Docebo Inc.

Good morning, everyone, and welcome to the Docebo Q2 2025 earnings call. All participants are currently in a listen-only mode. We will open up the lines for a question and answer session momentarily. 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. I'd now like to turn the call over to Docebo's Vice President of Investor Relations, Mike McCarthy. Please go ahead, Mike.

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, 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&A, Docebo would like to remind listeners that certain information discussed may be forward-looking in nature. 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 CDAR 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. Please see our MD&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 Docebo's CEO, Alessio Artufo, and our CFO, Brandon Farber. Gentlemen. Good morning.

Once again, to ask 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. Thank you.

I was going to say, you can take the first question, Julianne.

Thank you. Our first question comes from Ryan McDonald from Needham and Company. Please go ahead. Your line is open.

Hey, good morning. Thanks for taking the question. This is Matt Shea 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. Could you just unpack that a bit? What are you seeing in the mid-market and how durable do you think that strength is? And then are there any verticals within that mid-market strength that were particularly strong or noteworthy?

Good morning. So we did report a very strong outcome in our mid-market segment. And I would underscore that, you know, the Chabot over the past several years has strengthened its position in the mid-market, mid-enterprise and enterprise segments. This is the result of work that we have done to better segment our efforts in outbound and in digital marketing, being more efficient where we allocate our spend and target verticals that are more in line with our strengths and capabilities. And so really having a stronger focus on the industries where we have more success. Historically, in mid-market, the technology sector has been a leading sector of our efforts, 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. I would say additionally we have implemented some process and people changes in mid-market with new improved leadership capabilities and we've seen an immediate impact and so we're very pleased for this uptick. Relative to durability, we expect mid-market to continue to be strong in the quarters to come. And as that combines with strength and age relative to enterprise cycles, we're very excited about the future ahead.

Got it. That's helpful, Collar. And then it was nice to see a majority of new customers still looking to use you for two or more use cases. 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% rate last year. 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, and then you kind of think you can expand with them over time? Or how are you thinking about the lower multi-use case adoption rates so far in 2025 relative to last year?

Yeah, sure. So, look, our priority is, as you say correctly, win as much market share within a customer or addressable market within a customer as we can. And there are a couple of ways of doing that. Way number one is to penetrate a customer and sell as wide as we can from day one. That has the backdrop of reducing the cell velocity because bringing on board both internal and external use cases, for example, and the subcomponents of those use cases, the benefit is multi-use case and IRCV likely. The downside is more cooks in the kitchen and therefore slower decision process. So what we are continuing to refine is a process that optimizes ACV and velocity. So when you see a slight reduction, what that means is that we found that in certain segments, it is more productive to enter in an organization with a couple of use cases and win the trust and do a really great job and expand from there, which is a very good example of what we've done with a notable enterprise customer this quarter.

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

Hi, good morning. Really nice to see the big five tech expansion. Maybe first could you, I think there's only two of those that you have currently. Maybe confirm that and then we could talk about how that was one and the decision behind the displacement of an internal system.

Good morning and yes to question number one, you're you're accurate in that number two relative to the one we've announced and the expansion that we spoke about, we're really pleased about it because it really is the ultimate recognition of the strategic efforts we've been putting in place 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. Expanding these customers, especially in the enterprise space, underscores the importance of our investments in customer success, where in this enterprise, its complexity and the ability to really serve the customer across multiple use cases and stakeholders becomes important to win the trust to expand further. Second, I think, you know, you were asking about the why 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. Number one, have capabilities of large scale, so true enterprise capabilities. Second, high integrability, meaning the ability to integrate with multiple systems pre-existing. via APIs, webhooks, and other technological means. This customer, interestingly, had an experience coming from an in-house, grown, owned system. So I know that in the past there has been a question of are enterprises you know, looking to build their own system, what we're seeing is that actually, you know, a large big five like this one is actually moving away from a decision of an own system towards using Docebo as the backbone of their infrastructure. And finally, what makes this additionally very special is this is for a customer experience use case, enabling, you know, technology teams that are part of the target market of this company. And so it's just a rather perfect example of our execution.

