Q1 2025 Docebo Inc Earnings Call
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Good morning everyone and welcome.
Speaker Change: And welcome to the Docebo Q1 2025 earnings call. All participants are currently in a listen only mode. We will open the lines for a question and succession momentarily. Analysts can ask questions that pressing star followed by one on your telephone keypad. We ask an analyst, please limit themselves to two questions and return to the queue for any follow-ups.
Speaker Change: I'd now like to turn the call over to George Tsebo's Vice President of Investor Relations, Michael McCarthy. Please go ahead, Mike.
Mike McCarthy: Thank you, Julianne. Earlier this morning, Docebo issued its Q1 2025 results. The press release, which included a link to management's prepared remarks and our quarterly investor slide deck, role-posted tour investor relations website.
Mike McCarthy: This morning's call will allow participants to ask questions about our results and the written commentary that has been provided this morning.
Mike McCarthy: Before we begin this morning's Q and A, Doce Able would like to remind listeners that certain information discussed may be forward looking in nature. Such forward looking information reflects the company's current views with respect to future events.
Mike McCarthy: 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? [inaudible]
Mike McCarthy: For more information on the risks, uncertainties and assumptions relating to forward looking statements, please refer to Docebo's public filings which are available on both Cedar and Edgar.
Mike McCarthy: Police, RMDNA for additional information regarding or non-IFRS financial measures.
Speaker Change: including reconciliation to the nearest IFRS measures. Please note that unless otherwise stated, all references to any financial figures are in US dollars. Now, I'd like to turn the call over to Dorchebo CEO , Alessio Artuffo, and our CEO , Brandon Farber. [inaudible]
Speaker Change: Julianne, would you take the first question, please? Certainly, as a reminder to ask a question, please press star one on your telephone keypad. We have the analyst, please limit themselves to two questions in return to the queue for any follow-ups.
Speaker Change: Our first question comes from Suthan Sukumar from Steeple. Please go ahead, your line is open.
Suthan Sukumar: Good morning, Gents. From my first question, I wanted to touch on the leadership transitions that were announced alongside the results with the departure of the CRO and CPO roles. These are obviously key roles. Are these related to execution or performance issues and what stage are you at in replacing the CRO? [inaudible]
Roll, let appreciate any color there.
Celestio: Absolutely. Hi, it's Alessio speaking. Fair question, and you know, one that I'd like to address that on. So first, you know, for perspectives when you when you take a step back.
Celestio: The Chebo, over the past five years, has grown from roughly 74 million in ERR to currently 225, right?
Celestio: Now, when I stepped into the CEO role, one of the first things that I thought about was taking a close look at what kind of leadership we need for the Chebo's next piece of growth.
Celestio: So if you thought, first in general we're not the same company that we were three or five years ago.
Celestio: The scale that we operate at today with more enterprise customers and more global footprint, it just requires a leadership team that is aligned with that future state.
Celestio: Second, Sun Change is the way you're just natural evolution, you know, leaders moving on after building an incredible foundation, that's Fabio's example.
RCPO.
Celestio: Others were intentional decisions to bring in fresh expertise where I believe we needed it and on all of those we've been very soft and proactive and are reactive in those changes.
Celestio: I'd like to also point to the strength of the talent we've attracted recently.
in the past 12 months. [inaudible]
Celestio: On a number of different fronts and you know we continue executing <unk> and we believe you're super well suited to win a large enterprises are in the in the technology space. Thanks to these great experience.
Celestio: Great.
Alexia: Thank you Alexia I'll pass the line.
Speaker Change: Our next question. Our next question comes from Robert Young from Canaccord Genuity. Please go ahead. Your line is open.
Robert Young: Hi, Good morning, just maybe a question on the full year guide reduction.
Robert Young: I think in the prepared comments you highlighted that it is really due to macro expectations as opposed to anything that's happening right now maybe if it gets revisit churn is there a churn in the quarter or is that is there an increase in churn.
Robert Young: And then maybe if you could just broaden the explanation for the decision to reduce the full year guide at this point.
Robert Young: Hey, Rob its Brian speaking.
Robert Young: Unpack the guidance just a little bit so from a Q1 perspective on revenues, we slightly beat the upper end of our guide.
Robert Young: From a Q2 perspective, our revenues are actually coming in right in line with where remodels into the beginning of the year.
