Q1 2025 Docebo Inc Earnings Call
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Good morning, everyone, and welcome.
And welcome to the Doce Table 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 Josh Chabos, Vice President of Investor Relations, Mike 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.
Speaker Change: This morning's call will allow participants to ask questions about our results and the written commentary that has been provided this morning.
Speaker Change: Before we begin this morning's Q&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.
Speaker Change: Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the void-looking statements.
Speaker Change: 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.
Speaker Change: During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures that do not have standardized meanings under IFRS.
Speaker Change: Please CRM-DNA for additional information regarding our non-IFRS financial measures.
Speaker Change: Including reconciliations 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 Docebo CEO Alessio Artuffo and our CEO , Brandon Farber.
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 to analyze, please, limit themselves to two questions in return to the queue for any follow-ups.
Speaker Change: Our first question comes from Southan Sukhamar from Steeple. Please go ahead. Your line is open.
Speaker Change: 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. And these are obviously key roles.
Speaker Change: Are these related to execution or performance issues, and what stage are you at in replacing the CRO role? What appreciate any color there?
Speaker Change: Absolutely. Hi, Alessio speaking. Fair question. And you know, one of that I'd like to address that on. So first, you know, we're perspectives when you when you take a step back.
Speaker Change: The Chebo, over the past five years, has grown from roughly 74 million in ARR to currently 225, right?
Speaker Change: 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 Chebus next days of growth.
Speaker Change: So, if you thought, first, in general, we're not the same company that we were three or five years ago.
Speaker Change: 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.
Second.
Speaker Change: Some changes where just natural evolution, you know, leaders moving on after building an incredible foundation, that's Fabulous example.
RCPO.
Speaker Change: Others were intentional decisions to bring in fresh expertise where I believe we needed it. And on all of those we've been very thoughtful and proactive and are reactive in those changes.
Speaker Change: I'd like to also point to the strength of the talent we've attracted recently.
Speaker Change: In the past 12 months we've added very strong proven leaders with track records in scaling I grew up in South Businesses. And a kind of bench strength isn't the standard of instability, it's more like a focus on ambition and momentum.
Speaker Change: And finally, you know, what really matters the most is preserving what makes the Chebospecial, which is our culture, our agility, and a team that is customer obsessed.
while upgrading our ability to activate the cues.
Speaker Change: As far as the CRO search, I will say that we're well underway and I'm very pleased with the process of work on it.
Thank you, Alessio.
Speaker Change: Yeah, for my second question, I'd like to touch any V.S. I appreciate the color and the paper marks on the loss of the skills build their use case and continued work on internal use cases for W.S.
Speaker Change: Can you speak a little bit about how the relationship overall with AWS is now given this change? Do you see increased risk here of potentially losing AWS altogether?
Speaker Change: So, couple of thoughts on this one. The first one is relative to the relationship. It is excellent, it is collaborative and we're preserving a very close relationship with the Amazon AWS team.
Speaker Change: Amazon overall remains a very important customer for the Chebo and it's such, you know, we're very pleased with that. Relative to Amazon AWS and their journey with us. As a reminder, this is a customer that stayed with us for their entire contract term.
And that means five years roughly.
Speaker Change: During the time, I think it's important to underscore that we've helped...
Speaker Change: To unlock a massive business, if you think about it alone in 2025, they've activated close to 10 million users, 10 million learners in the platform, and are well underway to train 29 million users, which was their goal.
Speaker Change: The decision that AWS team made, although certainly regrettable from our standpoint, no doubt about that.
Speaker Change: is that because the business has become so mission-critical for them and because they have such a fundamental belief in building internally, you know, with recent changes in leadership, they opted for a build versus, you know, use the commercial product. [inaudible]
Speaker Change: So, they didn't take the perspective of going for another commercial product. That would have been very concerning, but that was not intended. The intent was to just have them.
Speaker Change: It's freedom of executing anything they wanted all around the lower experience and the way they wanted to achieve it was by building their own technologies. You know, they certainly have the firepower, the one of the...
