Q2 2025 Docebo Inc Earnings Call

Speaker #4: Good morning, everyone, and welcome to the Docebo Q2 2025 earnings call. All participants are ly in a listen-only mode. We will open up the lines for a question and answer session momentarily.

Operator: Good morning everyone, and welcome to the Docebo Q2 2025 earnings call. All participants are currently in a listen-only mode. We will open up the lines for a question and answer session momentarily. Analysts can ask questions by pressing star followed by the number 1 on their telephone keypads. We ask that analysts please limit themselves to 2 questions and return to the queue for any follow-ups. I'd now like to turn the call over to Docebo's Vice President of Investor Relations, Mike McCarthy. Please go ahead, Mike.

Speaker #4: Analysts ask questions by pressing star, followed by the number one on their telephone keypads. We ask that analysts please limit themselves to two questions and return to the queue for any follow-ups.

Speaker #4: I would now like to turn the call over to Docebo's Vice President of Investor Relations, Michael McCarthy. Please go ahead, Mike.

Speaker #5: Thank ou, Julianne. Earlier this morning, Docebo issued its Q2 2025 results. The press release, which included a to management's prepared remarks and our quarterly investor slide deck, were all posted to our investor relations website.

Mike McCarthy: Thank you, Julianne. Earlier this morning, Docebo issued its Q2 2025 results. The press release, which included a link to management's prepared remarks and our quarterly investor slide deck, were all posted to our investor relations website. This morning's call will allow participants to ask questions about our results and the written commentary that management provided this morning. Before we begin this morning's Q&A, Docebo 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. 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. 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 SEDAR and EDGAR.

Speaker #5: This morning's call will allow participants to ask questions about our results and the written commentary that management provided. Before we begin this morning's Q&A, Docebo would like to remind listeners that certain information discussed may be forward-looking in nature.

Speaker #5: Such forward-looking information reflects the company's current views with respect to future events. 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.

Speaker #5: For more information on the risks, uncertainties, and umptions relating to forward-looking statements, please refer to Docebo's public filings, which are available on CDAR and EDGAR.

Speaker #5: 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 and do not have standardized meanings under IFRS.

Mike McCarthy: 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 and do not have standardized meanings under IFRS. Please see our MD&A for additional information regarding our non-IFRS financial measures, 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's CEO, Alessio Artuffo, and our CFO, Brandon Farber. Gentlemen.

Speaker #5: Please see our MD&A for additional information regarding our non-IFRS financial measures. Including reconciliations, to the nearest IFRS measures. Please note that unless otherwise stated, all references to any financial figures are in US dollars.

Speaker #5: Now, I'd like to turn the call over to Docebo CEO, Alessio Artufo, and our CFO, Brandon Farber. Gentlemen.

Speaker #6: Good morning.

Alessio Artuffo: Good morning.

Speaker #4: Once again, to ask a estion, please press star, followed by the number one on our telephone keypad. As a reminder, we ask that analysts please limit themselves to two questions and return to the queue for any follow-ups.

Operator: Once again, to ask a question, please press star followed by the number one on your telephone keypad. As a reminder, we ask that analysts please limit themselves to two questions and return to the queue for any follow-ups. Thank you.

Speaker #4: Thank you. Our first question will come from.

Mike McCarthy: Julianne, you can.

Operator: Our first question will come from.

Speaker #7: Yeah. I was going to say you can take the first question, Julianne.

Mike McCarthy: Yeah, I was going to say, you can take the first question, Julianne.

Speaker #4: Thank you. Our first question comes from Ryan McDonald from Needham & Company. Please go head. Your line is open.

Operator: Thank you. Our first question comes from Ryan MacDonald from Needham & Company. Please go ahead, your line is open.

Speaker #8: Hey, good morning. Thanks for taking the question. This is, Matt Shayon for Ryan. Congrats on a nice quarter here, guys. maybe just to start, you ys called out strength in the mid-market during the quarter.

Matthew Shea: Hey, good morning. Thanks for taking the question. This is Matthew Shea on for Ryan MacDonald. Congrats on a nice quarter here, guys. Maybe just to start, you guys called out strength in the mid-market during the quarter. Could you just unpack that a bit? What are you seeing in the mid-market and how durable do you think that strength is? Were there any verticals within that mid-market strength that were particularly strong or noteworthy?

Speaker #8: Could you just unpack that a bit? What are you seeing in mid-market, and how durable do you think that strength is? And then, were there any verticals within that mid-market strength that were particularly strong or noteworthy?

Speaker #9: good morning. So, we did report, a very strong, outcome, in our mid-market segment. And I would underscore that, you know, Docebo over the past, several years, has strengthened its position, in, in the mid-market, mid-enterprise, and enterprise segment.

Alessio Artuffo: Good morning. We did report a very strong outcome in our mid-market segment, I would underscore that Docebo, over the past several years, has strengthened its position in the mid-market, mid-enterprise, and enterprise segments. This is the result of work that we have done to better segment our efforts in outbound and in digital marketing, being more efficient where we allocate our spend and target verticals that are more in line with our strength and capabilities. Really, having a stronger focus on the industries where we have more success. Historically, in mid-market, the technology sector has been a leading sector of our efforts, where our product resonates very much with SaaS companies. We're seeing beyond that, even organizations across healthcare and financial services playing a very big role in this success.

Speaker #9: This, , is the result, of, work that we have done, to better segment, our efforts, in, outbound. And in digital marketing, being more efficient, where we allocate our spend and target verticals, that are, you ow, more in line, with what we, with our strength and capabilities.

Speaker #9: And so, really, having, having a stronger focus, on the industries where we have a more success. Historically, in, in mid-market, the technology sector, has been, a leading, sector of our efforts.

Speaker #9: So where our product resonates very much with SaaS companies, we're seeing, beyond that, organizations across healthcare and financial services playing a very big role in this success.

Speaker #9: I would say, additionally, we have implemented some process and people changes in mid-market, with new, improved leadership capabilities. We have seen an immediate impact.

Alessio Artuffo: I would say, additionally, we have implemented some process and people changes in mid-market with new, improved leadership capabilities. We've seen an immediate impact. We're very pleased for this uptick. Relative to durability, we expect mid-market to continue to be strong in the quarters to come. As that combines with a strengthened H2 relative to enterprise cycles, we're very excited about the future ahead.

Speaker #9: And so, we're very pleased with this uptick. Relative to durability, we expect the mid-market to continue to be strong in the quarters to come.

Speaker #9: And, as that combines, with, a strengthened, H2 relative to enterprise cycles, we're very excited about the future ahead.

Speaker #8: Got it. That's helpful color. And then, it was nice to see majority of new customers still looking to use you for two or more use cases.

Matthew Shea: Got it. That's helpful color. Then it was nice to see a majority of new customers still looking to use you for 2 or more use cases. Nitpicking a little bit here, but that 65% level for 2 or more use cases we've seen the last 2 quarters is down from the, call it, 70% to 80% rate last year. Would be good to get your view on what has changed maybe this year versus last year. Are customers just buying smaller in 2025 given the macro backdrop, and then you kind of think you can expand with them over time? How are you thinking about the lower multi-use case adoption rate so far in 2025 relative to last year?

Speaker #8: I mean, nitpicking a little here, but that 65% level for two or more use cases we've seen the last two quarters is down from the, call it, 70% to 80% rate last year.

Speaker #8: Would be good to get your view on what has changed maybe this year versus last year? Are customers just buying smaller in 2025, given the macro backdrop?