Robert Young: So when you really look at it we're taking a more measured approach and HQ, where we're reducing our new logo growth assumption collateral holding our expansion and retention impact the same.
Robert Young: From a PFS perspective, when we look at the two different revenue streams are professional services is mainly onboarding of new customers. So that will have a more meaningful impact in a given year. We previously guided that to be roughly flat year over year. We now expect professional services will be down year over year.
Speaker Change: And really the main messages.
Speaker Change: We're reacting appropriately to the macro that we're seeing we came into the year with roughly one third of our pipeline.
Speaker Change: It was more geared towards macro sensitive.
Speaker Change: And markets that are particularly being impacted by tariffs in particular retail and manufacturing and automotive.
Speaker Change: And we wanted to make sure that we're just taking a measured approach and we react accordingly.
Speaker Change: Okay. That's good.
Speaker Change: Okay. So bright for my second question would be around your large customer pipeline last quarter. I think you said that customer account over 100000 through.
Speaker Change: <unk> grew 18% and then the numbers you provided this quarter it looks like that's up 15% to 16% so that seems like it's slowing.
Speaker Change: Maybe if you could revisit the large customer pipeline is it overrepresent that didn't know the end markets that you're you just highlighted maybe you just talked about.
Speaker Change: The customer metrics, you've shared this quarter and why that growth has decelerated and then I'll pass the line.
Speaker Change: From an enterprise perspective, our pipeline still remains healthy.
Speaker Change: I would say, we did see a bit of elongation in the enterprise space previously we had communicated for probably the past.
Speaker Change: Four to six quarters that deal scrutiny deal elongation was roughly stable.
Speaker Change: Good to see that change just a little bit this quarter, but nothing really significant to call out.
Speaker Change: Overall, if you think about the enterprise motion you may not do.
Speaker Change: Capo.
Speaker Change: Typically been more weighted towards the back half of the year, where we tend to see the enterprise buyers cycle by Morris offer near the end of the budget cycle.
Speaker Change: So we do expect a lot of that pipeline to converge in Q3 and Q4.
Speaker Change: And when you look at our new HCV growth, we still we still grew.
Speaker Change: Solid pace year over year, so the trends are consistent with prior years as well.
Speaker Change: Okay.
Speaker Change: And the end market you highlighted it as the pipeline over represented there is it.
Still broadly well diversified.
Speaker Change: It's probably well diversified like if you look at our error by industry.
Speaker Change: Performed very well in these end market historically.
Speaker Change: Historically manufacturing retail and auto are.
Speaker Change: Representative high win rates.
Speaker Change: Great customer of ours.
Speaker Change: While it is one third I don't think Thats overrepresent as compared to historical.
Speaker Change: Okay. Thanks, I'll pass the line.
Moderator: Our next question comes from George Sutton from Craig Hallum Capital Group. Please go ahead. Your line is open.
George Sutton: Thank you.
Speaker Change: Yes, Hello, I have kind of a DNA question. So as we look at the.
Speaker Change: Expected growth for the full year, 97%, we start to bring them to bear a single digit growth company and I don't feel like you are building a single digit growth company can you just talk about that relative to your expectations longer term.
Speaker Change: Okay.
Speaker Change: Unless youre on mute.
George Sutton: Hey, George Thank you for the question and you know my background.
Speaker Change: Crow.
Speaker Change: And now CEO brings me to say that I agree with you. We are very we're very focused and we remain extremely focused on growth.
Speaker Change: And.
Speaker Change: While the guidance may not reflect that statement. It takes into consideration. The current market that is Brendan very well explained as dynamics that are very much outside of our control and so we take a prudent approach in that regard, but let me touch some points.
Speaker Change: Perhaps them give them some perspective is how I think about our growth levers.
Number one.
Speaker Change: I believe the chair boom is going through a Jordan <unk> of the improvement.
Speaker Change: Improvement in the product.
Speaker Change: He said that he is very sustained we've been adding capabilities.
Speaker Change: Particularly focusing on AI enablement.
Speaker Change: And really transforming the LMS in Walter today, He's a true AI enterprise learning platform in.
Speaker Change: The goal is to offer an end to end solution that comprises not only all the plays the way our people store content and deliver content, but where our customers are able to do them end to end life cycle of content creation through content delivery as well as coaching on the platform that I believe the deal.
