Hello, thank you all for joining us. I'm Jon Perachio, LivePerson's Vice President of Investor Relations. Joining me today is John Sabino, LivePerson's Chief Executive Officer. We'll be discussing our previously announced transaction with SoundHound AI and addressing questions submitted by stockholders. I'd like to remind everyone that certain statements made during today's presentation may constitute forward-looking information. These statements reflect the current expectations of management and are subject to risks and uncertainties that could cause actual results to differ materially. I encourage all participants to refer to the full disclaimer and forward-looking statements disclosure contained within the press releases issued on July 10th, July 23rd, and June 28th, all of which are available at voteliveperson.com and on the SEC's website at sec.gov. Nothing on this call constitutes an offer to sell, buy or exchange, or a solicitation of an offer to sell, buy, or exchange any securities.
A transcript of this webcast will be filed with the SEC and made available on the Investor Relations section of LivePerson's website, as well as on our transaction website, voteliveperson.com. With that, I'll turn it over to John.
Thanks so much, Jon, thank you to everybody for joining today. Look, we wanted to hold this town hall because we know there's a lot of information out there about this transaction. There's press releases, SEC filings, letters, voting materials, we know that all this can be difficult to sort through. Today, I wanted to speak plainly about what's at stake and why the board is recommending this transaction and why your vote matters. We'll spend a few minutes today to walk through some key points, then we'll answer some questions submitted by stockholders, as Jon just said. Let's kick this off, and let me start with the vote itself. The special meeting for the vote is going to be on the August 20th , approval requires the support of a majority of the outstanding LivePerson shares.
This is not simply about letting your vote sit there. We need a majority of the shares to be voted, that means that a share not voted is the same as effectively voting against the transaction. However many shares you own, your participation is really important, and this vote will help determine both the future of LivePerson and the value that stockholders have the opportunity to receive from their investment. Now, before we get into the details, let me summarize why the board is recommending that stockholders vote for this transaction. This transaction will bring together the complementary capabilities across voice, digital engagement, agentic AI, and AI assurance. Most LivePerson stockholders will become stockholders of the combined company with SoundHound, with a strong balance sheet, no debt, greater scale, broader strategic capabilities, and an accelerated path to profitability.
After comprehensive review of LivePerson's alternatives, the board determined that the transaction with SoundHound really does represent the best alternative for maximizing stockholder value. With that as being the background and the context, let me spend a few minutes on how the board reached its decision and what this transaction is expected to mean for stockholders. Some of the points I'm about to share cover specific transaction terms and financial details, I'm going to stay close to my notes and make sure I describe them accurately for all of you that are listening today. First and foremost, the LivePerson board of directors undertook a comprehensive review of alternatives in which 66 potential counterparties were contacted.
Following that process, the board determined that the transaction with SoundHound represents the best alternative for maximizing stockholder value, including when compared with continuing as a standalone company, given the business, financial, competitive industry, and market risks that are facing LivePerson. This transaction would also unite complementary capabilities across voice, digital engagement, agentic AI, and AI assurance. The combined base of our two companies together includes over 25 of the Fortune 100 companies, creating one of the conversational AI sector's most comprehensive enterprise customer footprints and significant opportunity to introduce additional capabilities across a company's existing customer base. That's why the board is leaning in and wants all of us to vote for the transaction with our share. All right. Let's talk a little bit about LivePerson's debt and the agreement we reached with note holders.
It was an important part of the board's assessment, and it really did revolve around LivePerson's financial position. LivePerson's outstanding debt currently exceeds the total value of the transaction. As part of this transaction, our secure note holders have agreed to exchange their notes at a value reflecting a substantial discount to the notes' approximate $350 million par value. Given LivePerson's valuation and significant debt, without these substantial concessions from our note holders, stockholders may not have had the opportunity to receive any value for their shares in any strategic transaction. This transaction's not occurring in isolation from our financial circumstances. The agreement with our note holders really is a critical part of the overall transaction and the opportunity for our common stockholders to receive value. Now, let me address the consideration LivePerson stockholders are expected to receive if the transaction is approved and completed.
Based on the assumptions described in our proxy statement and prospectus, most LivePerson stockholders will receive SoundHound stock. As of the announcement of the transaction on April 21st, 2026, the SoundHound stock consideration to be received by LivePerson stockholders represented approximately $3.33 in value per LivePerson share. That represents a premium of approximately 22% over LivePerson's 30-day volume-weighted average trading price before the announcement. The exact number of SoundHound shares a stockholder receives will not be finalized until closing. It will be determined using the formula described in our proxy statement and prospectus, and will depend in part on SoundHound's stock price near the closing. The calculation uses a 10-day volume-weighted average price of SoundHound stock ending three trading days before the closing, and is subject to a collar. If the average price is above $12 per share, $12 will be used in the calculation.
