Q4 2023 Docebo Inc Earnings Call

Operator: Good morning, everyone, and welcome to the Docebo Q4 2023 earnings call. All participants are currently in listen-only mode.

Good morning, everyone and welcome to the table Q4, 2023 earnings call.

All participants are currently in listen only mode. We will open the line for a question and answer session for analysts following the presentation.

Operator: We will open the line for a question-and-answer session for analysts following the presentation. Instructions will be provided at that time for research analysts to ask questions. We ask that they please limit themselves to two questions and return to the queue for any follow-up. I'd now like to turn the call over to Docebo's Vice President of Investor Relations, Mike McCarthy. Please go ahead, Mike.

Instructions will be provided at that time for research analysts to ask questions. We ask that analysts please limit themselves to two questions and returning to the queue for any follow ups.

I'd now like to turn the call over to <unk>, Vice President of Investor Relations, Mike Mccarthy. Please go ahead Mike.

Thank you operator before we begin do trimble would like to remind listeners that certain information discussed today may be forward looking in nature such forward looking information reflects the company's current views with respect to future events.

Michael W. McCarthy: Thank you, Operator. Before we begin, Docebo would like to remind listeners that certain information discussed today may be forward-looking in nature and reflect the company's current views with respect to future events. However, any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forecast.

Any such information is subject to risks uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward looking statements.

Michael W. McCarthy: For more information on risks, uncertainties, and assumptions relating to forward-looking statements, please refer to Docebo's public filings, which are available on CDAR and EDGAR. During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial proportions, they are not recognized measures and do not have standardized meanings under IFA.

More information on risks uncertainties and assumptions relating to forward looking statements. Please refer to <unk> public filings, which are available on SEDAR and Edgar.

During the call we will reference certain non <unk> financial measures. Although we believe these measures provide useful supplemental information about our financial performance. They are not recognized measures and do not have standardized meanings under ifr us.

Michael W. McCarthy: Please see our MD&A for additional information regarding our non-IFRS financial measures, including reconciliations to the nearest IFRS. Please note that, unless otherwise stated, all references to any financial figures are in U.S. dollars. Now, I'd like to turn the call over to Docebo's CEO, Claudio Irvine. So everybody, and thank you for joining us for our fourth and final earnings call.

Please see our MD&A for additional information regarding our non <unk> financial measures, including reconciliations to the nearest <unk> measure.

Please note that unless otherwise stated all references to any financial figures for U S dollars.

Now I'd like to turn the call over to Doug <unk> CEO Claudio verbal.

So everybody and thank you for joining us for our fourth ordinary coal.

Claudio Erba: With me today are Alessia Tuch, our president and COO, and Sukaram Mehta, our CFO. I will begin our talk this morning with a short summary of Docebo's success over the past. Alessio will provide a more detailed overview of Q4 Thailight, and Sukaram will review our final... Our key growth metrics show continued improvement as a result of the investments we are making. Docebo is becoming more effective in identifying the needs of enterprise customers and progressing through their organization to close them. Overall, our profitable growth strategy resulted in a strong subscription revenue growth of 28% in Q4. Additionally, we achieved an adjusted EBITDA margin of 13.2% and a free cash flow margin of 14.2% as we ended the year.

With me today are all affected our president and CEO and Scott our CFO.

This morning, we just feel somebody of the civil success over the past year.

That's the only provides a more detailed review of Q4.

Let's highlight and forgotten we review our finance performance.

Or P grow matrix showed a continued improvement as a result of the investments we are making the tech will become even more effective.

Like many of US live enterprise customer and progressing through they don't get any basin to close deals.

Our profitable growth strategy resulted in strong subscription revenue growth.

8% in Q4.

Additionally, we achieved an adjusted EBITDA margin of 13, 2% and the free cash flow margin of 14, 2% as we ended the year.

Claudio Erba: I'm also proud to say that during the year, we completed two important acquisitions that brought strategic technology and valuable domain expertise to our product development team, particularly in the field of AI. People that needed to go have been successfully integrated within the expected timeline, and their contribution to the Docebo platform will start to be visible in the marketplace later this year. These positive financial and operational results enable us to make strategic investments in our future growth and maintain our industry leadership position through innovation. It's from this position of strength that the leadership team and I felt it was the right time for me to transition into the role of Chief Innovation Officer.

Most of the proud to say that during the year. We completed two important <unk> movie from the broker did you couldn't allergy available domain expertise to our problem development in Colombia.

We're already in the field of AI.

Therefore that didn't go well.

Successfully integrated with the expected timelines and their contribution to the single block.

That would be visible in the marketplace later this year.

This positive financial and operational results enable us to make strategic investments in our future growth and maintain our industry leadership position through innovation.

From this position of strength, but that the leadership team and I felt it was the right time for me to transition into the role of Chief Innovation Officer.

Claudio Erba: In my new role, some of the key areas we will focus on include identifying novel ideas and trends in the R&D space and finding ways for Docebo to leverage them. Advising Alessio and Fabio on innovation ideas for early stage products, including product positioning, feature creation, and improvement, leading and doing deep research, serving as one of the Docebo industry experts and evangelists for Docebo positioning as a leader in innovation, and providing ongoing mentorship to the executive leadership team and board on important technology development and positioning. As I pass the baton to Alessio, I feel excitement as I transition into my new position.

In my new role some Vicki <unk>, who will walk US include that you didn't see barring a Nobel prize in reality these days and finding ways for this you're able to leverage them.

As you probably know basically be up or early stage product is going to be brought up was easily predict creation and improvement.

And going deeper they're serving as one of the cable industry expert and about really bullish about positioning as the leader in innovation.

And providing ongoing basis to the executive leadership team and board all important technology development and positioning better.

It was talked about total ICL I do with excitement as they transition into my new position is accelerating so think about the future and the gradual possibilities with <unk>.

Alessio Artuffo: It's exhilarating to think about the future and the incredible possibilities that lie ahead. As Docebo continues to grow and evolve, I am certain that there will be even larger and more exciting achievements waiting to be realized. Now, I would like to turn the call over to Aleksandr. Thank you, Claudio, and good morning, everyone.

The stable continuing to grow the bulb I'm certain that that would be even larger and more exciting achievement waiting to be realized.

No I would like to turn the call older less fuel.

Thank you Claudio and good morning, everyone.

Alessio Artuffo: As I step into this interim CEO role at Docebo, I would be remiss if I did not mention how fortunate Docebo has been to be led by Claudio and what an honor it is for me to continue to grow the company following his legacy. Before discussing business performance and our improved market position, I would like to briefly share our strategic perspective on the macro trends we saw this quarter. After that, I will go over some of our key performance indicators for the quarter. Macro trends in quarter 4 aligned with our expectations, and we expect that 2024 will follow a similar pattern.

As I stepped into the interim CEO role at the table I would be remiss if I did not mention our fortunate the table has been to be led by Claudio and whatnot honor. It is for me to continue to grow the company. Following his legacy of success.

Before discussing the business performance and our improved market position I would like to briefly share our strategic perspective on the macro trends that we saw this quarter. After that I will go over some of our key performance indicators for the quarter.

Macro trends in quarter, four aligned with our expectations and we expect the 'twenty 'twenty four will follow a similar pattern, we expect to see need to get those deals that will continue to receive close scrutiny from the C suite.

Alessio Artuffo: We expect significant enterprise deals that will continue to receive close scrutiny from the CISCO. Our improved execution within the enterprise go-to-market ecosystem is helping us tackle this challenge, as larger customers with multiple use cases now view their investments in learning as strategic and mission-critical. SMB and first-time LMS customers continue to approach their decisions with caution. That said, we continue to penetrate mid-to-large organizations with complex and multiple use cases, leading with a solution that delivers a faster ROI and adds value to our customers. Geographically, we observed a positive trend in Europe, indicating a potential improvement in the market. We will continue to monitor this closely as the year progresses. North America, on the other hand, continues to maintain its strong performance, showcasing its resilience in the face of broader challenges. Now, to the quarter four highlights.

Our improved execution within the enterprise go to market ecosystem is helping us tackle these challenges our larger customers with multiple use cases now view the investments in learning is strategic and mission critical.

Our symbion first time LMS customers continue to approach the decisions with caution.

We continue to penetrate mid to larger organizations with complex in multiple use cases, leaving with a solution that delivers a faster right and in value to our customers.

Geographically, we observed a positive trend in Europe, indicating a potential improvement in the market.

We will continue to monitor this closely as the year progresses.

Eric on the other end continues to maintain its strong performance, it's showcasing its resilience in the face of broader challenges.

Now to the quarter four highlights.

Alessio Artuffo: We're excited to report that subscription revenue increased by 28% and total revenues grew by 27% in Q4, with total revenues exceeding the upper end of our guidance. ARR as of December 31, 2023 of 194.3 million increased 24% or 23% after adjusting for the positive impact of approximately 1 percentage point given the weakening of the US dollar relative to foreign currency. ARR growth was the result of our improving execution in the enterprise customer segment and our strong appeal across industry verticals. Adjusted EBITDA of 13.2% well exceeded our guidance. Our discipline to drive optimal growth at the right cost has helped us deliver quality growth with operating leverage. Enterprise customers with ACV over $100,000 in ARR accounted for approximately 56% of gross ARR generated in the fourth quarter. Additionally, ACV for new customers in the quarter was about $71,000 compared to $70,500 in the September period. External and hybrid use cases continue to account for more than half of our pipeline.

We're excited to report that subscription revenue increased by 28% and total revenues grew by 27% in quarter four with total revenues exceeding the upper end of our guidance range.

As of December 31, 2023 of the $194 3 million increased 24% or 23% after adjusting for the positive impact of approximately one percentage point given the weakening of the U S dollar relative to foreign currencies.

Our growth was the result of our improving execution in the enterprise customer segment, and our strong appeal across industry verticals.

Adjusted EBITDA of 13, 2% well exceeded our guidance our discipline to drive profitable growth at the right cost has helped us deliver quality growth with operating leverage enterprise.

Customers with ACD over a $100000 in euro accounted for approximately 56% of growth <unk> generated.

