Mark Schappel : Great. Thanks. And I realize Wild Health is less of a focus these days, but I was wondering if you just give us an update on that business in the quarter and just your general thoughts on how you view the business.
John Collins: Yes, as we’ve discussed previously, Wild Health is a valuable asset to a LivePerson, but not necessarily strategic to its core and is run on a standalone basis at this time. I don’t have further updates beyond what I had provided previously for Wild Health’s growth, which has moderated relative to the expectations we had very early in the year when we first launched in 2023, but remain consistent with the expectations we set last quarter.
Operator: The next question we have comes from Jeff Van from Craig-Hallum Capital Group.
Jeff Van: Great. Thanks, John on Wild Health, just I guess two off-shoot questions. One, what was the margin on that business? What was the impact from a gross margin that was highly profitable revenue? And then somewhat of a tail to that question is, how are you thinking about gross margins for Q4?
John Collins: Yes, Hey, Jeff. So the, as you just to recap, we took all of the expense for the Wild Health based Medicare revenue that didn’t occur in Q4. And in Q3, we don’t have that expense. So there’s clearly a bump to non-GAAP gross margins as a result of that one-time Medicare reimbursement, which we recognize, $7 million in the third quarter. So that moved the needle for gross margin up by one to two points. So as we think about gross margin on a normalized basis, it would be within 76% to 78% that we expect broadly for the business in the fourth quarter independent of the Wild Health contribution.
Jeff Van: Okay, very helpful. And then on the retention, I know the goal is 105 to 15 maybe just expand on that a bit. I mean, how close are you to 100? Why are you below 100? Where are customers going if they’re leaving? Is it just less usage? Just maybe a little expansion on the retention, where you are, where you’re going, and why we’re where we are now?
John Collins: Yes, I think the lot of reasons for why we are, where we are at the moment, a lot of it relates to a defocusing and restructuring wind down of non-core, and just a lot of some all that fortunately is in the rearview mirror now, and we’re rebuilding that good market motion. And I think the indicators are positive, as I mentioned previously. To be more specific, a lot of the NRR headwind relates to lower volumes coming off the forecast from the pandemic that they’re renewing now, rather than full-on cancellations moving elsewhere. And then I think with regard to the expectations moving forward, as I mentioned in relation to a question earlier, there is a blended NRR that we’re reporting here, which includes some of the lower end of the market that we service, lower end of mid-market, and some of those customers are not really where we’re putting a lot of support at the moment.
And so if we were to isolate the enterprise customer base, that NRR would be much closer, if not within the range that we have, but the wider blended rate is still below that 105 target. Again, though, we expect sequential improvement moving forward.
Jeff Van: And just one follow-up on the volumes, the post-pandemic volume resets. I mean, is there a way to quantify like what percent of the contracts are reset to rational volume levels for what they’re actually consuming as opposed to pandemic. How far through that transition are we?
John Collins: I think we’ll be fully through that transition by first or second quarter of next year, Jeff.
Jeff Van: Okay. And then if I could just one last one, sorry. And on bookings, I know last quarter you said it was the best bookings quarter, I believe since early ‘22, if I caught it on this call, you said this was up sequentially from that number. How are the bookings this quarter relative to expectations relative to a year earlier? And I know it’s a multi-part question, but the customer count is down. Do you think that’s going to continue, you’re just going to post bigger deals or do you expect that to reverse?
John Collins: Yes, a couple of clarifications. So in the prepared remarks, I said that overall bookings were consistent, approximately consistent with last quarter, but enterprise deal values were actually up sequentially. So despite the lower deal counts, again, emphasizing the strategic focus on our enterprise customer base, we did increase overall ACV sequentially while bookings were approximately the same.
Operator: Thank you. Ladies and gentlemen, we have reached the end of our call today. Thank you for joining us. You may now disconnect your lines.
