Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Coveo Solutions Inc (CVOSF, Financial) exceeded its guidance for the second quarter of fiscal 2025, delivering SaaS subscription revenue of $31.2 million.
- The company reported positive cash flows from operations amounting to $1.4 million and an improved adjusted EBITDA of $1.5 million.
- Coveo Solutions Inc (CVOSF) has seen significant growth in its generative AI solutions, with a 50% increase in customers using its relevant augmented generative answering solution.
- The company has established strong partnerships with major platforms like Shopify, SAP, and AWS, enhancing its market reach and credibility.
- Coveo Solutions Inc (CVOSF) has successfully launched new innovations, such as the relevant augmented passage retrieval API, which is attracting promising initial demand.
Negative Points
- The company is experiencing some headwinds with enterprise customers being budget-sensitive, leading to lower net expansion rates than planned.
- Coveo Solutions Inc (CVOSF) is facing challenges with churn in the SaaS revenue from the platform acquired from Qubit, which declined by 51%.
- Despite positive bookings, the company is maintaining its annual guidance towards the lower to mid-point of the range, indicating cautious optimism.
- There are ongoing challenges in the enterprise software budgetary environment, which could impact future growth if not improved.
- The company has had to deal with a few M&A-related transactions in its customer base, resulting in lost revenue.
Q & A Highlights
Q: Can you discuss the operating changes in the sales and marketing organization since the appointment of the new CRO and how it's contributing to the accelerated pace of bookings?
A: Louis Tetu, Chairman and CEO, explained that the appointment of John Grosshans as Chief Revenue Officer, along with other leadership changes, has been pivotal. The company has implemented consistent sales methodologies and better leadership across regions, which, combined with increasing market demand for AI, has contributed to the acceleration in bookings.
Q: Can you expand on the Shopify relationship and the opportunities there?
A: Louis Tetu highlighted the strategic alliance with Shopify, emphasizing its significance as Shopify expands into the enterprise market. Coveo's AI search and personalization technology complements Shopify's offerings, particularly for large enterprises with complex needs. The partnership includes joint co-sale motions across various regions.
Q: Are all the GenAI customers in production, and is the time frame for them to move into production shrinking?
A: Louis Tetu confirmed that the logos shown are customers who have signed contracts and moved into production after extensive testing. The deployment process has become faster, and the market is reacting positively to Coveo's API, which allows companies to use their own large language models with Coveo's technology.
Q: How are non-tech verticals adopting your products, and are they moving from initial trials to broader implementations?
A: Louis Tetu noted that beyond tech companies, sectors like financial services and airlines are increasingly adopting Coveo's solutions. Enterprises are realizing the importance of retrieval augmented generation (RAG) technology for secure and accurate data use in AI applications.
Q: Can you provide an update on the SAP contribution to bookings and the evolution of the partner channel pipeline?
A: Louis Tetu stated that Coveo continues to experience success with SAP, being an endorsed solution that SAP sellers promote. The partnership is expanding, and Coveo is investing in strengthening relationships with systems integrators and other alliances to enhance its market presence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