If a SoundHound share is below $7 per share, $7 will be used in the calculation. The aggregate consideration is also subject to a possible downward adjustment based on LivePerson's cash balance shortly before closing, as described in our public filings. Because the final exchange ratio depends on a formula with variable factors, we encourage stockholders to visit voteliveperson.com and use the interactive illustrated calculator to see what consideration could mean for their individual holdings on an estimated basis. Stockholders holding LivePerson shares listed on the Tel Aviv Stock Exchange are expected to receive an equivalent value in cash instead of SoundHound shares, subject to the terms described in our proxy statement and prospectus. To pull this together, stockholders receiving SoundHound shares, the second component of the transaction, is an opportunity to participate in the potential future upside of the combined companies.
I think this is a good thing. LivePerson stockholders receiving SoundHound stock will become stockholders of the combined company with a strong balance sheet with no debt and an accelerated path to profitability. SoundHound has stated that assuming the transaction closes in the second half of 2026, it expects to achieve a combined revenue range of a minimum of $350 million-$400 million in 2027. SoundHound has also stated that the combined business is expected to reach $500 million in revenue based on existing customer base alone. In summary, I know there was a lot of detail, and the full terms are available in the proxy statement and prospectus, but I encourage everyone to review those materials. Let me bring you back to the central point. The board conducted a comprehensive process, considered LivePerson's financial position, and evaluated the alternatives available to the company.
Based on that review, the board unanimously determined that the SoundHound transaction is the best alternative for maximizing value for LivePerson stockholders. It provides stockholders the opportunity to receive value from their LivePerson shares and for most stockholders to participate in the potential upside of the combined company with broader capabilities, greater scale, and a strong balance sheet with no debt. That is why the board is recommending that you vote for this transaction. It brings me back to what you're hearing from us so frequently. A share that is not voted is the same as voting against the transaction. We do not want anyone to miss the opportunity to participate simply because an email was overlooked or a proxy card was not sent. Voting takes only a few minutes, and your vote must be received by 11:59 P.M. Eastern Time on August 19th, 2026.
You attend a special meeting online and vote during that meeting if your shares are held directly in your name as a stockholder of record. Even if you plan on attending the LivePerson special meeting, we recommend that you vote your shares today so that your vote will be counted if you later decide not to attend the special meeting. However many shares you own, your vote matters, and we stress please vote for the transaction. Hopefully that gives a good overview to everybody, Jon, and we could probably start moving on to some of the questions we've received from some investors on things that we think are on the minds of stockholders today.
Yeah, sure. Great. Thanks for that, John. The first question for you is why does the board believe the merger consideration fairly compensates LivePerson stockholders?
Okay. At signing, the consideration was set to deliver roughly $3.33 per share, as I've already said. This is a premium of about 22% over the 30-day average price the day the deal was announced. The board considered a few things. First, the board ran a comprehensive review contacting over 66 parties, and you can read about every detail of that in the review process in our proxy statement. Second, LivePerson's financial advisor, Houlihan Lokey, delivered an opinion that the consideration is fair from a financial point of view to LivePerson's common stockholders, and that was based on assumptions and qualifications from their opinion. Lastly, arguably most importantly, LivePerson's debt exceeds the total value of this transaction.
As we've said many times before, without the note holders agreeing to accept substantially less than what they're owed, there would be no value available to distribute to all stockholders. In considering these facts, the board determined that SoundHound's offer provides the best path forward for stockholders. Offering a premium above the trading price at signing, an opportunity to participate in the future of the combined entity with a more comprehensive platform and, as I've stated many times before, zero debt. Look, if you really want to take a look at this for yourself, you can refer to the calculator at voteliveperson.com, and we encourage everybody to do that.
Great. Thanks, John. Second question for you is why has the board concluded that selling now was superior to continuing LivePerson's standalone turnaround?
That's a good question. It's true that our turnaround was progressing. We extended our debt maturities, and we gained some flexibility to continue investing in our platform. However, we continue to face an extremely competitive landscape, and there's a lot of headwinds which contributed to a slower turnaround than originally planned. It was critical that we sought out alternatives. After review, the board concluded that this transaction really does offer stockholders a much better path to value. For most, future upside as part of a company that has flexibility to invest in the right technologies and opportunities. The fact is we're just constrained as LivePerson alone right now. The board determined in its review that any other alternatives, including being a standalone company, may result in leaving no value for stockholders. That is something we really wanted to avoid.