<unk> generated in the fourth quarter. Additionally, ACD for your customers in the quarter was about $71000 compared with the $70000 500 in the September periods.

External and hybrid use cases continue to account for more than half of our pipeline.

Alessio Artuffo: In addition to the progress our enterprise sales team is making, we're steadily increasing our presence with large system integrators. They're helping us access a great number of high-quality deals in both the enterprise and government sectors. Now, I would like to highlight a few customer wins, upsells, and cross-sells, of course. We're thrilled to share that Docebo has recently secured a major customer win with one of the top four U.S.-based global banks.

In addition to the progress of our enterprise sales team is making were steadily increasing our presence with large system integrators theyre, helping us access a great number of high quality deals in both enterprise and government segments.

Now I would like to highlight a few customer wins Upsells and cross sells this quarter.

We're thrilled to share that the table as recently secured a major customer win with one of the top four U S based global banks.

Alessio Artuffo: This prestigious bank has chosen Docebo to replace their outdated LMS provider in order to meet the onboarding and compliance learning needs of their vast global workforce. This collaboration marks a significant milestone for us as we continue to revolutionize the world of learning and development. Other notable large enterprise wins include Special Olympics International, three major Italian brands in the luxury goods and performance automotive industries, including Valentino and Pirelli, and a leading e-commerce company. Special Olympics International, which serves more than 4 million athletes and unified partners in over 170 countries, chose Docebo to address several hybrid use case requirements, including memberships, associations, and continuing education management, and more exciting news from Europe.

This prestigious bags that has chosen to table to replace their outdated LLS provider in order to meet the Onboarding and compliance learning needs of the vast global workforce.

Collaboration marks a significant milestone for us as we continue to revolutionize the world of learning and development.

Other notable large enterprise wins include Special Olympics International three major Italian brands in the luxury goods and performance, although mortgage industries, including Valentino MP rally and a leading E Commerce company.

Vessel Olympics international which serves more than four Midland athletes and unified partners in over 170 countries chose tableau to address several hybrid use case requirements, including membership Association and continuing education management.

And more exciting news from Europe, We recently partnered with Pirelli to revolutionize partner learning and we bought <unk> to enhance various external learning initiatives.

Alessio Artuffo: We recently partnered with Pirelli to revolutionize partner learning and with Valentino to enhance various external learning initiatives. This includes empowering our customers and partners through education, offering exclusive memberships, and providing comprehensive training programs for their retail and franchising activities. Turning to our amazing customers, we very quickly leveraged our early franchisee and internal use case momentum with both jangles having just signed them back in quarters. Then there is Tali Black & Decker, a global leader in tools and outdoor operating manufacturing facilities worldwide. This customer-iconic brand includes DeVault, Black & Decker, Craftsman, and Stanley.

This includes empowering our customers and partners through education, offering exclusive memberships and providing comprehensive training programs for their retail and franchisee networks.

Turning to our amazing customers, we very quickly leveraged our early franchisee and internal use case momentum we bojangles', having just signed then back in quarter three.

Then there is a solid black and Decker, a global leader in tools and outdoor operating manufacturing facilities worldwide. This customer iconic brand include the ball black and Decker Craftsman and Stanley.

During the quarter the company expanded the scope of the external use case of the discover platform being used to support both customer and brand training.

And lastly.

<unk> five U S based technology company that we signed in August is expanding their use of the service platform third partnership supports their multiple use case needs, including a large extended audience.

Alessio Artuffo: During the quarter, the company expanded the scope of their external use case of the Docebo platform, being used to support both customer and brand training. And lastly, a big five U.S.-based technology company that we signed in August is expanding the reuse of Docebo Plus. Their partnership supports their multiple use case needs, including a large external audience. Now, for our government segment, we are increasingly optimistic about our ability to secure a FedRAMP sponsor as well as obtain our FedRAMP certification. Our government sales team is fully staffed and actively selling, establishing relationships that are crucial for Docebo to create a strong pipeline in this important era of growth. Having a clear path to FedRAMP certification, our collaboration with the big four system integrators, and our preferred distributor, Kerasoft, positions us well to succeed in both federal and select opportunities.

Now to our government segments.

We are increasingly optimistic about our ability to secure a fed ramp sponsor as well as obtain our fed ramp certification.

Our government sales team is fully staffed and actively sell at establishing relationships that are crucial for the table to create a strong pipeline in this important area of growth.

Having a clear path to fed ramp certification.

Our collaboration with the Big four system integrator, and our preferred distributor get resolved.

<unk> as well to succeed in both federal and sled opportunities.

In quarter four one of our notable wins came at the state level as the Texas County District, and retirement system chose the table for their Onboarding and professional developer you gave me.

Now as the Oems performance during the quarter met our expectations. We're excited about the opportunities and progress being made with the NY and our wing box as they expand our platform further into their enterprise customer base and into new geographies for the children, including APAC countries, where Darwin box is growing rapidly.

Alessio Artuffo: In quarter four, one of our notable wins came at the state level, as the Texas County District and Retirement System chose Docebo for their onboarding and professional development use case needs, now for OEMs. Performance during the quarter met our expectations. We're excited about the opportunities and progress being made with E&Y and DarwinBox as they expand our platform further into their enterprise customer base and into new geographies for Docebo, including APAC countries where DarwinBox is growing rapidly. As Claudio notes, innovation will remain a critical part of why we win.

As cloud nodes innovation will remain a critical part of why we win.

In each one 2024, we will be providing better access to learn insights are comprehensive and module analytics experience with a new generation of customizable dashboards embedded into learn elements.

This will provide increased data visibility and analytics engagement for our customers.

Learning Si utilizes slow flake and AWS quick sized to deliver advanced filtering drill down a sharing features that can be fully customized to meet the needs of different use cases for which a customer is using our cloud segment.

Alessio Artuffo: In H1 2024, we will be providing better access to learn insights, a comprehensive and modern analytics experience with a new generation of customizable dashboards embedded into Learn LMS. This will provide increased data visibility and analytics engagement for our customers. Learning Sites utilizes SlowFlake and AWS QuickSight to deliver advanced filtering, drill-down, and sharing features that can be fully customized to meet the needs of different use cases for which a customer is using our platform.

We will also be launching learner communities this year and module that enables customers to create this and activate around digital community, but they can seamlessly embed and integrate into their loading coffers.

Later this year, we will release several exciting new AI capabilities the <unk>.

It will shape will be announced and monetize that winning new checkbook interface powered by Jenny.

This integration, bringing improved AI content generation capabilities for our amazing product.

Alessio Artuffo: We will also be launching Learner Communities this year, a module that enables customers to create and activate their own digital communities that they can seamlessly embed and integrate into their learning plans. Later this year, we will release several exciting new AI capabilities. Docebo's shape will be enhanced and monetized with a new chatbot interface powered by Jenea. This integration brings improved AI content generation capabilities to our amazing product. The AI creation add-on now supports vertical page outputs in addition to horizontal slide formats.

The AI creation at all now supports the vertical page outputs. In addition to horizontal slide formats. In addition, we will be launching a new virtual role play technology.

Okay is that during our last of the table inspire.

It is currently in bad out and will be available for early access in April and general availability in late quarter three 2024.

This product offers a video based that role play learning experiences for sales enablement, and then potential for other use cases like customer support and onboarding in the future.

Alessio Artuffo: In addition, we will be launching a new virtual role-play technology showcased during our last Docebo Inspire. It is currently in beta and will be available for early access in April and general availability in late quarter three, twenty twenty four. This product offers a video-based role-play learning experience for self-enablement and has potential for other use cases like customer support and onboarding in the future. It will be sold to customers on an annual licensing mark. In conclusion, I want to express my gratitude to the global Docebo community for their support and contributions to a highly successful 2023 for Docebo. As we look to 2024, we will continue to focus our execution on these five pillars of growth. Number one, continue to lead in the external use case. A large greenfield opportunity for Docebo. Number two, expand our presence where we will continue to grow our base of enterprise customers worldwide. Number three, introducing a robust learning platform to the lucrative and underserved government sector.

It will be sold to customers.

Licensing model.

In conclusion I want to express my gratitude to the global the table community for their support and contributions to our highly successful 2023 for the shovel.

As we look to 2024, we will continue to focus our execution on these five pillars of growth.

Number one continue to lead the external use case large greenfield opportunity for the cycle.

Number two.

Expand our presence we will continue to grow our base of enterprise customers worldwide.

Number three introducing a robust learning platform to the lucrative and underserved the government sector.

Number four scaling up our partnerships with strategic partners throughout the year.

And number five improving our expansion, meaning up sells and cross selling gas for instance, with our current customers.

Our goal is to achieve growth by consistently and methodically execute our plans.

Suthan Sukumar: Number four, scaling up our partnerships with strategic partners throughout the year, and number five, improving our expansion, meaning upsell and cross-selling efforts with our current customers. Our goal is to achieve growth by consistently and methodically executing our plan. We are dedicated to promoting innovation and using it as a crucial factor in our success. By leveraging innovation, we aim to distinguish ourselves from our competition and constantly enhance our products and services to meet the changing demands of our customers. With that said, I would like to hand the call over to Sokari. Thank you, Alessio, and good morning everyone.

We're dedicated to promoting innovation and using it as a crucial factor in our success.

By leveraging innovation, we aimed to distinguish ourselves from our competition and constantly enhance our products and services to meet the changing demands of our customers.

With that said I would like to hand, the call over to <unk>.

Thank you Alicia and good morning, everyone.

It's interesting a detailed breakdown of our financial results for the three months and fiscal year ended 31 December 2023 can be found in our press release, MD&A and financial statements, which are now available on our website and also filed on SEDAR and Edgar.

Subscription revenues were $46 5 million.

Representing 94% of total revenue for the quarter and an increase of 28% from the prior year.

Suthan Sukumar: For those interested, a detailed breakdown of our financial results for the three months and fiscal year ended 31st December 2023 can be found in our press release, MD&A, and financial statements, which are now available on our website and are also filed on CDER and EDGAR. Subscription revenues were $46.5 million, representing 94% of total revenue for the quarter and an increase of 28% from the prior year. Total revenue for the fourth quarter grew to $49.3 million, an increase of 27% from the prior year and exceeded our guided range. Annual recurring revenue at the close of Q4 was $194.3 million, an increase of 24 percent or 23 percent after adjusting for the positive impact of approximately one percentage point given the weakening of the U.S. dollar relative to other foreign currencies.