Speaker Change: Added capabilities that we let bolster our growth in the future and I'm really excited about it.
Speaker Change: I think when I, then think even further.
Speaker Change: And think about our future on the agenda side. For example, there is even more room to be optimistic at inspire rather we've we've announced the.
Speaker Change: Major initiative called the Broadridge Armani.
Speaker Change: And I believe that identification and agents there will be a crucial component to them.
Speaker Change: In in our story in the future and very much very much excited about that so in short the answer to your question is yes. We are very focused on building our remaining a balanced growth story.
Speaker Change: And very much executing towards that.
Speaker Change: So I'm with you on Egencia.
Speaker Change: And about the opportunity here's the challenge that I wanted to understand.
Speaker Change: It's going to change workflows pretty meaningfully you guys could clearly affect the chief learning officer, and really strengthen their position within an organization.
Speaker Change: So I'm wondering will agenda.
Speaker Change: Through the Chief Learning officer will be someone else in the organization that gets passed with that opportunity.
Speaker Change: Well the beauty of our business Hum, Georgia as well.
Speaker Change: We we are not only multi industry as you know and very horizontal what also multi use case, what I think about the air out of the company and I split it across multiple use cases, it's very well differentiated historically, the chief learning officer, as they can and more internal roll in.
Speaker Change: In companies and lately, we're seeing a convergence where the CLO becomes more of a chief transformation officer and stops the aim to external learning gets well now this doesn't happen everywhere. So I expect that the identification of the automation that's to come from different places and not just from one single year.
Speaker Change: Unit, we will seed from the office of the Chief Marketing Officer from the office of the Chief revenue Officer and of course from the office of the CIO. These stakeholders are already involved with the table that are already talking to us.
Speaker Change: <unk>.
Speaker Change: In particular with phase two of our agenda solution. The one that we'll build them workflows and connectors between the table and third party platforms.
Speaker Change: <unk> HCM and others.
Speaker Change: You know, it's going to be very much a diverse audience there will be reaping the benefits of it. So we're not designing this just for one use case, but loyal to our current strategy for multiple use cases.
Speaker Change: Perfect. Thank you. Thank you.
Speaker Change: You have more than one.
Speaker Change: Our next question comes from Ryan Macdonald from Needham <unk> Company. Please go ahead. Your line is open.
Speaker Change: Yeah, Hey, good morning, guys. This is Matt Shea on for Ryan Thanks for taking the questions.
Speaker Change: Considering the guidance update and looking at sales and marketing expenses I guess, given the macro is creating a tighter budget environment with the elongated sales cycles in your purchasing decision why not ramp EBITDA margins in the near term how are you thinking about the right balance of having capacity to capture share when the market reopens first ramping.
Speaker Change: When when market demand is weaker.
Hey, Matt.
Speaker Change: The way, we're thinking about EBIT.
Speaker Change: Youll notice it based off of our guide is that theres going to be a fairly big step function change from Q2 to Q3 and even into Q4, where we're approaching if not at 20% EBITDA margin.
Speaker Change: How we're thinking about investments in sales and marketing and then more broadly we have baked.
Speaker Change: Hey, good investment opportunities right now and we want to make sure that we're still investing in those.
Speaker Change: Number one is the government go to market motion.
Speaker Change: We just received.
Speaker Change: Got it.
Speaker Change: We're seeing strong demand strong pipeline and we wanted to make sure that we're investing in unlocking those investment dollars across the whole go to market motion from a government perspective in order to capture that market.
Speaker Change: Secondly, but probably more importantly is on product.
We just unveiled last month.
Speaker Change: Our roadmap that requires more head count.
Speaker Change: So different skill sets than we used to hire from.
Speaker Change: From a product of yesterday.
Speaker Change: So from an investment perspective, we're really thinking about these two levers.
Speaker Change: Across the remaining area of the business, we're pulling on efficiencies not only from an AI perspective, but we're just also looking at the overall demand perspective and make sure we're hiring in the right places.
Speaker Change: Okay got it that's helpful.
Speaker Change: Maybe sticking with the selling environment, 65% of new customers partnered with Doug <unk> had two or more use cases this quarter down slightly from 70% last quarter, I guess anything to call out there and I assume is still up on a year over year basis, but maybe it'd be good to get your thinking around the metric and how you expect it to trend in $2025 60.