Speaker Change: Biggest companies in the world, engineering-wise, to do so. I think in a way, you know, I'm proud of the fact that we've given them a lot of input on how to do it. Because for five years, they've consumed our product and they probably, you know, it was a catalyst for idea for them. [inaudible]
Speaker Change: But we maintain a fantastic relationship and we'll do our best to transition them in the best way. And again, Amazon remains a great customer, a partner of ours, on a number of different fronts. And, you know, we continue executing and we believe you're super well suited to win large enterprises in the technology space, thanks to this great experience.
Great.
Thank you, Alessio. I'll pass the line.
Speaker Change: Our next question comes from Robert Young from Canacord Genuity. Please go ahead to line is open.
Robert Young: Hi, good morning. Just maybe a question on the full your guide reduction.
Robert Young: I think in the prepared comments highlighted that it's really due to macro expectations. As opposed to anything that's happening right now, maybe it gets revisit churn. Is there churn in the quarter? 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, it's Brandon speaking, so you know if we unpack the guide of 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 renders are actually coming in right in line with where we modeled it at the beginning of the year.
Robert Young: So when you really look at it, we're taking a more measured approach in H2 where we're reducing our new logo growth assumption while we're holding our expansion and retention impact the same.
Robert Young: You know, from a PS perspective, when we look at the two different revenue streams, our professional services is mainly onboarding a new customer.
Robert Young: So, that will have a more meaningful impact in the given year. We previously guided that would be roughly flat year over year. We now expect professional services will be down year over year.
And, you know, really the main message is...
Robert Young: We're reacting appropriately to the macro that we're seeing. We came into the year with roughly one third of our pipeline. That was more geared towards.
Robert Young: macro-sensitive end-market that are particularly being impacted by terrorists, in particular retail manufacturing and automotive.
Robert Young: And we want to make sure that we're just taking a measured approach and we react accordingly.
Speaker Change: Okay, so my second question would be around your large customer pipeline. Last quarter, I think you said that customer count over 100,000.
Through 18% and then the numbers you've provided this quarter...
Looks like that's up.
Speaker Change: 15 to 16%. So that seems like it's slowing. Maybe if you could revisit the large customer pipeline.
Speaker Change: Is it overrepresented in those end markets that you just highlighted? Maybe you just talk about the customer metrics you shared this quarter and why the growth is decelerated? Then I'll pass the line.
From an enterprise perspective, our pipeline still remains healthy.
Speaker Change: I would say we did see a bit of yearly elongation in the enterprise space, you know, previously we've communicated for probably the past four to six quarters that...
Speaker Change: The old scrutiny, the early elongation, was roughly stable. We did 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, even at Docebo, it's typically been more weighted towards the back half of the year where we tend to see the enterprise buyer cycle buy more software near the end of the budget cycle.
Speaker Change: So we do expect a lot of that pipeline to convert to Q3 and Q4.
Speaker Change: And, you know, when you look at our new ACB growth, we still grew at a solid pace here over here, so the trends are consistent with prior years as well.
Speaker Change: And the end market you highlighted is the pipeline over represented there or is it still broadly well diversified?
Speaker Change: It's probably well diversified, like if you look at our air or our buying industry, we perform very well in these end markets. Historically manufacturing, retail and auto are well representative, high wind rates.
Speaker Change: You know, a great customer of ours. So, you know, while it is one third, I don't think that's overrepresented, compared to historical.
Okay. Thanks. So, that's fine.
Speaker Change: All right, next question comes from Dorch Sutton from Craig Harlem Capital Group. Please go ahead. Your line is open. Thank you very much.
George Sutton: Thank you. Let's see how I have kind of a DNA question. So as we look at the...
Speaker Change: Expected growth for the full year at 9-10%. We start to bring in to...
Speaker Change: They're a single-digit growth company, and I don't feel like you're building a single-digit growth company. Can you just talk about that relative to your expectations longer term?
Alessio, you're on mute.
Speaker Change: Hey George, thank you for the question and you know my background of a CRO and now CEO brings me to say that I agree with you we are a very we're very focused we remain extremely focused on growth.
Speaker Change: And, you know, while the guide may not reflect that statement, it takes into consideration the current market that has Brandon very well explained. As dynamics, there are very much outside of our control. And so we take a prudent approach in that regard.
Speaker Change: But, let me touch some points that perhaps give some perspective as I think about our girl's flabbers.
Number one.
