Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to LivePerson's 4th 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 giving instructions at that time. As a reminder, this conference 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.
Thanks very much. This is Matthew Kempler, VP of Planning and Investor Relations. Joining me on the call today is Robert LoPassio, LivePerson's Founder and CDO 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 10ks, 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. Thanks, Matt.
Good evening and thank you for joining LivePerson's Q4 2018 earnings call. The Q4 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 record $65,700,000 and accelerating the 50% year over year growth. Equally important, contract signings set a new record, and this was against the previous high watermark. It is worth calling out that we saw strength in both enterprise when we signed several 70 figure contracts, and mid market SMB, which generated record demand after we increased our focus on selling conversational commerce solutions to smaller businesses.
The Q4 was one of those times where everything came together, reflecting strong momentum in our business. On our last earnings call, I shared with teams that have gone into reaching this point. We are sitting on one of the richest datasets of conversational data in the world. Our data is on moat. This is what allows us to drive our AI strategy to power things like Maven, Conversational Builder and LiveEngage as a whole.
Within the past year, the major consumer technology companies such as Google, Apple, Facebook and WhatsApp have all moved in to conversational commerce and integrated into our platform, opening our reach to billions of consumers and echoing that brand 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 and 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 a restructuring point. In the Q4 alone, 3 of the world's largest and most admired brands in travel, retail and finance services took the lead to conversational commerce on live and games.
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 2 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 4th industrial revolution. Gartner just named conversational commerce a top trend that will impact the future of digital commerce.
They projected that by 2022, at least 5% of digital commerce orders will be dedicated and initiated by AI. We are leading this transformation when it comes to how brands engage with the consumers who have been making the product a market that's continuing our momentum. Our aim is to be more than just a driving force in the industry. We want to dominate the marketplace and become one of those esteemed technology companies that defies a generation. For us to achieve that goal, we need to have the best product and the right sales capacity to get in front of every company as a whole 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 Video 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 of investment to accelerate our revenue. One of the areas we've already started ramping within our sales groups. We ended 2018 with approximately 50 core carrier 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 slab capacity. And Chris will provide more details, but we do anticipate that this investment will serve in LivePerson's momentum and positioning to approach, if not achieve, 20% growth by the Q4 of 2019 and to generate at least 20% growth, if not better, in 2020. My conviction in these targets comes from 2 points that have been well established in 2018. 1st, conversational commerce is real and it's a substantially very large opportunity.
2nd, why pursue the leadership position in this market? And let me elaborate a little further. We estimate that Conversational Commerce represents a $200,000,000,000 total interest for market and we're seeing validation of large TAM manifest itself in several ways. Foremost is in our ARPU trends, which reflect net new revenue as customers got messaging and AI to ship volumes away from phone calls, and even the web and apps. For the trailing 12 months ending the 4th quarter, our ARPU for enterprise and mid market customers set a record, increasing by 25 percent 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 jumped to adopted more than one endpoint, like an Apple Business Chat or a WhatsApp or SMS. The second validation code is in the pace in which adoption trends are accelerate. 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 per AI is burgeoning.
At the start of 2018, just over 25% of messaging and conversations involved automation. By year end, it was greater than 50%. During that same time, monthly AI based thought interactions grew 5 fold. All the success we've been doing before even the benefit of Maven, our newly introduced patent pending AI engine, which is custom built to power successful outcomes in conversational care and commerce. By arming our field organization with Maven, we expect to achieve our goal reaching a 100% messenger adoption among our enterprise customers by 2020 with automation as a driving force of those conversations.
The 3rd indication of market opportunity comes from examining contract value. In 2017, LivePerson halted the sale of legacy solutions and shifted to only solidified engaged. Over the next 2 years, our ARPU for enterprise mid market increased more than 40% and we added more than $150,000,000 of total contract value during that time frame. So, April 24 months ago, we had 0 revenue in live engaging messaging and today is $150,000,000 in 2 years. It's incredibly rapid adoption curve and it's 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 4th 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 Airlines, which Fortune has named the world's most admired airline for 6 straight quarters. We are looking forward to supporting Delta and their work to connect with customers on their channel of choice through a new technology.