Speaker Change: 5% to 70% the right level or does it may be moved lower given the macro and then maybe it'd be good to just get a refresh on how you're incentivizing the sales force to drive more of those multi use case deals given the environment.
Speaker Change: So the way we look at it we certainly see higher retention metrics with the more use cases customers have.
Speaker Change: At the same time, when we look at it.
Speaker Change: Sure.
Speaker Change: Enterprise customers.
Speaker Change: It is not uncommon for them to come to <unk> with one use case.
Speaker Change: And then we expand those use cases over time.
Speaker Change: So when we land a new customer, we're not necessarily trying to land.
Speaker Change: We're not 100% focused on landing a different use cases.
Speaker Change: We want to land a customer we want to onboard them correctly, we want to support them correctly and we wanted to.
Speaker Change: Span across New York multiple different departments multiple different use cases and over time make sure they've become a stickier customer.
Speaker Change: Okay.
Speaker Change: Our next question comes from Josh Baer from Morgan Stanley. Please go ahead. Your line is open.
Speaker Change: Thanks for the question I was just hoping you could come back to some of the assumptions embedded in guidance and really wanted to focus on the retention piece, which it sounds like the the prudence is more on the new logo side.
Speaker Change: Just wondering if you could expand on what those retention assumptions are or no. That's not an area where you are.
Putting in assuming that they declined.
Speaker Change: Just thinking through past times of budget scrutiny that we have seen retention decline and so what are the assumptions and why maintain.
Speaker Change: Maintain that.
Speaker Change: So from a Q1 perspective on retention.
Speaker Change: We performed exactly as we expected last quarter, we mentioned that Q1 would be the highest quarter of renewables that Toshiba has ever had and just to put that in perspective. It was a 75% increase in contracts up for renewal in Q1 of 2025 compared to 2024, when we <unk>.
Speaker Change: Look out the next few quarters.
Speaker Change: We're actually seeing a fairly clear path to gross retention improvement this quarter over quarter.
Speaker Change: So from a gross retention perspective, when we look at the overall macro environment, we're not seeing a big impact.
Speaker Change: Okay. Thank you and then on the.
Speaker Change: On the the.
Speaker Change: The AWS news, so we're saying that that's not going to really impact 25 does that.
Speaker Change: Does that come into play in 2026 or whats the timing of that thanks.
Speaker Change: So as of now they've provided they've provided their intention to not renew as of December 31, 2000, 2000 22025 and.
Speaker Change: Just to give you guys a little bit more color AWS with roughly one 8% of our total IRR, which when you think about a top 10 customer concentration perspective, we.
Speaker Change: Don't really have any big concentration from our top 10 customers.
Speaker Change: Bill.
Bill: <unk> be no impact on 2025.
Speaker Change: Of course, we're going to support them through this migration.
And there is a chance that this takes longer than expected and into 2026, but as of now.
Bill: In Edinburgh.
Speaker Change: Were taken.
Speaker Change: Taking a look at this business as if it is going to come will end December 31st.
Speaker Change: Thank you. Thank you.
Speaker Change: Our next question comes from Stephanie price from CIBC. Please go ahead. Your line is open.
Speaker Change: Hi, Good morning, I, just wanted to follow up on AWS as well so so Amazon isn't the chamber for three other use cases, just curious if you could give us how much of the era of Amazon is in total.
Speaker Change: I'm wondering when the three other Amazon contracts expire and if they could move to an internally built AWS solution.
Speaker Change: Hey, Stephanie so the other use cases, so we're in three different departments within Amazon and three separate contracts.
Speaker Change: That renew throughout over the next three years.
Speaker Change: They are smaller use cases, let's call them roughly six figures each low six figures each.
Speaker Change: And given the size of the departments, we do not believe that they will move to internally develop solutions, just because theyre smaller in scope.
Speaker Change: And if they were their overall immaterial to our revenue growth.
Speaker Change: Okay. Okay. That's good color.
Speaker Change: And Brian maybe you could provide an update on capital allocation priorities as well you were active on the <unk> in the quarter and announced a renewal.
Speaker Change: And also on your credit facility, how are you thinking about balancing shareholder returns and potential M&A here.
Speaker Change: Yes.
Speaker Change: We're all on the credit facility.
Speaker Change: This credit facility from a position of strength we have.
