Q2 2025 Docebo Inc Earnings Call
Speaker #2: Analysts can 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 #2: I would now like to turn the call over to Docebo's Vice President of Investor Relations, Michael McCarthy. Please go ahead, Mike.
Speaker #4: 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, was all posted to our Investor Relations website.
Speaker #4: 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.
Speaker #4: 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 #4: 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 CDAR and EDGAR.
Speaker #4: During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our cial performance, they are not recognized measures and do not have standardized meanings under IFRS.
Speaker #4: Please see our D&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 U.S. dollars.
Speaker #4: Now, I'd like to turn the call over to Docebo's CEO, Alessio Artufo, and our CFO, Brandon Farber. Gentlemen.
Speaker #5: Good morning.
Speaker #2: Once again, to queue 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.
Speaker #2: Thank you. Our first question will come from.
Speaker #6: Yeah, I was going to. You can take the first question, Julianne.
Speaker #2: Thank you. Our first question comes from Ryan McDonald from Needham & Company. Please go ahead. Your line is open.
Speaker #7: Hey, good ning. Thanks for taking the question. This is, Matt Shay on for Ryan. Congrats on a nice quarter here, guys. maybe just to start, you guys called out strength in the mid-market during the quarter.
Speaker #7: Could you just unpack that a bit? What you seeing in the mid-market and, 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 #8: Good evening. So, we did report a very strong outcome in our mid-market segment. I would underscore that, you know, Docebo over the past several years has strengthened its position in the mid-market, mid-enterprise, and enterprise segments.
Speaker #8: This is the result, of, work that we have done, to better segment, our efforts, in, h, outbound. And in digital marketing, being more efficient, where we allocate our spend and target verticals, that are, you know, more in line, with what we, with our strength and capabilities.
Speaker #8: 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 #8: So where our product resonates very much, with SaaS companies, but we're seeing beyond that, even, organizations, across, healthcare, and financial services, playing a very big role in this success.
Speaker #8: 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.
Speaker #8: And so we're very pleased, for this, this uptick. relative to durability, we, we expect mid-market to continue to be strong, in the quarters to come.
Speaker #8: And, as that combines with strengthened H2 relative to enterprise cycles, we're very excited about the future ahead.
Speaker #7: Got it. That's helpful color. And then it was nice to see a majority of new customers still looking to use you for two or more use cases.
Speaker #7: I mean, nitpicking a little bit 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 percent rate last year.
Speaker #7: 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 #7: And then you kind of think you can expand with them over time, or how are you inking about the lower multi-use case adoption rates so far in 2025 relative to last year?
Speaker #8: Yeah, sure. So, look, our priority is, as you say correctly, to win as much market share within a customer or addressable market within a customer as we can.
Speaker #8: And there are a couple ways of doing that. way number one is to, you ow, penetrate, a customer and sell as wide as we can, from day one.
Speaker #8: 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 #8: The downside is, more cooks in the kitchen and therefore, a slower decision process. So what we are continuing to refine is a process that optimizes ACV and velocity.
Speaker #8: 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 it in an organization with a couple of use cases, win the trust, do a really great job, and expand from there.
Speaker #8: Which a very good example of what we've done, with, a notable enterprise customer this quarter.
Speaker #2: Our next question comes from Robert Young from Canaccord Genuity. Please go ahead, your line is open.
Speaker #9: Hi, good evening. It's really nice to see the big five tech expansion. Maybe first, could you connect? I think there are only two of those that you have currently.
Speaker #9: 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 #8: Good morning. And yes, to question number one, you're accurate in that. Number two, relative to the one we've discussed and the expansion that we spoke about, we're really pleased about it because it really is the ultimate recognition of the strategic efforts that we've been putting in place.
Speaker #8: 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 #8: And, expanding these customers, especially in the enterprise space, underscores the importance of our investments in customer success. We're, in this enterprise is complexity, and, the ability to really serve the customer across multiple use cases and stakeholders, becomes important to win the trust to expand further.
Speaker #8: Second, I think, you know, you were asking about the why and how behind 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.
Speaker #8: Number one, we have capabilities of large scale, so true enterprise capabilities. Second, high integrability, meaning the ability to integrate with multiple pre-existing systems via APIs, webhooks, and other technological means.