Speaker Change: I believe Docebo is going through a journey of improvement in the product at a pace that is very sustained.
Speaker Change: We've been adding capabilities, particularly focusing on AI enablement, and really transforming the LMS in what today is a true AI enterprise learning platform.
Speaker Change: The goal is to offer an end-to-end solution. The comprise is not only of a place where people store content and deliver content, but where our customers are able to do end-to-end life cycle of content creation through content delivery, as well as coaching on the platform.
Speaker Change: I believe that these and add that capabilities will bolster or growth in the future and I'm really excited about it.
I think when I
Speaker Change: Then think even further and think about our future on the agenda side. For example, there's even more room to be optimistic. At Inspire, Rob, we've...
We've announced our major initiative called the Broadjet Harmony.
Speaker Change: And I believe that identification and agency will be a crucial component in our story in the future.
Speaker Change: And very much excited about that. So in short, answer to your question is yes, we are very focused on building a balanced growth story and very much executing towards that.
Speaker Change: So I'm with you on a genticae ivory excited about the opportunity. Here's the challenge that I want to understand.
Speaker Change: It's going to change workflows pretty meansfully. That could clearly affect the Chief Learning Officer and...
Speaker Change: Really strengthen their position within an organization. So I'm wondering, will a Gentika AI come through the Chief Learning Officer or will be someone else in the organization that gets tasked with that opportunity?
Well, the beauty of our business, George, is we...
Speaker Change: We are not only multi-industry, as you know, in very horizontal, but also multi-use case. When I think about the ARR of the company and I split it across multiple use cases, it's very well differentiated. Historically, the Chief Learning Officer has taken a more internal role in companies. Lately, we're seeing a convergence where the CLO becomes more of a transformation officer and taps into external learning as well.
Speaker Change: Now, this doesn't happen everywhere, so I expected the identification, the automation, to come from different places, and not just from one single unit.
Speaker Change: We will see it 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.
Speaker Change: In particular, it says to all our agentex solutions, the one that will build the workflows and connectors between the cable and third-party platforms, the HCMs and others, you know, it's going to be very much a diverse audience that will be reaping the benefits of it.
Speaker Change: So, we're not designing this just for one use case, but loyal to our current strategy for multiple use cases.
Perfect. Thank you. Thank you.
You have more than one.
Speaker Change: Our next question comes from Ryan McDonald from Needham & Company. Please go ahead. Your line is open.
Matt: Yeah, hey, good morning guys. This is Matt Cheon for Ryan. Thanks for taking the questions.
Matt: Considering the guidance update and looking at sales and marketing expenses, I guess given the macro is creating a tighter budget environment with the long-edged sales cycles and fewer purchasing decisions.
Matt: 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 margins when market demand is weaker?
Hey Matt!
Speaker Change: The way we're thinking about it, but you'll notice, based off of our guide, is that there's going to be a fairly big step function change from Q2 to Q3.
Speaker Change: And even to Q4, we're approaching, if not, at 20% EBITDA margin. How we're thinking about investments in sales and marketing and more broadly is, you know, we have two big investment opportunities right now and we want to make sure that we're still investing in those.
Number one is the government's go-to-market motion.
Speaker Change: We just received ATO status, and we're seeing strong demand, strong pipeline, and we want 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.
Secondly, but probably more importantly is on products.
You know, we just unveiled last month.
Speaker Change: A roadmap that requires more headcounts and also different skillsets than we used to hire from our product of yesterday.
Speaker Change: So, from an investment perspective, we're really thinking about these two levers and then across the remaining area of the business. We're pulling on efficiencies not only from you know, 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. Maybe sticking with the selling environment, 65% of new customers partnered with Docebo. Had two or more use cases of this corridor down slightly from
Speaker Change: 70% last quarter. I guess anything to call out there, and I assume this is still up on a year-over-year basis, but maybe be good to get your thinking around the metric and how you expect it to trend.
Speaker Change: 2025 is 65 to 70% the right level or could it maybe move lower given the macro and then maybe 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. Thank you very much.
Speaker Change: So the way we look at it, we certainly see higher retention metrics.
With the more use cases customers have.
At the same time, when we look at, you know, certain enterprise customers.