Speaker Change: $90 million of cash on the balance sheet, we just generated $9 million of free cash flow during the quarter.
Speaker Change: <unk> repurchased $9 million of shares in the open market during the quarter.
Speaker Change: Yes.
Speaker Change: At our three pronged cash deployment, which is investing back in the business.
Speaker Change: Back shares.
And.
Speaker Change: Buying companies from an M&A perspective, and this credit facility allows us to operate in those three levers at the same time, if the opportunity exists.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Richard <unk> from National Bank. Please go ahead. Your line is open.
Speaker Change: Yes. Thank you so beyond the management changes you were talking about earlier are there any things you need to do from an operating perspective to kind of get your execution with large enterprise. So a level it's been in the past and so the prior smaller cohort. So as an example, do you need to lean in more heavily on that.
Speaker Change: Partnerships or anything like that.
Richard: Hi, Richard.
Speaker Change:
Your reference to partners is a very good one we are in fact leaning in heavily in in leveraging the relationships with <unk>.
Speaker Change: Si partners, namely, we're working very closely with Accenture.
Speaker Change: Accenture and Deloitte and many others.
Speaker Change: And our position in the enterprise space and these efforts are paying off Additionally, I mentioned that.
Speaker Change: Amazon AWS as a partner we've recently.
Speaker Change:
Speaker Change: Become a part of their certified program and are seeing.
Speaker Change: A great success in leveraging AWS as a partner with the enterprises the buying the table through Amazon AWS as a channel.
Speaker Change: In general I would say our goal with in the coming months is to strengthen overall.
Speaker Change: Principles, such as you know.
Speaker Change: Discipline in forecasting in the overall execution and and I believe that we are.
Speaker Change: We're doing a great job in that regard.
Speaker Change: As I spend more time with the revenue organization. These days.
Speaker Change: And I become very very involved in it.
Speaker Change: Really focused on again.
Speaker Change: Strengthening our capabilities, so that we set up our incoming CFO for success.
Speaker Change: Okay, great. Thanks, and my second question is with respect to the departure of your.
Speaker Change: CPO shall.
Speaker Change: Should we read anything into it in that your product portfolio is sort of still in need of some changes sort of the timing given that you are making this targeted to enterprise. It released a bunch of products and then you announced.
Speaker Change: The departure of late.
Speaker Change: How should we sort of read that.
Speaker Change: Well, yes, I can I can give some color so first.
Speaker Change: This is not a reaction or a sudden departure, it's part of a well thought out succession planning about 10 months ago. We brought on board a very capable leader Mr. CBRE as our SVP of product.
Speaker Change: Andreas <unk> has taken over.
Speaker Change: Our.
Speaker Change: Our product management organization.
Speaker Change: And and be doing a great job at that.
Speaker Change: And our Vice President Obama arty.
Speaker Change: Artificial intelligence has been really really.
Speaker Change: <unk> been instrumental accelerating.
Speaker Change: Product, especially on the AI front relative to <unk>.
Speaker Change: <unk> departure it was.
Speaker Change: It was again part of our succession planning and Ricardo Rosa joining gogo.
Speaker Change: As.
Speaker Change: Chief Technology Officer brings the characteristics of the lead that we were looking for in terms of engineering.
Speaker Change: And our goal really is.
Speaker Change: To strengthen.
Speaker Change: Our overall organization and make it an AI first organization not just them.
Speaker Change: On.
Speaker Change: On the product offering side, but in the backbone in the core of the product and so this is all.
Speaker Change: A cohesive plan towards that.
Speaker Change: Our next question will come from Kevin Krishna Rhatany from Deutsche Bank. Please go ahead. Your line is open.
Speaker Change: Hey, there good morning, just first a question maybe for Brandon on the.
Speaker Change: The SMB base can you remind us how big that business is I think it's historically been around 25% of your E. R. R.
Speaker Change: Sort of what are you seeing there what gives you the confidence in the coming quarters that you won't be impacted by macro uncertainty smbs are quite sensitive is it is that mainly because the majority of those renewals happened in Q1.
Speaker Change: Just give us your view on the confidence of that that SMB business is not falling off at a faster pace.
Speaker Change: Yes.
Speaker Change: So I think.
Speaker Change: Brendan and Micah.
Speaker Change: Got kicked out of the Calder and are currently in the process of dialing in so no problem at all I will.
