we're focused on is what percentage of dollars are we keeping from existing customers and the upsells that we drive include the ones that we're keeping.
Yeah, I think, and Koji, I know we mentioned it in our prepared remarks, but the Net Promoter Score increase of 20 points in our last survey and the work that our technology teams and our infrastructure teams are doing to just continue to build not only great innovations but a platform that's incredibly stable and reliable, that's probably the best proof point of the renewal rates that we're seeing right now.
Got it. Last one for me, if I may. Mobile percentage of interactions on LiveEngage, it ticked here at 54%. I guess any commentary would be helpful on what percentage of that volume is coming from messaging transactions versus web chat transactions, and maybe how that grew from 2018 would be really helpful. Thank you.
Yeah. At a high level, the growth is being driven primarily by messaging off the web. Think IVR deflection, think Apple Business Chat, and now WhatsApp. Web messaging, though, is something that we're increasingly selling into our customer base. We don't think anybody should be using chat anymore, we're looking to be replacing that with web messaging. We're seeing that adoption. The growth that you're seeing is primarily tied to off the web.
Great. Thank you very much.
Thank you, Koji.
Our next question is from the line of Richard Baldry from ROTH Capital.
Thanks. We're about halfway through the first quarter. Can you maybe talk about how you're doing on the hiring process? It would seem to me the economy's pretty strong, so it might be a bit of a tough environment. What types of backgrounds are you looking at, and do you feel pretty good about what you've been able to bring in the first half? Thanks.
Yeah. Hey, thanks, Rich. Hope the new addition's doing well to the family. We're having really nice progress, actually. We're looking at 3,500 candidates a week, so we couldn't be more pleased with how our internal recruiting teams are doing. We went to lengths late in 2018 to build out that capacity rather than to have a reliance solely on agencies. The mix is about 50/50 between technology skills and go-to-market sales resources. From a technology perspective, the type of profiles we're looking at fall into the categories of data science and machine learning, skills that relate to bot automations and integrations, and then just an overarching strategy of building more vertical use cases for our platform. From a go-to-market perspective, as I mentioned in my remarks, it's heavily emphasized to quota-carrying reps. Think of enterprise software reps, if you will. Demand generation teams, we call them SDRs here.
They're creating the top of the funnel and then progressing it to hand off to the sales reps, and then channel partner managers. Channel has been a really nice growing part of our business. As we mentioned, it accounted for a 30% increase year-over-year in influence sales and was a third of our ACV. That's how I'd characterize the investments. I'll hold off on particular profiles because I think it's part of a competitive advantage.
Maybe to follow up with that, there's a lot of focus on international. How do you feel about the rest of the infrastructure you have in place to support those new hires in sales internationally? Thanks.
Yeah, internationally, let's take it in two different parts because EMEA is at a different level of its maturity than APAC, which Rob mentioned is really having some very nice wins and rapidly growing. The enterprise team has had for a while now, very strong management continuity. They have a very strong infrastructure that wraps around the go-to-market, whether it's legal, pricing, human resources support. We're building that out more in APAC. The infrastructure that we need to develop is less focused on EMEA. They have it already. It's more focused on Asia, where we're building out those type of call it G&A support services team.
Thanks.
Our next question is from Ryan MacDonald from Needham & Company.
Good afternoon, Chris and Rob. Just first on the U.S. market, was impressed by the strength in the quarter, re-accelerating now up to, I think you said 11% year-over-year growth. Can you talk about what the driver mix of that was between enterprise and sort of mid-market/SMB? As you're looking at the investments moving forward, where you're weighting those U.S. investments, whether it be on the enterprise or the mid-market there?
Yeah. Hey, Ryan. Thanks. Earlier in the year, we had mentioned that we were going to make North America an even heavier focus of ours, and that was back when total North America was growing at 4%. As you highlighted, the acceleration to 11% was very encouraging for us. Within that 11%, as I highlighted, North America enterprise grew 17%. That was an acceleration even over the last quarter, which was in the mid-teens. We did see declines in the SMB space, again, that was not up to this last quarter or fourth quarter, an area of focus of ours. What I would highlight is if you looked at the bookings performance, not just globally, but really equally driven across North America internationally, they had record bookings, and it wasn't just two or three home run deals. It was very consistent.
The linearity was consistent across each month of the quarter. We're really pleased with the momentum that that team is building. They've worked hard for it, and they're pretty excited right now in the field. Very happy with North America's turnaround. Obviously, enterprise growing at 17% is great. International enterprise grew 30%. We still think there's room to run there, but we're excited about what we can bring to the mid-market SMB group as well.
Yeah, I think.
Go ahead.