This new brand, along with 3 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 TV or rescheduled 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 an amazing win with Wonder World's 5 London apparel retailers. But sorry, out of the bot only deployment to 1 brand quickly transformed into a planned rollout of 1 messaging that bought across every one of the retailers brand. 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 our largest bank to Japan, which marks a new milestone in the Asia Pacific region, where we are steadily building the momentum. This new customer will work alongside our partner IBM to deploy message in a box to its more than 40,000,000 consumers.
Our addressable market also continues to expand in ways we are not prudent to consider when we built LiveEngage. One example is the 7 figure win we had with the Telco earlier that we're never providing used to send personalized bulk outbound SMS and WhatsApp messages to consumers. Unlike traditional outbound messages that are led to patient learning, we could be fully enabled for two way communication. Another customer deployed the largest WhatsApp for business implementation globally by volume and live engage. After successful pilot last summer, we also signed the expansion agreement with Alamarq, one of the world's largest hospitality companies to bring in seat beverage order to several professional sports vendors 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 hotdog, 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 6 figure deal with a leading reading card provider to enable consumers to search for reading cards using Amazon Alexa. To summarize, 2018 was an incredible year for LivePerson characterized by a 16% point year over year increase in our revenue growth rate, record contract signing, multi year loan 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 1st mover advantage and product leadership and risk 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 incredibly exciting time for our company and with each passing quarter, I've 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 points swing in our revenue growth rate year over year and is building as illustrated by the continued acceleration 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 4 points, delivering mid teens growth for the year. Peeling back on those results, our total B2B revenue grew 15% in the 4th 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 Q4, 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. And our consumer segment continued its trend of 4 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 3rd straight 20% plus growth quarter.
Compelling customer ROIs, high customer satisfaction metrics, rich agent experiences and a stable platform is the 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 relationship storage with 5 of the largest financial institutions in the world, 2 of the largest telcos, Delta Airlines, the top 5 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 1 third of signed ACV. From a geographic perspective, total U. S.
Revenue accounted for 61% of sales in the 4th 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 those in the 4th 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 4th quarter, on a per share basis, GAAP net loss of $0.11 adjusted operating income of 1,400,000 and adjusted EBITDA of $0.08 while within or better than our issued guidance ranges.
Cash on hand held steady quarter over quarter at 66,500,000 dollars 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. And in 2018, we delivered meaningful impact in each of these areas. Let me expand on that.
A technology standpoint, our investments are 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. We leveraged their leadership to more than triple the number of messaging endpoints integrated on LiveEngage, adding Apple Business Chat, WhatsApp, Google Rich Business Messenger, Google Adlibo and Alexa in just 8 months.
And 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 to 18 month technology lead. And 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 30, 2018, the aggregate contract value of our enterprise pipeline has increased 25%. And 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.
And as Rob said, that was even before we launched the Conversational Commerce. Compared to industry benchmarks, our average sales rep is currently handling 2 to 3 times the number of opportunities that would be ideal. This is why we're confident that the time is right to invest in go to market capacity, 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 1st 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. And about 1 third of the investment will be in North America and 2 thirds internationally. From a program perspective, our marketing calendar suggests that front end loaded 2019 with about 3 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 Q3 of 2019, a more meaningful contribution in the Q4 and then full contribution by early 2020. More specifically, we're issuing revenue guidance for 2019 in the range of $285,000,000 to $293,000,000 or 14% to 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 teens growth in the first half of 2019 as we build out sales capacity and drive more initial opportunities through low price 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 4th quarter. On the back of that momentum, we then 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 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 $10,000,000 to $15,000,000 dollars which implies a margin of 4% to 5%.
The pacing of adjusted EBITDA is expected to be as follows: given the immediate emphasis on hiring quickly and heavy volume of Q1 and Q2 customer summits, we anticipate modest losses in the first half of twenty nineteen with a double digit margin in the second half as hiring debates, 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 8 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. 2nd, we're applying those learnings as a blueprint for how to fully scale out our technology, demand generation and sales team. Our emphasis on completing those investments in early 2019 will create an exciting escape velocity for our financial business model to look into 2020 beyond. And third, we're committed to capitalizing on our leadership position, continuing to bring exciting innovation, 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?
Our first question is from the line of Koji Ikeda from Oppenheimer.