Speaker #8: And then you kind of think you can expand with them over time, or how are you thinking about the lower multi-use case adoption rates so far in 2025 relative to last year?

Speaker #9: Yeah, sure. So, look, our priority is, as you say correctly, to win as much market share within a customer or addressable market as we can.

Alessio Artuffo: Yeah, sure. Look, our priority is, as you say correctly, win as much market share within a customer or addressable market within a customer as we can. There are a couple of ways of doing that. Way number one is to penetrate a customer and sell as wide as we can from day one. That has the backdrop of reducing the sales velocity because bringing on board both internal and external use cases, for example, and the subcomponents of those use cases, the benefit is multi-use case and higher ACV likely. The downside is more cooks in the kitchen and therefore slower decision process. What we are continuing to refine is a process that optimizes ACV and velocity.

Speaker #9: And there are a couple of ways of doing that. Way number one is to, you know, penetrate a customer and sell as wide as we can from day one.

Speaker #9: That has the backdrop of reducing the sales velocity. Because bringing onboard both internal and external use cases, for example, and the subcomponents of those use cases, the benefit is multi-use case and higher CV likely.

Speaker #9: The downside is, more, cooks in the kitchen and therefore, slower decision process. So what we are, continuing to, refine is a process that optimizes, ACV and velocity.

Speaker #9: And so when you see a slight reduction, what that means is that we found that in certain segments, it is more productive to enter into an organization with a couple of use cases, win the trust, and do a really great job to expand from there, which is a very good example of what we've done with a notable enterprise customer this quarter.

Alessio Artuffo: When you see a slight reduction, what that means is that we found that in certain segments it is more productive to enter in an organization with a couple of use cases and win the trust and do a really great job and expand from there, which is a very good example of what we've done with a notable enterprise customer this quarter.

Speaker #4: Our next question comes from Robert Young from Canaccord Genuity. Please go ahead. Your line is open.

Operator: Our next question comes from Robert Young from Canaccord Genuity. Please go ahead. Your line is open.

Speaker #10: Hi, good morning. really nice to see the, the big five tech, expansion, maybe first, could you con I ink there's only two of those that you have currently.

Robert Young: Hi, good morning. Really nice to see the Big Five tech expansion. Maybe first, I think there's only two of those that you have currently. If you maybe confirm that, and then if you could talk about how that was won and the decision behind the displacement of an internal system.

Speaker #10: If you could maybe confirm that? And then, if you could talk about how that was won, and the decision behind the displacement of an internal system.

Speaker #9: good ning. And yes, to question number one, you're, you're accurate in that number two. Relative to the, one we've unced, and the expansion, that we, we spoke about, we're, we're really pleased about it because it really is the ultimate, recognition of the strategic efforts that we've been putting in place.

Alessio Artuffo: Good morning. Yes to question number 1, you're accurate in that number 2. Relative to the 1 we've announced and the expansion that we spoke about, we're really pleased about it because it really is the ultimate recognition of the strategic efforts we've been putting in place to achieve this type of growth within an account. First, let me say this is a very strategic customer that we have been serving already for a while, and expanding these customers, especially in the enterprise space, underscores the importance of our investments in customer success, where in these enterprises, complexity and the ability to really serve the customer across multiple use cases and stakeholders becomes important to win the trust to expand further. Second, I think, you were asking about the why behind the customer's choice. It's very simple.

Speaker #9: To achieve this type of growth within an account, first, let me say this is a very strategic customer that we have been serving already for a while.

Speaker #9: And expanding this customer, especially in the enterprise space, underscores the importance of our investments in customer success. In this enterprise complexity, the ability to really serve the customer across multiple use cases and stakeholders becomes important to win the trust to expand further.

Speaker #9: second, I think, you ow, you were asking about the why and behind the, the, customer's choice. And it's very simple. The customer's main objective was, to scale the learning operation, the learning infrastructure, with a partner that was able to accomplish two things.

Alessio Artuffo: The customer's main objective was to scale their learning operation, their learning infrastructure with a partner that was able to accomplish two things. Number one, have capabilities of large scale, so true enterprise capabilities. Second, high integrability, meaning the ability to integrate with multiple systems preexisting via APIs, webhooks, and other technological means. This customer, interestingly, had an experience coming from an in-house grown, owned system. I know that in the past, there has been a question of are enterprises looking to build their own system? What we're seeing is that actually, a large Big Five like this one is actually moving away from a decision of an owned system and towards using Docebo as the backbone of their infrastructure.

Speaker #9: Number one, have capabilities of large scale. So true enterprise capabilities. Second, high integratability. Meaning the ability to integrate with multiple systems preexisting, via, you know, APIs, webhooks, and, and other technological means.

Speaker #9: This customer, interestingly, had an experience coming from an in-house, grown-owned system. So, you know, I know that in the past there has been a question of our enterprise's, you know, looking to build their own system. What we're seeing is that actually, you know, a large big five like this one is actually moving away from a decision of an owned system toward using Docebo as the backbone of their infrastructure.

Speaker #9: And finally, what makes this, additionally very special is, this is for a, customer experience use case. Enabling, you know, technology teams, that are part of the target market of this company.

Alessio Artuffo: Finally, what makes this additionally very special is this is for a customer experience use case enabling technology teams that are part of the target market of this company. It's just a rather perfect example of our execution.

Speaker #9: And so, it's just a rather perfect example of our execution.

Speaker #8: Oh, thanks for all that color. That's great. for, for my second question, Brandon, maybe great to see the guidance bump and, and thought maybe you could just get into some of the assumptions behind that.

Robert Young: Oh, thanks for all that color. That's great. For my second question, Brandon, maybe great to see the guidance bump and thought maybe you could just get into some of the assumptions behind that. Are the larger deals still upside? Is FedRAMP still upside? If you can feather into that, maybe just, I think last quarter you'd suggested that net retention was improving through the H2 of the year, if that's still one of the assumptions. I'll pass line.

Speaker #8: Our, our the larger deal still, upside is FedRAMP still upside. and then if you can feather into that, be just the I think last quarter you'd suggested that net retention was improving through the back half of the year.

Speaker #8: If that's still one of the assumptions, then I'll pass the e.

Speaker #11: Hey, Rob. before I get to your question, maybe, you know, it's important if we just zoom back to when we last reported on May 9th, it was, we were roughly 30 days post-liberation day.

Brandon Farber: Hey, Rob. Before I get to your question, maybe it's important if we just zoom back to when we last reported on 9 May. We were roughly 30 days post Liberation Day, and we really put out a guidance at that point in time that we felt reflected the environment, which was frankly a little bit chaotic. What we see is that in times of chaos, companies tend to deal with the change first. Once that change is controlled, they return to spend on investments. If we zoom back today, we certainly saw a portion of that chaos was maybe more noise as opposed to news. We're just really updating our revenue guidance to reflect the macro that we see today, which is really reflecting the following. We saw strong performance in our mid-market sector, which Alessio Artuffo talked about.

Speaker #11: And we really put out guidance at that point in time that we felt reflected the environment, which was frankly a little bit chaotic.

Speaker #11: And what we see is that in times of chaos, companies tend to deal with the change first. Once that change is controlled, they return to spend on investments.

Speaker #11: You know, if, if we zoom back today, you know, we certainly saw a portion of that chaos was maybe more noise as opposed to news.

Speaker #11: And we're just really updating our revenue guidance to reflect the macro environment that we see today, which is really reflecting the following. You know, we saw strong performance in our mid-market sector, which Alessio talked about.