Speaker #8: 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.
Speaker #8: What we're seeing is that actually, you know, a, a, a, a large big five like this one is actually moving away from a decision of an owned system, towards using Docebo as the backbone of their infrastructure.
Speaker #8: And finally, what makes this additionally very special is that this is for a customer experience use case, enabling technology teams that are part of the target market of this company.
Speaker #8: And so, it's just a, a rather perfect example of our ecution.
Speaker #7: Oh, thanks for all 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.
Speaker #7: Are the larger deals still upside? Is FedRAMP still upside? And then if you can feather into that, maybe just the, I think last quarter you had suggested that net retention was improving through the back half of the AR.
Speaker #7: If that's still one of the assumptions. And then I'll pass the e.
Speaker #10: Hey, Rob. Before I get to your question, maybe it's important if we just zoom back to when we last reported on May 9th. We were roughly 30 days post-liberation day.
Speaker #10: 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 #10: 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 #10: You know, if, if we zoom back today, you know, certainly saw a portion of that chaos was maybe more noise as opposed to news.
Speaker #10: and we're just really updating our re-revenue guidance to reflect the macro 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 #10: We continued to see elongated sales cycles in the enterprise space, and FX became a tailwind for us. During the current quarter, it helped us to the tune of 1% on total revenues and 2% on subscription.
Speaker #10: You know, 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.
Speaker #10: On your other question from an NRR perspective, consistent with last quarter, we mentioned that we expected to see improvements from an OSS retention perspective after Q1.
Speaker #10: From a retention perspective, it, it, it performed at expectations, if not a little bit better Q3. We do expect another improvement in retention before taking a dip back down in Q4 with the loss of AWS.
Speaker #10: That's all within our guidance. From a, from a FedRAMP pective and large enterprise that continues to be out of our guide as well.
Speaker #7: All right. Thanks a lot for all of that. I'll leave the e.
Speaker #2: Our next question comes from George Sutton from Craig Hallam. Please go ahead; your line is open.
Speaker #11: 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 2026.
Speaker #11: Can you give us a little sense of the trajectory of what you would expect from FedRAMP?
Speaker #8: 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, and it really unlocks, alongside SLED, or State and Local, a $2.7 billion TAM across U.S. federal, state, and local agencies.
Speaker #8: That's, that's a very important factor to just, recall. And you're correct. We did have an acceleration, in the, the, obtaining the FedRAMP certification. Which we're very pleased about.
Speaker #8: And, as far as, you know, 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 an increase and strengthening of our government pipeline over the past few months.
Speaker #8: 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, the pipeline behavior is making us very, excited.
Speaker #8: 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 meaningful contribution, from the federal and more broadly the government, vertical of Docebo.
Speaker #8: and I'll close by saying, look, the reason why we're super excited about it, is, is very simple. You know, we are in a unique position to offer a solution in this market, that is scarce.
Speaker #8: Because the players that are currently winning or owning market share lag behind on capabilities, features, and innovation. If you look at the, the communications even from the, White House, relative to AI modernization, and preferences, over legacy systems, that plays exactly now wheelhouse.
Speaker #8: To conclude, there's a great product-market fit. Timing is more accelerated than we had originally estimated, and the pipeline is in line with expectations, with the possibility to win business in federal already this year.
Speaker #8: And just as a reminder, in this quarter, we won a couple of new states in SLED, which is a very important fact. We're starting to penetrate more and more states, which is a great sign of success.
Speaker #10: Yeah, I would just add, you know, seasonally, Q2 is a strong quarter for state and local, and we saw, you know, strong performance in the government sector.
Speaker #10: And, you know, 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.
Speaker #10: 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 eing increased traction after the FedRAMP as our brand improves in the government sector.
Speaker #7: 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 the sales cycles, when would we start to expect to see his imprint on the numbers?
Speaker #8: Immediately. That's what I tell him every day. But, more seriously, Mark is a couple of weeks in, and he's already making an impact in the organization.
Speaker #8: by, you know, focusing, on what our obvious, short-term wins or low-hanging fruit. But I, have, you ow, a, a, a longer-term view of his contribution.
