Starboard Value has argued webchat provider LivePerson needs to streamline its cost structure and focus investments on its core products, saying these and several governance improvements can help the company catch up with its peers. Starboard recently nominated four to LivePerson’s board.

In a Thursday letter, Starboard said LivePerson has underperformed a list of rivals by 458% since going public in April 2000 and that it was trading at a “persistent” valuation discount to these companies, with the value gap widening “considerably” in the last year.

LivePerson was profiled as vulnerable to shareholder activism in March 2021 by Insightia’s Vulnerability module. The report identified several issues, such as underperformance relative to peers including Nuance and Twilio, and high dissent against directors.

Starboard blames ballooning operating costs and rising capital expenditures for a dip in performance in recent years. However, the investor said that it has confidence LivePerson can create significant value for shareholders due to its “best-in-class” technology” and devotion from blue-chip companies to its messaging solutions.

The activist, a 9.7% shareholder, listed several steps to improve profitability, starting with a new cost strategy that reduces inefficiencies and improves productivity, particularly in the sales and marketing departments, which made up 35% of sales in 2021.

The company should also look at product development and capital expenditures, which accounted for 43% of sales in 2021, and implement a “strict focus” on its core competencies while de-emphasizing non-core initiatives.

Implementing increased rigor and focus could lead to improvements in both growth and profitability, wrote Starboard’s Peter Feld, in an attempt to put down fears of a revenue slowdown, which often comes with a slimmer structure.

Responding to the activist, LivePerson said it “welcomes feedback from investors.” The company added that its board and management have “constructively” engaged in dialogue with Peter Feld and his firm over the past two months. LivePerson also listed a series of recent achievements including a 28% year-over-year revenue growth in 2021 and noted that it has generated more than 250% total return for shareholders over the past five years.

LivePerson shares rose as much as 5.6% Thursday but at the end of the day were up just 1% at $25 each, giving the company a market value of $1.8 billion.

Feld, a portfolio manager at the activist firm, is part of Starboard’s four-person slate, alongside John McCormack, of private equity firm Siris Capital, and technology industry executives Vanessa Pegueros and Yael Zheng.

Feld also called for measures to help LivePerson move towards “best-in-class governance,” telling the company to consider ending its staggered board, separating the CEO and chairman roles, and introducing a lead independent director position.