Total revenue for the fourth quarter grew to $49 3 million, an increase of 27% from the prior year and exceeded our guided range.

Annual recurring revenue at the close of Q4 was $194 3 million, an increase of 24% or 23% after adjusting for the positive impact of approximately 1%. This point given the weakening of the U S dollar relative to other foreign currencies.

We added 80 net new customers in Q4 and ended the quarter with a total of 3759 customers an increase of 11% year over year.

Average contract value was approximately 52000 for the fourth quarter and increased from $49000 in the third quarter of 2023, and an increase of 12% year over year.

The growth in average contract value is being driven by our continued expansion into the enterprise customer segment with average contract value of $100000 and above.

Net retention for the year came in at 104% down from the prior year gross retention remained relatively flat compared to the prior year and gross profit margin for the fourth quarter improved by 40 basis points year over year to 81, 2% of revenue and was relatively consistent with the prior quarter.

Suthan Sukumar: We added 80 net new customers in Q4 and ended the quarter with a total of 3,759 customers, an increase of 11% year over year. Average contract value was approximately $52,000 for the fourth quarter, an increase from $49,000 in the third quarter of 2023 and an increase of 12% year-over-year. The growth in average contract value is being driven by our continued expansion into the enterprise customer segment with average contract values of $100,000 and above. Net retention for the year came in at 104%, down from the prior year. Gross retention remained relatively flat compared to the prior year, and gross profit margin for the fourth quarter improved by 40 basis points year-over-year to 81.2% of revenue and was relatively consistent with the prior quarter. Total operating expenses for the fourth quarter increased to $38.9 million from $31.5 million in the prior year period.

Total operating expenses for the fourth quarter increased to $38 9 million from $31 5 million in the prior year period.

G&A as a percentage of revenue decreased to 17, 4% for the fourth quarter compared to 17, 9% for the third quarter of 2023.

We expect G&A expenses to continue to drive operating leverage while remaining relatively flat in absolute dollar spend.

Sales and marketing expense as a percentage of revenue was 32, 8% for the fourth quarter compared to 34, 9% for the third quarter.

Our investments in it systems and workforce optimization have resulted in improved productivity and efficiency leading to improvements in our sales and marketing efficiency.

R&D investments in the fourth quarter were $9 million or 18, 3% of revenue a decrease from $10 3 million for the third quarter.

As a result, adjusted EBITDA was $6 5 million for the fourth quarter of 2023, or 13, 2% of revenue above our guided range of 10% to 10, 5% of revenue.

Suthan Sukumar: GNA as a percentage of revenue decreased to 17.4% for the fourth quarter compared to 17.9% for the third quarter of 2023. We expect GNA expenses to continue to drive operating leverage while remaining relatively flat in absolute dollar spend. Sales and marketing expense as a percentage of revenue was 32.8% for the fourth quarter compared to 34.9% for the third quarter. Our investments in IT systems and workforce optimization have resulted in improved productivity and efficiency, leading to improvements in our sales and marketing efficiency. R&D investments in the fourth quarter were $9 million, or 18.3% of revenue, a decrease from $10.3 million for the third quarter.

We reported net income of $3 2 million for the fourth quarter of 2023 compared to $1 $6 million for the fourth quarter of 2022.

Adjusted net income for the fourth quarter of $8 3 million compared to $3 4 million for the fourth quarter of 2020.

We generated positive free cash flow of $7 million or 14, 2% of revenue compared to 18% for the third quarter of 2023, and five 1% for the fourth quarter of 2022.

In addition, as part of our NCI VNS IV programs during the fourth quarter, we repurchased approximately 2 million common shares for cancellation at an average price of $47 90.

For the total cash consideration of $108 2 million, which includes transaction costs.

Share based compensation accounted for three 3%, our fourth quarter revenue compared to two 8% in the fourth quarter of 2022.

More importantly, net dilution impact for fiscal year 2023 was less than 1%.

Suthan Sukumar: As a result, adjusted EBITDA was $6.5 million for the fourth quarter of 2023, or 13.2% of revenue, above our guided range of 10% to 10.5% of revenue. We reported net income of $3.2 million for the first quarter of 2023, compared to $1.6 million for the fourth quarter of 2022, and adjusted net income for the fourth quarter of $8.3 million, compared to $3.4 million for the fourth quarter of 2022. We generated positive free cash flow of $7 million, or 14.2% of revenue compared to 18% for the third quarter of 2023 and 5.1% for the fourth quarter of 2022. In addition, as part of our NCIB and SIB programs, during the fourth quarter, we repurchased approximately 2 million common shares for cancellation at an average price of $47.90 for a total cash consideration of $108.2 million, which includes transaction costs. Fairbanks compensation accounted for 3.3% of fourth-quarter revenue compared to 2.8% in the fourth quarter of 2022. More importantly, the net dilution impact for fiscal year 2023 was less than 1%.

Now for our Q1 2024 outlook, where our guidance is above the street's consensus for both the top and bottom line.

Here are the key takeaways, we expect total revenue to range between 51% to $51 2 million.

We expect gross margin to range between <unk> 81 to 81, 5%.

We expect adjusted EBITA margin to range between 12, five to 13, 5%.

A few additional points to note in regards to our first quarter guidance, we expect subscription revenue to be about one percentage points higher than overall company revenue, while professional services remained relatively flat sequentially from Q4.

This is being driven by our increasing work with system integrators, who are a critical part of our both expansion into the large enterprise accounts and the government business, which is in place.

Before turning the call over for Q&A I would like to highlight several key points as we enter this new year.

First our top priority remains growth and we aim to position the company to consistently deliver profitable growth regardless of the economic cycle.

We are successfully pursuing a balanced approach to growth and profitability by expanding our adjusted EBITDA margins and we will continue to invest in our AI roadmap and expanding our go to market teams, including government related costs to achieve fed ramp compliance.

Second we anticipate continuing to show operating leverage and achieving an adjusted EBITDA of approximately 15% for the full fiscal year 2024.

That concludes my prepared remarks, operator, please open the line so that we can take questions from the analysts.

Certainly.

At this time I would like to remind everyone in order to ask a question. Please press star one.

Suthan Sukumar: Now, for our Q1 2024 outlook, where our guidance is above the street consensus for both the top and the bottom line. Here are the key takeaways. We expect total revenue to range between $51 to $51.2 million. We expect gross margin to range between 81 to 81.5%. We expect adjusted EBITDA margin to range between 12.5% to 13.5%.

Your first question comes from Ryan Macdonald with Needham. Please go ahead.

Hi, Thanks for taking my questions and congrats on a great quarter, maybe just start on just the strong execution in the quarter.

Lots of great new customer wins with our top four U S financial services company.

Great expansion curious as you're looking at sort of the pipeline and maybe some of the success in fourth quarter.

What you are seeing sort of drive that in terms of improved execution in productivity from the direct salesforce versus some additional.

Operator: A few additional points to note in regards to our first quarter guidance. We expect subscription revenue to be about 1 percentage point higher than overall company revenue, while professional services revenue to remain relatively flat sequentially from Q4. This is being driven by our increasing work with system integrators who are a critical part of both our expansion into the large enterprise accounts and the government business, which is Fed and Led. Before turning the call over to Q&A, I would like to highlight several key points as we enter this new year. First, our top priority remains growth, and we aim to position the company to consistently deliver profitable growth regardless of the economic cycle. We are successfully pursuing a balanced approach to growth and profitability by expanding our adjusted EBITDA margins.

The benefit from the growing Si channel relationships and how you see that sort of balance in the pipeline looking into 2024.

Okay.

Yeah.

Good morning, Ryan and thank you for the question Alex just speaking again I'll take your question.

So a few things on them.

The enterprise motion and the one thing that I'd like to.

Emphasize is that as we mentioned in prior calls one of the big factors for us is being maturing our execution by demonstrating value at the point of sale.

The way we do this today is a lot better than we used to do it one year ago.

Do we do it is value engineering methodology and team that is fully ramped in the company. This has helped us achieve.

Operator: And we will continue to invest in our AI roadmap and expand our go-to-market teams, including government-related costs to achieve FedRAMP compliance. Second, we anticipate continuing to show operating leverage and achieving an adjusted EBITDA of approximately 15% for the full fiscal year 2024. That concludes my prepared remarks. Operator, please open the line so that we can take questions from the analysts. Sure. At this time, I would like to remind everyone, in order to ask a question, please press star 1. Your first question comes from Ryan McDonald with Needham. Please go ahead.

Really good results.

Right.

<unk> that we closed in quarter four you mentioned that.

The significant.

So services organization that we want but it would also include in this upsells.

The caliber of purely where do we add to demonstrate with.

Specific volume in order to add the certain use cases.

As we think about the pipeline I think our job is to continue to extract value from the business. There is a lot of greenfield.

And we are really.

Doubling down on our execution on the demand side, not only with our stronger branding and marketing team execution, but also by adding to our sales in the territory is warranted. The territories are really in a very well coordinated manner, we've been focusing on this launch.

Alessio Artuffo: Hi, thanks for taking my questions and congrats on a great quarter. Maybe to start on just the strong execution in the quarter, lots of great new customer wins with the top four U.S. financial services companies, and some great expansion. Curious, as you're looking at sort of the pipeline and maybe some of the success in the fourth quarter, how are you seeing sort of drive that in terms of, you know, improved execution and productivity from the direct sales force versus some additional benefit from the growing SI channel relationships and how you see that sort of balance in the pipeline looking into 2024. Good morning, Ryan, and thank you for the question. Alexis is speaking.

I hope this helps.

Yes, absolutely very helpful. Maybe just as a follow up then I wanted to discuss sort of the OEM channel obviously.

Or last months Ceridian, which is obviously a big OEM channel partner view acquired a business called the lumi for which is a sort of LMS, Alex Pease provider at the low end of the market.