Speaker Change: I will answer.
Speaker Change: <unk> answered the question so relative to SMB.
Speaker Change: D.
Speaker Change: The figures you have shared are accurate.
Speaker Change: And in terms of the of the retention trend, we don't see any reason why we believe this since he's gonna accelerator.
Speaker Change: In in any way now.
Speaker Change: With regards to our strategy, we've been very clear we're building all nipples on a position of strength with our mid market business and enterprise and the reason is very simple the capabilities that we're building suite a complexity there is more appropriate of companies that have a.
Speaker Change: More complex use cases more use cases and as a result over time, we will see smbs.
Speaker Change: Probably dilute but.
Speaker Change: We have many smbs are very happy customers and we maintain them as such.
Speaker Change: And I don't have any information that makes me believe that.
Speaker Change: Let's say loss of SMB customers should accelerate at this point.
Speaker Change: Got it okay. Thanks, Celesio, maybe just a small question here in your in the script.
Speaker Change: Talked about.
Speaker Change: Instances, where procurement teams are tapping the brakes, bringing deals to sign off and a majority of that is from macro user a majority and so I'm wondering are there what else are you seeing outside of macro or is there anything on competition is it decisions on products with that with an AI flavor, taking a bit longer just anything else that you are.
Speaker Change: That youre seeing there that might be impacting sort of the tapping of the brakes.
Speaker Change: Yeah for sure so macro plays a very significant role in in all of this.
Speaker Change: The seizure scrutiny is there is not a new factor in this environment, but certainly some industries as described before I've taken them.
Speaker Change: A prudent position again in light of the.
Speaker Change: Frankly daily uncertainty that many have been subject to.
Speaker Change: I think another element that plays into this and I believe it's a very temporary element that will resolve itself from a maturity curve standpoint that is the one or the AI readiness since not so much of ours.
Speaker Change: The selling part of the buyers themselves and what we see is that while the business sees the meaning the people that want the products are very AI first them.
Speaker Change: The procurement officers that the GSE teams the risk teams that are not always aligned already if you will with this posture and so there is.
Speaker Change: Sometimes a disconnect in the buying journey between the work that the customers are looking for and what are the let's say legal ramifications of the hours that are ready to embrace and so it's a lot of education and it's a lot of the.
Speaker Change: Working through that with legal teams with the ITT <unk> with the risk teams and frankly as we continue to do this we've become better and better and better and frankly, we see this also on the on the flip side as we buy our selves.
Speaker Change: AI technologies at the table, we experienced this with our legal team.
Speaker Change: Really looking into how to best ask the right questions to these providers I believe it's the part of a natural cycle that will resolve itself and does remind me a little bit of the <unk>.
Speaker Change: Prem to cloud the wind procurement teams that we're very let's.
Speaker Change: Let's say not ready at first that we embrace SaaS providers and then it became the de facto standards.
Alexia: Got you. Thanks, Thanks Alexia.
Speaker Change: Our next question comes from Gavin Fairweather from core Mark. Please go ahead. Your line is open.
Gavin Fairweather: Oh, Hey, thanks for taking my questions, maybe just on the GAAP side with Ato completed in dose seeming to come down a little bit curious if youre seeing any change in the pace of sales processes, but maybe you could just discuss your expectations for the flow of Rfps over the next year.
Gavin Fairweather: Hey, Kevin.
Gavin Fairweather: As a reminder.
Gavin Fairweather: Zoom out on the fed ramp opportunities just for a second so cup.
Gavin Fairweather: A couple of weeks ago, We announced we received authority to operate which is Ato status and what that means for us is that essentially it unlocked the opportunity to bid and win contracts is if we're fully authorized.
Gavin Fairweather: Since the introduction of Deutsche we've actually seen a step function change where the fed ramp PMO office is moving faster.
Gavin Fairweather: Look at our previously communicated timeline, we expected to receive ACO status at the end of Q3, and we received it well in advance of where we expected.
Gavin Fairweather: Full authorization, usually takes or previously took six to 12 months after IPO.
Gavin Fairweather: And now we expect to get that closer to the six month, Mark if not sooner.
Gavin Fairweather: There is also some positive news, where the white house last week or roughly last month in April put out an executive order, where they're essentially tell in there.
Gavin Fairweather: Federal departments to favor off the shelf SaaS solutions over on Prem that's definitely all playing in our favor.
