Docebo Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 9, 2025

Key Takeaways

  • Docebo implemented a planned leadership succession by replacing its CRO and CPO to align the executive team with its next growth phase, while adding proven SaaS leaders to strengthen execution and ambition.
  • The AWS Skills Builder contract, representing about 1.8% of ARR, will not be renewed after December 2025 as AWS builds an internal solution, but Docebo retains a collaborative, multi-use-case partnership across other smaller AWS agreements.
  • Full-year 2025 revenue guidance was trimmed to reflect macro uncertainty and a more measured new-logo growth assumption in H2, with Q1 modestly above plan, Q2 in line, and professional services now expected to decline year-over-year.
  • Securing FedRAMP ATO status ahead of schedule has accelerated Docebo’s ability to bid on U.S. federal contracts, driving a rapidly growing government pipeline amid White House directives favoring off-the-shelf SaaS.
  • Docebo reinforced its AI-first product strategy by unveiling Docebo Creator for automated video and podcast generation, overhauling administrator UX, and preparing to launch agentic automation (Project Harmony) this summer to streamline learning workflows.
AI Generated. May Contain Errors.
Earnings Conference Call
Docebo Q1 2025
00:00 / 00:00

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Operator

Good morning, everyone, and welcome to the Dulcebo Q1 twenty twenty five Earnings Call. All participants are currently in a listen only mode. We will open the lines for a question and answer session momentarily. I'd now like to turn the call over to Docebo's Vice President of Investor Relations, Mike McCarthy. Please go ahead, Mike.

Mike McCarthy
Mike McCarthy
Vice President-Investor Relations at Docebo

Thank you, Julianne. Earlier this morning, Docebo issued its Q1 twenty twenty five 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 and A, Deutsche Borg would like to remind listeners that certain information discussed may be forward looking in nature.

Mike McCarthy
Mike McCarthy
Vice President-Investor Relations at Docebo

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 both SEDAR and EDGAR. During the call, we will reference certain non IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meanings under IFRS.

Mike McCarthy
Mike McCarthy
Vice President-Investor Relations at Docebo

Please see our MD and 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. Now I'd like to turn the call over to Dorshebo's CEO, Alessio Artufo and our CFO, Brandon Farmer.

Mike McCarthy
Mike McCarthy
Vice President-Investor Relations at Docebo

Gentlemen? Julianne, would you take the first call first question, please?

Operator

Certainly. Our first question comes from Suthan Sukumar from Stifel. Please go ahead. Your line is open.

Suthan Sukumar
Suthan Sukumar
Managing Director at Stifel Financial Corp

Good morning, gents. For my first question, I wanted to touch on the leadership transitions that were announced alongside the results with the departure of the CRO and CPO roles. I mean, these are obviously key roles. Are these related to execution or performance issues? And and what stage are you at in replacing the the CRO role? Would appreciate any color there.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Absolutely. Hi. It's Alessio speaking. Fair question. And, you know, one that I'd like to address head on.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

So, first, you know, for perspective, when you when you take a step back, the Chebu over the past five years has grown from roughly 74,000,000 in ARR to currently $2.25. Right? Now when I, stepped into the CEO role, of the first things that I thought about was taking a close look at what kind of leadership we need, for Docebo's next phase of growth. So if a few a few thoughts. First, in general, we're not the same company that we were three or five years ago.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

The scale that we operate at today with more enterprise customers and more global footprint, it just requires a leadership team that is aligned with that future state. Second, some changes where just natural evolutions, you know, leaders moving on, after building, getting credible foundation. That's that's Fabio's example, our CPO. Others were intentional decisions, to bring in fresh expertise where I believe we needed it. And, on all of those, we've been very thoughtful and proactive and are reactive in those changes.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

I'd like to also point to the strength of the talent that we've attracted recently. In the past twelve months, we've added, very strong proven leaders with track records in, in scaling our growth SaaS businesses. And the kind of bench strength, isn't a sign of instability. It's more like like a focus on ambition and momentum. And and finally, you know, what really matters the most to me is preserving what makes the Chebo special, which is, our culture, our agility, and, and a team that is customer obsessed while upgrading, our ability to execute.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

As far as, CRO search, I will say that we're well underway, and I'm very pleased with process that we're running.

Suthan Sukumar
Suthan Sukumar
Managing Director at Stifel Financial Corp

Thank you, Lucille. For my second question, I'd like to touch on AWS. I appreciate the color in the prepared remarks on the loss of the Skills Builder use case and continued work on internal use cases for AWS. Can you speak a little bit about how the relationship overall with AWS is now given this change? And and do you see increased risk here of potentially losing AWS altogether?