On international, we're only in a small footprint of markets, obviously, Europe and Asia. We're now looking at South America. Even in Asia, we're obviously heavy in Australia, Japan, and now Singapore. When you think of places like even Indonesia, where they are heavy messaging, 200, 300 million people, businesses, they're already transacting through these messaging platforms, but they need something to make it truly business enabled, especially for WhatsApp, which is dominant in all these markets. I think for us, we haven't really scratched the surface. I think this year we'll take a bigger bite out of other markets, especially in South America, Brazil, Mexico, heavy WhatsApp users there. We're kind of following the main technology messaging platforms in and working on scaling those different regions.
Got it, thanks. Just a quick follow-up in terms of the technology. Obviously Maven was released into early access, and I think is going to be reaching general availability early this year. As customers are evaluating sort of the new functionality and capabilities around the messaging channel, is there more of a drive to push Maven to help manage multiple channels within messaging? Can that be a growth driver as we're looking in 2019, or maybe that's more of a 2020? Thanks.
Yeah. The big part about automation is what we're seeing is that, if I go back 24 months ago, we're very focused on the shift of voice to messaging.
We've achieved some great results there, and we have customers that move 30%-40% of their voice volume out for the first time that the technology was able to do that. When you get to those levels, you've got to have automation. It's necessary to have that type of platform, and that's what Maven really helps with. As we've mentioned, about 50% of our interactions right now on the platform are automated. Maven just gives a set of tools to enable that on a certain scale. The other part is we have it built in our own platform, as we call it Conversation Assist, where it helps guide the agents in building bots. It helps guide the agents on live interactions.
You'll see at Mobile World Congress next week, we're releasing Maven for telcos there that they can put inside of their messaging Android devices, a concierge, a helper, and it's powered by Maven. We're using it in many different ways, that technology, not just as a front end for bot building, but it's assistant and it's also using it for things like we're building our own bots to do scale within the telco vertical.
Got it. Thanks.
Our next question is one of Jeff Van Rhee from Craig-Hallum.
Great. Thank you. Several from you guys. Hey, I guess, let's see where to start. The $150 million of bookings that you referenced, just to be clear, is that total contract value, or is it $150 million in ARR?
Total contract value. Yeah.
Okay. Can you give us a sense of just durations? I know you've been getting longer and longer contracts. At the same time, I know you point not to necessarily look too closely at deferreds, but what's going on with durations?
In general, they're getting longer, I wouldn't be able to give you a precise number.
Okay. Can you talk for a second about the accelerator packs? Just what does a typical deploy look like there? I know you're going for speed to get set and to demonstrate the use case, what does that mean in terms of an initial ARR, ACV signing and then follow-on time to revenue? Just what do those look like? A little more there would be helpful.
Sure. Let's go through duration first. Think three to nine months in nature. In terms of price point, you're in the low six figures. Time to revenues, sign a contract, however long the implementation takes, call it three to six weeks. The scope is really dependent upon the customer, right? We leave it open-ended. We offer the platform. That customer may choose two or three endpoints, or all of them. We're accommodating to any scenario. We make it to where we begin to measure. We go in with the sales as a quantifiable ROI, we measure it throughout the period. It's that measurement throughout the period and continuing to put the ROI in front of the customer that allows us to, pre-term, go and make it a bigger engagement. That is the model. That's the go-to-market model.
A lot of them are not human-based. We're doing a fair amount that are just automation, bot-based, basically so they're not even using human agents. They're using it to test out our AI capabilities. There's a lot of activity there.
Got it. On the sales capacity side, obviously you've been messaging that you're tapped there and the activity levels are super high. Just talk to me about the thought process on two-thirds of the incremental spend going international versus domestic. Is there something about the international TAM that's more addressable, more appealing? If you're tapped out everywhere, I would have thought maybe a little more balanced domestic, international? Just talk about the thought process there.
Yeah. Fair point. I wouldn't go there to the TAM. I understand why you'd think that, but it was more a reflection of where we did our testing and learning on the initial deployments of where we're putting demand generation teams, for example. It was in North America first. We tested and learned in North America in a lot of these sales, expanding sales reps, expanding sales generation teams, and adding channel partner managers. We don't have to do as much now. We're still adding to that list, but we already had a head start, whereas internationally, we did not do that.
Got it. Rob, several quarters ago, I know you signed some really sizable deals. You were looking at the early use cases and just said, "Look, I think it's a matter of time until we sign a $100 million contract just based on the value we're bringing to these call centers." What's your thinking there now?
I've been in meetings where I've put it out. I mean, we've talked about it's there. It's going to happen. We're getting to a place now where looking at transforming banks, obviously with another healthcare organization. I feel like we've put it out. I've been in meetings where I've talked to decision-makers, so I feel like there's a hunt going on, and I'd like to see that in 2019, that we do something in that area. Yeah.