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. And I guess any sort of commentary on the proof of concept trend 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 introduced as our accelerator packs. I think they're 1 and the same.
As we've talked about on prior calls, we began the year, I guess we launched our accelerator pilots in late Q1 had around 25 opportunities. That grew in the 3rd to 65. We are well over 100 now in the pipeline and we're closing them. And more importantly than just closing them, we're finding that they translate into bigger engagements down the road. So they continue to be a great selling tool to just make it easier to complete the transaction, get the customer to experience the returns in the platform quickly and then work with them down the road on how to adjust it in the scope of our platform to the services that they need.
We had a couple of wins this quarter that fell into that category.
Great. Thanks for that. And 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. And looking at my model here, I recall back in 2016, you gave a customer renewal rate of 83%. I mean, 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?
Yes. Let me that predates me a bit and Matt's got the gray hair to answer the question here who doesn't have gray hair. 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. And then the revenue renewal rate, also a new metric, when we say 90% for the total company in the mid-90s for enterprise. But Matt, you want to make a comment on, so I guess pre LiveEngage? Yes.
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 we were seeing in the churn as we forced that into light 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're driving are the ones that we're keeping. Yes. I think and Koji, I mean, 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 innovation, 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. Got it. And last one for me, if I may. So mobile percentage interactions on LiveEngage, it took care of 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.
Yes. So at a high level, the growth is being driven primarily by messaging off the web, think IVR deflections, same capital 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. So we're looking to be replacing that with web messaging.
We're seeing that adoption. But the growth that you're seeing is primarily tied to off the web. Great.
Thank you very
much. Thank you, Cody.
And our next question is from the line of Richard Baldry from ROTH Capital.
Thanks. We're about halfway through the Q1. So could you maybe talk about how you're doing on the hiring process? It seemed to me the economy is 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. Yes. Hey, thanks. Rich, hopefully new additions doing well to the family.
We are 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 late in 2018 to build out that capacity rather than to have a reliance solely on agencies. The mix is about fifty-fifty 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 thought automations and integrations and then just 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 influent sales and with a third of our ACV. So that's how I characterize the investments. I'll hold off on particular profiles because they get part of a competitive advantage. And maybe to follow-up with that, there's a lot of focus on international. So how do you feel about sort of the rest of the infrastructure you have in place to support those new hires and sales internationally?
Thanks. Yes. I mean, internationally, let's take it in 2 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. So 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 and A Support Services team. Thanks.
And our next question is from the line of Ryan MacDonald from Needham and Company.
Hey, good afternoon, Chris and Rob. Just first on the U. S. Market, was impressed by the strength in the quarter, reaccelerating 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 marketsMB?
And then as you're looking at the investments moving forward, what were you rating those U. S. Investments, whether it be on the enterprise or the mid market there? Yes. 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%. So 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 acceleration even over the last quarter, which was in the mid teens.
We did see declines in the SMB space, but again, that was not up to this last quarter or Q4, an area of focus of ours. But what I would highlight is if you looked at the bookings performance, not just globally, but really equally driven across North America and internationally, consistent. The linearity was consistent across each month of the quarter, and 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. So very happy with North America's turnaround.
Obviously, enterprise going at 17% is great. International enterprise grew 30%. So we still think there's room to run there. But we're excited about what we continue to bring what we can bring to the mid market SMB Group as well. And I think head on to international, we're only 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 Singapore. But when we think of places like even Indonesia, where they're heavy messaging to 300,000,000 people, businesses are 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.
So that's we're kind of following the main technology messaging platforms in and working on scaling those different regions. Got it. And then just a quick follow-up in terms of a 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?
And can that be a growth driver as we're looking in 'nineteen? Or maybe that's more of a 2020? Yes. The big part about automation is what we're seeing is that if I go back 24 months ago, we were very focused on the shift of voice to messaging. And we've achieved some great results there, and we have customers that move 30% to 40% of their voice volume out.
The first time, the technology is going to do that. When you get to those levels, you've got to have automation. And so 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 at a certain scale.