Speaker #11: We continue to see elongated sales cycles in the enterprise space. And FX became a tailwind for us, where during the current quarter, it helped us to the tune of 1% on total revenues and 2% on subscription.

Brandon Farber: We continued to see elongated sales cycles in the enterprise space, and FX became a tailwind for us, where during the current quarter it helped us to the tune of 1% on total revenues and 2% on subscription. If you actually look at the different puzzle pieces that construct our annual guide, and if you look at our Q3 guide and our full year guide together, you'll actually see that we're trending closer to the higher end of our range as opposed to the lower end or even the midpoint. On your other question, from an NRR perspective, consistent with last quarter, we mentioned that we expected to see improvements from a gross retention perspective after Q1. From a retention perspective, it performed at expectations, if not a little bit better.

Speaker #11: You know, i-if you actually look at the different puzzle pieces that construct our annual guide, and if you look at our Q3 guide, and our full-year guide together, you'll actually see that we're trending closer to the higher end of our range as opposed the lower end or even the or even the midpoint.

Speaker #11: on your other question from an NRR perspective, consistent last quarter, we mentioned that we expected to see improvements from a gross retention perspective after Q1.

Speaker #11: From a retention perspective, it performed at expectations, if not a little bit better. In Q3, we do expect another improvement in retention before taking a dip back down in Q4 with the loss of AWS.

Brandon Farber: Q3, we do expect another improvement in retention before taking a dip back down in Q4 with the loss of AWS. That's all within our guidance. From a FedRAMP perspective and large enterprise, that continues to be out of our guide as well.

Speaker #11: That's all within our guidance. From a, from a FedRAMP perspective and large enterprise that continues to be out of our guide as well.

Speaker #8: All right. Thanks a lot for all of that. I'll pass the e.

Robert Young: All right. Thanks a lot for all of that. I will pass the line.

Speaker #4: Our next question comes from George Sutton from Craig Hallam. Please go ahead. Your line is open.

Operator: Our next question comes from George Sutton from Craig-Hallum. Please go ahead. Your line is open.

Speaker #12: Thank you. It was nice to see you get FedRAMP, earlier than expected. It sounds like you're talking about, potentially meaningful contributions in the second half of '26.

George Sutton: Thank you. It was nice to see you get FedRAMP earlier than expected. It sounds like you're talking about potentially meaningful contributions in H2 2026. Can you just give us a little sense of the trajectory of what you would expect from FedRAMP?

Speaker #12: Can, can you just give us a little sense of the trajectory of what you would expect from FedRAMP?

Speaker #9: Hi, Craig. Good morning. Sorry, George. So first, FedRAMP was a very important milestone for us. We achieved that just as a look back in May.

Alessio Artuffo: Hi, Craig. Good morning.

Robert Young: George.

Alessio Artuffo: George. First, FedRAMP was a very important milestone for us. We achieved that, just as a look back, in May, and it really unlocks, alongside SLED, state and local, a 2.7 billion TAM across US federal, state, and local agencies. That's a very important fact to just recall. You're correct, we did have an acceleration in obtaining the FedRAMP certification, which we're very pleased about. As far as the forward-looking, we're seeing, thanks to the work that we did in advance and preparing ourselves for this moment with partners like Deloitte and others, we've seen an increase and strengthening of our government pipeline over the past few months. While we're cautious in this market, because it's not a market that we have sold into, the federal one, before, and we are learning its dynamics, and we will be learning over the coming months.

Speaker #9: And, it really unlocks, alongside SLED, or state and local, a 2.7 billion TAM across US federal, state, and local agencies. That's, that's a very important, factor to just, recall.

Speaker #9: And you're correct. We did have an acceleration, in the, the, obtaining the FedRAMP tification. Which we're very pleased about. And, and as far as, you ow, the, the, forward-looking, we were seeing, thanks to the work that we did in advance and preparing ourselves for this moment, with, partners like Deloitte, and others, we've seen a, a, an increase and, strengthening of our, government pipeline, over the past few months.

Speaker #9: while we're cautious, and this market, because it's not a market that we have sold into the federal one before, and we are learning its dynamics, and we will be learning, over the coming months, the pipeline behavior is making us very, excited.

Alessio Artuffo: The pipeline behavior is making us very excited. With deals that have the potential to be this year, and for sure, a growth expected in 2026. We expect, as you said, H2 2026, by that time, to have meaningful contribution from the federal and more broadly, the government vertical of Docebo. I'll close by saying, look, the reason why we're super excited about it is very simple. We are in a unique position to offer a solution in this market that is scarce, because the players that are currently winning or owning market share lag behind on capabilities, features, and innovation. If you look at the communications, even from the White House, relative to AI modernization and preferences over legacy systems, that plays exactly in our wheelhouse. To conclude, there's a great product market fit.

Speaker #9: With the deals that have the potential to be this year, and for sure, a growth expected in 2026, you know, we expect, as you said, H2 2026, by that time to have a meaningful contribution from the federal and more broadly the government vertical of Docebo.

Speaker #9: And I'll close by saying, look, the reason why we're super excited about it is very simple. We are in a unique position to offer a solution in this market that is scarce.

Speaker #9: Because the players that are currently winning are only market share lagging behind on capabilities, features, and innovation. If you look at the communications, even from the White House, relative to AI modernization and preferences over legacy systems, that plays exactly into our wheelhouse.

Speaker #9: So to conclude, there's a great product-market fit, timing, is, more accelerated than we had originally estimated. And pipeline, is, in line with expectations, with possibility to win business, in federal, already this year.

Alessio Artuffo: Timing is more accelerated than we had originally estimated, and pipeline is in line with expectations, with possibility to win business in federal already this year. Just as a reminder, in this quarter, we won a couple of new states in SLED, which is a very important fact, and we're starting to penetrate more and more states, which is a great sign of success.

Speaker #9: And just as a reminder, in this quarter, we won, a couple new states in SLED. which, is, very important fact and we're starting to penetrate more and more states, which is a great sign, of success.

Speaker #8: I, yeah, I would just add, you know, seasonally, Q2 is a strong quarter for state and local and we saw, you know, strong performance on the government sector.

Brandon Farber: Yeah. I would just add, seasonally, Q2 is a strong quarter for state and local, and we saw strong performance on the government sector. While federal gets a lot of attention, I do think it's important for us to continue to call out the opportunity at state and local. Today, we are in about 10 states, and within those states, we're about 10% penetrated, so there's a lot of room for growth, and we're seeing increased traction after the FedRAMP as their brand improves in the government sector.

Speaker #8: And, you know, while federal gets a lot of attention, I do think it's important to, for us to continue to call out the opportunity at state and local.

Speaker #8: Today, we are in about 10 states, and within those states, we're 10% penetrated. So, there's a lot of room for growth. We're seeing increased traction after the FedRAMP, as our brand improves in the government sector.

Speaker #12: Super. It was nice to see you've seated a CRO, and it looks like Mark's background is quite good. I'm curious, given sales cycles, when would we start to expect to see his imprint on the numbers?

George Sutton: Super. It was nice to see you've seated a CRO, and looks like Mark's background is quite good. I'm curious, given sales cycles, when would we start to expect to see his imprint on the numbers?

Speaker #9: immediately. That's, that's what I tell him every day. but, more, more seriously, Mark, is a couple of weeks in. And he's ready making an impact in the organization.