Speaker Change: Yeah, it's not uncommon for them to come to the table with one use case.
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, or we're not 100% focused on landing eight 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 want to expand across the art multiple different departments, multiple different use cases, and over time, make sure they become a stickier customer.
Speaker Change: Our next question comes from Josh Baer from Morgan Stanley . Please go ahead. Your line is open.
Josh Baer: 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...
Josh Baer: Sounds like the prudence is more on the new logo side.
Josh Baer: Just wondering if you could expand on what those retention assumptions are, no, like that's not an area where you're putting in, you know, assuming that they...
Josh Baer: Declined, just thinking through past times of budget scrutiny, think that we have seen retention decline, and so what are the assumptions and why maintain that?
Josh Baer: So, from a Q1 perspective on retention, we performed it exactly as we expected. So, last quarter, we mentioned that Q1 would be the highest quarter.
Josh Baer: of renewals that Docebo has ever had. And just to put that in perspective, it was a 75% increase in contracts up for renewals Q1 of 2025 compared to 2024.
Josh Baer: When we look out the next quarters, we're actually seeing a fairly clear path that grows retention improvements in the quarter of a quarter.
Josh Baer: So, from a growth retention perspective, when we look at the overall macro environment, we're not seeing a big impact.
Josh Baer: Okay, thank you. And then on the AWS news, so saying that that's not going to really impact 25, does that come into play in 2026, or what's the timing of that? Thanks.
Josh Baer: So, as of now, they've provided their intention to not renew as of December 31st, 2020- 2025, and...
Speaker Change: You know, just to give you guys a little bit more color, AWS was roughly 1.8% of our total ARR, which, you know, when you think about a top 10 customer concentration perspective, we don't really have any big concentration from a top 10 customers.
So there will be no impact on 2025.
Speaker Change: And, of course, we're going to support them through this migration. And, you know, there's a chance that this takes longer than expected and into 2026, but as of now, we're guiding in and we're taking a look at this business as if it's going to go away on December 31st.
Thank you.
Speaker Change: Our next question comes from Stephanie Price from CIBC. Please go ahead. Your line is open.
Stephanie Price: Hi, good morning. I just wanted to follow up on AWS as well. So, so Amazon is a disabled for three other use cases. Just curious if you could go with how much of the ARR Amazon is in total. You know, and wondering when these three other Amazon contracts expire and if they could move to an internally built AWS solution.
Stephanie Price: Stephanie, so the other use cases is so we're in three different departments within Amazon and there's three separate contracts.
That renews throughout, you know, over the next three years.
They are smaller use cases that, you know, what's called them roughly six figures, each, low six figures each.
Stephanie Price: And given the size of the departments, we do not believe that they'll move to internally develop solutions just because they're smaller in scope and if they were they're, you know, overall immaterial to our revenue growth.
Speaker Change: Okay, okay, that's a good color. And, and Brandon, we could provide an update on capital allocation priorities as well. You were active on the NTIB in the quarter, and announced the renewal, and also a new credit facility. How are you thinking about balancing your hold of returns in the potential M&A here?
Brenda: Yeah, and just, you know, overall in the credit facility, you know, we're entering into this credit facility from a position of strength. We have $90 million of cash on the balance sheet. We just generated $9 million of free cash flow during the quarter. We repurchased $9 million of shares in the market during the quarter.
Speaker Change: We're always going to look at our 3D prongs of cash deployment, which is investing back in the business.
Speaker Change: Find 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.
Thank you.
Speaker Change: Our next question comes from Richard Saye from National Bank. Please go ahead, your line is open.
Yes, thank you.
richard say: 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 level that's been in the past for sort of prior smaller cohort. So as an example, do you need to...
Speaker Change: Lean in more heavily on SI partnerships or anything like that.
Hi Richard.
Speaker Change: Your reference to partners is a very good one. We are in fact leaning heavily in
Speaker Change: in leveraging the relationships with SI partners, namely, we're working very closely with Accenture and Deloitte and many others to strengthen our position in the Enterprise
Speaker Change: Additionally, I mentioned Amazon AWS as a partner recently.
Speaker Change: has become a part of their certified program and are seeing a great success in leveraging AWS as a partner with enterprises buying Docebo through Amazon AWS as a channel.