Thanks for all that color. That's great. For my second question, Brandon, maybe great to see the guidance bump and thought maybe you could just get into some of the assumptions behind that. Are the larger deals still upside, is FedRAMP still upside? And then if you can feather into that, maybe just the last quarter you suggested that net retention was improving through the back half of the year, if that's still one of the assumptions. And then I'll pass the line.

Hey, Rob. Before I get to your question, maybe, you know, it's important if we just zoom back to when we last reported on May 9th. We were roughly 30 days post-liberation day, and we really put out a guidance at that point in time that we felt reflected the environment, which was frankly a little bit chaotic. 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. If we zoom back today, we certainly saw a portion of that chaos was maybe more noise as opposed to news. And we're just really updating our 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. We continued to see elongated sales cycles in the enterprise space. And FX became a tailwind for us, where during the current quarter, it helped us to the tune of 1% on total revenues and 2% on subscription. You know, if you actually look at the different puzzle pieces that construct our annual guide, and if we 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. On your other question, from an NRR perspective, consistent with last quarter, we mentioned that we expected to see improvements from a gross retention perspective after Q1. From a retention perspective, 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. That's all within our guidance. From a FedRAMP perspective and large enterprise, that continues to be out of our guide as well.

All right. Thanks a lot for all of that. I'll pass the line.

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

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 26. Can you just give us a little sense of the trajectory of what you would expect from FedRAMP?

Hi, Craig. Good morning. 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, state and local, a 2.7 billion TAM across U.S. federal, state, and local agencies. That's a very important fact to just recall. And you're correct, we did have an acceleration in obtaining the FedRAMP certification, which we're very pleased about. And as far as the forward-looking, we're 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. 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 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 the channel. And I'll close by saying, look, the reason why we're super excited about it is very simple. We are in a unique position to offer a solution in this market that is scarce because the players that are currently winning or owning market share lag behind on capabilities, features, and innovation. If you look at the communications even from the White House relative to AI modernization and preferences over legacy systems, that plays exactly in our wheelhouse. So to conclude, there's a great product market fit. Timing is more accelerated than we had originally estimated, and pipeline is in line with expectations, with possibility to win the business in federal already this year. And just as a reminder, in this quarter, we won a couple of new states in SLAT, which is a very important fact, and we're starting to penetrate more and more states, which is a great sign of success.

Yeah, I would just add, you know, seasonally, Q2 is a strong quarter for state and local, and we saw strong performance on the government sector. And 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. 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 seeing increased traction after the FedRAMP as their brand improves in the government sector. Super.

It was nice to see you've seeded a CRO, and it looks like Mark's background is quite good. I'm curious, given sales cycles, when would we start to expect to see his imprint on the numbers?

Immediately. That's what I tell him every day. More seriously, Mark is a couple weeks in and is already making an impact in the organization by focusing on what are obvious short-term wins or low-hanging fruit. But I have a longer-term view of his contribution. First, let me say, like you said correctly, he has a track record of success at the likes of Outreach and Catalyst. What he has mastered is the art of selling, but also has a deep understanding of the customer success function as it relates to selling. That is a very important attribute in a modern CRO, and I'm excited that Mark has that. His mandate is very clear. It is to sharpen execution, increase efficiency, and look, if you ask him, I think what he can bring in the quicker way is improved velocity. Mark is really good at identifying 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. 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 also a learning officer expert that we are leveraging, Brandon Carson, our CLO. He partners with Mark and Kyle to support our enterprises in the early stage of their strategy definition. And we're seeing early signals that this strategy of involving 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.

Great. Thank you.

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

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 about what you are most excited about and where you are with monetization. And then I'd also like to know how you're thinking about and monitoring potential risks from AI. So both sides. Thanks.