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

So couple of thoughts on this one. The first one is relative to the relationship. It is excellent. It is collaborative, and we're preserving a a very a very close relationship with the Amazon AWS team. Amazon overall remains a very important customer for Deutschebo.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

And and as such, you know, we're very pleased with that. Relative to Amazon AWS and their journey with us. As a reminder, this is a customer that stayed with us for their entire contract term, and that means five years roughly. During that time, I think it's important to underscore that we've helped to unlock a massive business. And if you think about it alone in 2025, they've activated, close to 10,000,000 users, 10,000,000 learners in the platform and, are well underway to train, 29,000,000 users, which was their goal.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

The decision that, you know, AWS team made, although, you know, certainly regrettable from our standpoint, no doubt about that, is that because the business has become so mission critical for them and because they have a such a fundamental belief in building internally, you know, with the recent changes in leadership, they they opted for a build versus versus, you know, use the commercial product. And so they didn't take the perspective of going for another commercial product. That would have been, you know, very concerning, but that was not the intent. The intent was to just have them a freedom, of executing anything they wanted all around the loader experience, and, and the way they wanted to achieve it was by building their own technologies. And, you know, they certainly have the firepower.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

They're one of the biggest companies in the world engineering wise to do so. I think in in a way, you know, I'm proud of the fact that we've given them a lot of input on how to do it, because for five years, they've consumed their product, and they probably you know, it's it was a catalyst for idea for them. And, but we maintain a fantastic relationship, and we'll do our best to transition them in the best way. And, again, Amazon remains a great customer and partner of ours, on a number of different fronts. And, you know, we continue executing, and, we believe you're super well suited to win large enterprises in the in the technology space, thanks to this great experience.

Suthan Sukumar
Suthan Sukumar
Managing Director at Stifel Financial Corp

Great. Thank you, Alessio. I'll pass the line.

Operator

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

Robert Young
Managing Director & Head of Research at Canaccord Genuity Inc

Hi, good morning. Just maybe a question on the full year guide reduction. I think in the prepared comments, you highlighted that it's due to macro expectations as opposed to anything that's happening right now. Maybe if we could just revisit churn. Is there churn in the quarter?

Robert Young
Managing Director & Head of Research at Canaccord Genuity Inc

Is there an increase in churn? And then maybe if you could just broaden the explanation for the decision to reduce the full year guide at this point.

Brandon Farber
Brandon Farber
CFO at Docebo

Hey, Rob. It's Brandon speaking. So, you know, if we unpack the guide of just a little bit. So from a q one perspective on revenues, we slightly beat the upper end of our guide. From a q two perspective, our revenues are actually coming in right in line with where we modeled it at the beginning of the year.

Brandon Farber
Brandon Farber
CFO at Docebo

When you really look at it, we're taking a more measured approach in h two where we're reducing our new logo growth assumption while we're holding our expansion and retention impact the same. You know, from a PS perspective, when we look at the two different revenue streams, our professional services is mainly onboarding of new customers. So that will have a more meaningful impact in the given year. We we previously guided that would be roughly flat year over year. We now expect professional services will be down year over year.

Brandon Farber
Brandon Farber
CFO at Docebo

And, you know, really, the main message is we're we're reacting appropriately to the macro that we're seeing. We came into the year with roughly one third of our pipeline that was more geared towards macro sensitive end markets that are particularly being impacted by tariffs, in particular, manufacturing and automotive. And we wanna make sure that we're just taking a measured approach, we we react accordingly.

Robert Young
Managing Director & Head of Research at Canaccord Genuity Inc

Okay. That's good. Okay. So my my second question would be around your large customer pipeline. And last quarter, I think you said that customer account over a hundred thousand grew 18%.

Robert Young
Managing Director & Head of Research at Canaccord Genuity Inc

And then the numbers you provided this quarter looks like that's up 15% to 16%. So that seems like it's slowing. Maybe if you could revisit the large customer pipeline. Is it overrepresented in those end markets that you just highlighted? Maybe just talk about, you know, the the customer metrics you've shared this quarter and why the growth has decelerated. And then I'll pass the line.

Brandon Farber
Brandon Farber
CFO at Docebo

From an enterprise perspective, our pipeline still remains healthy. I would say we did see a bit of deal elongation in the enterprise space. You know, previously, we've communicated for probably the past four to six quarters that deal scrutiny, deal elongation was roughly stable. Yep. We did see that change just a little bit this quarter, but nothing really significant to call out.