Speaker Change: In general, I would say our goal with in the coming months is to strengthen overall all the principles such as, you know,
Speaker Change: Discipline in forecasting in the overall execution and I believe we are doing a great job in that regard.
Speaker Change: As I spend more time with the revenue organization these days, and I become very, very involved in it. I'm really focused on, again, strengthening our capabilities so that we set up our incoming guest hero for success.
Speaker Change: Okay, great. Thanks. And my second question is, you know, with respect to the departure of your CTO.
Speaker Change: Should we read anything into it and that your product portfolio is still still in need of some changes, sort of the timing given that you're making this part of the enterprise, you've released a bunch of products, and then, you know, this is the departure late.
Yeah, you know, how should we reserve that?
Speaker Change: Well, yes, I can give some color. So first, this is not a reaction or a sudden departure. It's part of a well-sourced succession planning about 10 months ago. We brought on board a very capable leader in Mr. Sivieri as our SCPO product.
And Andrea Sincense has taken over our program management organization.
Speaker Change: and we're doing a great job at that. Him and our Vice President of Artificial Intelligence have been really, really...
Speaker Change: The instrumental at accelerating our product, especially on the eye front.
Speaker Change: Relative to Fabio's departure, it was, you know, again, part of a succession planning and Ricardo LaRosa joining us.
Speaker Change: as Chief Technology Officer brings the characteristics of the leader we were looking for in terms of engineering that.
Speaker Change: And our goal really is to strengthen our overall organization and make it an AI first organization not just.
Speaker Change: on the product offering side, but in the backbone and in the core of the product. So this is all a cohesive plan towards that.
Speaker Change: Our next question will come from Kevin, Krishna Ratney from Deutsche Bank. Please go ahead, your line is open.
Kevin Krishnaratne: Hey there, good morning, just first a question, maybe for Brandon on the SMB base, can you
I beg that business, I think it's...
Kestore, it's been around 25% of your ARR.
Speaker Change: What are you seeing there? What do you see the confidence in the coming quarters that you won't be impacted by macro uncertainty. SMBs are quite sensitive. Is that mainly because the majority of those renewals happened in Q1? Or just give us your view on the confidence of that SMB business not falling off at a faster pace?
Speaker Change: Yeah, the figures you've shared are accurate. And in terms of the retention trend, we don't see any reason why we believe this sense is going to accelerate in any way now.
Speaker Change: With regards to our strategy, we've been very clear, we're building on a position of strength with our mid-market business and enterprise, and the reason is very simple. The capabilities that we're building suit a complexity that is more appropriate of companies that have more complex use cases, more use cases, and as a result, over time we will see SMB's, you know, probably dilute. But...
Speaker Change: We have many SMDs that are very happy customers and we maintain them as such. And I don't have any information that makes me believe that, let's say, loss of SMD customers should accelerate at this point.
Got it. Okay. Thanks, Alessio. Maybe.
Speaker Change: Just a small question here. In the script, you talked about instances where procurement teams are tapping the brakes and bringing deals to sign off. A majority of that is from macro, used or majority. So I'm wondering, what else are you seeing outside of macros? Is there anything on competition? Is it decisions on products with an AI flavor taking a bit longer? Anything else that you're seeing that might be impacting the tapping of the brakes.
[inaudible]
Speaker Change: Yeah, for sure. So Metro plays a very significant role in all of this. Decisions scrutiny is not a new factor in this environment, but certainly some industries as described before have taken a prudent position again in light of the 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 we resolve itself from a maturity curve standpoint, is the one of the A.I. readiness. Not so much of us on the selling part, but of the buyers themselves.
Speaker Change: What we see is that while the businesses, meaning the people that want the products, are very AI first.
Um...
Speaker Change: The procurement officers, the GRC teams, the risk teams are not always aligned already, if you will, with this posture. And so, you know, there is sometimes a disconnect in the buying journey between what the customers are looking for and what the, let's say, legal ramifications of the house are ready to embrace. And so, it's a lot of education, it's a lot of...
Speaker Change: You know, working through steps with legal teams, with IT teams, with risk teams. And frankly, as we continue to do this, we become better and better and better. And frankly, we see this also on the flip side as we buy ourselves AI technologies at the Chebo. We experience this with our legal team really looking into how to best ask the right questions to these providers. I believe it's the...