And the other part is we have it built in our own We'll see a mobile I'll be in Mobile World Congress next week. We're releasing Mavens to telcos there that they can put inside of their messaging Android devices, a concierge, a helper and powered by Maven. And so we're using it in many different ways, that technology, not just as an front end for bot building, but it's assisted and it's also using it for things like we're building our own bots to be scaled within the telco vertical.
And our next question is from the line of Jeff Van Rhee from Craig Hallum.
Great. Thank you. Several from you guys. So I guess, let's see where to start. So the and $50,000,000 of bookings that you referenced, just to be clear, is that total contract value or is it 150,000,000 ARR?
Total contract value. Yes. Okay. And can you give us a sense of just durations? Like I know you've been getting longer and longer contracts, but and 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, but 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 it's going for speed to get 7 to demonstrate the use case, but kind of 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. So let's kind of go through duration first. I think 3 to 9 months in nature.
In terms of price point, you're in the low six figures. Time to revenues, sign the contract and however long the implementation takes, call it 3 to 6 weeks. And then the scope is really dependent upon the customer, right? We leave it open ended. We offer the platform.
That customer may choose 2 or 3 endpoints or one or all of them. And 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 and then we measure it throughout the period. And it's that measurement throughout the period and continuing to put the ROI in front of the customer that allows us to preterm go and make it a bigger engagement. That is the model.
That's the go to market model. And a lot of them are not human based. We're doing a fair amount that are just automation bot based basically implementations. So they're not even using human agents. They're using it to test out our AI capabilities, and so there's a lot of activity there.
Got it. And then on the capacity side, obviously, you've been messaging that, that you're kind of tapped there and the activity levels are super high. Just talk to me about the thought process on 2 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. Yes. 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.
So 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. So we don't have to do as much now. We're still adding to that risk, but we already had a head start, whereas internationally, we did not do that. Got it. And Rob, it's several quarters ago.
I know you signed some really sizable deals, but you're looking at the early use cases and just say, look, I think it's a matter of time until we signed $100,000,000 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. So I mean, it's 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, at the level of health care organization. So I feel like we're we put it out. I've been in need where I talk to our decision makers. So I feel like we have a hot going on, and I'd like to see that we in 2019, that we do something in that area. So Yes.
Got it. If I could just one last quick one for you. You gave a thank you so much, by the way, for the incremental, just a sense of how the year plays, how the leverage plays, how the spend plays. You gave a little teaser on obviously the out year 2020 in terms of 20% top on growth. But it looks like from the spending profile, you're going to kind of reach your peak on spend in Q2, Q3 2019.
So to the degree you're willing, can you just give any sense of what the incremental EBITDA margins look like in your Now 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 'twenty. Jeff, you broke up a bit. So 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.
You're asking with and you're correct, with the front end loading of our investment, because we want to emphasize that productivity and contribution for those returns happening as much as 'nineteen as we can, that then creates a leverage environment of our business in the second half, right? As that revenue then 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 in 2020, we will on May 8. But I will say that we will have margin expansion in 2020.
Got it. Thanks.
And our next question is from the line of Mike Lasmore from Northland Capital Markets.
Great, thanks. Yes, great results outlook.
On the did you say you expect the SMB segment to start growing again? Or has it already started growing?
It will start growing again. It will have a really nice growth for this year.
And what's the main driver there? I mean, I think you touched on
it a little bit, but just clarify. Focus. Yes. We went out of the gate 2 years, 24 months ago with we have to go out on the enterprise and win those T Mobile and companies like that. And it just was being focused down on made of that.
And then now that that's going, we know there are a lot of other companies in the world that want to take part in this. And so we then started to basically open up funding like midyear. And then we saw a very strong Q4 on the bookings side, better than they've ever had. And then they continue to do that. They're ramping their sales teams and their SDR teams and their marketing.
And so they're very excited about what they're seeing. So we're just that was dampening down growth rates overall. If you just separate the enterprise as well, over 12%, which everyone always talked about. So right now, that's moving in a very, very positive and strong direction. Very great.
And how about any color on the auto vertical and how that's trending? Yes, it's good. We did an acquisition of Advantage Tech. 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.
And it just opens up a whole another area of addressable markets and also resellers. We renamed it LivePerson Auto, so it's got a new brand on it, But we have great leadership over there too. But 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. And with Maven, they're also incorporating that and we're doing a lot of activity over there.