Gavin Fairweather: The pipeline growth.
Gavin Fairweather: We received ACO, we've been surprised by.
Gavin Fairweather: We're building the pipe.
Gavin Fairweather: We even have an expansion opportunity with our sponsor an agency. So we continue to be very excited about this opportunity.
Gavin Fairweather: That's very helpful. And then just my second question just on CAC paybacks, if they've been impacted by the renewal cycle that youre moving through but I'm curious how those are trending on on a gross bookings basis. If you could discuss that and then secondly, how do you think about a target CAC payback for this.
Gavin Fairweather: So more of a kind of normal environment, given your shift up market and in the building partner network.
Speaker Change: From a from a cat perspective on new logo perspective, it's certainly not where we want it to be.
Speaker Change: We realize we're never going to get back to the cost levels. We were during the Covid era, where there were some natural efficiencies in our operating model.
Speaker Change: At the same time, we think where we are now versus where we used to be somewhere in the middle of that is the right target operating model now.
Speaker Change: Now, we're doing a lot of things to become more efficient.
Speaker Change: We are now fully staffed from an enterprise perspective, we're investing in golf and expect that to pay off in 2026.
Speaker Change: And we're really focused on pipeline conversion improvement in win rates and as we take a deeper look into our go to market. We see a lot of opportunities for continued efficiency and continued improvement from cash perspective.
Speaker Change: Thanks, so much.
Speaker Change: Yeah.
Speaker Change: Our next question comes from <unk> Li from Cantor Fitzgerald. Please go ahead. Your line is open.
Speaker Change: Thank you for taking my question and good morning, Alexia and Brendan.
Speaker Change: So a couple a couple of questions for Alexia I'll, firstly kicking off from that.
Speaker Change: In spite of that obviously well attended attendance on the prospects of Cvs higher.
Speaker Change: Wondering if you could give us some of the feedback you've received from the events and how is the pipeline building process on that Alexia.
Speaker Change: In terms of.
Speaker Change: How does the pipeline build and converting.
Speaker Change: Yes.
Speaker Change: And then the second piece of my question.
Speaker Change: As on the product silos.
Speaker Change: You spoke pretty bullish on the automation Hanmi copilot.
Speaker Change: Obviously, it's in the early phase when will this opportunity.
Speaker Change: The more modern possible likely more material and then I have a follow up.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Unless you're on mute.
Speaker Change: Less so.
Speaker Change: So great question, and let me start with <unk>.
Speaker Change: The experience of the turbine supplier, which you attended.
Speaker Change: We're able to witness the infectious energy around the confidence.
Speaker Change: First let.
Speaker Change: Let me say one thing about this confidence that started the historically as the Ada table customer confidence and it's becoming an industry conference. The fact of standard I myself have met the customers' them, but as you pointed correctly prospects, which have increased very materially.
Speaker Change: Year over year and.
Speaker Change: Certainly serving as the lead generation and sales acceleration.
Speaker Change: Platform for us, but also industry experts.
Speaker Change: Analysts day, we add in the room some of the most recognized industry expert in the field. So we take a lot of pride in building not just the confidence, but an incredible experience.
Speaker Change: During inspire as you said well we've announced.
Speaker Change: And can meet the beyond announced because he wanted to announce things and not put a date to it for each and every single thing that we spoke about them. We were bullish in saying, whether it's whether it's live already or very shortly liza, meaning a week or a month or for the medium term.
Speaker Change: So.
Speaker Change: Customers have really appreciated that some of the feedback has been.
Speaker Change: That has been the most enthusiastic here.
Speaker Change: Frankly, it is varied Hayden is varied across a few categories.
Speaker Change: One.
Speaker Change: Continues to be an area of real interest from customers is relative to the triple creator.
Speaker Change: Creators can either I think it's a very symbolic example.
Speaker Change: Our renewed the AI first division because it's not just <unk>.
Speaker Change: Simply about creating the content, which one but officially.
Speaker Change: You know attributor to it it goes well beyond its creator is a real creator of a learning experience that you can go and create a now enter and create videos.
Speaker Change: From simple tax that you can convert.
Speaker Change:
Speaker Change: The ink to fully that rated podcast.
Speaker Change: You can do things that way imaginable, just a year ago and and customers are really you know [laughter].