Brandon Farber
Brandon Farber
CFO at Docebo

Overall, if you think about the enterprise motion, even at Deutsche Bo, it's typically been more weighted towards the back half of the year where we tend to see the enterprise buyer cycle buy more software near the end of the budget cycle. So we do expect a lot of that pipeline to convert in q three and q four. And, you know, when you look at our new ACV growth, we still we still grew at a solid pace year over year. So the trends are consistent with with prior years as well.

Robert Young
Managing Director & Head of Research at Canaccord Genuity Inc

And and the end markets you highlighted, is the pipeline overrepresented there, or is it, you know, still broadly, well diversified?

Brandon Farber
Brandon Farber
CFO at Docebo

It's probably well diversified. Like like, if you look at our ARR by industry, you know, we perform very well in these end markets. You know, historically, manufacturing, retail, and auto are, you know, well representative, high win rates, you know, great customer of ours. So, you while it is one third, I don't think that's overrepresented as compared to historical.

Robert Young
Managing Director & Head of Research at Canaccord Genuity Inc

Okay. Thanks. I'll pass the line.

Operator

Our next question comes from George Sutton from Craig Hallum Capital Group. Please go ahead. Your line is open.

George Sutton
Partner- Co-Director of Research at Craig-Hallum

Thank you. Last year, I have kind of a DNA question. So as we look at the, expected growth for the full year 9% to 10%, we start to bring into there a single digit growth company. And I don't feel like you're building a single digit growth company. Can you just talk about that relative to your expectations longer term?

Brandon Farber
Brandon Farber
CFO at Docebo

Alessio, you're on mute.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Hey, George. Thank you for the question. And, you know, my background of a CRO and now CEO brings me to say that I agree with you. We are a very we're very focused. We remain extremely focused on growth.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

And while the guide may not reflect that statement, it takes into consideration the current market that as Brendan very well explained has dynamics that are very much outside of our control. And so we take a prudent approach in that regard. But let me touch some points that perhaps give some perspective as how I think about our growth levers. Number one, I believe that Shebo is going through a journey of, improvement in the product at a pace that is very sustained. We've been adding capabilities, particularly focusing on AI enablement and really transforming the LMS in what today is a true AI enterprise learning platform.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

The goal is to offer an end to end solution that comprises not only of a place where people store content and deliver content, but where our customers are able to do end to end life cycle of content creation through content delivery as well as coaching on the platform. I believe that these added capabilities will bolster our growth in the future, and I'm really excited about it. I think when I then think even further, and think about our future on the agentic side, for example, there's even more room to be optimistic. At Inspire, Rob, we've we've announced our major initiative called the project harmony. And and I believe that identification and agents will be a crucial component, in, in our story in the future, and and very much very much excited about that.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

So in short, answer to your question is, yes. We are very focused on building, remaining a balanced growth story and very much executing towards that.

George Sutton
Partner- Co-Director of Research at Craig-Hallum

So I'm with you on Agencik AI. Very excited about the opportunity. Here's the challenge that I wanted to understand. It's going to change workflows pretty meaningfully. That could clearly affect the chief learning officer and really strengthen their position within an organization.

George Sutton
Partner- Co-Director of Research at Craig-Hallum

So I'm wondering, will AgenTek AI come through the chief learning officer, or will it be someone else in the organization that gets tasked with that opportunity?

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Well, the beauty of our business, George, is that we we are, not only multi industry, as you know, and very horizontal, but also multi use case. When I think about, the ARR of the company and I split it across multiple use cases, it's very well differentiated. Historically, the chief learning officer has taken a more internal role in companies. Lately, we're seeing a convergence where the CLO becomes more of a chief transformation officer and, taps into external learning as well. Now this doesn't happen everywhere.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

So I expect the agentification, the automation to come from different places and not just from one single unit. We will see it from the office of the, chief marketing officer, from the office of the chief revenue officer, and, of course, from the office of the CIO. These stakeholders are already involved with the They're already talking to us. And, in particular, phase two of our agentic solution, the one that will build the workflows and connectors between the Chavo and third party platforms, the HCMs and others, you know, it's going to be very much a diverse audience that will be reaping the benefits of it. So we're not designing this just for one use case, but loyal to our current strategy for multiple use cases.

George Sutton
Partner- Co-Director of Research at Craig-Hallum

Perfect. Thank you.

Brandon Farber
Brandon Farber
CFO at Docebo

Thank you.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

You're more than welcome.

Operator

Our next question comes from Ryan MacDonald from Needham and Company. Please go ahead. Your line is open.

Matthew Shea
Equity Research Associate at Needham & Company

Yeah. Hey, good morning, guys. This is Matt Shay on for Ryan. Thanks for taking the questions. Considering the guidance update and looking at sales and marketing expenses, I guess, given the macro is creating a tighter budget environment with elongated sales cycles and fewer purchasing decisions, why not ramp EBITDA margins in the near term?