Obviously I don't think the OEM channel has been an important one for you in terms of driving growth as you think about sort of expectations in the 'twenty four I know youre not guiding for the full year, but maybe what your sort of thoughts were in terms of the growth algorithm of how much growth you are expecting to be driven from the OEM channel this year in <unk>.

Alessio Artuffo: I'll take your question. So, a few things on the enterprise motion. The one thing that I'd like to emphasize is that, as we mentioned on prior calls, one of the big factors for us has been maturing our execution by demonstrating value at the point of sale. The way we do this today is a lot better than we used to do it one year ago.

How that changes if at all in your in your mind now that ceridian sort of the <unk>.

Buying I guess, a competitive solution to maybe go to market with internally or more directly than through partnership going forward. Thanks.

100% so.

First off let me lead by saying that the table and therefore.

Dave Forster have established a stronger enduring working relationship.

Alessio Artuffo: How do we do it via a value engineering methodology and team that is fully integrated into the company. This has helped us achieve really good results with, you know, logos that we closed in quarter four. You mentioned the significant financial services organization that we won, but I would also include in this upsells of the caliber of Pirelli, where we had to demonstrate specific value in order to add a certain use case. As we think about the pipeline, I think our job is to continue to extract value from the business. There's a lot of green field available, and we are really doubling down on our execution on the demand side, not only with our strong branding and marketing team execution, but also by adding our sales in the territories, working the territories really in a very well-coordinated manner. We've been focusing on this a lot. I hope this helps.

Coming partners several years ago.

Number two I would say the important to note the leadership over of.

Of the two companies are working together on this positioning that you mentioned.

And so we expect further discussions with them.

We don't anticipate any impact.

There is material on revenue for fiscal year 'twenty four at this time and.

With regards to kind of other partners that we're working with.

For software, we continue to work on a really healthy pipeline of new Oems.

The work that we're doing with organizations like <unk> and Darwin box.

And then a charter is very significant.

We're seeing.

Really good traction we're intrigued also by the fact that that a wing box operates in Arizona.

Thats what will.

We will be strategic in the future and.

Alessio Artuffo: Yeah, absolutely. Very helpful. Maybe just as a follow-up, then, I wanted to discuss the OEM channel. Obviously, about last month, Ceridian, which is obviously a big OEM channel partner for you, acquired a business called Illumi, which is a sort of LMS LXP provider at the low end of the market. Obviously, I don't think the OEM channel has been an important one for you in terms of driving growth. If you think about sort of expectations for a 24 (I know you're not guiding for the full year), maybe what your sort of thoughts were in terms of the growth algorithm of how much growth you were expecting to be driven from the OEM channel this year and how that changes, if at all, in your mind now that Ceridian is sort of buying 100%. First off, let me lead by saying that, you know, Docebo and Dayforce have established a strong and enduring working relationship since becoming partners several years ago.

They are extremely focused on the APAC market. So this is very good for us.

Finally, I would say I would roll into this conversation of our efforts in.

Strategic partnerships and channel in general because we're seeing a tremendous amount of traction on our sites look we don't guide specifically on OEM versus other channels, but this.

It remains the channel in general remains a priority and a growth pillar for us in the future.

I appreciate the color and congrats Brian.

Oh thanks.

Thanks, Ryan I was just going to jump into just to clarify that from our perspective, Michael Let's just said.

And is there any material impact to revenue for FY 2024, and we're comfortable with.

With the consensus has been built.

Yes.

Excellent. Thank you guys.

Your next question comes from Rob Young with Canaccord Genuity. Please go ahead.

Hi, good morning, Thanks for taking the questions.

You added $12 $5 million of.

On only 80 customers.

And so I wanted to dig into that trend is there any underlying churn there or because it seems like the average customer value quite a bit higher I think you said 71000 on incremental customers and so there's a bit of it.

Alessio Artuffo: You know, number two, I would say the important to note the leadership of the two companies that are working together on this positioning that you mentioned. And so we expect further discussions with them, we don't we don't anticipate any impact that is material on revenue for fiscal year 24 at this time and with regards to kind of other partners that we're working with we first off we continue to work on a really healthy pipeline of new OEMs but the work that we're doing with organizations like ENY and Darwin Box and MHR is very significant we're seeing very good traction we're intrigued also by the fact that Darwin Box operates in a region that for us will be strategic in the future and they're extremely focused on the APAC market so this is very good for us finally I would say I would roll into this conversation our efforts in strategic partnerships and channel in general because we're seeing a tremendous amount of traction on our side look we don't guide specifically on OEM versus other channels but this remains the channel in general remains a priority and a growth pillar for us in the future, Appreciate the color, congrats on the grand victory. Thanks, Ryan. I was just going to jump in just to clarify that from our perspective, like Alessio said, we do not anticipate any material impact to revenue FY 2024, and we're comfortable with how the consensus has been built. Excellent, thanks again. Your next question comes from Rob Young with Canaccord Genuity. Please go ahead.

Disconnect. There and then maybe just talk about the big jump in average customer value this quarter.

Scott would you like to take this.

Yes, yes, good morning, Rob, Yes, so good call out yet so it's very consistent to what we spoke about in the last few quarters. If you think about the fact that we've been continuously focusing on supporting the <unk>.

Sweet spot for us continues to be at the mid market to the large enterprise customers as.

As well as print and penetrating into the government segment. We saw we also saw a win that we notified noted in our press release with the Texas.

They've been.

And in effect what is what has kept us consistently happening as we move up market is that youre going to continue to see the chip will focus on stronger unit economics in the mid to large.

Enterprise to large enterprise segment, and we are very strategically focused on driving sales in the <unk>.

<unk> commercial space as we call it.

Where we see an opportunity to grow that customer into multiple use cases, and higher and drive higher HDD, but from a.

We've spoken about this from a from an.

Overall unit economics perspective.

We'll invest our growth dollars to drive higher LTV and categories are in segments, where we can have multiple use cases and multiple.

Protestant module supporting those customers and that's really what's playing out here.

You can kind of see in the numbers.

From a channel perspective, as well youre seeing that more enterprise and midmarket customers that participating into the growth in the last three quarters or so and that's pretty much what's driving the higher of course there are certain.

Operator: Hi, good morning, thanks for taking the questions. I know that you added 12.5 million in ARR to only 80 customers. And so I want to dig into that trend. Is there any underlying churn there? Or because it seems like the average customer value is quite a bit higher; I think you said 71,000 for incremental customers. And so there's a bit of a disconnect there. And then maybe just talk about the big jump in average customer value this quarter. Tsukara, would you like to take this?

There's a small element of churn that comes through us.

Not supporting as much of the SMB customer that is that has a lower ticket value.

It has a lower ticket value, we will you will try and make sure that we either extract additional value for them, but there.

There could be some incremental churn that comes from that number but majority of this is driving through.

Through our focus in the mid to large enterprise customers, which you don't need the quantity, but you get the quality from an EQT perspective and higher ATV.

Suthan Sukumar: Yeah, yeah. Good morning, Rob. Yeah. So, a good call out. Yes. So it's very consistent with what we spoke about in the last few quarters. If you think about the fact that we've been continuously focusing on supporting, you know, the sweet spot for us continues to be the mid market to the large enterprise customers, as well as penetrating into the government segment. We saw we also saw a win that we notified, and noted in our press release with the Texas state win.

Okay.

Yeah.

And then question second question for me will be on the expansion, but the large.

Big five technology company it seems as though these expansions on these large deals are coming quicker.

And so if I'm right on that what's driving it.

Is it just better go to market with your cross selling effort or is it some market function, whereas it consolidation what's happening.

And are you seeing this sort of cross sell come through quickly more quickly than in the past now pipeline.

Suthan Sukumar: In effect, what is consistently happening as we move up the market is that you're going to continue to see the chip focus on stronger unit economics in the mid to large mid-enterprise to large enterprise segment. And we are very strategically focused on driving sales in the SMB commercial space, as we call it, where we see an opportunity to grow that customer into multiple use cases and hire and drive higher ATV. But as we've spoken about this from an overall unit economics perspective, we will invest our growth dollars to drive higher ATV in categories or in segments where we can have multiple use cases and multiple products and modules supporting those customers. And that's really what's playing out here.

Yes no.

I actually would.

I would say.

Rob that in the instance of this expansion that's relatively quick on this customer it is not uncommon for us to uncover further needs in India.

In the initial phases of issue with Onboarding implementation integration, especially with large customers that have complex use cases.

The complex organizational complexity of needs that may arise at the point of sale, but also sometimes surface. After the point of sale. So we actually see this.

Quite frequently with that said.

Suthan Sukumar: You know, we can kind of see in the numbers from a channel perspective as well. You're seeing that more enterprise and mid market customers are participating in the growth in the last three quarters or so, and that's pretty much what's driving these to be higher. Of course, there's certain, we call it, a small element of churn that comes through us just not supporting as much as the SMB customer that is, which is a lower ticket value. If it is a lower ticket value, you will try and make sure that we either extract additional value for them, but there could be some incremental turn that comes from that number.

What we're referring towards expansion here is.

Additional modules rates additional modules or additional technology additional skus to the existing contractor and not necessarily selling into say.

Subs and or separate entities of the customer we just essentially became even more sticky.

And added more technology to the original contract.

Okay.

The trend towards faster cross sell is that is that not a bunch of it seems like bojangles' this quarter.

Alessio Artuffo: But the majority of this is driving through our focus on the mid to large enterprise, which you don't need the quantity of, but you get the quality from an ATV perspective and higher ATV. OK. And then the second question for me will be on the expansion with the large, Big Five technology companies. It seems as though these expansions on these large deals are coming quicker. And so if I'm right about that, what's driving it? Is it just better to go to market with your cross selling effort? Or is it some other market function? Or is it consolidation? What's happening?

This large it just seems as though your <unk>.

Expanding more quickly than in the past.

And.

The same customer.

It is intentional that there is more intentionality in.

Continuing to execute on the expansion side that this is one of the.

If you will output of the work we're putting into it.

As <unk> said before the land and expand strategy with.

The amazing customers that we have is a pillar of growth and.

These are just a couple of good applied examples.

