LivePerson (NASDAQ:LPSN) vs. Sprout Social (NASDAQ:SPT) Financial Review

LivePerson (NASDAQ:LPSN) and Sprout Social (NASDAQ:SPT) are both small-cap computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitability.

Institutional & Insider Ownership

79.8% of LivePerson shares are held by institutional investors. 2.0% of LivePerson shares are held by insiders. Comparatively, 10.1% of Sprout Social shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for LivePerson and Sprout Social, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LivePerson	1	1	0	0	1.50
Sprout Social	1	6	6	0	2.38

Sprout Social has a consensus target price of $21.91, suggesting a potential upside of 209.01%. Given Sprout Social’s stronger consensus rating and higher possible upside, analysts clearly believe Sprout Social is more favorable than LivePerson.

Profitability

This table compares LivePerson and Sprout Social’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LivePerson	-51.72%	N/A	-7.71%
Sprout Social	-10.59%	-18.93%	-7.76%

Volatility and Risk

LivePerson has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500. Comparatively, Sprout Social has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500.

Earnings & Valuation

This table compares LivePerson and Sprout Social”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LivePerson	$312.47 million	0.11	-$134.27 million	($27.95)	-0.10
Sprout Social	$405.91 million	1.03	-$61.97 million	($0.81)	-8.75

Sprout Social has higher revenue and earnings than LivePerson. Sprout Social is trading at a lower price-to-earnings ratio than LivePerson, indicating that it is currently the more affordable of the two stocks.

Summary

Sprout Social beats LivePerson on 9 of the 14 factors compared between the two stocks.

About LivePerson

LivePerson, Inc. engages in conversational artificial intelligence. It enables brands to leverage the Conversational Cloud's intelligence engine to connect with consumers through an integrated suite of mobile and online business messaging technologies. The company offers the Conversational Cloud, an enterprise-class digital customer conversation platform, which enables businesses and consumers to connect through conversational channels, such as voice, in-app, and mobile messaging. It also provides professional services; LivePerson's Conversational AI, including conversation builder, manager, and intelligence, and intent manager. In addition, it provides Voice AI, conversational intelligence and insights, and integration services. The company sells its products to Fortune 500 companies, Internet businesses, online merchants, automotive dealers, educational institution, public sector, and not-for-profit organizations. It operates in the United States, Canada, Latin America, South America, Europe, the Middle East, Africa, the United Kingdom, and the Asia-Pacific. LivePerson, Inc. was incorporated in 1995 and is headquartered in New York, New York.

About Sprout Social

Sprout Social, Inc. designs, develops, and operates a web-based social media management platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company provides cloud software for social messaging, data and workflows in a unified system of record, intelligence, and action. It offers integrated tools, such as social engagement/response; publishing; reporting and analytics; social listening and business intelligence; reputation management; social commerce; employee advocacy; and automation and workflows. In addition, the company provides smart inbox, social customer relationship management, social monitoring and alerts, customer service tools, and automation; and centralized content planning, creation, and publishing, automated scheduling, content performance reporting, suggested content, message approval workflows, publishing permissions and governance, and content and asset libraries. Further, it offers social media; content performance, customer service and team, custom report builder, and reporting API; and market research, brand health, competitive insights, consumer trends, and product feedback; and social commerce, reputation management, employee advocacy, mobile applications, and chat bot creation and management. Additionally, the company offers professional services consisting of consulting and training services. It serves social and community management; public relations; marketing; influencer marketing; customer service and care; commerce, sales and customer acquisition; recruiting and hiring, product development, and business strategy; and small-and-medium-sized businesses, mid-market companies, enterprises, marketing agencies, government, non-profit, and educational institutions. Sprout Social, Inc. was incorporated in 2010 and is headquartered in Chicago, Illinois.