Alessio Artuffo: Immediately. That's what I tell him every day. More seriously, Mark is a couple of weeks in, and he's already making an impact in the organization by focusing on what are obvious short-term wins or low-hanging fruit. I have a longer-term view of his contribution. First, let me say, like you said correctly, he has a track record of success at the likes of Outreach and Catalyst, where he has mastered the art of selling, but also has a deep understanding of the customer success function as it relates to selling. That is a very important attribute in a modern CRO, and I'm excited that Mark has that. His mandate is very clear. It is to sharpen execution, increase efficiency, and look, if you ask him, I think, what he can bring in the quicker way, it's improve velocity.

Speaker #9: by, you ow, focusing, on what our obvious, short-term wins, or low-hanging fruit. But I, have, you know, a, a, a, a longer-term view of his contribution.

Speaker #9: First, let me say, like you said correctly, he has a track record of success at the likes of Outreach and Catalyst.

Speaker #9: What he has mastered, the art of selling, but also, the deep understanding of the customer's success, function as it relates to selling. That is a very important attribute in a modern CRO.

Speaker #9: And 'm excited that Mike ha that Mark has that. his mandate is very clear. it is to sharpen execution, increase efficiency, and, and look, if you asked him, I think, what, he can bring, in quicker way, it's, improved velocity.

Speaker #9: Mark is a really good at identifying, you ow, process and/or, ways to optimize in funnel and he's actively working that. But the biggest contribution on a longer-term perspective, that I expect him with the team to make, is, , really blending further and further our post-sales function and our sales function.

Alessio Artuffo: Mark is really good at identifying process and/or ways to optimize in funnel, and he's actively working on that. The biggest contribution on a longer-term perspective that I expect him, with the team, to make is really blending further and further our post-sales function, and our sales function, because that will have very meaningful impacts on our retention, GRR, and NDRR both, and he's spending already a lot of time on it. I would also offer the information that it's not completely common for sales organizations to add in-house also a learning officer expert that we're leveraging, Brandon Carson, our CLO. He partners with Mark and Kyle to support our enterprises in the early stage of their strategy definition. We're seeing early signals that this strategy of involving CLO in the learning strategy in pre-sales is actually paying dividends.

Speaker #9: Because that will have, very meaningful impact, on our retention, GRR, and NDRR both. And, he's spending already a lot of time on it. I would also offer the information that, it's not completely common for sales organizations, to have in-house, also, a learning officer expert, that, we are, we are leveraging, Brandon Carson, our CLO, he partners with Mark and Kyle to support our enterprises, in the early stage of their strategy definition.

Speaker #9: And, and we're seeing, early signal that this strategy of involving, CLO in the learning strategy in pre-sales, is actually paying, dividends. So we, we think it's a unique asset, and, Mark, Kyle, and Brandon combined are going to e, a real force in our GTM efforts.

Alessio Artuffo: We think it's a unique asset and Mark, Kyle, and Brandon combined are going to be a real force in our GTM efforts.

Speaker #12: Great. Thank you.

George Sutton: Great. Thank you.

Speaker #4: Our next question comes from Josh Bear from Morgan Stanley. Please go ahead. Your line is open.

Operator: Our next question comes from Joshua Baer from Morgan Stanley. Please go ahead. Your line is open.

Speaker #12: Great. Thanks for the question. Alessio, you gave a good summary of where Docebo is with AI innovation and in your prepared remarks. I was hoping you could talk about what you are, most excited about, and where you are with monetization, and then, I, I'd also like to know how you're thinking about and monitoring potential risks from AI.

Joshua Baer: Great. Thanks for the question. Alessio, you gave a good summary of where Docebo is with AI innovation and in your prepared remarks. I was hoping you could talk about what you are most excited about and where you are with monetization, and then I'd also like to know how you're thinking about and monitoring potential risks from AI. Both sides. Thanks.

Speaker #12: So both sides. Thanks.

Speaker #9: I love this question. The risk is that I talk for far too long and Mike and Brandon tell me to shut up. I will do my best to summarize all my thoughts, but it's a great question that opens up a lot of interesting things.

Alessio Artuffo: I love this question. The risk is that I talk for far too long and Mike and Brandon tell me to shut up. I will do my best to summarize all my thoughts, but it's a great question that opens up a lot of interesting things. First, let me tell you what I'm most excited about. I think it needs to be put in the context of what we have been doing at Docebo over the past year or so. That is a declared intent to transition from being one of the most innovative and modern LMSs to an AI-first learning platform and company. Because it's not only about our products, it's also what we do within the company. We've begun that change at a rapid pace about a year ago. Into that context, recently, in July, after announcing it at our conference, Inspire, we've launched Harmony.

Speaker #9: First, let me tell you what I'm most excited about. and I think it needs to be put in the context of what we have been doing at Docebo over the past, you know, year or so, and, and, and that is a declared intent to transition from being one of the most innovative and modern LMSs to an AI-first learning platform and company.

Speaker #9: Because it's not only about our products, it's also what we do within the company. And we've begun that change at a rapid pace, about a year ago.

Speaker #9: into that context, recently, in July, after announcing it at our conference Inspire, we've launched Harmony. Har what is Harmony? Harmony is, our agentic platform.

Alessio Artuffo: What is Harmony? Harmony is our agentic platform. We went live in July and what we announced was a great capability of being able to now search in platform in a modern way. Search like you would talk to ChatGPT or to Claude, which brings a new level of AI capability to Docebo. Customers can now go in Docebo and ask natural questions and get summaries. That, frankly, is just the beginning of a long-term vision, which is what excites me the most. Harmony really is destined to be an agent of agents. What it will do, it will help create content. It will automate administrative tasks that take a long time. It will perform actions at 10, 20, and 100x the speed that a human can. While they sleep, administrators can have Harmony accomplish tasks for them.

Speaker #9: We went live in July and, what we announced was, a great capability of being able to now search in platform in a modern way.

Speaker #9: Search, like you would talk to ChatGPT or to Claude. which brings a new level of AI capability to Docebo. Customers can now go into Docebo and ask natural questions and get summaries.

Speaker #9: That, frankly, is just the beginning of a long-term vision, which is what excites me the most. Because Harmony really is destined to be an agent of agents.

Speaker #9: What it will do, it will help create content. It will automate administrative tasks that take a time. It will perform actions at 10, 20, 100 extra speed that a human can, while they sleep administrators can have Harmony accomplish tasks for them.

Speaker #9: I would offer, also, that my vision for Harmony and for agents of agents is that administrative tasks and improving the admin life is one part of the equation here.

Alessio Artuffo: I would offer also that my vision for Harmony and for agents of agents is that administrative tasks and improving the admin life is one part of the equation here, but it's not the full story. The full story is allowing Docebo to become an end-to-end AI-first platform by also enabling learners, when they log in Docebo, to have an AI-first experience. I believe the technology offers the possibility to switch from an instructor-led model, which frankly every LMS prioritizes, where somebody creates courses and students take lessons, to a learner-first model, where the learner has the ends of the learning and the control of their learning and upskilling in their hands. The script is flipping, and Harmony will enable our customers to do that. That's a little bit more high level. There is a lot of innovation that is coming also in the core product.

Speaker #9: But it's the full story. The full story is, allowing Docebo to become an end-to-end AI-first platform by also enabling learners, when they log in Docebo, to have an AI-first experience.

Speaker #9: And, I believe it, the technology offers the possibility to switch from an instructor-led model, which frankly every LMS prioritizes, where, you know, somebody creates courses and students take lessons.

Speaker #9: To a learner-first model, where the learner is as the ends of the learning and the control of their learning and upskilling in their ends.

Speaker #9: So, the script is flipping, and Harmony will enable our customers to do that. That's a little bit more high-level. There is a lot of innovation that is coming also in the core product.