Speaker Change: I'm pleased not only with those capabilities, but also with the fact that we've made the strategic and frankly bold decision to include the <unk> hundred for every customer and we've done it on the basis of a belief that if we have the customers happy and creating content within our platform and not having to leave the platform to create content.
Speaker Change: We have not only a happier customer about also stickier customers.
Speaker Change: The second Wow.
Speaker Change: At the conference was that relative to our U S plan.
Speaker Change: Let's face it.
Speaker Change: Cable is the UX.
Speaker Change: Cause the we have such an enterprise that has become complex on the administrative side and we ourselves know that when that happens it administrators get overwhelmed.
Speaker Change: We've announced the deeper worker over our administrative features and the customers are really really happy about that it shows in our NPS scores.
Speaker Change: Any shows.
Speaker Change: The feedback we've been given and finally, just because otherwise they take a lot of time you know this is a question that I'm very passionate about the agents and <unk> monetization.
Speaker Change: So.
Speaker Change: And in the summer we are launching our first agency platform to improve loss from operation today, we take care of automating and enabling just couple of bdcs. It as out of any administrators sleep. My goal overtime. This is a journey, it's not a sprint.
Speaker Change: Is that the table becomes a manageable block format.
Speaker Change: Allows our agents to do the work and creative people are to be creative and not waste their time spending endless amount of hours enrolling users into courses.
Speaker Change: We will enable the automation in all of this.
Speaker Change: From a monetization standpoint, my focus is building the best learning platform out there monetization is absolutely important.
Speaker Change: And it's not a stack on the thoughts there.
Speaker Change: However, our priority is cheap finger.
Speaker Change: Product that makes people at the monetization will come we're introducing a Canadian based system already for the first time in our history.
Speaker Change: On the AI video presenter capability.
Speaker Change: So we're starting to introduce where logical and we're aligned with the way buyer to buy some consumption format.
Speaker Change:
Speaker Change: Again, the agents are something that firstly, we need to ship them, we need to prove that they solve customer problems and they really have Ottawa and for our customers. It at that point when volume meats business processes anything D&O customers. This monetization will be very simple.
Speaker Change: Got it got it thanks for that Alex Hey, Barry excuse me I appreciate that really comprehensive answer and then I'll.
Speaker Change: And then on the financial side.
Speaker Change: You Derisk some of the guidance.
Speaker Change: For.
Speaker Change: 225 was wondering how much conservatism have you placed on this revision.
Speaker Change: Considering.
Speaker Change: We had the headwinds the renewal headwinds.
Speaker Change: Has that been.
Speaker Change: We have to AWS headwind.
Speaker Change: And then on the flip side the upside you have the fact that it sounds like it takes six to nine months, but you envision on the low end six months right. So we can assume by like September maybe.
Speaker Change: You guys certify and I assume that Youre building, a pipeline where will that.
Speaker Change: So the upside from that as well to offset that so basically yes.
Speaker Change: Separately.
Speaker Change: Got it.
Speaker Change: Thomas for that.
Speaker Change: Yes.
Speaker Change: Certainly say, we took a more measured approach some of the items you just mentioned are not factored into our guide.
Speaker Change: Certainly do not have a material amount.
Speaker Change: Fed ramp revenues expected for 2025, so if that does materialize that will be upside.
Speaker Change: And we continue to guide in a way where we do not include whale deals in our forecast.
Speaker Change: If we see certain large deals, which I'm talking about deals over $1 million Eric Bolton.
Speaker Change: Given year that will be upside to the guide as well.
Speaker Change: As I mentioned, we're reacting to what we're seeing in the macro and we feel this is a measured approach and with upside potential with the items I discussed.
Speaker Change: Yes.
Speaker Change: Got it thanks for that Brendan and thanks a lot.
Speaker Change: Hello.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: We have no further questions I would like to turn the call back over to Alexia are two fold for closing remarks.
Speaker Change: The excitement at the table is because we're not just improving the LMS, we're imagining the future of learning within AI first learning plus hormone that aims at solving a real life business problems and again, giving back the time and the power.
Speaker Change: Two learning.
Speaker Change: Professionals.
Speaker Change: The team at the Chip is Super excited our customers are thrilled about the innovation, we are rapidly bringing to the market. We appreciate your time and we look forward to the next caller and thank you very much.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: [music].