Got it. And just a clarification on
a long time that you made. You said I think you said something about having record signings in the quarter. Is that does that refer to the number of accounts that signed? Or does
that refer to like the ACV of bookings?
You can apply it to both. The number of deals is very strong, especially in the new customers that we're bringing in into the platform, but that also translated to ACV. Yes. If you look at Q4 of last year, not last year, but the 'seventeen year, we had a big quarter, but it was really driven by 1 or 2 big, big customers. Very interesting now, it was not a big customer of 1.
That one big customer was 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 promotional side. So it feels good. That's why when we see that, we now have we see pipelines grow like they have over the year. We want to bet down now to accelerate that.
Yes, that's a great point.
And our next question is from the line of Zach Cummins from B. Riley.
Hey, Zach. Hey, this is Sarkis on for Zach. 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 'nineteen 'twenty?
Yes. I mean, when you look at how we're investing today, we're investing in really 3 major areas. One area is endpoints. So we keep building out all the endpoints over the next WhatsApp. We have now WeChat.
That's Flow Live, we have LINE in Asia. We have also WhatsApp, but also those platforms get better and better each month. So they're adding more features like payments and stuff like that. They're getting these platforms have a long way to go. If I look at my vision and say like where how we should be doing Conversational Commerce, they're building things in, so we have to develop against those.
The second part is our use cases. So we're developing around predominantly, it's where we beachheads into care, where all the voice calls are, but now we're fanning out into sales and marketing. And so as I mentioned in my remarks, we did a deal on outbound. So like you can outbound market through messaging, using our platform, and that's really a marketing event. So that's more use cases.
And the 3rd driver is automation and human conversations on the platform. So how do we make the especially 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 interval is up in the 90s, we've got a good bot in the market. So these are kind of the 3 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 4th quarter? Maybe what's the expected conversion rate on opportunities from an event like that?
So the I won't give you a specific number, but they're very, very high because they relate to those. And I think and anyone who was there, it was an amazing event. It just basically showed the power of the platform and their operating model, which is in the Lexi. So they're all presenting. We also all we've had other customers do presentations.
And we call it 1st. I think it's really important we kind of brand it 1st. It's like all these customers want to be the first at something. There's this 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. And so this is really what we see. They're out there presenting, and they're presenting and they're very proud of it. So that's a very exciting thing. And I think that drives a lot of options because everyone else in the room wants to be a first in something else, and they want to get there quickly.
So we see very good results. That's why we are investing heavily on the marketing events like that throughout 2019. Yes. I'd just add, what we did say in our last call was that from Bellingham all the way up to T Mobile, no reason to believe T Mobile being different is that when we have our customers at the summit, we convert them over 40% of the time. If you think about those summits, you can almost pack 3 to 4 months of a sales cycle into 2 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. So, keep 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.
And our next question is the line of Mark Schappel from Benchmark. Hi, guys. How are 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? Or is it going to change? Are you just trying to set up as many partners as you can right now?
Or is there a focus on just kind of consolidating what you have?
Yes. Thanks for the question. Good to speak with you. It depends on where you are in our different go to market spectrums. If you're in if we're talking specific to the small and medium business, there we are rapidly expanding the number of customers.
So that is a volume gain and the old eighty-twenty rule would apply. If you go up the stack to mid market and enterprise, it's 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. So it really depends on which end of the go to market spectrum you're on. Great. Thank you.
And then 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.
Yes. I think, obviously, as we remove voice calls from those large voice platforms, they're obviously going to try defending that. But I've said this before, they're just they're kind of like evil doers 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 make sure it doesn't work so they can get more voice on and say, this is just a toy. So those are the guys right now that we have a target on to get rid of. And 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 and go straight to a human to messaging a voice, human voice. So 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, 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.
And 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. So 2018 was a year for the record books in so many ways in key metrics, including ARPU, revenue retention, new logo sign, 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 inside Howling will 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 12% in 2020, but to take a greater share of 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 start up and just launched our platform 2 years ago and generated 100 and $50,000,000 in contract volume, we'd be a pretty hot start up. So obviously, we've been around a while, but I think we're running 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.
So 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 4th quarter 2018 conference call. This does conclude the call, and you may now disconnect.