Matthew Shea
Equity Research Associate at Needham & Company

How are you thinking about the right balance of having capacity to capture share when the market reopens versus ramping margins when market demand is weaker?

Brandon Farber
Brandon Farber
CFO at Docebo

Hey, Matt. So the way we're thinking about EBITDA is you'll notice based off our guide is that there's going to be a fairly big step function change from Q2 to Q3 and even to Q4 where we're approaching, if not at 20% EBITDA margin. How we're thinking about investments in sales and marketing and more broadly is, you know, we have we have two big investment opportunities right now, and we wanna make sure that we're still investing in those. Number one is the government's go to market motion. You know, we just received ATO status and, you know, we're seeing strong demand, strong pipeline.

Brandon Farber
Brandon Farber
CFO at Docebo

And we wanna make sure that we're investing in unlocking those investment dollars across the whole go to market motion from a government perspective in order to capture that market. Secondly, but probably more importantly, is on product. You know, we just unveiled last month a road map that requires more headcount and also different skill sets than we used to hire from from our product of yesterday. So from an investment perspective, we're really thinking about these two levers. And then across the remaining area of of the business, we're pulling on efficiencies not only from, you know, an AI perspective, but we're just also looking at the overall demand perspective and make sure we're hiring in the right places.

Matthew Shea
Equity Research Associate at Needham & Company

Okay. Got it. That's helpful. Maybe sticking with the selling environment, 65% of new customers partnered with Docebo had two or more use cases this quarter, down slightly from 70% last quarter. I guess anything to call out there?

Matthew Shea
Equity Research Associate at Needham & Company

And I assume this is still up on a year over year basis, but maybe it'd be good to get your thinking around the metric and how you expect it to trend in 2025. Is 65 to 70% the right level, or could it maybe move lower given the macro? And then maybe it'd be good to just get a refresh on how you're incentivizing the Salesforce to drive more of those multiuse case deals, given the environment.

Brandon Farber
Brandon Farber
CFO at Docebo

So the way we look at it is, you know, we certainly see higher retention metrics with the more use cases customers have. At the same time, when we look at, you know, enterprise customers, you know, it's not uncommon to for them to come to Docebo with one use case, and then we expand those use cases over time. So when we land a new customer, we're not necessarily trying to land or, you know, we're not % focused on landing eight different use cases. We wanna land a customer. We wanna onboard them correctly.

Brandon Farber
Brandon Farber
CFO at Docebo

We wanna support them correctly, and we wanna expand across the org multiple different departments, multiple different use cases, and over time, make sure they become a stickier customer.

Operator

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

Joshua Baer
Joshua Baer
Executive Director - Software Equity Research Analyst at Morgan Stanley

Thanks for the question. I was just hoping you could come back to some of the assumptions embedded in guidance and really wanted to focus on the retention piece, which sounds like the the prudence is more on the the new logo side. Just wondering if you could expand on what those retention assumptions are. No. You're like, that's not an area where you're putting in, you know, assuming that they declined.

Joshua Baer
Joshua Baer
Executive Director - Software Equity Research Analyst at Morgan Stanley

Just thinking through past times of budget scrutiny, think that we have seen retention decline. And so what are the assumptions and and why, you know, maintain that?

Brandon Farber
Brandon Farber
CFO at Docebo

So from a q one perspective on retention, we perform we performed exactly as we expected. You know, last quarter, we mentioned that q one would be the highest quarter of renewals that Docebo has ever had. And just to put that in perspective, it was a 75% increase in contracts up for renewal in q one of twenty twenty five compared to q twenty twenty four. When we look out to the next quarters, we're actually seeing a fairly clear path to gross retention improvements quarter over quarter. So from a gross retention perspective, when we look at the overall macro environment, we're not seeing a big impact.

Joshua Baer
Joshua Baer
Executive Director - Software Equity Research Analyst at Morgan Stanley

Okay. Thank you. And then, on the on the, the AWS, news, so you're saying that that that's not gonna really impact '25. Does that does that come into play in 2026, or what's the timing of that? Thanks.

Brandon Farber
Brandon Farber
CFO at Docebo

So as of now, they've provided they've provided their intention to not renew as of December 2025. And, you know, just to give you guys a little bit more color, AWS was roughly 1.8% of our total ARR, which, you know, when you think about a top 10 customer concentration perspective, we don't really have any big concentration from top 10 customers. So there will there will be no impact on 2025. And, of course, we're gonna support them through this migration. And, you know, there's a chance that this takes longer than expected and into 2026.