Got it. If I could, just one last quick one for you. Thank you so much, by the way, for just the sense of how the year played, how the leverage played, how the spend played. You gave a little teaser on, obviously, the out year 2020 in terms of 20% top-line growth. It looks like from the spending profile, you're going to reach your peak on spend in Q2, Q3 2019. To the degree you're willing, can you just give any sense of what incrementally the margins look like in?
That a lot of it.
How far can you ride that? I mean, where does that get you? Because it sure looks like the incrementals are going to be really good in 2020.
Jeff, you broke up a bit. I'm going to do my best to rephrase what I think you're asking, and just let me know if I didn't get it right.
Okay.
You're asking, and you're correct, with the front-end loading of our investment, because we want to emphasize that productivity and contribution for those returns happens as much in 2019 as we can. That creates a leverage environment of our business in the second half, right? As that revenue ramps, and as that spend begins to flatten out, that should create leverage. What we talked about was that we see double-digit margins in the second half of the year. Not ready to go into detail on 2020. We will on May 8th. I will say that we will have margin expansion in 2020.
Got it. Thanks.
Our next question is from line of Michael Latimore from Northland Capital Markets.
Great. Thanks. Yeah. Great results outlook. Did you say that you expect the SMB segment to start growing again, or has it already started growing?
It will start growing again. Yeah, we'll have a really nice growth rate this year.
Fair. What's the main driver there? I think you touched on it a little bit, but just to clarify.
Focus. Yeah. We went out of the gate two years, 24 months ago, with we have to go out on the enterprise and win those T-Mobiles and companies like that focused on made a bet. Now that that's going, we know there are a lot of other companies in the world that want to take part in this. We then started to basically open up funding midyear, we saw a very strong Q4 on the booking side, better than they've ever had. They continue to do that. They're ramping their sales teams and their SDR teams and their marketing. They're very excited about what they're seeing. That was damping down growth rates overall. The enterprise over 20%, which everyone always talks about. Right now, that's moving in a very, very positive and strong direction.
Very great. How about any color on the auto vertical and how that's trending?
Yes, it's good. We did an acquisition of AdvantageTec. I think that has really helped that vertical. We now have end-to-end through messaging. You can buy a car, and you can get your car serviced. It just opens up a whole another area of addressable markets and also resellers. We renamed it LivePerson Automotive, so it's got a rebrand on it. We have great leadership over there, too. I think it's also going to be growing at a nice rate and obviously using stuff that we're doing on the AI side. With Maven, they're also incorporating that. There's a lot of activity over there.
Got it. Just clarification on one comment you made. I think you said something about having record signings in the quarter. Does that refer to the number of accounts that signed, or does that refer to the ACV of bookings?
You can apply it to both.
Both. Yeah.
The number of deals was very strong, especially in the new customers that we're bringing into the platform. That also translated to ACV.
Yeah, if you look at Q4 of last year, last year, the 2017 year.
Big quarter
It was a big quarter, but it was really driven by one or two big customers. Very interesting now, it was not a big customer one. That one big customer, it was just a healthy, like we didn't have to worry about who's coming in, who's flipping, whatever. We had a nice. Just overall good enterprise customers and even on the commercial side. It feels good. That's why when we see that, we see pipelines grow like they have over the year. We want to bet down now to accelerate that.
That's a great sign. Great. Thank you.
Thanks a lot, Mike.
Thanks.
Our next question is from line of Zack Cummins from B. Riley.
Hey, Zack.
Hey, this is our key phone for Zack. Thanks for taking my question here. I know you guys mentioned the accelerated pace of investments for the sales team. Can you maybe give us some incremental color on maybe some product development investments that you seek to make out for fiscal 2019 and 2020?
Yeah. When you look at how we're investing today, we're investing in really three major areas. One area is endpoint. We keep building out all the endpoints. The next WhatsApp, we have now WeChat, that's going live. We have Line in Asia. We have a few of WhatsApp. Also, those platforms get better and better each month. They're adding more features like payments and stuff like that. These platforms have a long way to go. If I look at my vision and say, how we should be doing conversational commerce, they're building to the wind, so we have to develop against those. The second part is use cases. We're developing around predominantly, even though we beachhead into care where all the voice calls are, but now we're fanning out into sales and marketing.
As I mentioned in my remarks, we did a deal on outbound. Like you can outbound market through messaging using our platform, and that's really a marketing event. That's more use cases. The third driver is automation and human conversations on the platform. How do we make the, especially the automation ones, richer? How do we make sure that these automations that we're doing, they can complete a full end-to-end automation in the high 90s? That's kind of our confidence intervals. Up in the 90s, we've got a good bot in the market. These are kind of the three areas that we're constantly investing in with the platform.
Great. Thanks for that. Another kind of follow-up. Can you maybe talk about the pipeline generation from the T-Mobile customer event in the fourth quarter? Maybe what's the expected conversion rate on opportunities from an event like that?