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, but it's a great question that opens up a lot of interesting things. First, let me tell you what I'm most excited about. And I think it needs to be put in the context of what we have been doing at the CEBO over the past year or so. And 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. Because it's not only about our products, it's also what we do within the company. And we've begun that change at a rapid pace about a year ago. Into that context, recently in July, After announcing it at our conference Inspire, we've launched Harmony. What is Harmony? Harmony is our agentic platform. 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. Search like you would talk to chat GPT or to cloud. which brings a new level of AI capability to Docebo. Customers can now go into Docebo and ask natural questions and get summaries. 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. What it will do, it will help create content. It will automate administrative tasks that take a long time. It will perform actions at 10, 20, 100x the speed that a human can. While they sleep, administrators can have Harmony accomplish tasks for them. 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. But it's not the full story. The full story is allowing Decebo to become an end-to-end AI-first platform by also enabling learners, when they log in Decebo, to have an AI-first experience. I believe the technology offers the possibility to switch from an instructor-led model, which frankly every LMS prioritizes, where somebody creates courses and students take lessons, to a learner-first model, where the learner is at the end of the learning and the control of the learning and upskilling in their hands. So the script is flipping, and Harmony will enable our customers to do that. That's a little bit more high level. there is a lot of innovation that is coming also in the core product. You know, when I speak about to customers, one of the things they tell me is, Alessio, great on AI, but, you know, we're still using the core product. So, you know, the innovator's dilemma, right? And so we always have to deal with a trade-off between continuing to evolve our core, which is so important, while at the same time preparing the chamber for the next one, two, three years. So that's... that's uh some of the things that excite me the most i haven't even spoken about the chebo creator and all the capabilities about creating content and that's also another big area of excitement i hope that else like i told you was going to be a lot that's great and and on the risk side um i mean anything that either new entrance or ways that uh companies are leveraging

you know, LLMs internally themselves, like anything to look out for, that you're looking out for?

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. Well, Docebo was a new entrant at one point, so I know that story really well. But, you know, there's a lot of things to say about it. First of all, we have the benefit of experience, data, and customers that we can work with. and in order to improve the learning landscape. Second, for sure, there is a debate whether people can just learn in isolation through an LLM and skip, if you will, the formal learning component. I would offer the following reasoning about that and the way I think about risk mitigation. Learning is a process in an organization or corporation that embodies two things. The transformation of knowledge into learning, and then the absorption of learning towards the skills, the 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 the corporation. They are a non-deterministic system. If you go to LLM 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 to skills evolution. 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 walls are crumbling, to skills. And we're doing this in an agentic way. And that is our way of mitigating risk and future proofing the table for the next 10 years.

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

Good morning, guys. I wanted to double-click on the big tech expansion deal you guys announced this morning. Could you give us a bit of sense on the size and scope of the deal? And as you think about this customer long-term, what are the levers for additional growth opportunity here?

Hey, Susan. On the size and scope, so it's a customer ad use case. I would say it's a large six figures, slightly below seven figures deal. 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, can you just repeat?

Oh, just curious on what, you know, how you guys think about what the growth opportunity might be ahead with this customer?

So it's actually a great question because if you look at the two use cases that we have, there are still two customer ed use cases, which is to say we do not have the employee experience use case. 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. So while it's hard to exactly quantify how penetrated we are within that customer, I would still say we are under-penetrated.

Got it. Thank you. Just on the recent CRO hierarchy, it's good to see a new CRO in place, and I know he's just fresh in the seat, but how do you anticipate your focus shifts or priorities change with respect to your current go-to-market motion?

I don't believe, Sutan, that there will be any drastic shift. Like I mentioned before, rather a real focus on execution efficiency and really ensuring that as we interact with customers, we just create value together with them. As I mentioned before, Mark has a really good experience across both sales and customer success. And integrating those functions, having a full cycle where the customer feels taken care of and supported and we manage against their expected outcomes is an area where I believe we have room to grow. And so one of his mandates is to really strengthen our muscle in that area. And yeah, that's, I think those are the most important things that I would underscore.

Okay, great. Thank you for the color. I'll pass the line. Thank you.

