Coveo Solutions Q1 Earnings Call Highlights

Key Points

• Q1 fiscal 2027 results were solid: Revenue rose 8% year over year to $38.5 million, adjusted EBITDA improved to positive $0.1 million, and operating cash flow reached $9.2 million. Coveo ended the quarter debt-free with $107.1 million in cash.
• Customer expansion and AI adoption accelerated: A Fortune Global 500 technology customer expanded to more than $10 million in annual subscription revenue, while generative AI solutions accounted for about 30% of bookings. Management also highlighted strong growth among strategic, commerce and multi-use-case customers.
• Fiscal 2027 guidance was reaffirmed: Coveo expects full-year total revenue of $160 million to $164 million, SaaS subscription revenue of $154 million to $158 million, adjusted EBITDA of $2 million to $7 million and operating cash flow above $10 million.

Coveo Solutions TSE: CVO reported first-quarter fiscal 2027 revenue within its guidance range, a slight adjusted EBITDA outperformance and positive operating cash flow, while highlighting a record customer expansion that lifted one client above $10 million in annual subscription revenue.

Executive Chairman Louis Têtu said the company’s results reflected continued execution discipline as enterprise customers increasingly move artificial intelligence initiatives from experimentation toward production deployments focused on measurable business outcomes.

“The conversation has shifted from possibility to deployment, from experimentation to production, from excitement to measurable business value,” Têtu said. He said enterprises are placing greater emphasis on trusted data context, security, governance, relevance and optimization as they deploy AI at scale.

First-Quarter Financial Results

Coveo said total revenue rose 8% year over year to $38.5 million in the first quarter. SaaS subscription revenue, including the legacy Qubit platform, increased 9% to $37.4 million. With the legacy Qubit platform fully deprecated, SaaS revenue from the Coveo Core platform increased 13% from the prior-year period.

• Product gross margin was 81%, while overall gross margin was 78%.
• Adjusted EBITDA was positive $0.1 million, compared with negative $1.9 million a year earlier.
• Cash flow from operating activities totaled $9.2 million, aided by seasonal working-capital movements.
• Cash and cash equivalents were $107.1 million as of June 30, 2026, and the company said it remained debt-free.
• Net expansion rate was 102% for the Coveo Core platform and 99% including legacy Qubit customers.

Chief Financial Officer Karine Hamel said generative AI solutions represented about 30% of first-quarter bookings. She said customers are increasingly incorporating generative AI into digital experiences at the beginning of their purchasing processes, rather than treating it as a separate experiment.

Hamel also said Coveo renewed its normal course issuer bid after quarter-end, providing the company with the option to repurchase about 5.1 million shares over a 12-month period.

Record Customer Expansion and Strategic Accounts

Shortly after the quarter ended, Coveo closed what management described as the largest transaction in its history with a Fortune Global 500 technology customer. The expansion increased the customer’s annual SaaS subscription revenue with Coveo to more than $10 million.

Simoneau said the customer expanded across new use cases, more digital experiences, greater consumption and additional languages after Coveo had delivered value over the previous 18 months. The customer uses Coveo across customer-facing and internal AI applications, with the company’s platform also serving as a grounding and intelligence layer for agentic AI initiatives.

During the quarter, Coveo expanded relationships with Nespresso, ADI Global, Enbridge and Linde AG, among others. It also signed a seven-figure subscription with a Fortune 500 healthcare-distribution company.

Hamel said that healthcare distributor initially began with a low-six-figure subscription for contact-center and self-service uses. The customer subsequently selected Coveo to support its B2B commerce experience, growing the relationship to more than $1 million in annual recurring revenue.

Management said larger strategic customers and industry segments including B2B and B2C commerce, multi-use-case clients and generative AI adopters are expanding faster than the company’s reported consolidated net expansion rate. Têtu said the top 25 Coveo customers, all of which are seven-figure accounts, grew by more than 150% over the past three years.

Product Adoption and Commerce Opportunity

Simoneau said Coveo’s Conversational Search offering is live in production with customers, while several dozen other organizations are evaluating it. The company also reported increased demand for Conversational Product Discovery, with customers onboarding and others in evaluation processes.

Coveo introduced Merchandising Copilot during the quarter. Simoneau said a majority of merchandisers using the product engage with it at least weekly, while some customer environments have seen AI-driven actions exceed manual merchandising actions.

The company pointed to Metcash, an Australian food, liquor and hardware distributor, as an example of its commerce capabilities. Coveo integrated information from Adobe, Magento, SAP and Salesforce for Metcash, which management said resulted in revenue per visit increasing more than 25%, conversion improving more than 30% and average order value rising more than 10%.

Metcash subsequently expanded its Coveo relationship from commerce into supplier-facing workflows using AI search and generative AI capabilities, according to Simoneau.

Management also cited Linde, which initially adopted Coveo for a B2B commerce search experience in one market. Linde has since expanded the platform to additional markets and languages, according to Coveo.

Têtu and Simoneau emphasized the company’s strategy of remaining independent from individual AI models and data repositories. They said customers increasingly want to use multiple models based on cost, speed and reasoning requirements rather than being locked into a single large language model provider.

Outlook Reaffirmed

Coveo reaffirmed its fiscal 2027 outlook, saying the timing of large enterprise transactions remains difficult to forecast despite continued customer adoption, expansion among strategic customers and an active pipeline of opportunities.

• Second-quarter SaaS subscription revenue is expected to be between $38.5 million and $39 million, representing approximately 10% to 12% Coveo Core platform growth.
• Second-quarter total revenue is projected at $39.7 million to $40.2 million.
• Full-year SaaS subscription revenue is expected to range from $154 million to $158 million, representing about 10% to 13% Coveo Core platform growth.
• Full-year total revenue is forecast at $160 million to $164 million.
• Second-quarter adjusted EBITDA is expected to be $0.5 million to $1.5 million, while full-year adjusted EBITDA guidance remains $2 million to $7 million.
• The company expects operating cash flow of more than $10 million for the full fiscal year.

Hamel said Coveo remains focused on investing in areas intended to support medium- and long-term growth while maintaining discipline in capital allocation and operating efficiency.

About Coveo Solutions (TSE:CVO)

Coveo brings superior AI-Relevance to every point-of-experience, transforming how enterprises connect with their customers and employees to maximize business outcomes. Relevance is about moving from persona to person, the degree to which the enterprise-wide content, products, recommendations, and advice presented to a person online aligns easily with their context, needs, preferences, behavior and intent, setting the competitive experience gold standard. Every person's journey is unique, and only AI can solve the complexity of tailoring experiences across massive, diverse audiences and large volumes and variety of content and products.

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