Coveo Solutions Q2 Earnings Call Highlights

Key Points

• Coveo reported record bookings in fiscal Q2 2027, with total revenue up 8% year over year to $40.4 million and adjusted EBITDA rising to $2 million. Core-platform SaaS revenue grew 12%, while net expansion improved to 105%.
• Generative AI solutions generated more than half of quarterly bookings and represented 16% of annual recurring revenue, as customers moved from experimentation to production deployments. Coveo also secured two seven-figure subscriptions, including an agreement with Australian retailer Coles.
• The company raised the low end of its full-year SaaS revenue outlook to $156 million–$158 million, while maintaining adjusted EBITDA guidance of $2 million–$7 million. Coveo also closed its cash-funded Anglera acquisition to strengthen AI-powered product catalog enrichment.

Coveo Solutions TSE: CVO reported its strongest bookings quarter on record in the second quarter of fiscal 2027, with revenue and adjusted EBITDA exceeding the company’s guidance ranges. Management cited demand for commerce, generative AI and multi-use-case deployments, while highlighting two seven-figure subscription transactions during what it characterized as a seasonally slower period.

Executive Chairman Louis Têtu said the company’s large-enterprise strategy is centered on “Experience AI,” which applies AI to digital commerce, service and workplace experiences. He said Coveo is focusing on industrial B2B distribution, complex retail and large-scale service environments, where product catalogs, technical knowledge and business rules must be integrated to generate reliable AI-driven outcomes.

“We continue to see marquee customer transactions with two seven-figure subscriptions in the quarter,” Têtu said. He also said Coveo views AI innovation as expanding the need for its platform rather than displacing it, arguing that enterprises require context from their own data, products, contracts and business rules to support useful AI applications.

Financial results and outlook

Chief Financial Officer Karine Hamel said SaaS subscription revenue, excluding the now fully deprecated Qubit business, totaled $39.1 million, up 12% year over year on the Coveo core platform and 9% on a reported basis. Total revenue was $40.4 million, an 8% increase from the prior-year period.

• Product gross margin was 82%, while total gross margin was 80%.
• Adjusted EBITDA was $2 million, compared with $0.6 million a year earlier.
• Cash flow from operating activities was negative $14.9 million, which Hamel attributed to the seasonality of collections and working-capital timing.
• Coveo ended the quarter with $82.7 million in cash and cash equivalents and no debt.
• Net expansion rate for the Coveo core platform was 105%, up three percentage points sequentially.

For the third quarter, Coveo expects SaaS subscription revenue of $39.7 million to $40.2 million, representing approximately 11% to 12% growth for the core platform. The company forecast total revenue of $40.6 million to $41.1 million and adjusted EBITDA of $1 million to $2 million.

For the full fiscal year, Coveo raised the lower end of its SaaS subscription revenue outlook to a range of $156 million to $158 million, representing approximately 12% to 13% growth for the core platform. It narrowed total revenue guidance to $160 million to $162 million. The company maintained its forecast for adjusted EBITDA of $2 million to $7 million and operating cash flow of more than $10 million.

Hamel said the revised full-year revenue outlook reflects a higher floor for SaaS revenue as well as lower expected professional-services revenue. Coveo is voluntarily moving more implementation work to systems-integrator partners as part of its alliances strategy, she said.

Large contracts and generative AI demand

Co-founder and Chief Executive Officer Laurent Simoneau said Coveo has now delivered four consecutive quarters featuring seven-figure transactions. The company’s largest transaction in its history was an expansion with a global Fortune 500 technology company, which became Coveo’s first customer relationship to exceed $10 million in annual recurring revenue.

Coveo also signed a seven-figure agreement with Australian retailer Coles. Simoneau said Coles, which operates more than 840 supermarkets, selected Coveo to power search across its online properties. The platform is intended to provide personalization, intelligent ranking and search optimization while retaining merchandising controls. Coveo said the initiative is designed to improve conversion, average order value and revenue per visit.

Hamel said generative AI solutions represented 16% of Coveo’s annual recurring revenue and accounted for more than 50% of bookings during the second quarter. Those solutions are incremental to customers’ core Coveo subscriptions, she said. Management said customers have increasingly shifted from experimentation toward production AI deployments, seeking secure and relevant experiences that can produce measurable results.

Other new customer wins and expansions mentioned by management included US Foods, LG, Intel, a global commercial equipment parts distributor and a North American industrial gases and equipment supplier.

Product initiatives and Anglera acquisition

Coveo highlighted Conversational Product Discovery, a commerce capability that allows shoppers to interact with product information through natural-language conversations. Simoneau said the product grounds responses in product catalogs and merchandising rules, and can work with external AI tools including ChatGPT, Gemini and Claude through interoperability protocols.

The capability is live at Linde, a supplier of industrial gases and engineering products. Coveo said the deployment is intended to help Linde customers navigate technical specifications, compatibility requirements and application needs. Several additional customers are onboarding, Simoneau said, while the product has generated expansion opportunities and new-prospect interest.

The company also discussed its Merchandising Agent, formerly called Merchandising Copilot, which is embedded in Coveo Merchandising Hub. The tool can analyze performance, recommend actions and execute approved changes to business rules, facets and product recommendations. According to Simoneau, more than 70% of users have engaged with the product repeatedly, approximately half have applied recommendations, and more than 20% of storefront optimizations are being completed through automated AI-agent actions.

Coveo also closed its acquisition of Anglera on the day of the earnings call. The acquired technology uses AI to enrich product catalogs by extracting attributes from unstructured product content. Management said the capability addresses missing, incorrect or inconsistent data related to product dimensions, materials and compatibility.

Hamel said Anglera’s fiscal 2027 revenue contribution is expected to be immaterial. The acquisition was funded with cash on hand and includes an earn-out tied to commercial milestones, with a potential additional payment in early 2028. Coveo said it expects the longer-term benefit to come from integrating Anglera’s capabilities into its commerce offering and supporting product discoverability through search engines and AI assistants.

Investment priorities

Management said its Forward Deployed Engineering initiative is nearing full scale, with more than 40 customer engagements completed. Simoneau said the program has contributed to retention and expansion by helping customers address architecture and interoperability challenges. Hamel said the costs are included in Coveo’s SaaS subscription offering and are recorded within the company’s cost of subscription.

Têtu said the company plans to continue investing in demand generation, differentiated industry verticals and account expansion, while maintaining focus on the health of its economic model. Management said Coveo remains primarily focused on organic growth and maintaining a debt-free balance sheet, though it may consider additional targeted acquisitions that complement its strategy.

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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