Speaker #8: first, let me say, like you said correctly, he has a track record of, of success, at the likes of outreach and, and catalyst. What he has mastered, the art of selling but also, the deep understanding of the customer's success, function as it relates to selling.
Speaker #8: That is a y important attribute in a modern CRO. And I'm excited that Mike ha that Mark has that. his mandate is very clear.
Speaker #8: it is to sharpen execution, increase efficiency, and, and look, a few asked him, I think, what, he can bring, in the quicker way, it's, improved velocity.
Speaker #8: Mark is really good at identifying, you know, process and/or ways to optimize in funnel, and he's actively working on 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.
Speaker #8: 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 have in-house a learning officer expert that we are leveraging. Brandon Carson, our CLO, partners with Mark and Kyle to support our enterprises in the early stage of their strategy definition.
Speaker #8: And we're seeing early signals that this strategy of involving the CLO in the learning strategy in pre-sales is actually paying dividends. So 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 #7: Great. Thank you.
Speaker #2: Our next estion comes from Josh Bear from Morgan Stanley. Please go head, your line is open.
Speaker #7: 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 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 and monitoring potential risks from AI.
Speaker #7: So both sides. Thanks.
Speaker #8: 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.
Speaker #8: But it's a great question that opens up a lot of interesting and uninteresting things. First, let me tell you what I'm excited about, and 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.
Speaker #8: Because it's not only about our products; it's also about what we do within the company. We've begun that change at a rapid pace—about a year ago.
Speaker #8: In that context, recently, in July, after announcing it at our conference in Spire, we've launched Harmony. What is Harmony? Harmony is our agentic platform.
Speaker #8: 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 #8: Search, like you would talk to ChatGPT or 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 #8: 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 #8: It will help create content. It will automate administrative tasks that take a long time. It will perform actions at 10, 20, or even 100 times the speed of a human. While they sleep, administrators can have Harmony accomplish tasks for them.
Speaker #8: 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.
Speaker #8: 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.
Speaker #8: And, I believe it, it the technology offers the possibility to switch from an instructor-led model, which frankly every LMS, prioritizes, where, you ow, we somebody creates courses and students, take, take lessons.
Speaker #8: 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 #8: So the, the script is flipping. And Harmony will enable, our customers to do that. that's a little bit more a high level. There is a lot of innovation that is coming also in the core product.
Speaker #8: You know, when I speak about to customers, one the things they tell me is, lessio, great on AI, but, you know, we're still using the core product.
Speaker #8: So, you know, the innovator's dilemma, right?" And so we always have a 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 #8: So that's some of the things that excites me the most. I haven't even spoken about Docebo Creator and all the capabilities for creating content.
Speaker #8: 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 #7: That's great. And, and on the risk side, I, I mean, anything that, You, you,
Speaker #8: Yeah, absolutely.
Speaker #7: A 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?
Speaker #8: 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.
Speaker #8: well, Docebo was a new entrant at one point. So I know that story really well. But, you know, there's a of things to say about it.
Speaker #8: First of all, we have the benefit of experience data and customers that we can work with. In order to improve the learning landscape.
Speaker #8: Second, for sure, you know, there is a debate whether people can just learn in isolation through an LLM and skip, if you will, the formal learning component.
Speaker #8: I would, I would offer the following, reasoning about that. And the ay I think about the risk mitigation. learning is a process in a in an organization, in a corporation, that embodies two things.
Speaker #8: The transformation of knowledge into learning, and then the absorption of learning towards the 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 their corporation.
Speaker #8: They are a non-deterministic system. If you go into an LM 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, learning, and skills evolution.
Speaker #8: 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.
Speaker #8: Two skills. And, we're ing this in an agentic way. And that is our way mitigating risk and future-proofing Docebo for next 10 years.
Speaker #2: Our next question comes from Sutan Sukumar from Stifel. Please go ahead; your line is open.
Speaker #10: Good morning, guys. I, wanted to, to double-click on the big tech expansion deal ou guys announced, this, this morning. could you give the, the 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 levers for your for, additional growth opportunity here?
Speaker #8: 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.