Brandon Farber
Brandon Farber
CFO at Docebo

But as of now, we're guiding, and we're we're taking a look at this business as if it's gonna go away on December 31.

Joshua Baer
Joshua Baer
Executive Director - Software Equity Research Analyst at Morgan Stanley

Thank you.

Operator

Our next question comes from Stephanie Price from CIBC. Please go ahead. Your line is open.

Stephanie Price
ED - Equity Markets at CIBC World Markets

Hi. Good morning. I just wanted to follow-up on AWS as well. Amazon uses Doshiba for three other use cases. Just curious if you could give us how much of the ARR Amazon is in total, you know, and wondering when these three other Amazon contracts expire and and if they could move to an internally built AWS solution.

Brandon Farber
Brandon Farber
CFO at Docebo

Hey, Stephanie. So the the other use cases is so we're in three different departments within Amazon, and there's three separate contracts that renew throughout you know, over the next three years. They are smaller use cases that, you know, let's call them roughly 6 figures each, low 6 figures each. And given the size of the the departments, we do not believe that they'll move to internally develop solutions just because they're smaller in scope. And if they were, they're overall immaterial to our revenue growth.

Stephanie Price
ED - Equity Markets at CIBC World Markets

Okay. Okay. That's good color. Brandon, maybe you could provide an update on capital allocation priorities as well. You were active on the NCIB in the quarter and announced the renewal and also a new credit facility.

Stephanie Price
ED - Equity Markets at CIBC World Markets

How are you thinking about balancing shareholder returns and potential M and A here?

Brandon Farber
Brandon Farber
CFO at Docebo

Yes. And just overall in the credit facility, we're entering into this credit facility from a position of strength. We have $90,000,000 of cash on the balance sheet. We just generated $9,000,000 of free cash flow during the quarter. We repurchased $9,000,000 of shares in the open market during the quarter.

Brandon Farber
Brandon Farber
CFO at Docebo

So, you know, we're always gonna look at our three prongs of cash deployment, which is investing back in the business, buying back shares, and buying companies from an m and a perspective. And this credit facility allows us to operate in those three levers at the same time if the opportunity exists.

Stephanie Price
ED - Equity Markets at CIBC World Markets

Thank you.

Operator

Our next question comes from Richard Tse from National Bank. Please go ahead. Your line is open.

Richard Tse
Managing Director & Technology Analyst at National Bank Financial

Yes. Thank you. So beyond the management changes you were talking about earlier, are there any things you need to do from an operating perspective to kind of get your execution with large enterprise to a level it's been in the past for, you know, sort of prior smaller cohort? So as an example, do you need to lean in more heavily on SI partnerships or or anything like that?

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Hi, Richard. Your reference to partners is a very good one. We are in fact leaning heavily in leveraging the relationships with SI partners, namely we're working very closely with Accenture and Deloitte and many others to strengthen our position in the enterprise space. And these efforts are paying off. Additionally, I mentioned that Amazon AWS is a partner.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

We've recently become a part of their certified program and are seeing a great success in leveraging AWS as a partner with enterprises buying Pochebo through Amazon AWS as a channel. In general, I would say our goal within the coming months is to strengthen overall principles such as discipline in forecasting, in the overall execution. And I believe we are doing a great job in that regard. As I spend more time with the revenue organization these days and I become very, very involved in it, I'm really focused on, again, strengthening our capabilities so that we set up our incoming CRO for success.

Richard Tse
Managing Director & Technology Analyst at National Bank Financial

Okay. Great. And my second question is, with respect to the departure of your CPO, should we read anything into it and that your product portfolio is sort of still in need of some changes, sort of the timing given that you're making this hard to to enterprise. You released a bunch of products and then, you know, this is a departure. Like, you know, how how should we sort of read that?

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Well, yes, I can I can give some color? So first, this is not a reaction or a sudden departure. It's part of a well thought out succession planning. About ten months ago, we brought onboard a very capable leader in Mr. Civieri as our SVP of product.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

And Andrea, since has taken over our product management organization and been doing a great job at that. Him and our Vice President of artificial intelligence have been really, really, been instrumental at accelerating our product, especially on the AI front. Relative to, Fabio's departure, it was, it was, you know, again, part of a succession planning, and Ricardo Olaroza joining us as chief technology officer brings the characteristics of the leader we were looking for in terms of engineering that. And our goal really is to strengthen our overall organization and make it an AI first organization, not just on the product offering side, but in the backbone and in the core of the product. And so this is all a cohesive plan towards that.

Operator

Our next question will come from Kevin Krishnaratne from Deutsche Bank. Please go ahead. Your line is open.