I won't give a specific number, but they're very, very high because everybody from those in messaging. Anyone who was there, it was an amazing event. They just basically showed the power of the platform and their operating model, which is to invest in. They're out presenting. We also had 10 other customers do presentations, and we call it firsts. I think it's really important we kind of brand it firsts. It's like all these customers want to be the first at something. There's the telco in Europe that was the first to scale WhatsApp at the huge rate, and move voice calls to WhatsApp. There's T-Mobile, the first to go live ever on messaging and really scale and build an operating model. Aramark, the first to have in-stadium ordering through messaging bots and AI. Go on and go.
This is really what we see, is they're out there presenting, and they're presenting, and they're very proud of it. That's a very exciting thing. I think that drives a lot of adoption because everyone else in the room wants to be a first at something else, and they want to get there quickly. We see very good results. That's why we are investing heavily on the marketing events like that throughout 2019.
I just add, what we did say at our last call was that from Bellingham all the way up to T-Mobile, there's no reason to believe T-Mobile will be any different, is that when we have our customers at the summits, we convert them over 40% of the time. If you think about those summits, you can almost pack three to four months of a sales cycle into two days, right? You've got hands-on tech demos. You've got customers effectively being references. You've got use cases, different use cases being illustrated. You've got transformation journey workshops there. Key access to key decision-makers so that we continue to be a very important, not just creation of opportunities engine for us, but progressor of opportunities as well.
Thank you for that. That's helpful.
Our next question is a line of Mark Schappel from Benchmark.
Hi, guys. How you doing? Nice job on the quarter and the year. Just a couple of questions here. Most of my questions have been answered, but I do have a few. Chris, the company had some success in the past year ramping up the channel business, and I was just wondering, as you plan to continue to build up that organization, how is that going to change in the coming year? Is it going to change? Are you just trying to sign up as many partners as you can right now, or is there a focus on just kind of consolidating what you have?
Yeah. Thanks for the question. Good to speak with you. It depends on where you are in our different go-to-market spectrums. If we're talking specific to the small-medium business, there, we are rapidly expanding the number of customers. That is a volume game, and the old 80/20 rule would apply. If you go up the stack to mid-market and enterprise, of course, you want to expand into new partnerships, but it's how do we continue to leverage the terrific pipelines that are being created by the likes of IBM, Accenture, and others, and just start converting them. It really depends on which end of the go-to-market spectrum you're on.
Okay, great. Thank you. Rob, we're starting to hear other contact center-focused software vendors start to talk about messaging and conversational commerce, and maybe you can just give us an idea of some of the other competitors that you're seeing in the messaging space.
Yeah, I think honestly, as we remove voice calls from those large voice platforms, they're obviously going to try defending that. I've said this before, they're kind of like evil dealers in the world. They basically promote voice. They don't want to cannibalize themselves. When they do things like messaging, it doesn't work, by the way. They do it at some small little thing, and they show it doesn't work, so they can get more voice on and say, "This is just a toy." Those are the guys right now that we have a target on to get rid of. We have good referenceable customers. We know consumers don't want to pick up the phone, so and dial and being put on hold.
As we mentioned last time, T-Mobile removed their IVR now as their primary way to get to them is go straight to a human, to messaging or voice, even voice. Those are the guys that you're right, they're going to try defending themselves, but are they willing to destroy themselves to grow? Even we took a hard pivot, as you know, because I didn't believe chat could get us there, and we kind of took the hard medicine to get here. I don't think they're willing to take the hard medicine.
Okay, great. Thank you.
Ladies and gentlemen, it seems we have reached the end of our call today. I would like to turn the call to Rob LoCascio for closing remarks.
Thank you, operator. 2018 was a year for the record books in so many ways, and our key metrics, including ARPU, revenue retention, new logos signed, messaging and AI adoption, and total revenue hit new highs. Conversational commerce is moving into the mainstream now. Over the next 24 months, we expect virtually every large brand to decide how they want to participate in this, and LivePerson is making the right investments to accelerate momentum by capitalizing on its leadership position with these industry tailwinds. We expect our revenue growth rate to ramp towards 20% by year-end in 2019 and to exceed 20% in 2020 as we take a greater share of the emerging multibillion-dollar market opportunity.
I've been obviously on the helm for a long time, and I have to say, if we were a startup and just launched our platform two years ago and generated $150 million in contract value, we'd be a pretty hot startup. Obviously, we've been around a while, but I think we need to run now as a hot startup. We need to attack the market and win it, and I think we're in a great position to do it. Thank you, everyone, for the support, and we'll see you guys on the Q1 call.
Ladies and gentlemen, we thank you for joining us for the LivePerson fourth quarter 2018 conference call. This does conclude the call, and you may now disconnect.