Okay. Thanks, a lot our pipeline.

Thank you so much.

Alessio Artuffo: And are you seeing this sort of cross sell come through more quickly than in the past? Yeah, no, I actually would say, Rob, in the instance of this expansion that's relatively quick for this customer, it's not uncommon for us to uncover further needs in the initial phases of, if you will, onboarding, implementation, integration, especially with large customers that have complex use cases and an organizational complexity of needs that may arise at the point of sale but also sometimes surface after the point of sale. So, we actually see this quite frequently.

Your next question comes from Suzanne Sue Kumar with Stifel. Please go ahead.

Good morning Gents.

Congrats again on another impressive quarter.

The first question for me is on the.

The government opportunity.

Yeah.

Could you guys provide an update on kind of how you're thinking about the timeline is here for for for full certification.

And the progress on the pipeline build side of things.

But to do in the meantime.

And do you guys foresee any impacts here from the U S election.

Alessio Artuffo: With that said, what we're referring to as expansion here is additional modules, right? Additional modules, additional technology, additional SKUs to the existing contract and not necessarily selling into say, you know, subs and or separate entities of the customer. We just essentially became even more sticky and added more technology to the original contract. Okay.

Hello, Sudan are lesser speaking.

No.

We are incredibly focused on this as you may imagine.

It's a it's a big undertaking from an FX standpoint of our teams that have done an amazing job in.

In terms of our federal certification, which is.

What I think we're talking about the time yearly.

Is we're progressing really well and we are actually very optimistic.

While securing a sponsor.

Alessio Artuffo: But is the trend towards faster cross-sell, is that not a function? It seems like Bojangles this quarter, this large cut, it just seems as though you're... expanding more quickly than in the past in the same way. It is intentional.

Shortly we.

We have.

More than one option to do so.

And so we're very.

And yes, we want to surface a cautious yet the VEB optimism.

In in securing the sponsor and why is this important because the pathway through with sponsorship the yields a faster timeline and certification as opposed to a standard application process, which it has.

Alessio Artuffo: There is more intentionality in continuing to execute on the expansion side. This is one of the, if you will, outputs of the work we're putting into it. As Sukarno said before, the land and expense strategy with the amazing customers that we have is a pillar of growth. These are a couple of good applied examples. Thanks a lot. I've had fun. Thank you so much.

A more delayed timeline.

In the matter of the several months.

Compare that to the sponsored one.

I would say.

Even even ahead of getting the certification, though I went on surface that where we're continuing to win.

Operator: Your next question comes from Suthan Sukumar with Stifel. Please go ahead. Good morning, gents, and... Congratulations again on another impressive quarter. The first question for me is about the U.S. government opportunity. You guys provided an update on how you're thinking about the timeline here for full certification and the progress on the pipeline build side of things, in the meantime, and, of course, we will see any impacts here from the US election. Hello Suthan, Alessio speaking.

Material business in material deals in the space more on the sled side state and local.

And and <unk>.

I would say in this regard and working with our size that are in the market has been critical for us.

We've mentioned in the past working with specific strategic in size and that those collaborations are getting just deeper and deeper and spilling over to the commercial side of those same size.

In an interesting way.

Alessio Artuffo: So, we are incredibly focused on this, as you may imagine. It's a big undertaking from an effort standpoint of our teams, who have done an amazing job. In terms of our FedRAMP certification, which is... what I think, you know, we're talking about primarily is that we're progressing really well and we are actually very optimistic about securing a sponsor shortly. We have more than one option to do so. And so we want to surface a cautious yet vivid optimism in securing the sponsor. And why is this important?

It's focused on government has led us to getting the with the size that starting from the government door, but opening up the doors on the commercial side that perhaps before we are not as open.

And so we are reaping benefits.

On both sides of the equation.

Great.

Thank you for that color.

The second question I had was.

I guess more on the.

So the cross sell attractions you guys can see could you provide an update on some of the recent adoption trends you've been seeing across your.

Learning suite, and especially with some of the more recent product innovations.

Alessio Artuffo: pathway through a sponsorship yields a faster timeline to certification as opposed to a standard application process which has a more delayed timeline in the matter of several months, compared to the sponsored ones. You know, I would say even ahead of getting the certification, though, I want to point out that we're continuing to win material business and material deals in the space, more on the SLED side, state and local. And, you know, I would say in this regard, working with SIs that are in the market is critical for us. So, we've mentioned in the past working with specific strategic SIs and that those collaborations are getting just deeper and deeper and spilling over to the commercial side of those same SIs. So, in an interesting way, this focus on government has led us to getting deep with a size starting from the government door but opening up doors on the commercial side that perhaps before were not as open, and so we're reaping benefits on both sides of the equation. Thank you for that color!

That you launched recently like the integration, which I know, which I believe was launched during the quarter just kind of curious.

How that may be trending.

Sure.

So.

In terms of the adoption.

Adoption and and.

Technologies that we've launched.

I want to underscore that we were really are.

Very satisfied with the trend that we've seen on the <unk>.

With regards to the triple shape whichever shape.

Is brining to be a strategic technology and the platform for us moving forward.

We emphasize the on the shape side to the AI engine AI capabilities, we're pushing very much into that customer.

Or like you can get to more and more as we improve it I.

I would say an example of that since you were just asking about government we mentioned.

The customer win.

Alessio Artuffo: The second question I had was, I guess, more on the sort of cross-sell traction you guys have been seeing. Could you provide an update on, you know, some of the recent adoption trends you've been seeing across your... learning suite, and especially with some of the more recent product innovations that you launched recently, like integration, which I know, which I believe was launched during the quarter. Just kind of curious how that may be, Schwartz. So, um..., in terms of adoption and technologies that we've launched. I want to emphasize that we are really very satisfied with the trend that we have seen with regard to Docebo's shape.

In Texas on the government side, and one of the key Differentiators and that deal will shape.

In order to repurpose existing material that the the agency adds in.

Being able to to recreate content using shape, but shaper.

In our view.

Even further opportunity to them.

We want to push further the content creation offering size of it.

And the <unk> side.

Working very much on it.

<unk>.

Shape I would say already great results there.

However.

Amazing stuff is yet to come so we're incredibly.

Bullish on that technology.

We're seeing an uptick in.

Alessio Artuffo: Shape is priming to be a strategic technology and platform for us moving forward. We emphasize on the shape side the AI and Gen-AI capabilities. We're pushing very much into that. Customers are liking it more and more as we improve it. I would say an example of that, since you were just asking about government, we mentioned the customer win in Texas on the government side.

The sale and the pipeline creation of the module, Microsoft teams, which we've launched them.

A few months ago, and he's starting to do really well for us.

In general look.

I would I would say that.

Best answer that I can think of to your question is.

We continue to think about providing value to our customers and focusing.

Alessio Artuffo: And one of the key differentiators in that deal was Shape, in order to repurpose existing material that the agency had and be able to recreate content using Shape. But Shape, in our view, as a, you know, even further opportunity, Suthan, we want to push further the content creation authoring side of it. And the Gen AI side, we're working very much on it. So. On shape, I would say already great results. However...

On how our products meet the customers' needs.

Concerted focus on the customer experience and understanding really where we need to do better how that's doing better.

Swiftly makes it into our product roadmap to stay on top of the market trends.

It's a big focus we have yes, we're becoming bigger, but we don't want to lose the agility and nimbleness of being able to continue to improve our product for our amazing customers that is a priority that we have now and we're going to continue to drive in the future.

Alessio Artuffo: The amazing stuff is yet to come, so we're incredibly, are bullish on that technology. Um, We're seeing an uptick in the sale and pipeline creation of the Microsoft Teams module, which we launched a few months ago, and it's starting to do really well for us, and, in general, I would say the best answer that I can think of to your question is, "We continue to think about providing value to our customers and focusing on how our products meet the customer's needs. There's a concerted focus on the customer experience and understanding really where we need to do better and how that doing better swiftly makes it into our product roadmap to stay on top of the market trends." That's a big focus we have.

And one quick point soup and decided what to add to that is that we look into 2024 and we will.

Some more color.

As we.

Implement some of the changes, but as we go to market and positioned well you can expect that.

As we package the offering to our customers it would be more around features and capabilities of the problem, we solve for them rather than the modules.

And individuals.

Products have also said that historically.

Suthan Sukumar: Yes, we're becoming bigger, but we don't want to lose that agility and nimbleness of being able to continue to improve our product for our amazing customers. That is a priority that we have now and we're going to continue to have in the future. And one quick point, Suthan, just what I want to add to that is that as we look into 2024, and we'll provide some more color as we implement some of the changes, but as we go to market and position Docebo, you can expect that, you know, as we package the offering to our customers, it would be more around features and capabilities of the problem we solve for them rather than the modules and individual products and modules that historically have been placed

In place for the customer size, we look at it.

Opening different packaging and pricing optionality for our customers. We also think that that would help not only ease our ability to sell increase deal velocity, but also make sure we sell from a most importantly makes them yourself from a perspective of driving value and driving solving the problem for the customer and so that's going to be certainly one.

One other area as we think about margins going forward.

Okay.

That's great. Thank you gents.

I appreciate the color and congrats again on the quarter I'll pass along.

Thank you Suzanne.

Your next question comes from Josh Baer with Morgan Stanley. Please go ahead.

Great. Thanks for the question I was hoping you could talk a little bit about the competitive landscape just thinking about the legacy LMS vendors as to the competitive environment getting easier or tougher staying the same and then I have a follow up thank you.

Suthan Sukumar: So as we look at opening up different packaging and pricing optionality for our customers, we also think that that would help not only ease our ability to sell, increase deal velocity, but also make sure we sell from a perspective of driving value and solving the problem for the customer. And so that's certainly going to be one other area as we think about modules going forward. Thank you. Bye.

Good morning, Josh a couple of comments from my side on competitive landscape no notable changes or something they renew that.

Changes our views on our strategy in general.

Notably on the customer wins that we have executed this time in this quarter.

Alessio Artuffo: That's great. Thank you, gents. Appreciate the color and congrats again on the quarter. I'll pass the line.

I would say the bank that we referred to I think the script that we.

