Last night, LivePerson Inc., (LPSN) reported stronger than expected 3Q earnings, beating our and the Street’s estimates for bookings, total revenue and non-GAAP EPS. For the next quarter and 2013, management is guiding largely in line with the consensus, though it is tightening the full year ranges for revenue and EPS.

Though the company reported respectable results and valuation is reasonable (2.1x EV/2014E Revenue), we believe LPSN remains in the midst of a modest rebuild mode and visibility is not yet sufficiently firm to turn aggressive on the stock. In our opinion, the bulk of the rebuild largely consists of 1) transitioning from a single product chat company to a customer engagement solutions provider around its market-leading enterprise chat franchise (which should be available early next year) and 2) bringing the sales force to speed with selling the entire LiveEngage product line, rather than just chat. If the transition is successful, we believe the company could drive 20%-plus revenue growth consistently during the next few years, allowing for plenty of time to build positions in the stock.

LPSN reported revenue and non-GAAP EPS of $45.2 million (+14%) and $0.07 compared with our estimates of $47.5 million and $0.04, which matched the consensus. On the conference call, management noted that the top line was aided by closing two large deals that fell out of the first half of the year. Bookings were a highlight in the quarter, growing at an annual rate of 26% to $10.2 million with new customers driving 30% of bookings. Cash flow from operations was $3.0 million, down slightly from $3.4 million in 3Q12.

The full year outlook tightens to $177-$178 million and $0.19-$0.21 from $174-$179 million and $0.18-$0.21. In keeping with management’s outlook, we are fine-tuning down our 4Q revenue estimate, which was high on the Street, nearly $1 million to $46.6 million and shaving a penny from EPS to $0.05. We are maintaining our 2014 top and bottom line estimates at $202.1 million $0.27.