Our next question comes from Yi-Fu Lee from Cantor Fitzgerald. Please go ahead. Your line is open.

Good morning, Alexia and Brandon. Nothing better to end the week than a positive earnings trend. So, Alexia, I just wanted to start with your favorite child. Harmony Organic AI, which 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, discord, and expected automated actions by year end. So I just wanted to drill down more on the go-to-market and sales strategy that's to monetize this great product. How do you think of that pricing and now that you have Mark CRO in place?

Great question. And I believe... Josh earlier asked a 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. Yi, first of all, it's good to have you on the call. And thank you for the question. So on the merit of our money and monetization, if we go back to our last earnings call, I said that my priority is for us to ship capabilities that create value for our customers relative to the topic of monetization. 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 have launched Harmony Search in the beginning of July, so not even a month ago. And our approach, by the way, 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. this is a little bit different than your more standard three, six months release cycle. We wanted to improve these AI capabilities weekly. It's early to establish the hard numbers relative to usage, even though the usage dashboards that we see please us. but it's hard to make a definitive statement in just about a month. But I can tell you the following, that when I see that features like a 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 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. Now the question is, will we monetize it? How fast, how soon, and how in general?

How about the go-to-market? How about in terms of how would you sell? Forget the money aspect. I get it. You want to deliver the value to customers first. How would you reach them? You already have an existing customer. How would you leverage the CMO, CRO in place to say, hey, we have this awesome product in Harmony. Could you give it a try?

Well, first, for clarity, it was our strategic choice to put these products in the hands of as many customers as we can. We gave Creator and Harmony both in the hands of all our customers that wanted to activate it and without discerning or using it as an upsell mechanism. And the reason was we really wanted to get to a place where the customers want to use it, want more of it before again applying monetization strategies. The way we're talking about it, the way we're using it is really a proof point of our AI strategy and a differentiator against legacy vendors. 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.

Excellent call, Alexia. I just want to follow up with Brandon on the financial side. Sounds like from your prepared remarks, you're very optimistic about the second half with the new signs of tech investments and reskilling and upskilling. So, Brandon, can you talk about other verticals in light of the ongoing trade negotiations? know verticals you called out auto industrial retail in last quarter uh are we are we out of the bush yet or are you you know do you still have some reservations and how does that big five tech win uh that you mentioned earlier today uh you know proves that hey look you know the shape was able to serve other large tech titans right even in light of you know the last unfortunate lost contract with awf that's it for me thanks alexio and brendan

Thanks for the question. So on the general industry groups that we called out, what I would say is that in the enterprise space, within those subsectors, we continue to see deal scrutiny and elongated sales cycles. And the good news is that we have a playbook that works well from this. We've been in multiple different macro environments over the past three years. 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 and show that every month you do not purchase this LMS, you're actually losing out on money. In the current quarter, that worked out very well in the mid-market space, 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. In all end segments, we saw strength. In enterprise, in both of the sub-segments, we continue to saw deal elongation. From the large tech company win, you know, this is a customer of ours that we've had for a while. They're fans of Docebo. They come to our Inspire event. And the continued expansion is just proof of Docebo executing from an implementation perspective, from a customer success perspective, from a customer support perspective. And there are 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 become referenceable companies. and that helps us win other logos.

Our next question comes from Kevin Krishna Ratney from Gosha Bank. Please go ahead. Your line is open.

Hey there, good morning. I'm just one maybe clarification here in in your prepared remarks. He talked about the customer account above 100,000 ramping 23%. I think it was 16%, so really nice acceleration there. I'm just wondering. What we're seeing there, is there something mechanically to think about? Because it looks like just quite a jump from the 16% to 23%.

Yeah, Kevin, so there's really three ways that a customer can become a customer count above $100K. Number one, first-time Docebo customer during the quarter. Number two, that current customer was a $50,000 customer, and they expanded during the current quarter to become over $100K. And we did see not only strong performance in mid-market from a new logo perspective, but also from an expansion perspective. And then thirdly, we did see a benefit on the customer count due to FX, where certain contracts denominated in Euro GPP that were around the roughly 90 to 95 range got pushed above 100K. So all those three factors together led to the acceleration in the customer count growth.