Operator: Thank you, Suthan. Your next question comes from Josh Baer with Morgan Stanley. Please go ahead.

Alessio Artuffo: Great, thanks for the question. I was hoping you could talk a little bit about the competitive landscape. Just thinking about the legacy LMS vendors. Is the competitive environment getting easier, tougher, or staying the same? And then I have a follow-up. Thank you. Good morning, Josh.

<unk>.

<unk> indicated.

But they are the <unk>.

Felt like their system was outdated.

We are we continue to see a trend that we have described before where.

Especially larger organizations.

That have providers.

<unk>.

A overlapping assets.

Alessio Artuffo: A couple of comments from my side on the competitive landscape. No notable changes or anything very new that changes our views on our strategy in general. Notably, on the customer wins that we have executed this time, in this quarter, I would say, you know, the bank that we refer to, I think the script we used indicated that they felt like their system was outdated.

Constitute an opportunity for us to be crisp and clear in our value proposition and offering.

And as a result of standout.

And clear that confusion and come in.

With a very well defined value prop.

And in that case that was the big strengths that we've leveraged we believe we have much more opportunities to do the same thing across some of the best.

Alessio Artuffo: We continue to see a trend that we have described before where, especially large organizations that have providers with overlapping assets, constitute an opportunity for us to be crisp and clear in our value proposition and offering, and as a result, standout, and clear the confusion and come in with a very well-defined value proposition. And in that case, that was a big strength that we've leveraged. We believe we have much more opportunities to do the same thing across some of the best companies that have that same issue. The other trend that is the opposite of competition, the lack of competition we're seeing on the external use case side. It's a very big greenfield opportunity. Pirelli, which we mentioned in our script, for example, was an expansion that allowed us to win the business of partner training. Now, this technology was built-in-house; it was non-competitive before. Why? Because, as we've mentioned before, the business of external training is often still greenfield, and so we love that, because it makes our job a little bit easier, in a way, but definitely less competitive, and then Luke. Okay, really?

Companies that have that same issue.

The other trend that is it.

The opposite of competition or the lack of competition, we're seeing in the external use case site.

It's a very big Greenfield opportunity Peter Lee that we mentioned in our script for example was an expansion.

That allowed us to.

When the business off.

Partner training.

Now this technology was.

He was a built in ours was no noncompetitive before why because as we've mentioned before.

The business of external training it oftentimes.

Is this still a greenfield and so we love that.

Because it makes our job a little bit easier in a way.

But yeah definitely less competitive.

And then look I really.

Okay.

Markets in the markets the non enterprise markets.

Remain noisy there are a lot of small vendors.

And.

In general the SMB space tends to be a race to the bottom space in terms of pricing and that.

Alessio Artuffo: The non-enterprise markets remain noisy, there are a lot of small vendors, and, in general, the SMB space tends to be a race to the bottom in terms of pricing, and that is also one of the reasons why we remain focused on higher value ACD and more complexity, given the capabilities of our product. Really helpful. And that was kind of my follow-up with the different market segments. I think you answered it for S&B. So maybe just think about your evolution as a company and maybe thinking about enterprise versus mid-market or upper mid-market, like where are you prioritizing your resources? And when you think about sales reps going after opportunities, how are they balancing the potential to land bigger with a broader LMS deployment versus potentially landing for a specific use case or a single department, like balancing that versus bigger displacement opportunities? Sure. So, Kukaram, please chime in with any additional considerations, but I have a couple of points to this question.

He is also one of the reasons why we remain focused on them.

Volume ACD and more complexity, given the capabilities of our product.

Got it really.

Really helpful.

And that was kind of my.

My follow up was around the.

The different market segments, I think you answered it for F&B. So maybe just like thinking about your evolution of the company and maybe thinking about enterprise versus mid market or upper mid market like where are you prioritizing your resources.

When you think about sales reps going after opportunities like how are they balancing the potential to land bigger with like a broader LMS deployment versus.

Potentially landing.

A specific use case or a single department like balancing that versus a bigger displacement opportunity.

Sure.

So.

Karen please chime in with any additional considerations, but I have a couple of points to this question.

Alessio Artuffo: Historically, Josh, as you know, we have been quite balanced in our approach to small, mid-market, and enterprise segments. Over the past few years, we have taken a position such as that our product capabilities and our differentiation in our platform lead to being more appreciated by organizations that are not necessarily small or big per se but have more complex use cases, meaning they have more jobs to be done. This can happen in a very large bank, but it can also happen in a relatively small, relative to size, association. But that doesn't mean that that association doesn't have the complexity of needs that we are able to satisfy that eventually yields a high ACV.

Historically, Josh as you know we have been quite balanced in our approach to small mid market and enterprise segments.

Over the past few years, we have taken a position such as that our product capabilities.

And.

Our differentiation in our platform.

Lead itself to being more appreciated by organizations that are not necessarily.

Small or big per se, but that's more complexity of use cases, meaning they have more jobs to be done.

This can happen in a very.

In a very large bank, but it can also add Ben in a relatively small.

Relative to size the association.

That doesn't mean that that association doesn't have the complexity of needs that we are able to satisfy that he will eventually.

<unk>.

So the first thing I would like to note is not always the employee size is the driver of the complexity and therefore the value that we can offer and extracts.

Alessio Artuffo: So, the first thing I'd like to note is that employee size is not always the driver of complexity and, therefore, the value that we can both offer and extract. Um, secondly, you asked where we are diverting more of our efforts and resources, where we're certainly focused on building a platform that scales, that is secure, that is stable and highly performing in highly complex environments. I'm speaking about concurrency. I'm speaking about a high volume of users. And look, we recognize that the LMS market per se is, in theory, competitive, but when you really look at the players that can do complexity, multiple use cases, and manage multiple millions of users and enable learning as a business at scale, allowing and unlocking millions and billions of revenue. There are not many who can do that.

Secondly, you asked where we are diverting more of our efforts and resources.

We're certainly focused on building a platform that scales.

That is the secure debt is stable and high performing in highly complex environments I'm speaking about concurrency.

Speaking about high volume of users.

Look we recognize that the.

Mass market per se.

Is that in theory competitive, but when you really look at the players that can do complexity multiple use cases and manage multiple millions of users.

And enable learning as a business at scale, allowing an unlocking millions and billions of revenue there.

There are not many can do that and so what are they voting.

Alessio Artuffo: And so we're diverting, we're focusing our resources in exactly becoming that one player platform company that solves everything for learning technologies, for learning in general, and become a partner of the company as opposed to, you know, the LMS tool. We want to be seen as a strategic partner and not just as a commoditized technology. And Josh, the only thing I want to add quickly to Alessia's point is that it's obvious, I'm sure you're seeing this across the board, you know, ultimately in the decision making process, that's been also an effort and change as we, not change is the wrong word, but have improved our motion in the last couple of years as more C-suite and the scrutiny, what that effectively really means is that you do get an opportunity more than you used to even in the past, where you can potentially consolidate the tech stack at the onset.

We're focusing our resources and exactly becoming that one player platform company that solves everything for learning technologies for learning in general and become a partner.

The company as opposed to you know.

The LMS tool that we want to be seen as a strategic partner and not adjust the commoditize technology.

And just the only thing I want to add quickly to a lets just point is that.

With all of this im sure Youre seeing that across the board.

Ultimate team in the decision making process.

That's been also an effort and change as we change the wrong word but have improved our motion in the last couple of years.

As more C suite and the scrutiny what that effectively really means is that.

You do get an opportunity more than you used to even in the past where you can potentially consolidate the tech stack at the onset, but we are more than happy depending on scenarios of each customer to start with a certain use case or a multiple use cases and build over time one of the strategies that we do where we consolidated the textile.

Alessio Artuffo: But we are more than happy, depending on the scenarios of each customer, to start with a certain use case or multiple use cases and build over time. One of the strategies that we do, where we can consolidate the tech stack at the onset, is that we will continuously track, and I don't want to give all of our strategies, but just some perspective, is that we will track, at all of our mid to large mid market to enterprise customers, our opportunity based on use cases. And we will work hard to win the hearts of those departments beyond the ones that we serve today.

At the onset as though we will continuously tracking I don't want get to all of our strategies, but just some perspective is that we will track at all of our mid to large.

Mid market to enterprise customers or opportunity based on use cases, and we will work hard to win the hearts of those departments beyond the ones that we start today. So I think the reality is when this market consolidating the tech stack and multiple use cases and leading from the ones that drive revenue and drive protect revenue for an organization.

Suthan Sukumar: So I think the reality is in this market, consolidating the tech stack and multiple use cases and leading from the ones that drive revenue and protect revenue for an organization gives us a prime seat to do so. And that's the team that's playing out there, as well as I'll say that the big win in the major bank is also a theme that is worth considering in the competitive landscape, that legacy technologies are now becoming a burden for organizations that are focused on driving productivity, but also employee experience. Thank you for watching. Bye. Josh, Claudio speaking.

<unk> gives us a prime seat to do so and that's the theme that's playing out there as well as I'll say that the big win in the major Bank is also a theme that is worth considering in the competitive landscape at the legacy technologies are now now becoming a burden for for certainty organizations that are focused on driving productivity, but also in <unk>.

The experience.

Perfect. Thank you Josh.

I don't know if you remember I mean department field I'm kidding.

Claudio Erba: I don't know if you remember me. I'm the former CEO. I'm kidding.

I want I wanted to add one point.

Two.

Claudio Erba: I want to add one point to what Alessio and Sukaram were saying. No one understands one important element, which is the competition barrier we have in very sophisticated and complex use cases, but why we have this advantage because to build an horizontal element that plays in multi-department, 35 FedRAMP that can scale to millions of users. It's like a 5-7 year job. And if I were an entrepreneur and wanted to make money quickly, I would build a vertical LMS that covered only one use case. And I will not change the table because it's too complex and it's too risky.

At one point it was a nice deal and we've.

Got it would saying no wanting to spend that one important element, which is the body the competition, but here we have.

In battery.

So 50 gated and complex you gave this but why we at visa.

Advantage.

To be honest and Amit.

<unk>.

That plays a big part of demand.