Speaker #8: 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. And sorry, your second question.
Speaker #8: Could you just repeat?
Speaker #10: Oh, just, curious on what, you know, how, how you guys think about what growth opportunity might be ahead with this customer.
Speaker #8: So, it's actually a bit of an at 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.
Speaker #8: And 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 #8: So, while it's hard to exactly quantify how penetrated we are within that customer, I would still say we are under-penetrated.
Speaker #10: Got it. Thank you. And, just on the, the recent CRO hierarchy analysis, this is good to see, a new CRO in place. And I, and I know he's just fresh in the seat, but how do you anticipate your focus shifts and, or, , or priorities change with respect to your current go-to-market motion?
Speaker #8: 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.
Speaker #8: Together with them. as I mentioned before, Mark has a really good experience across both sales and customer success. And, you ow, 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 #8: And so one of his mandates is to really strengthen our muscle in that area. And yeah, that— that's, I think those are the most important things that I would underscore.
Speaker #10: Okay. Great. Thank you for the color. I'll pass the line.
Speaker #8: Thank ou.
Speaker #2: Our next question comes from Yifu Li from Cantor Fitzgerald. Please go ahead, your line is open.
Speaker #12: 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.
Speaker #12: That's, Harmony Agenic AI, 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 #12: So I just wanted to drill down more on the go-to-market and sales strategy best to monetize this great product. How do ou think of that pricing and now that you have Mark CRO in place?
Speaker #8: Great question. And I believe, 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.
Speaker #8: Yi, first of all, it's good to have you on the call. and, and, and thank you for the estion. So on, on the merits 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.
Speaker #8: 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 launched Harmony Search in the beginning of July.
Speaker #8: So not even a month ago. And our approach, by the ay, 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.
Speaker #8: So, this is a little different than your more standard three- or six-month 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.
Speaker #8: but it's hard to, ou know, 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 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.
Speaker #8: Now, the question is, will we monetize it, how fast, how soon, and how in general? we.
Speaker #12: Yeah, Alessio, how, how about the go-to-market? ike, how about how about, like, in terms of, like, how would you sell? Forget the money aspect.
Speaker #12: I, I get it. You want to deliver the value to customers first, right? How would you reach them? You already have an existing customer, right?
Speaker #12: How would you leverage the CMO and CRO in place, right, to say, 'Hey, we have this awesome product in Harmony. You know, could you give it a try?'
Speaker #8: Yeah. Well, first, for clarity, it was our strategic choice to put these products in the hands of as many customers as we can.
Speaker #8: 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 #8: 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 strategies.
Speaker #8: The way we're talking about it, the way we're using it, is really a proof point of how our AI strategy is a differentiator against legacy vendors.
Speaker #8: And 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 #12: Excellent call, Alessio. I just want to follow what Brandon on the financial side. Sounds like from your prepared remarks, you're very optimistic about the second half with renewed signs of tech investments and reskilling and upskilling.
Speaker #12: 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, in the quarter.
Speaker #12: are we are we out of the woods yet, or are you, you know, do you still have some reservations? And how does that big five tech win, that you mentioned earlier today, you know, prove that, "Hey, look, you know, Docebo is able to serve other large tech titans," right?
Speaker #12: Even in light of, you know, the loss—unfortunately, we lost the contract with AWS. That's it from me. Thanks, Alessio and Brandon.
Speaker #8: Thanks for the question. So on the general, industry groups that we called out, you know, what I would say is that in the enterprise space, within those sub-sectors, we continue to see deal scrutiny.
Speaker #8: And elongated sales cycles. You know, on the good s is that we have a playbook that works well from this. You know, we've in multiple different, macro environments over the past three years.
Speaker #8: 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 could pitch that to their executives.
Speaker #8: And show that every month you do not purchase this LMS, you're ally losing out on money. In current quarter, that worked out very well in the mid-market space.
Speaker #8: And we saw value engineering make a difference on a couple of manufacturing wins that we had during the quarter. So generally, I would continue to separate mid-market and all-end segments.
Speaker #8: We saw strength in enterprise, in most of the sub-segments, we continue to sell a deal elongation. From the from the large, tech company win, you know, this is a customer of ours that we've had for a while.