Yeah. Thanks, John. It's very important context. Next question is: What happens if the transaction is not approved by stockholders?
All right. Look, if this deal does not go through, we remain an independent company. We will face substantial risks and an increasing entry of well-funded competitors in our space. You don't need me to tell that. You can just look at the news every day. We'll immediately face two problems, managing our debt obligations while also dealing with the fact that our revenue is contracted. This makes it tougher to invest in the future and run the company as it stands today. That's why this vote is so important, and it's not a matter of comparing the merits of a sale versus a standalone path, because a standalone path is going to be very difficult for this company and may end up with stockholders not getting anything, and we want to avoid that.
Great. Thanks, John. Another question from a shareholder referenced that LivePerson contacted 66 counterparties in the process. Were there any other or better offers?
We did run a highly rigorous and comprehensive strategy review process led by very capable advisors. Out of the 66 potential counterparties contacted, only SoundHound submitted a formal bid. SoundHound's offer was the highest, most definitive, and only actionable proposal that really did preserve value for our common stockholders.
What are the chances of a competing bid emerging before the meeting later in August?
Look, I can't predict every scenario. This was a very extensive process, as you've seen in our filings. We're not currently expecting anything like that.
Another question from an investor is why are the Tel Aviv Stock Exchange holders getting cash while other stockholders get SoundHound AI stock? Which is the better deal, and why the difference?
This is really being driven by local regulatory and compliance reasons in Israel. The value that Tel Aviv Stock Exchange holders will receive in cash is designed to be substantially equivalent to the value a Nasdaq holder would receive in stock consideration. Nasdaq holders will receive freely tradable shares. TASE or Tel Aviv Stock Exchange members will receive the equivalent value in cash. Again, this is because of compliance and regulatory reasons, and there's not really one that's better than the other.
Thanks, John. That's very clear. Next question is: What percentage recovery or economic outcome is expected for creditors compared to its common shareholders? How did the board evaluate whether that allocation was fair?
The board considers the allocation highly favorable to stockholders because we negotiated significant financial concessions from our lend holders to ensure that there's money on the table for equity holders. To give you the specifics, creditors agreed to write off over $140 million of what they were owed basically enabling $43 million in deal value, or $3.33 per share as of signing to go directly to common stockholders instead of going entirely towards the debt repayment. We think that this works for our shareholders.
Thanks, John. Another one here. How did the board value LivePerson's existing customer relationships, enterprise integrations, Conversational Cloud platform, and cross-sell potential in determining that the merger consideration was fair to common shareholders?
Okay. Our financial advisors, Houlihan Lokey, ran a standard valuation model, a number of them including discounted cash flows. While our technology and customer bases are valuable, our financial losses and negative equity severely damaged our standalone value. Partnering with SoundHound immediately provides this financial stability we'll need to retain our customers and, most importantly, continuing to invest in the platform and being able to innovate. That's what really led in this direction.
Okay, great. Thanks, John. One last question: How did the board evaluate newer LivePerson product initiatives, such as Syntrix, which you've talked about on some prior earnings calls in the valuation process?
Look, Syntrix is an innovative product. There's interest in it. It's still in its early stages, as with all new products. Because its long-term success really does require a lot of future investment for customer adoption and improving the product, the board viewed this as an asset whose value will actually be unlocked much better when combined with SoundHound's omnichannel platform and their financial stability. We see Syntrix as still being valuable, but it's going to need more investment to move it forward, as any product would, and we think we can do this best with SoundHound.
Great. Thanks, John. Thanks for clarifying that. That is all the time today that we have for questions. John, again, thank you for providing this additional context to the transaction. I'm sure it'll be very helpful to the shareholders, and clarifies why it's important for all LivePerson stockholders to vote. Thank you to everyone who joined in today. Additional transaction materials and voting information are available on voteliveperson.com. For assistance voting your shares, please contact MacKenzie Partners Toll -ree at 1-800-322-2885. As a reminder, votes submitted in advance of the special meeting must be received by 11:59 P.M. Eastern Time on August 19th, 2026. Please vote for the transaction today. Thank you.
Thank you, Jon, and thank you everyone for attending.
That concludes our call today. Thank you for joining. You may now disconnect.