Speaker #9: You know, when I speak about to customers, one of the things they tell me is, "Alessio, great on AI, but, you ow, we're still using the core product.

Alessio Artuffo: When I speak to customers, one of the things they tell me is, Alessio, great on AI, but we're still using the core product. The innovator's dilemma, right? We always have to deal with a trade-off between continuing to evolve our core, which is so important, while at the same time preparing Docebo for the next one, two, three years. That's some of the things that excite me the most. I haven't even spoken about the Docebo Creator and all the capabilities about creating content, that's also another big area of excitement. I hope that helps. Like I told you, it was going to be a lot.

Speaker #9: So, you know, the innovator's dilemma, right? And so we always have to deal with a trade-off between continuing to evolve our core, which is so important, while at the same time preparing Docebo for the next one, two, three years.

Speaker #9: So that's, that's, some of the things that excite me the most. I haven't even spoken about Docebo Creator and, all the capabilities about creating content.

Speaker #9: And that's also another big area of excitement. I hope that helps. Like I told you, it was going to be a lot.

Speaker #12: That's great. And on the risk side, I mean, anything that,

Joshua Baer: That's great. On the risk side.

Alessio Artuffo: Yeah

Joshua Baer: anything that-

Speaker #9: Yes, absolutely.

Alessio Artuffo: Yes, absolutely.

Speaker #12: New, new entrance or ways that companies are leveraging, you know, LLMs internally themselves, like anything to look out for that you're looking out for?

Joshua Baer: either new entrants or ways that companies are leveraging LLMs internally themselves, like anything to look out for that you're looking out for?

Speaker #9: Sure. So there are always going to be new entrants. and frankly, in the, 13 years that I've been at Docebo, and 20 in the industry, there have always been new entrants.

Alessio Artuffo: Sure. There are always going to be new entrants. Frankly, in the 13 years that I've been at Docebo, and 20 in the industry, there have always been new entrants. Well, Docebo was a new entrant at one point, I know that story really well. There is a lot of things to say about it. First of all, we have the benefit of experience, data, and customers that we can work with in order to improve the learning landscape. Second, for sure, there is a debate whether people can just learn in isolation through an LLM and skip, if you will, the formal learning component. I would offer the following reasoning about that and the way I think about risk mitigation.

Speaker #9: Well, Docebo was a new entrant at one point, so I know that story really well. But, you know, there's a lot of things to say about it.

Speaker #9: First of all, we have, the benefit of, experience data and customers that we can work with. And in order to improve, the learning landscape.

Speaker #9: second, for sure, you know, there is, a debate whether, people can just learn in isolation through an LLM. And, and, skip, if you will, the formal learning component.

Speaker #9: I would, I would offer the following, reasoning about that. And the way I think about the risk mitigation. learning is a process in a in an organization, in a corporation, that embodies two things.

Alessio Artuffo: Learning is a process in an organization or corporation that embodies two things: the transformation of knowledge into learning, and then the absorption of learning towards skills, competencies that we possess and evolve over time. LLMs don't have any information about one's degree of knowledge in a certain area within the corporation. They are a non-deterministic system. If you go to an LLM and ask the same question 3 times, you get three different flavors of answers. In order to be deterministic, a platform needs to have the knowledge, the ability to transform this knowledge into structured learning with pedagogical models, and the underlying skills backbone that ties knowledge learning to skills evolution. That's what we are doing. We're building a platform that has an LLM-like experience that ties learning and knowledge, because those two walls are crumbling, to skills.

Speaker #9: the transformation of knowledge into learning, and then the absorption of learning towards, skills, competencies, that we possess and evolve over time. LLMs, don't have, any information, about, , one's, you know, degree of, knowledge, in a certain area within their corporation.

Speaker #9: They are a non-deterministic system. If you go into an LLM and ask the same question three times, you get three different flavors of answers. In order to be deterministic, a platform needs to have the knowledge, the ability to transform this knowledge into structured learning with pedagogical models, and the underlying skills backbone that ties knowledge and learning to skills evolution.

Speaker #9: That's what we are doing. We're building a platform that has an LLM-like experience, that, ties learning and knowledge, because those two worlds are crumbling, to skills.

Speaker #9: And we're doing this in an agentic way. That is our way of mitigating risk and future-proofing Docebo for the next 10 years.

Alessio Artuffo: We're doing this in an agentic way, and that is our way of mitigating risk and future-proofing Docebo for the next 10 years.

Speaker #4: Our next question comes from Sutan Sukumar from Stifel. Please go ahead. Your line is open.

Operator: Our next question comes from Suthan Sukumar from Stifel. Please go ahead.

Speaker #13: Good morning, guys. I, wanted to, to double-click on the big tech expansion deal you guys announced. this, this morning. could you ive a, a, a bit of sense on the size and scope of the deal and, and, you know, as you think about this customer long-term, what's the, what are the levers for your, for, additional growth opportunity here?

Suthan Sukumar: Good morning, guys. I wanted to just double-click on the big tech expansion deal you guys announced this morning. Could you give a bit of sense on the size and scope of the deal? As you think about this customer long term, what are the levers for additional growth opportunity here?

Speaker #9: Hey, Sutan. On the, size and scope, so it's, it's a customer-ed use case. I would say it's, large, six figures, slightly below seven figures deal.

Alessio Artuffo: Hey, Suthan. On the size and scope, it's a customer ed use case. I would say it's a large six figures, slightly below seven figures deal. From a customer account perspective, you'll see that it's not in our new logo ACV because it's same customer, but completely different department. Sorry, your second question, could you just repeat?

Speaker #9: From a customer account perspective, you'll see that it's not in our new logo ACV because it's the same customer but a completely different department. And sorry, your second question.

Speaker #9: Could you just repeat?

Speaker #13: Oh, just, curious on what, you know, how, how you ys think about what the growth opportunity might be ahead with this customer.

Suthan Sukumar: Oh, just curious on how you guys think about what the growth opportunity might be ahead with this customer?

Speaker #9: So, i-i-it's actually a great question because if you look at the two use cases that we have, they are still two customer-ed use cases, which is to say we do not have the employee experience use case.

Alessio Artuffo: It's actually a great question because if you look at the two use cases that we have, they are still two customer ed use cases, which is to say we do not have the employee experience use case. From what we know today, this customer still uses multiple different LMSs, not just for internal, but there are other customer experience use cases as well. While it's hard to exactly quantify how penetrated we are within that customer, I would still say we are under-penetrated.

Speaker #9: And from, from what we know today, this customer still uses multiple different LMSs, not just for internal, but there are other customer experience use cases as well.

Speaker #9: So while it's hard to exactly quantify, how penetrated we are within that customer, I would still say we were under-penetrated.

Speaker #13: Got it. Thank you. And, just on the, the recent CRO high rising, you know, this is good to see, a new CRO in place.

Suthan Sukumar: Got it. Thank you. Just on the recent CRO hire, it's good to see a new CRO in place, and I know he's just fresh in the seat. How do you anticipate your focus shifts or priorities change with respect to your current go-to-market motion?

Speaker #13: And I, and I know he's just fresh in the seat, but how do you anticipate your focus shifts and, or, or, or priorities change with respect to your current go-to-market motion?

Speaker #9: I, I don't believe, Sutan that there will be any drastic shift, like I mentioned before, rather a real focus on execution, efficiency, and, and really ensuring that as we interact with customers, we just create value.