35 bedroom.

On many levels of use them. So it's like a viable threat that the ear Johnson and it probably wasn't antenna printer and wanted to make money quickly.

The vertical and a net <unk> carbon on one use case.

I will not change the table because it's too late.

To meet key and remembering that this company even 90 EBIT.

Claudio Erba: And remember that this company is 18 years and 11 months old. So, we got there because of the luxury of time we had to stay in the market and prosper in the market, and also because we have worked with transformational customers like Thomson Reuters, Bank Intesa, and Amazon AWS that, over time, added requirements that were very complex. So if I had to imagine what our strongest wall to protect the Chilbo Fortress is, it would be our complexity that makes it appealing for competitors to change a very sophisticated environment.

Alright.

What month, eight EMEA 11 month old.

So we.

We get there because the all the luxury of time, but we added to the market and prosper on the market.

So because we have worked with transport makes it like customers like Thomson Reuters bugging days, the Amazon AWS that overtime.

Wireman very complex, so if I have to imagine what is strong.

How long does the water to protect.

The jumbo product is.

Our complexity that makes it.

In the U K.

That is sophisticated environment on top of that.

Claudio Erba: On top of that, competitors that are there are not innovating fast enough, so we have innovation that plays to our advantage. If you sum those two, you will see that competition and pressure are on the small side, but we have these three stocks of very large and complex cases, which is very hard to change. Your next question will come from Kevin Kumar with Goldman Sachs. Please go ahead.

There are not innovating fast enough.

So we are also.

Also being met.

That plays on our advantage at some of those do you always be competition.

Thanks, sure Theres more site.

But we.

We have a deal.

Talk of that is large and complex cases, which is very hard to achieve.

Okay.

Your next question will come from Kevin Kumar with Goldman Sachs. Please go ahead.

Alright, Thanks for taking my question I wanted to start just maybe asking about the overall macro trends that youre seeing our enterprise sales cycles trending and when you talk to your customers.

Operator: Hi, thanks for taking my question. I want to start just maybe asking about overall macro trends that you're seeing, how are enterprise sales cycles trending? And when you talk to your customers, how are they talking about just overall kind of learning, and developing budgets for 24? Good morning, Kevin.

How long are you talking about just overall kind of learning and development budgets for 2004.

Okay.

Good morning, Kevin.

So.

I'd say from a <unk>.

Alessio Artuffo: So... from an enterprise trends point of view, we... We continue to see some form of elongation in the processes, and the trends that we've mentioned in the past haven't changed too much. Although, you know, we're seeing positive signals in some sectors more than others, but we remain cautious in our position around them, cell cycles specifically, and in terms of the trends that we're seeing, of course. Very naturally, everybody knows that Gen AI is a very critical trend that everybody talks about.

Enterprise that trends are we.

We continue to see some more mobile location on the processes and the trends that we've mentioned in the past.

Haven't haven't changed.

Too much although we are seeing in some sectors are more than others.

Some positive signals, but we remain cautious in our.

Our position around the.

Sales cycles specifically.

In terms of trends.

We're seeing.

Of course a.

<unk> naturally everybody knows that <unk> is a very.

Very critical trends that everybody talks about what I'm seeing in this area if I have to.

Alessio Artuffo: What I'm seeing in this area, if I have to say something that stands out more than others, is a great desire to be educated. I think we are in a phase in which 2024 will be the big year of education and realization relative to L&D, education and realization of the art of the possible and how to get to real value. Perhaps in the past few years, many have either used Gen-AI as a core capability to strengthen certain capabilities of a platform. In other instances, it has been used more as a marketing leverage.

See say something that stands out more than others is a deep desire to be educated.

We are in the phasing, which in 2020, Florida will be the peak year of the education of realization.

Relative to R&D.

Education and realization of the arc of the real policyholder.

Now to get to real value.

The past few years.

Many have either used gen AI as a core capability.

To strengthen certain capabilities of our platform in other instances it.

It is being used more as a marketing leverage from our perspective <unk> has always been an investment.

Alessio Artuffo: From our perspective, Gen-AI has always been an investment. And the way we respond to that, right, from our perspective at Gen-AI, is by making a huge investment in the core of our system with different features that make adoption easier and faster, and now that we're focused even more on shape, it's creating incremental value, which we spoke to with our roadmap on the creation side in particular. I think the additional element that I can speak to is... L&D leaders are very concerned and remain very concerned with the topic of skill transformation. We see it all the time going into projects in which there is a desire to upskill and train workforces, whether it's exiting workforces or entering newer generational workforces.

And the way, we respond to that right from our perspective.

<unk>.

Huge investment in the core of our system with different features that make.

Adoption easier and faster and now that we're focused even more on shape is creating incremental value Hum, which we spoke to with our roadmap.

On the financial side in particular.

I think the additional element that I can speak to is.

LNG leaders are very concerned remain very concerned with the topic of scale transformation.

We seek.

All the time going into projecting which.

There is a desire to upscale and trained workforces are whether it's exiting workforces are entering newer newer generation of workforces.

Alessio Artuffo: The attention to managing skills, which for us translates in a business, the business problem is this one, how we resolve it, and how we approach it is by helping customers translate very complex ontologies of skill sets into the platform, actually using AI. We have very sophisticated technology to do that, and our customers are finding a ton of value. I think GDP and skills management are the macro trends. There is also a palpable sentiment of how Gen-AI in itself will change the content world and whether the business of content will be disrupted by the adoption of Gen-AI. We know the capabilities of those technologies, and learning leaders really debate this a lot. And our role in all of this is to be part of an education system that guides customers and leads them and helps them with the technology that we have or that our partners can offer. I appreciate the color there; it's really helpful. And then maybe just one on net dollar retention. I think that dropped a bit in 23.

Pension to managing skills, which for us translates.

In the business problem is this one how.

How we resolve it in how we approach it is by helping customers translate very complex ontologies have skill sets in.

The platform actually using AI.

We have a very sophisticated technology to do that.

And our customers are finding a ton of volume.

I think Jen AI skills management are the macro trends there is also a palpable.

Sentiment of.

You know how gen AI in itself will change the content world.

Whether the business of content will be disrupted by.

By adoption of <unk>, we know the capabilities of those technologies and learning leaders really debate this alone.

And our role in all of this is to be part of that <unk> system. The guides customers and leads them and helps them with the technology. We have all the data partners that can offer.

I appreciate the color there really helpful. And then maybe just one on net dollar retention and I think that dropped a bit in 'twenty three so.

Operator: So maybe if you could help dissect that number a bit, did you kind of impact that, or did the rate of expansion slow a bit? And I guess how are you thinking about kind of the sustainable, like a range or a sustainable retention rate for the business going forward? Thank you, and Sukarno. Hi, Kevin. Good morning.

Maybe if you could help dissect that number a bit did Jeremy.

The impact of that or the rate of net expansion slowed a bit and I guess how are you how are you.

Thinking about kind of the sustainable.

Our range of sustainable retention rate for the business going forward. Thank you.

Sure. So currently you want to add Kevin morning, Yes.

Suthan Sukumar: Yeah. Yeah. Yep. We'll do it. Morning, Kevin.

Yes, yes, yes.

Suthan Sukumar: Yeah, So, net retention, I think, the way I would kind of speak to this here is generally that it's a bit of a consistent trend you're probably seeing across the macro. What's baked into our net retention at a high level, just to kind of give you some macro points here, specific to Docebo, is that cautious spending, and we talked about the, you know, some of the deliberate move that we've made in the past two years around mid-market to enterprise. So, if you combine cautious spending and the SMB space, in fact, in 2023, as well as just general macro threats from steep compression or flat steep compression from, especially on the internal use case side, I think those two factors combined are where net retention kind of is.

Good morning, Kevin, Yes, so net retention I think the way I would kind of speak to this year is generally it's a bit of a consistent trend youre probably seeing across macro.

What's baked into our net retention at a high level just to kind of give you some macro points here specific to the table is that.

The cautious spending and we talked about the some.

Some of the deliberate.

Move that we've made in the past two years around mid market to enterprise. So if you combine cautious spending in the SMB space impact.

In 2023, as well as just general macro trends from our seats compression our flat fee compression from especially on the internal use case type.

Those two factors combined is where net retention.

Was I would say that.

Suthan Sukumar: I will say that, as we always are, Frank, this is an area where we will call out ourselves as a management team, and it will be one of our important focus areas as we move forward. We'll certainly look to improve this as we move into the 2024, 2025 cycle. But I think what's important to also remember is that, from a gross retention perspective, you know, our gross retention was relatively flat year-over-year, slightly below

As we always are Frank this is an area, where we will call out ourselves as a management team will be one of our important focus areas as we move forward, we'll certainly.

Look to improve those as we move into 2020 for 2025 cycle, but I think what's important to also remember is that from a gross retention perspective.

Our gross retention was relatively flat year over year.

Likely below.

Suthan Sukumar: But where you continue to participate in mid- to large enterprise customers, expand multiple use cases, and as we look to pricing and packaging these more effectively into the latter part of this year, you should expect us to be focused on driving healthy expansion opportunities, not just from a cross-sell perspective, but more from an up-sell perspective. And then we, of course, have a number of new products that we spoke about at Chip Inspire in Q3 of last year that will kick in, whether it's in H1, late H1 and H2 of this year, that will show some more meaningful impact, I would say, as we look into 2025, but some impact in 2024 as well. But, you know, combining the use case expansion, new products and modules, and the new packaging that we're doing, I think, in a nutshell, what we'll say is that while the macro is what it was, and it certainly put some pressure on seed expansion and cost-to-spending in the lower end of the market, I think we're going to be highly focused on driving this avenue of growth as we look into 2024-2025 That's all, folks.

But where you continue to participate in mid to large enterprise customers expand multiple use cases, and as we looked at our pricing and packaging these more effectively.

Into the latter part of this year you should you should expect us to.

Not only be focused on driving healthy expansion opportunities not just from a cross sell perspective, but more of an upsell perspective and then.

Of course have a number of new products.

Spoke about that the chip inspired in Q3 of last year that will kick in.

It's an H one late H, one and H two of this year that will show some.