Kevin Krishnaratne
Director & Equity Research Analyst at Scotiabank Global Banking and Markets

Hey, there. Good morning. Just first a question maybe for Brandon on the SMB base. Can you remind us how big that business is? I think it's historically been around 25% of your ARR.

Kevin Krishnaratne
Director & Equity Research Analyst at Scotiabank Global Banking and Markets

Sort of what are you seeing there? What gives you the confidence in the coming quarters that you won't be impacted, by macro uncertainty? You know, SMBs are quite sensitive. Is it is that mainly because the majority of those renewals happen in q one? Or, you know, just give us your, your view on the confidence on that that SMB business not falling off, you know, at a faster pace.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Yeah. Guys, I I think Brandon and Mike got kicked out of the call and are currently in the process of dialing in. So no problem at all. I will I will answer the question. So relative to SMB, the the figures you've shared are accurate.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

And in terms of the retention trend, we don't see any reason why we believe this is going to accelerate in any way. Now with regards to our strategy, we've been very clear. We're building on a position of strength with our mid market business and enterprise. And the reason is very simple. The capabilities that we're building suit a complexity that is more appropriate of companies that have more complex use cases, more use cases.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

And as a result, over time, we will see SMBs, you know, probably dilute. But, you know, we have many SMBs that are very happy customers, and we maintain them as such. And I don't have any information that makes me believe that, let's say, loss of SMB customers should accelerate at this point.

Kevin Krishnaratne
Director & Equity Research Analyst at Scotiabank Global Banking and Markets

Got it. Okay. Thanks, Alessio. Maybe just a small question here. In your in the script, you know, you talked about instances where procurement teams are are tapping the brakes and, you know, bringing deals to sign off, and a majority of that is from macro.

Kevin Krishnaratne
Director & Equity Research Analyst at Scotiabank Global Banking and Markets

You used word majority. So I'm wondering, are there what else are you seeing outside of macro? Is there anything on competition? Is it, you know, decisions on, you know, products with, with an AI flavor taking a bit longer? Just anything else that that you're that you're seeing there that might be impacting sort of the tapping of the brakes? Thanks.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Yeah. For sure. So macro plays a very significant role in in all of this. Decision scrutiny is is not a new factor in this environment, but certainly some industries, as described before, have taken a prudent position again in light of the, frankly, daily uncertainty that many have been subject to. I think another element that plays into this, and I believe it's a very temporary element that will resolve itself from a maturity curve standpoint, is the one of AI readiness.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Not so much of us, on the selling part, but of the buyers themselves. What we see is that while the businesses, meaning the people that want the products, very AI first, the procurement officers, GRC teams, the risk teams are not always aligned already, if you will, with this posture. And so, you know, there is, sometimes a disconnect in the buying journey between, what the customers are looking for and what the, let's say, legal ramifications of the house are, ready to embrace. And so it's a lot of education. It's a lot of, you know, working through steps with legal teams, with the IT teams, with the risk teams.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

And frankly, as we continue to do this, we'll become better and better and better. And frankly, we see this also on the on the flip side as we buy ourselves AI technologies at Toccebo, we experience this with our legal team really looking into how to best ask the right questions to these providers. I believe it's part of a natural cycle that will resolve itself and does remind me a little bit of the era of on prem to cloud when procurement teams were very, let's say, not ready at first to embrace SaaS providers and then it became the de facto standard.

Kevin Krishnaratne
Director & Equity Research Analyst at Scotiabank Global Banking and Markets

Got you. Thanks, Alexia.

Operator

Our next question comes from Gavin Fairweather from Cormark. Please go ahead. Your line is open.

Gavin Fairweather
Managing Director & Co-Head of Research at Cormark Securities

Hey, thanks for taking my questions. Maybe just on the gov side with ATO completed and Doge seeming to calm down a little bit. Curious if you're seeing any change in the pace of sales processes and maybe you could just discuss your expectations for the flow of RFPs over the next year.

Brandon Farber
Brandon Farber
CFO at Docebo

Gavin, just as a reminder, if we zoom out on the FedRAMP opportunity just for a second. So a couple of weeks ago, we announced we received authority to operate, which is ATO status. And what that means for us is that, essentially, it unlocks the opportunity to bid and win contracts as if we're fully authorized. You know, since the introduction of Doge, we've actually seen a step function change where the FedRAMP PMO office is moving faster. So if you look at our previously communicated timeline, we expected to receive ATO status at the end of q three, and we received it well in advance of where we expected.