Alessio Artuffo: I don't believe, Suthan, that there will be any drastic shift. Like I mentioned before, rather a real focus on execution efficiency, and really ensuring that as we interact with customers, we just create value together with them. As I mentioned before, Mark has a really good experience across both sales and customer success. Integrating those functions, having a full cycle where the customer feels taken care of and supported, and we manage against their expected outcomes, is an area where I believe we have room to grow. One of his mandates is to really strengthen our muscle in that area. Yeah, I think those are the most important things that I would underscore.

Speaker #9: Together with them. as I mentioned before, Mark has a really good experience across both sales and ustomer success. And, you know, integrating those functions, integrating, having a full cycle where the customer feels taken care of, and supported, and we manage, you know, against their, their, expected outcomes, is an area where I believe we have a room to grow.

Speaker #9: And so one of his mandates is to really strengthen our muscle, i-in that area. And, yeah, that-that's that's, I think, those are the most important things that I would underscore.

Speaker #13: Okay. Great. Thank you for the color. I'll pass the line.

Suthan Sukumar: Okay, great. Thank you for the color. I'll pass the line.

Speaker #9: Thank ou.

Alessio Artuffo: Thank you.

Speaker #4: Our next question comes from Yi Fu Li from Cantor Fitzgerald. Please go ahead. Your line is open.

Operator: Our next question comes from Yi Fu Lee from Cantor Fitzgerald. Please go ahead. Your line is open.

Speaker #14: Good morning, Alessio and Brandon. Nothing better than to end the week than a positive earnings print. so Alessio, I just wanted to, start with your favorite child.

Yi Fu Lee: Good morning, Alessio and Brandon. Nothing better than to end the week than a positive earnings print. Alessio, I just wanted to start with your favorite child, that's Harmony Agentic AI, which you were most excited about at Inspire. Looks like you're ahead of schedule in delivering Harmony in different phases, first with search, then Copilot, Discorda, and expected automated actions by year-end. I just wanted to drill down more on the go-to-market and sales strategy, best to monetize this great product. How do you think of that pricing and now that you have Mark CRO in place?

Speaker #14: That's, Harmony Genic AI, which you were most excited about at Inspire. looks like you're ahead of schedule in delivering Harmony in different phases, first with search, then co-pilot this quarter and expected automated actions by year-end.

Speaker #14: So I just wanted to drill down more on the go-to-market and sales strategy best to monetize this great product. How do you think of that pricing and now that you have Mark CRO in place?

Speaker #9: Great question. And I believe, the Josh earlier asked the estion, on the flavor of monetization. And, I'm glad to cover this so that we can, respond even to the prior notes from Josh.

Alessio Artuffo: Great question, and I believe that Josh earlier asked the question on the flavor of monetization, and I'm glad to cover this so that we can respond even to the prior notes from Josh. Yi, first of all, it's good to have you on the call.

Speaker #9: Yi, first of all, it's good to have you on the call. and, and, and thank you for the question. So, on, on the merit of Harmony and monetization, if you if we go back to our last earnings call, I said that my priority is for us to ship capabilities that create the value for our customers relative to the topic of monetization.

Yi Fu Lee: Definitely.

Alessio Artuffo: Thank you for the question. On the merit of Harmony and monetization, if we go back to our last earnings call, I said that my priority is for us to ship capabilities that create value for our customers relative to the topic of monetization. That was the priority. In general principle, it's important first to deliver value to customers because monetization will follow once that is accomplished. We have launched Harmony Search in the beginning of July, so not even a month ago. Our approach, by the way, is an approach of shipping capabilities at a very good state of readiness and iterating fast and improving these capabilities very quickly as we go. This is a little bit different than your more standard 3, 6 months release cycle. We want to improve these AI capabilities weekly.

Speaker #9: That was the priority. in general principle, it's important first to deliver value to customers. Because monetization will follow. Once that is accomplished. We have, launched Harmony Search, in the beginning of July.

Speaker #9: So not even a month ago. And our approach, by the ay, is an approach of, shipping capabilities at a y good state of readiness and iterating fast and improving, these capabilities, very quickly as we go.

Speaker #9: So, this is a little bit different than your more standard, three, six months release cycle. We want to improve these AI capabilities weekly. it's early to establish the, you know, hard numbers, relative to usage, even though the usage dashboards that we see please us.

Alessio Artuffo: It's early to establish the hard numbers relative to usage, even though the usage dashboards that we see please us, but it's hard to make a definitive statement in just about a month. I can tell you the following, that when I see that features like Video Presenter that was launched a few months ago already generated more than 20,000 minutes of video content, and that roughly 2,000 customers generated AI assessments, and that with Content Builder that we also recently released, over 2,000 learning assets were developed by customers. All the data points to the fact that these products are becoming popular among our customer base. Now, the question is, will we monetize it? How fast, how soon, and how in general?

Speaker #9: but it's hard to, you ow, make a, a definitive statement, in just about a month. But I can tell you the following. That when I when I see that features like a video presenter that was launched a few months o, already generated, more than 20,000 minutes of video content, and that, roughly 2,000 customers generated AI assessments, and that, with content builder that we also recently released, over 2,000, learning, assets, were developed by customers, all the data points, to the fact that these products, are becoming, popular among our customer base.

Speaker #9: Now, the question is, will we monetize it, how fast, soon, and how in general? but.

Yi Fu Lee: Alessio, how about the go-to-market? In terms of how would you sell? Forget the money aspect. I get it. You want to deliver the value to customers first, right? How will you reach them? You already have an existing customer, right? How would you leverage the CMO, CRO in place, right, to say, Hey, we have this awesome product in Harmony. Could you give it a try?

Speaker #14: Alessio, how, how about the go-to-market? Like, how about how about, like, in terms of, e, how would you sell? Forget the money aspect. I, I get it.

Speaker #14: You want to deliver the value to customers first, right? How would you reach them? You already have the existing customer, right? how would you leverage the CMO, CRO in place, right, to, to say, "Hey, we have this awesome product in Harmony." you know, could you ive it a try?

Speaker #9: Yeah. Well, first, for, for clarity, it was our strategic choice, to put these products in the end of as many customers as we can.

Alessio Artuffo: Yeah. Well, first, for clarity, it was our strategic choice to put these products in the hands of as many customers as we can. We gave Creator and Harmony both in the hands of all our customers that wanted to activate it, and without discerning or using it as an upsell mechanism. The reason was we really want to get to a place where the customers want to use it, want more of it before, again, applying monetization strategies. The way we're talking about it, the way we're using it is really a proof point of our AI strategy and a differentiator against legacy vendors. It is the beginning of positioning us strongly in the AI-first category, which we fully belong to right now, and we're just building and building and building on top of it.

Speaker #9: We gave Creator, and Harmony both in the ends of all our customers that wanted to activate it. And without, discerning, or, or using it as an upsell mechanism.

Speaker #9: And, and the reason was, we really want to get to a place where the customers want to use it, want more of it, before, again, applying monetization, monetization strategies.

Speaker #9: The way we're talking about it, the way we're using it, is, really a proof point of our AI strategy and a differentiator against legacy vendors and it is the beginning of positioning us strongly in the AI-first category, which we fully belong to right now.

Speaker #9: And we're just, building and building and building on top of it.

Speaker #14: Excellent call, Alessio. I just want to follow what Brandon on the CIAL side. It sounds like from our prepared remarks, you're very optimistic about the second half, with renewed signs of tech investments and reskilling and upskilling.