More meaningful impact I would say as we look into 2025, but some impact in 2024 as well, but combining the use case expansion new products and modules in the new packaging that we're doing I think.

In a nutshell I will say is that while the macro was what was in it.

Certainly had some pressure on seed expansion and cautious spending in the lower end of the market I think.

We're going to be highly focused in driving this.

Many of growth as we look into 'twenty four 'twenty five.

Yeah.

That's helpful. Thank you guys.

Thank you.

Operator: Thank you, guys. Your next question comes from Richard Tse with National Bank Financial. Please go ahead.

Your next question comes from Richard Tse with National Bank Financial. Please go ahead.

Suthan Sukumar: Yes, thanks for taking my question. I'm kind of curious to see, you know, the business market reach a higher value. What is the mix of new wins from direct? Harg, and Howard at that.

Yes. Thanks for taking my question I'm kind of curious to see how the business is.

<unk> a bit in terms of I think you're moving upmarket to higher value.

Customers what is the mix of new wins from direct versus partners and how does that changed over year over year.

Yes sure.

Suthan Sukumar: I will pass it to you, Sukar. Yeah, thanks, Alessio. So, Richard, I think, in terms of overall, what's, what's, you know, changed as we look through the, over the years, generally, I think we've talked about on the growth side, with the bigger, bigger shift, and that Alessio spoke at the start of the call was that, you know, if you even remember, I know you've been following the company since the start of time when we went public, you know, at that time, the company from an even source attribution perspective was heavily inbound, there's a certain element of outbound from a partner, a side perspective, that was a very different motion compared to if you look at 2023, you know, you would say that to be able to be successful in the mid market and enterprise segments, we've successfully transitioned, or we've done as best as we can, and continue to work hard on transitioning, more robust outbound motion, a significant investment, as you know, from our partners, the ones that we called out, whether it's in the OEM channels, whether it's the OECD UIs, or partner channels, the UIs that we signed, as well as other FIs that we work with in the government space, Kerasoft is the one we named that is a significant partner to us in winning some of the business and driving some of the pipeline in the government space.

It will possibly you could look at it go ahead.

Okay. Thanks, a lot.

So Richard I think in terms of overall, what's what's.

Changed as we look through the over the years.

Generally I think we've talked about on the growth side.

The biggest bigger shifts the.

Let's just look at the start of the call was that if you remember I know you've been following the company since the start of time, when we went public at that time the company from even source attribution perspective.

Heavily inbound.

So there is a certain element of outbound from our partner Eisai perspective that was a very different motion compared to if you look at 2023, you would say that.

To be able to be successful in the Midmarket and enterprise segments, we successfully transitioned our we've done that.

Best as we can and continue to work hard on transitioning.

More robust outbound motion are significant investments as you know from our partners the ones that we called out whether it's in the OEM channel.

<unk> our partner channel.

We signed as well as other.

That we work with in the government space care soft when we named it as a significant part of our partner to us in winning some of the business and driving some of the pipeline in the government space. We have significant size that have helped us win deals such as the large big tech opportunity that.

Suthan Sukumar: We have significant FIs that have helped us win deals, such as the large big tech opportunity that we disclosed in Q3. I think that that shift, combined with heavy investments that we've made over the last two and a half, three years, drives our ability to sell in a mature, organized fashion to large enterprise customers. Combined with, of course, and the most important point is the technology that is not just innovative, but a technology that has to remain robust and perform at the level that is expected by the Fortune 500s of this world. I think that is the overall winning formula here, and for us, the game is pretty straightforward.

Disclosed in Q3, I think that that shift combined with the heavy investments that we've made over the last 253 years that drive our ability to sell in the mature organized fashion into large enterprise customers.

Combined with of course and the most important point is the technology that is not just innovative but a technology that is if that has to remain robust.

Perform at a level that is expected by the fortune five hundreds of this world I think that is overall, the winning formula here and for US that the game is pretty straightforward, we understand what our product does where we can support our customers and the use cases that can drive ROI for them. Our job is to just keep our heads down and continue to focus on channels.

Suthan Sukumar: We understand what our product does, where we can support our customers, and the use cases that can drive ROI for them. Our job is to just keep our heads down and continue to focus on channels and social attributions that will drive not only new business but expansion of the current business by keeping our, you know, by making sure that we do that in an efficient fashion from a CAF perspective. Okay, and just to relay a question to that, See you in a bit, become a lot more efficient, so in that context with everything you're doing, what's the order of magnitude? that you've picked up on the L- Thank you. I guess.

And so total attributions that will drive.

Not only new business, but expansion of the current business.

By keeping our by.

By making sure that we do that in an efficient fashion from a comp perspective.

Okay, and just a related question to that.

It seems like you're certainly become a lot more efficient so in that context with everything youre doing here.

What's sort of the order of magnitude in terms of the change that you've picked up on the LTV to CAC side. My guess is that it's improved but can you give us a sense of the degree of that improvement.

Yes, it's certainly.

Suthan Sukumar: Yeah, it's certainly significantly improved. I would say that it's, I want to emphasize some things around the margin profile, and I'll come back to CAC in a second. I think one thing that I want to highlight, though, Richard, that's important to note is that our investments, whether it's R&D and sales and marketing, on a relative basis, remain the same. The biggest impact that you're seeing, firstly, from operating leverage, which is pretty obvious, is that as the business scales, we're an 81% growth margin business, you're going to see the one area that we've always said all along, G&A, continue to give operating leverage to the business. On the sales and marketing side, as you think about the fact that 2023 was a year where we had higher quota capacity, more investments, major investments in technology, where we upgraded our CRM, and implemented a cash process, as well as the fact that the attrition levels are nowhere near the madness that was going on in the 2020-2021 era. You're going to see just natural efficiencies come through the system because of those inefficiencies that have gone away that were there in the 2020-2021 era.

Significantly improved I would say that.

I wanted to underscore some things around around the margin profile and I'll come back to attack in a second.

I think one thing that I want to highlight though Richard is important to note is that our investments, whether it's R&D or sales and marketing from a relative basis remains the same the biggest impact that youre seeing firstly from our operating leverage which is pretty obvious is that as the business scaling where 81% gross margin business youre going to see the one area that we've always.

Set all along G&A continue to get operating leverage of the business on the sales and marketing side. As you think about the fact that 2023 was a year, where we had higher quota capacity less more investments in major investments into technology, where we upgraded our CRM order to cash process as well as the fact that the attrition levels are.

Nowhere near that.

That was going on in 2020, 'twenty one era.

Going to see just natural efficiencies come through the system because of those inefficiencies that have gone away that were there in the in 2020, 'twenty, one era and so.

What I'm trying to articulate here is that growth is our primary focus and our investments in sales and marketing and R&D will remain to drive growth as the primary objective what youre seeing in the results come through as a positive on the EBITA side is just a natural inflection point of the business and certain nuances on how we continue to optimize.

Suthan Sukumar: What I'm trying to articulate here is that growth is our primary focus, and our investments in sales and marketing and R&D will remain to drive growth as the primary objective. What you're seeing in the results come through as a positive on the EBITDA side is just a natural inflection point of the business, and certain nuances on how we continue to optimize in certain areas, but majority of that, we will attribute to a model where we are now showing operating leverage to scale, and in terms of in terms of the sales and marketing side on the LTVD cap you can expect that we're you know comfortably north of seven to eight x, in that area, but I wouldn't disclose it on a segment basis, but it's much more superior when you think about certain segments versus others. This will conclude the question and answer session on today's call. I will now turn it back over to Claudio Erba for any closing remarks. Hello.

In certain areas, but majority of that.

We would attribute to a model, where we are now showing operating leverage through scale.

In terms of.

In terms of the sales and marketing side on the LTV to cap you can expect that we're comfortably north of 708 X.

In that area, but I wont disclose it on a segment basis, but it's much much superior when you think about certain segments versus others.

Okay, great. Thank you.

Okay.

This will conclude the question and answer session on today's call I will now turn it back over to Claudio for any closing remarks.

Hello.

As you as you all know this is my last earnings call.

I would like to take a minute to thank you Paul.

I want to thank all the analysts provide top Calgary.

Martin <unk> at the Garden.

<unk> reached the value on the Caribbean.

Claudio Erba: As you all know, this is my last earnings call, and I would like to take a minute to thank you all. I want to thank all the analysts that provide stock coverage, Stefan, Martin, Robert, Gavin, Christian, Josh, Richard, Ryan, Kevin, Suthan, Daniel, and the two Kevins. I have learned a lot from them.

Damian.

I have learned not blocked from it.

Small I don't know think small and big shareholders passive manager.

Hedge fund family offices, and indeed, we want that invested in the table given your trials.

I want to thank the board the executive team.

And both of the shape of employees partners and their families.

Claudio Erba: I want to also thank small and big shareholders, asset managers, pension funds, hedge funds, family offices, and the individuals that invested in Docebo and gave us their trust. I want to thank the board, the executive team, and all the Docebo employees, partners, and their families. You are now in the good hands of the best of the best, Alice, supported by a rock star like Sukaram and all the Docebo executive team.

You are not only in the good hands.

Amit supported by a rock star like to Colorado and don't yet.

Thank you.

This concludes today's conference. Thank you for your participation you may now disconnect.

Yeah.

[music].

Sure.

Claudio Erba: Thank you all. This concludes today's conference. Thank you for your participation. You may now disconnect.

[music].

Operator: This is a production of the Center for Contemporary Art, the Center for Contemporary Art, and the Center for Contemporary Art and Design in the United States. This is a production of the Center for Contemporary Art, the Center for Contemporary Art in New York, and the Center for Contemporary Art in the United States. This is a production of the Center for Contemporary Art, the Center for Contemporary Art in New York, and the Center for Contemporary Art in the United States. This is a production of the Center for Contemporary Art, the Center for Contemporary Art in New York, and the Center for Contemporary Art in the United States. This is a production of the Center for Contemporary Art, the Center for Contemporary Art in New York, and the Center for Contemporary Art in the United States. 2013 The Center for Contemporary Art

Okay.

[music].

Okay.

[music].

Yes.

Thank you.

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