Speaker Change: Part of a natural cycle that we resolve itself and does remind me a little bit of the era of on-prem to cloud when procurement teams were very, let's say, not ready at first to embrace SaaS providers and then it became the de facto standard.
Watch it. Thanks, thank you Alessio.
Speaker Change: Our next question comes from Gavin Fairweather from Cornmark. Please go ahead, your line is open.
Gavin Fairweather: Oh, hey, thanks for taking my questions. Maybe just on the gov side with ATO completed in Doge, seeming to calm down a little bit. Curious if you're seeing any change in the pace of sales processes, and maybe you can just discuss your expectations for the flow of RFPs over the next year.
Thank you.
Speaker Change: Hey Gavin, so this is a reminder, you know, free zoom out on the FedRAMP opportunities for a second. So, you know, 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 unlocks the opportunity to visit and win contracts as if we're fully authorized. You know, since the introduction of Doge, we've actually seen a step function change where the FedRAMP PMO office is moving faster.
Speaker Change: So if you look at our previously communicated timeline, we expected to receive ATO's data set to the NQ-3, and we received it well in advance of where we expected.
Speaker Change: Full authorization usually takes or previously took 6-12 months after ATO, and now we expect to get that closer to the 6-month mark if not sooner.
Speaker Change: There was 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 telling their federal departments. [inaudible]
Speaker Change: to favor off-the-shelf sass solutions over on-prem. That's definitely all playing in our favor. The pipeline growth...
Speaker Change: Since we've received ATO, we've been surprised by, you know, we're building the pipe, we're even having expansion opportunity with our sponsor and agency, so we continue to be very excited about this opportunity.
Speaker Change: Very helpful. And then just my second question. Just on CAC paybacks, they've been impacted by the renewal cycle that you're moving through. But I'm curious how those are trending on a gross bookings basis if you could discuss that. And then secondly, how do you think about a target CAC payback for this business and more of a kind of normal environment given your shift up market and the building partner network? [inaudible]
Speaker Change: From a CAC perspective on a new logo perspective, it's certainly not where we want it to be.
Speaker Change: You know, we realized we're never going to get back to the CAC 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.
Speaker Change: Now we're doing a lot of things to become more efficient.
Speaker Change: We are now fully that from an enterprise perspective. We're investing in Gov and expect that to pay off in 2026.
Speaker Change: We're really focused on type line conversion, improvement in wind 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 counter-respective.
Thanks so much.
Yifu Li: Our next question comes from Gifu Lee, from Canter Fitzgerald. Please go ahead. Your line is open.
Thank you.
Yifu Li: Thank you for taking my question and good morning, Alessio, and Brandon. So a couple of questions for Alessio first, like kicking off from that inspired event obviously well attended attendance on the prospect is 3x higher, was wondering if you could give us some of the feedback you received from the event.
Yifu Li: And how is the pipeline building process on that, Alessio, in terms of...
Yifu Li: You know, having the pipeline build and converting throughout the year. And then the second piece of my question is on the product side of Alex. You know, I mean, you spoke pretty bullish on the agentive automation, hardware, co-pilot. What's wondering, you know, obviously, you know, it's in the early stage.
Speaker Change: When will this opportunity be more monetizable, be more material, and then I have a follow-up with Brandon on the Financial side.
Alessio, are you on mute?
Speaker Change: Last, so great question, and let me start with the experience of the Chippew inspired which you attended and were able to witness the infectious energy around the conference.
Speaker Change: First, let me say one thing about this conference. It started historically as a Docebo customer conference, and it's becoming an industry conference, the fact of standard. I myself have met the person, but as you pointed correctly, prospects, which have increased very materially here over here. [inaudible]
Speaker Change: And, you know, certainly serving as a lead generation and sales acceleration platform for us, but also industry experts. Analysts, we add in the room some of the most recognized industry experts in the field. So we take a lot of pride in building not just a conference, but an incredible experience.