Yi Fu Lee: Excellent call, Alessio. I just want to follow with Brandon on the financial side. Sounds like from your prepared remarks, you are very optimistic about H2 with renewed signs of tech investments in reskilling and upskilling. Brandon, can you talk about other verticals in light of the ongoing trade negotiations? Verticals you called out auto, industrial, retail in last quarter. Are we out of the woods yet, or do you still have some reservations? How does that Big Five tech win that you mentioned earlier today prove that, hey, look, Docebo was able to serve other large tech titans, right? Even in light of the unfortunate lost contract with AWS. That's it from me. Thanks, Alessio and Brandon.

Speaker #14: So, Brandon, can you talk about other verticals in light of the ongoing, you know, trade negotiations? You know, verticals you called out: auto, industrial, retail, and last quarter.

Speaker #14: are we, are we out of the woods et? Or are you, you ow, do you still have some reservations? And how does that big five tech win?

Speaker #14: That you mentioned earlier today, you know, prove that, "Hey, look, you know, Docebo is able to serve other large tech titans,"? It is in light of, you know, the unfortunate loss of the contract with AWS.

Speaker #14: That's from me. Thanks, Alessio and Brandon.

Speaker #9: Thanks for the question. So on the general industry groups that we called out, what I would say is that in the enterprise space, within those sub-sectors, we continue to see deal scrutiny and elongated sales cycles. You know, on the good news, is that we have a playbook that works well from this.

Brandon Farber: Thanks for the question. On the general industry groups that we called out, what I would say is that in the enterprise space, within those sub-sectors, we continue to see deal scrutiny and elongated sales cycles. On the good news is that we have a playbook that works well from this. We've been in multiple different macro environments over the past 3 years, and when the deals become tough, we really lean on value engineering and really work with our prospects to build a business case and prove out the ROI of learning so that they can pitch that to their executives and show that every month you do not purchase this LMS, you're actually losing out on money.

Speaker #9: You know, we've been in multiple different, macro environments over the past three years. And when the deals become tough, we really lean on value engineering.

Speaker #9: And really work with our prospects to build a business case and prove out the ROI of learning so that they could pitch that to their executives.

Speaker #9: And show that every month you do not purchase this LMS, you're actually losing out on money. In the current quarter, that worked out very well in the mid-market space.

Brandon Farber: In the current quarter, that worked out very well in the mid-market space, and we saw value engineering make a difference on a couple of manufacturing wins that we had during the quarter. Generally, I would continue to separate mid-market. In all end segments, we saw strength. In enterprise, in most of the sub-segments, we continue to saw deal elongation. From the large tech company when this is a customer of ours that we've had for a while. They're fans of Docebo. They come to our Inspire events, and the continued expansion is just proof of Docebo executing from an implementation perspective, from a customer success perspective, from a customer support perspective. They're continued fans of Docebo, and we continue to get introduced through different departments within that company.

Speaker #9: And we saw value engineering make a di-difference on a uple of manufacturing wins that we had during the quarter. So generally, I would continue to separate mid-market and all-end segments.

Speaker #9: We saw strength. Mid and enterprise, and most of the sub-segments, we continue to sell a deal elongation. From the, from the large, tech company, when, you know, this is a customer of ours that 've had for a while, their fans of Docebo, they come to our spire events.

Speaker #9: And the continued expansion is just proof Docebo executing from an implementation perspective, from a ustomer success perspective, from a customer support perspective. And they're continued fans of Docebo, and we continue to get introduced through different departments within that company.

Speaker #9: Ultimately, having more and more of these large tech logos does help. Because they ultimately come from referenceable companies. And that helps us win other logos.

Brandon Farber: Ultimately, having more and more of these large tech logos does help because they ultimately become referenceable companies, and that helps us win other logos.

Speaker #4: Our next question comes from Kevin Krishnaratni from Scotiabank. Please go ahead. Your line is open.

Operator: Our next question comes from Kevin Krishnaratne from Scotiabank. Please go ahead. Your line is open.

Speaker #15: Hey, there. good morning. just one maybe clarification here, in, in your prepared remarks, you talked about the, customer account, above 100,000 ramping, 23%. I think it was 16%, so a really nice acceleration there.

Kevin Krishnaratne: Hey there. Good morning. Just one maybe clarification here. In your prepared remarks, you talked about the customer count above 100,000 ramping at 23%. I think it was 16%, a really nice acceleration there. I'm just wondering what we're seeing there. Is there something mechanically to think about? It looks like just quite a jump from the 16% to 23%.

Speaker #15: I'm just wondering, what we're seeing there, is there something mechanically to think about? Because it oks like just quite a, quite a jump from the 16 to 23%.

Speaker #9: Yeah. Kevin, so there's really three ways that a customer could become a customer account above 100K. Number one, first-time Docebo customer during the quarter.

Brandon Farber: Yeah, Kevin. There is really three ways that a customer can become a customer count above $100,000. Number 1, first-time Docebo customer during the quarter. Number 2, that current customer was a $50,000 customer, and they expanded during the current quarter to become over $100,000. We did see not only strong performance in mid-market from a new logo perspective, but also from an expansion perspective. Thirdly, we did see a benefit on the customer count due to FX, where certain contracts denominated in euro GPP that were around the roughly EUR 90,000 to 95,000 range got pushed above $100,000. All those 3 factors together led to the acceleration in the customer count growth.

Speaker #9: Number two, that current customer was a 50,000-dollar customer, and they expanded during the current quarter to become over 100. And we did see not only strong performance in mid-market, from a new logo perspective, but also from an expansion perspective.

Speaker #9: And then thirdly, we did see a benefit on a ustomer account due to FX, where certain contracts denominated in Euro GPP that were around the roughly 90 to 95 range got pushed above 100K.

Speaker #9: So all those three factors together led to the acceleration in the customer account growth.

Speaker #15: I see. Okay. That's, 's, that's super helpful. Thanks for that. the second one, know you gave us the guide for, for Q3, but can, can you talk about the, ARR trends and sort of what you, what you'd expect to close out the year Q3, Q4?

Kevin Krishnaratne: I see. Okay, that's super helpful. Thanks for that. The second one, I know you gave us the guide for Q2, but can you talk about the ARR trends and sort of what you'd expect to close up the year Q3, Q4? You had a pretty good bump up here in the Q2, $8 million. I know FX would've helped there, obviously. You had a couple of big deals that you signed, but can you just help us think about the ARR build for Q3 that'll help us think about the rest of the year? Thanks.

Speaker #15: You had a, you know, pretty good, bump up here in the Q2, 8 million. I know FX would have helped there, obviously. It had a couple of big deals that you signed.

Speaker #15: But just help us think about the, h, the ARR build for, for Q3 that'll p us, you know, think about the rest of the year.

Speaker #15: Thanks.

Speaker #9: Generally, Q3 is, seasonally weak quarter for us, specifically in EMEA, where, you know, vacations in July and August really makes September the only month that we could execute on contracts.

Brandon Farber: Generally, Q3 is a seasonally weak quarter for us, specifically in EMEA, where vacations in July and August really make September the only month that we could execute on contracts. From an ARR perspective, we would expect a step down in Q3 from the $8 million we printed during the current quarter. In Q4, while seasonally, typically the strongest quarter, we have AWS coming out at 31 December as well. Ultimately, I would say the impacts of ARR is in our revenue guide, and we expect the same seasonality trends that we historically have.

Speaker #9: So, from an ARR perspective, we would expect to step down in Q3 from the $8 million we printed during the current quarter. In Q4, while seasonally the strongest quarter, we have AWS coming out at December 31st as well.

Speaker #9: You know, ultimately, I would say the impacts of ARR are in our revenue guide, and we expect the same seasonality trends that we historically have.