Speaker #8: They're fans of Docebo. They come to our Inspire events. And they continue to expansion is just proof Docebo executing from an implementation perspective, from a customer success perspective, from a ustomer support perspective.
Speaker #8: And they're continued fans of Docebo, and we continue to get introduced through different departments within that company. Ultimately, having more and more of these large tech logos does help because they ultimately come referenceable companies.
Speaker #8: And that helps us win other logos.
Speaker #2: Our next question comes from Kevin Krishnaratni from Scotiabank. Please go ahead; your line is open.
Speaker #13: 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 ink it was 16%, so a ally nice acceleration there.
Speaker #13: 'm just wondering, what we're seeing there, is there something mechanically to think ? Because it looks like just quite a quite a jump from the 16 to 23%.
Speaker #8: 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.
Speaker #8: 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 #8: And then thirdly, we did see a benefit on the customer 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 #8: So all those three factors together led to the acceleration in the customer account growth.
Speaker #13: I see. Okay. That— that’s super helpful. Thanks for that. The second one, I know you gave us the guide for Q3, but can you talk about the ARR trends and sort of what you would expect to close out the year in Q3 and Q4?
Speaker #13: You had a, you know, a pretty good, bump up here in the Q2, 8 million. I know FX would've helped there, obviously, had a couple of big deals that you signed.
Speaker #13: But just help us think about the, the ARR build for, for Q3 that'll help us, you know, think about the rest of the year.
Speaker #13: Thanks.
Speaker #8: 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.
Speaker #8: so from an ARR perspective, we would expect to step down in Q3 from the 8 million we printed during the current quarter. And in Q4, while seasonally typically the strongest quarter, we have, AWS coming out at December 31st as well.
Speaker #8: You know, ultimately, you know, I would say the impacts of ARR is in our revenue guide. And we expect the same seasonality trends that we historically have.
Speaker #13: Tha-thanks, Brandon. I'm passing the e.
Speaker #2: Our next question comes from Aaron Kyle from CIBC. Please go ahead, your line is open.
Speaker #14: 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.
Speaker #14: So, I'm curious about that win. First of all, how many use cases did they select to achieve before? And then just on the education vertical in general, are you seeing more demand in that industry?
Speaker #8: 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 to welcome, them to our, our family as far as, use case.
Speaker #8: 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.
Speaker #8: I ink 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 #8: 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 #8: I think, you ow, the, the other things I can tell you is we, 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.
Speaker #8: additionally, in the competition, we understand there were also, if ou will, the giant, HRIS vendors with, a learning module, but again, because their learning capabilities are, not up to par with Docebo, we were able to overcome, overcome those.
Speaker #8: So all in all, a great deal, and as far as the question for broader education sector, it is, it is a segment that we, we love.
Speaker #8: 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.
Speaker #8: but we have a large amount of customers that use Docebo, similarly, to this use case. And so it's definitely a growing, footprint in the market.
Speaker #14: Thanks, Alessio. That's very helpful color there. And then maybe I'll just switch gears to capital allocation. You're fairly active on the NCIB this quarter with share buybacks.
Speaker #14: maybe if ou can just give us an update on, capital allocation priorities for the second half of the year as we look forward.
Speaker #8: 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, you know, we're esting in headcount and sales and marketing from a government vertical perspective.
Speaker #8: And R&D to really accelerate our AI roadmap. You know, buybacks is, you know, a, a good use of cash. It's not a fixed program, and it's tainly a program we use to deploy cash when we see our shares are at attractive valuations.
Speaker #8: And M&A is in, ou know, a vertical that we continue to look at. And, you know, we continue to wait for, an asset that has the right product.
Speaker #8: Is that the right price, and has the right people? Until all of those three line up, we'll continue to deploy our cash in means.
Speaker #14: Thanks, Brandon.
Speaker #2: Our last question will come from Gavin Fairweather from Cormark. Please go ahead, your is open.
Speaker #15: 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.
Speaker #15: And what are you hearing from your partners on kind of upcoming activity levels, maybe the historic versus the historical norms?
This concludes today's conference call. Thank you for your participation. You may now disconnect