Brandon Farber
Brandon Farber
CFO at Docebo

Full authorization usually takes or previously took six to twelve months after ATO, and now we expect to get that closer to the six month mark, if not sooner. There's also some positive news where the White House last week or, you know, roughly last month in April, put out an executive order where they're essentially telling their their federal departments to favor off the shelf SaaS solutions over on prem. That's definitely all playing in our favor. The the pipeline growth since we received ATO, we've been surprised by. We're, you know, we're we're building the pipe.

Brandon Farber
Brandon Farber
CFO at Docebo

We're we even have an expansion opportunity with our sponsoring agency. So we continue to be very excited about this opportunity.

Gavin Fairweather
Managing Director & Co-Head of Research at Cormark Securities

It's very helpful. And then just my second question, just on CAC paybacks, they've been impacted by the renewal cycle that you're moving through. But I'm curious how those are trending on a gross bookings basis, if you could discuss that. And then secondly, how do you think about a target CAC payback for this business in more of a kind of normal environment given your shift up market and and the building partner network?

Brandon Farber
Brandon Farber
CFO at Docebo

From a from a CAC perspective, on a on a new logo perspective, it's certainly not where we want it to be. You know, we realized we're never gonna get back to the CAC levels we were during the COVID era where there were some natural efficiencies in our operating model. At the same time, we think where we are now versus where we used to be, somewhere in the middle of that is the right target operating model. Now we're doing a lot of things to become more efficient. We are now fully staffed from an enterprise perspective.

Brandon Farber
Brandon Farber
CFO at Docebo

We're investing in Gov and expect that to pay off in 2026. And, you know, we're really focused on pipeline conversion improvement and win rates. And as, you know, we take a deeper look into into our go to market, we see a lot of opportunities for continued efficiency and continued improvement from CAC perspective.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Thanks so much.

Operator

Our next question comes from Yi Foo Li from Cantor Fitzgerald. Please go ahead. Your line is open.

Yi Fu Lee
Equity Research Analyst at Cantor Fitzgerald

Thank you for taking my question and good morning, Alexia and Brandon. So a couple couple questions for Alexio first. Like, kicking off of some of the Inspire event, obviously, well attended. Attendance of of the prospect is three x higher. Was wondering if you give us some of the feedbacks you received from the events, and how is the pipeline building process on that, Alexio, you know, in terms of, you know, having the pipeline build and converting, throughout the year?

Yi Fu Lee
Equity Research Analyst at Cantor Fitzgerald

And then the second piece of my question is is on the product side, actually. I mean, you you spoke pretty bullish on the agent automation, Harmony Copilot. Was wondering, you know, obviously, you know, it's in the early phase. When will this opportunity, you know, be more monetizable, like, be more material? And then I have a follow-up with Randall on the financial side, actually.

Brandon Farber
Brandon Farber
CFO at Docebo

Let's see. Are you on mute?

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Let so great question. And let me start with the the experience of the Docebo Inspire, which you attended and, were able to witness the infectious energy around the conference. First, you know, let me say one thing about this conference. It started historically as a Docebo customer conference, and it's becoming an industry conference, the fact of standard. I myself have met customers, but as you pointed correctly, prospects, which, have increased very materially, year over year and, you know, certainly serving as a lead generation and sales acceleration, platform for us.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

But also industry experts and analysts, we had in the room some of the most recognized industry experts in the field. So we take a lot of pride in building not just a conference, but an incredible experience. During Inspire, as you said well, we've announced and committed beyond announced because if one can announce things and not put a date to it. For each and every single thing that we spoke about, we were bullish in saying whether whether it's live already or very shortly live, meaning a week or a month, or for the medium term. So customers have really appreciated that.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Some of the feedback has been that has been the most enthusiastic, frankly, is varied. It varies across a few categories. The one that, continues to be an area of real interest from customers is, relative to the Chebot Creator. Creator Creator, I think, is a very symbolic example of our renewed AI first vision because it's not just, simply about creating the content, which one could superficially, you know, attribute to it. It goes well beyond it.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

You know, Creator is a a real creator of learning experience. You can go in Creator now and and create videos from simple text. You can convert text into fully narrated podcast. You can do things that were unimaginable just a year ago, And, and customers are really, you know, pleased, not only with those those capabilities, but also with the fact that we've made a strategic and, frankly, bold decision to include creator for every customer. And we've done it on the basis of a belief that if we have the customers happy and creating content within our platform and not having to leave the platform to create content, have not only happier customer, but also sicker customers.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

The second wow, at the conference was relative to our UX plan. Let's face it. The Shables UX, because we have such an enterprise that has become complex on the administrative side. And we ourselves know that when that happens, administrators get overwhelmed. So we've announced a deeper work of our administrative features, and the customers are really, really happy about that.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