Kevin Krishnaratne: Thanks, Brandon. Pass the line.

Speaker #15: Thanks, Brandon. I'm passing the e.

Speaker #4: Our next question comes from Aaron Kyle from CIBC. Please go head. Your line is open.

Operator: Our next question comes from Erin Kyle from CIBC. Please go ahead. Your line is open.

Speaker #16: Hi. Good morning. I just wanted to ask a question on the, the global education solutions customer win in the quarter. You mentioned students in response to an earlier question as well, Alessio.

Erin Kyle: Hi. Good morning. I just wanted to ask a question on the Global Education Solutions customer win in the quarter. You mentioned students in response to an earlier question as well, Alessio. I'm curious on that win, first of all, how many use cases they selected Docebo for, and then just on the education vertical in general, are you seeing more demand in that industry?

Speaker #16: So I'm just, I'm ious on that win first of all, how many use cases they selected to achieve before, and then just on the education vertical in general, are you seeing more demand in that, in that industry?

Speaker #9: Hi, Aaron. So, yes. the good call out, this is, you know, this is one of the awards, largest education publishers. And so, we're very, pleased then, to welcome, them to our, our family, as far as, use case, this is a full, Docebo, multi-use case hybrid, category.

Alessio Artuffo: Hi, Erin. Yes, good call out. This is one of the world's largest education publishers, and so we're very pleased to welcome them to our family. As far as the use case, this is a full Docebo multi-use case hybrid category. We are delivering capabilities for self-enablement, customer support, onboarding, and then a more customer-focused use case for continuing education aspects. I think notably, this customer came from a very well-known, large legacy vendor, where the pains were frankly the ones that we hear the most in rigidity, not very usable. We solved for those by bringing in flexibility and what we do really well, which is configuring an environment that adds complexity for the customer. I think the other things I can tell you is it was a very competitive deal against a number of both, I would say, mid-market competitors as well as enterprise competitors.

Speaker #9: We are delivering, capabilities for self-enablement, customer support, onboarding, and then, a more customer-focused use case for, continuing education, aspects. I think notably, you know, this customer came from, a very well-known large legacy, vendor, where the pains were frankly the, the ones that we, hear the most, in rigidity, not very usable.

Speaker #9: And so we solved for those by bringing in, you know, flexibility and, and, what we do really well, which is, configuring, an environment that has complexity, for the customer.

Speaker #9: I think, you know, the other things I can tell you is we, it was a very competitive deal against a number of both, I would say, mid-market competitors as well as enterprise competitors, and we were pleased with winning it.

Alessio Artuffo: We were pleased with winning it. Additionally, in the competition, we understand there were also, if you will, the giant HRIS vendors with a learning module. Again, because their learning capabilities are not up to par with Docebo, we were able to overcome those. All in all, a great deal. As far as the question for broader education sector, it is a segment that we love. Selling a learning solution to educators, it is something that comes natural to us. For sure, Docebo is not geared towards the education space in the sense of the academia, but we have a large amount of customers that use Docebo similarly to this use case. It is definitely a growing footprint in the market.

Speaker #9: additionally, in the competition, we understand there were also, if you will, the giant, HRIS vendors with, a learning module. but again, because they're learning capabilities are, not up to par with Docebo, we were le to overcome, overcome those.

Speaker #9: So, all in all, a great deal. And as far as the question for the broader education sector, it is a segment that we love.

Speaker #9: you know, selling a learning solution to educators, it's, something that, comes natural to us. for sure, Docebo, you know, is not geared towards, the education space in the sense of, the, academia, but we have a large amount of customers that use Docebo, similarly, to this use case.

Speaker #9: And so it's definitely a growing, footprint in the market.

Erin Kyle: Thanks, Alessio. That's very helpful color there. Maybe I'll just switch gears to capital allocation. You're fairly active on the NCIB this quarter on share buybacks. Maybe if you can just give us an update on capital allocation priorities for H2 of the year as we look forward.

Speaker #16: Thanks, Alessio. That, that's very helpful color there. And then maybe 'll just switch gears to, capital allocation. you're fairly active on the NCIB, the, this quarter on, on share buybacks.

Speaker #16: Maybe you can just give us an update on capital allocation priorities for the second half of the year as we look forward?

Speaker #9: Hey, Aaron. So, you know, a-as we've discussed in the past, we really have three areas where we deploy our cash. Number one is investing back in the business where we see strategic opportunities at the moment.

Brandon Farber: Hey, Erin. As we've discussed in the past, we really have three areas where we deploy our cash. Number 1 is investing back in the business where we see strategic opportunities. At the moment, we're investing in headcount in sales and marketing from a government vertical perspective and R&D to really accelerate our AI roadmap. Buybacks is a good use of cash. It's not a fixed program, and it's certainly a program we use to deploy cash when we see our shares are at attractive valuations. M&A is a vertical that we continue to look at, and we continue to wait for an asset that has the right product, is at the right price, and has the right people. Until all those three line up, we'll continue to deploy our cash in other means.

Speaker #9: You know, we're investing in headcount and sales and marketing from a government vertical perspective. And R&D to really accelerate our AI roadmap. You know, buybacks is, you know, a, a good use of cash.

Speaker #9: It's not a fixed program, and it's certainly a program we use to deploy cash when we see our shares are at attractive valuations. And M&A is in, you know, a vertical that we continue to look at.

Erin Kyle: Thanks, Brandon.

Operator: Our last question will come from Gavin Fairweather from Cormark. Please go ahead. Your line is open.

Gavin Fairweather: Oh, hey. Good morning. Thanks for taking my question. Just a quick one on the federal sector. Given sales cycles, I'm curious how much visibility you have on expected RFP levels in 2026, and what are you hearing from your partners on upcoming activity levels, maybe versus the historical norms?

Brandon Farber: Hey, Gavin. We've taken the opportunity, we're reaching out to all the federal departments ourselves. We've been talking to them for a number of years to prep Docebo to become FedRAMP solutions. I would say we're building pipe not just on RFPs, but through self-sourcing and pitching Docebo. Generally, what I would say from a sales cycle perspective is that Q3 tends to be the largest quarter from a federal contracting perspective because the government year end ends 30 September. That's really why we've always discussed that we expect to see more meaningful revenues from the federal sector in Q3 of 2026, because we just received FedRAMP compliance. In order to pitch, validate product, procure before 30 September of this year, it's tight.

Brandon Farber: Now, while we do see one or two potential deals to land, we do think it's the right approach to stay measured and continue to guide that this is more of a 2026 opportunity.

And and that's really why we've always uh, discussed that. We expect to see more meaningful revenues from the federal sector in Q3 of 2026 because we just received fed ramp compliance. And in order to pitch uh, validate product procure before September 30th of this year is tight. You know, while we do see you know 1 or 2 potential deals to land um

You know, we do think it's the right approach to stay measured and continue to guide that this is more of a 2026 opportunity.

Gavin Fairweather: Thanks so much.

So much.

Operator: We have no further questions. I would like to turn the call back over to Alessio Artuffo for closing remarks.

Alessio Artuffo: Thank you everyone. Thank you for participating in this earnings call. We look forward to seeing you in the next call for Q3 reporting in November. Have a great day. Thank you.

We have no further questions, I would like to turn the call back over to allesio or Tofu for closing remarks.

Thank you everyone. Thank you for participating in this. Um, um, earnings call. Um, we look forward to seeing you in the next, um, call for um, quarter 3 reporting in November, have a great day. Thank you.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

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