Speaker Change: During Inspire, as you said, well, we've announced and committed, beyond announced, because it one can announce things and not put a date to it. For each and every single thing that we spoke about, we were bullish in saying whether it's live or ready or very shortly live, meaning a week or a month or for the medium
Speaker Change: Some of the feedback that has been the most enthusiastic, frankly, is varied. It is varied across a few categories. The one that continues to be an area of real interest from customers is relative to the Chevo Creator.
Speaker Change: Creator, I think is a very symbolic example of our renewed AI first vision.
Speaker Change: Because it's not just simply about creating the content, which one could superficially attribute to it.
and Constable's are really...
Speaker Change: Please, not only with all those capabilities, but also with the staff that we've made a strategic and frankly bold decision.
Speaker Change: to include the creator for every customer. And we've done it on the basis of a belief that if we have the customer's happy and creating content within our platform and not having to leave the platform to create content, we have not only happier customer but also thicker customers.
Speaker Change: The second wow at the conference was relative to our UX plan. Let's face it, the tables UX because we have such an enterprise that has become complex on the administrative side. And we ourselves know that when that happens administrators get overwhelmed.
Speaker Change: So, we've announced a deeper work of our administrative features and the customers are really, really happy about that. It shows in our MPS scores, and it shows in all 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, agents and agentic and monetization.
Speaker Change: So, in the summer we are launching our first agency in platform to improve platform operation.
Speaker Change: They will take care of automating and enabling capabilities as are many administrators sleep. My goal over time, this is a journey, it's not a sprint, is that the Chebo becomes a manageable platform.
Speaker Change: There allows agents to do the work and creative people to be creative and not waste their time spending endless amount of hours and rolling users into courses. We will enable automation in all of this.
Speaker Change: From a requisition standpoint, my focus is building the best learning platform out there.
Monetization is absolutely important and it's not a second thought.
Speaker Change: However, our priority is shifting a product that makes people happy. Monetization will come where introducing a credit-based system already for the first time in our history on the AI video presenter capability.
Speaker Change: So we're starting to introduce where logical and where aligned with the way Baer is by some assumption form.
Speaker Change: But, you know, again, agents are something the first we need to shift them. We need to prove that they solve customer problems and they really have ROI for our customers. At that point when value meets business processes and it's in the end of customers, monetization will be very simple.
Speaker Change: Thanks for that, Alessio, very extremely appreciated, really comprehensive answer. And then all Brandon on this financial side.
Speaker Change: Some of the guidance for, you know, 2025. What's wondering how much conservatism have you placed on, you know, this revision?
Speaker Change: You know, considering, you know, we have the headwinds, the renewal headwinds.
One Q has, has that been ended? We have the AWS Helwin.
Speaker Change: And then on the fifth side, the upside, you have the fret ring. It sounds like it takes 69 months, but you envision on the lower end, like six months, right? So, I would consume by, like, September maybe.
Speaker Change: You know, you get set ground certified and I assume that you're building a pipeline when will that show the upside from the pet ground as well to offset that?
So, basically, your conservatism on the guys.
Thomas, we're back.
Speaker Change: Yeah, I mean, I would certainly say we took a more measured approach. Some of the items you just mentioned are not sacked into our guide.
Speaker Change: We certainly do not have the material amount of FedRap, Rev Music Effective for 2025, so if that does materialize, that will be upside. And we continue to guide in a way where we do not include whale deals in our forecast.
Speaker Change: So, if we see certain large deals, which I'm talking about deals over a million error closed in the given year, that will be upside to the guys as well.
Speaker Change: But, you know, as I mentioned, we're reacting to what we're seeing in the macro and we feel this is a measured approach and, you know, with up high potential with the items I discussed.
Speaker Change: Thanks for that, Brandon. Thanks a lot, Alessio.
Thank you. Thank you. Thank you.
Speaker Change: We have no further questions. I would like to turn the call back over to Alessio Artuffo for closing remarks.
Alessio Artufo: The excitement at the Chebo is at a peak. We're not just improving the LMS, we're imagining the future of learning with an AI first, learning platform that aims at solving real life business problems and again giving back the time and the power to learning professionals. The team at the Chebo is super excited. Our customers are thrilled about the innovation we're rapidly bringing.
Alessio Artufo: We appreciate your time and we look forward to the next call and thank you very much.
Speaker Change: This concludes today's conference call. Thanks for your participation. You may now disconnect.