It shows in our NPS scores, and it shows, you know, the feedback we've been given. And finally, just because, otherwise, they take a lot of time, you know, this is a question that I'm very passionate about, Agents and agentic and monetization. So Uh-huh. In in the summer, we are launching our first agents in platform to improve platform operation. They will take care of automating and enabling the capabilities as our mini administrators sleep.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

My goal over time, this is a journey, it's not a a sprint, is that the Shebo becomes a manageable platform that allows agents to do the work and creative people to be creative and not waste their time spending endless amount of hours enrolling users into courses. We will enable automation in all of this. From a monetization standpoint, focus is building the best learning platform out there. Monetization is absolutely important, and it's not a second thought. However, our priority is shipping a a product that makes people happy.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Monetization will come. We're introducing a credit based system already for the first time in our history, on the AI video presenter capability. So we're starting to introduce where logical and where aligned with the way buyers buy, some consumption form. But, you know, again, agents are something the first we need to ship them. We need to prove that they solve customer problems, they really, have ROI for our customers.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

At that point, when value meets business processes and it's in the end of customers, will be very simple.

Yi Fu Lee
Equity Research Analyst at Cantor Fitzgerald

Got it. Got it. Thanks for that, Alexa. Very extremely appreciate that, really comprehensive answer. And then Brandon, on the financial side, understood you derisked some of the guidance for you know, 2025, was wondering how much conservatism have you placed on, you know, this revision, you know, considering, you know, we had the headwinds, the renewal headwinds, one q, has has that been ended?

Yi Fu Lee
Equity Research Analyst at Cantor Fitzgerald

We have the AWS headwind. And then on the on the flip side, the upside, you have the FedRAMP. It sounds like it takes six to nine months, but you envision on the low end side, six months. Right? So we presume by, like, September maybe, you know, you get FedRAMP certified, and I assume that you're building a pipeline.

Yi Fu Lee
Equity Research Analyst at Cantor Fitzgerald

When will that, show the upside from the FedRAMP as well to offset that? So, basically, your your conservatism on the guidance. Thomas, on that.

Brandon Farber
Brandon Farber
CFO at Docebo

Yeah. I I mean, I I would certainly say we took a more measured approach. Some of the items you just mentioned are not factored into our guide. We certainly do not have the material amount of FedRAMP revenues expected for 2025. So if Fed does materialize, that will be upside.

Brandon Farber
Brandon Farber
CFO at Docebo

And we continue to guide in a way where we do not include whale deals in our forecast. So if we if we see certain large deals, which I'm talking about deals over a million error closed in in the given year, that will be upside to the guide as well. But, you know, as I mentioned, we're we're reacting to what we're seeing in the macro, and we feel this is a measured approach and, you know, with upside potential with the items I discussed.

Yi Fu Lee
Equity Research Analyst at Cantor Fitzgerald

Got it. Thanks for that, Brandon. Thanks for, yeah, Alexa, everyone.

Brandon Farber
Brandon Farber
CFO at Docebo

Thank you.

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

Thank you.

Brandon Farber
Brandon Farber
CFO at Docebo

Thank you.

Operator

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

Alessio Artuffo
Alessio Artuffo
CEO, President & Director at Docebo

The excitement at Shebo is at the peak. We're not just improving the LMS, We're reimagining the future of learning with an AI first learning platform that aims at solving real life business problems and, again, giving back the time and the power to learning, professionals. The team at Ocebo is super excited. Our customers are thrilled about the innovation we're rapidly bringing to the market. We appreciate your time, and we look forward to the next call. And thank you very much.

Operator

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

Executives
    • Mike McCarthy
      Mike McCarthy
      Vice President-Investor Relations
    • Alessio Artuffo
      Alessio Artuffo
      CEO, President & Director
    • Brandon Farber
      Brandon Farber
      CFO
Analysts
    • Suthan Sukumar
      Managing Director at Stifel Financial Corp
    • Robert Young
      Managing Director & Head of Research at Canaccord Genuity Inc
    • George Sutton
      Partner- Co-Director of Research at Craig-Hallum
    • Matthew Shea
      Equity Research Associate at Needham & Company
    • Joshua Baer
      Executive Director - Software Equity Research Analyst at Morgan Stanley
    • Stephanie Price
      ED - Equity Markets at CIBC World Markets
    • Richard Tse
      Managing Director & Technology Analyst at National Bank Financial
    • Kevin Krishnaratne
      Director & Equity Research Analyst at Scotiabank Global Banking and Markets
    • Gavin Fairweather
      Managing Director & Co-Head of Research at Cormark Securities
    • Yi Fu Lee
      Equity Research Analyst at Cantor Fitzgerald
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