I see. Okay, 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 expect to close up the year, Q3, Q4? You had a pretty good bump up here in the Q2, $8 million. I know FX would have helped there, obviously. You had a couple of big deals that you signed, but just help us think about the ARR build for Q3. That'll help us think about the rest of the year. Thanks.

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. 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. Ultimately, I would say the impacts of ARR is in our revenue guide, and we expect the same seasonality trends that we historically have.

Thanks, Brandon. Pass the line.

Our next question comes from Erin Kyle from CIBC. Please go ahead. Your line is open.

Hi, good morning. I just wanted to ask a question on the global education solutions customer win in the quarter. You mentioned students in response to an earlier question as well, Alessio. So I'm just curious on that win. First of all, how many use cases they selected to pay before and then just on the education vertical in general, are you seeing more demand in that industry?

Hi, Erin. So yes, good call out. This is one of the world's largest education publishers. And so we're very pleased to welcome them to our family. As far as the use case, this is a full Decebo multi-use case hybrid category. are delivering capabilities for self-enablement, customer support, onboarding, and then a more customer-focused use case for continuing education aspects. I think notably, you know, this customer came from a very well-known large legacy vendor where the pains were Frankly, the ones that we hear the most in rigidity, not very usable. And so we solved for those by bringing in flexibility and what we do really well, which is configuring an environment that has complexity for the customer. I think, you know, the other things I can tell you is 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. Additionally, in the competition, we understand that there were also, if you will, the giant HRIS vendors with a learning module. But again, because the learning capabilities are not up to par with the CHEBO, we were able to overcome those. So, all in all, a great deal. And as far as the question for broader education sector, it is a segment that we love. You know, selling a learning solution to educators is something that comes natural to us. For sure, the CEBO is not geared towards the education space in the sense of the academia, but we have a large amount of customers that use the CEBO similarly to this use case. And so it's definitely a growing footprint in the market.

Thanks, Alessio. That's very helpful color there. And maybe I'll just switch gears to capital allocation. You're fairly active on the NCIB this quarter on shared buybacks. Maybe if you can just give us an update on capital allocation priorities for the second half of the year as we look forward.

Hey, Erin. So, you know, 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 investing in headcount and sales and marketing from a government vertical perspective and R&D to really accelerate our AI roadmap. Buybacks is a good use of cash. It's not a fixed program and it's certainly a program we use to deploy cash when we see our shares are at attractive valuations. And M&A is a vertical that we continue to look at and we continue to wait for an asset that has the right product is at the right price and has the right people. And until all of those three line up, we'll continue to deploy our cash and other means.

Thanks, Brendan. Our last question will come from Gavin Fairweather from Cormark. Please go ahead. Your line is open.

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 and What are you hearing from your partners on kind of upcoming activity levels, maybe the historic versus the historical norms?

Hey, Gavin, you know, we're, we've taken the opportunity and we're reaching out to all the federal departments ourselves. You know, we've been talking to them for a number of years to prep Docebo to become FedRAMP solutions. And I would say we're building pipe, not just on RFPs, but through self-sourcing and pitching Docebo. You know, generally what I would say from a sales cycle perspective is that Q3 tends to be the largest quarter from a federal contracting perspective because the government year-end ends September 30th. And that's really why we've always discussed that we expect to see more meaningful revenues from the federal sector in Q3 of 2026 because we just received FedRAMP compliance. And in order to pitch, validate product, procure before September 30th of this year, it's tight. You know, while we do see, you know, one or two potential deals to land, you know, we do think it's the right approach to stay measured and continue to guide that this is more of a 2026 opportunity.

Thanks so much.

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

Thank you, everyone. Thank you for participating in this earnings call. We look forward to seeing you in the next call for quarter three reporting in November. Have a great day. Thank you.

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