Coveo Solutions Inc.

Good afternoon. My name is Jenny and I will be your conference operator today. At this time, I would like to welcome everyone to the CAVEYO first quarter fiscal 2024 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you. Mr. Moon, you may begin your conference.

Good afternoon, and thank you for joining us today. With me on the call are Louis Taitou, Coveo's Chairman and Chief Executive Officer, and Brandon Nessie, Chief Financial Officer of Coveo. Before we get started, I would like to note that certain statements made during this conference call are forward-looking statements within the meaning of applicable securities laws, including those regarding our plans, objectives, expected performance, and our outlook for the second quarter and fiscal year 2024. These forward-looking statements are given as of the date of this call, and while we believe any statements we make are reasonable, they are based on current expectations, which are subject to risks and uncertainties, and actual results could differ materially. We do not undertake and expressly disclaim any obligation to update our forward-looking statements, whether because of new information, future events, or otherwise. Further information on factors that could affect the company's financial results is included in filings we make with Canadian securities regulators, including under the section titled Risk Factors in the company's most recently filed annual information form, which is available under our CDAR Plus profile at www.cedarplus.ca. Additionally, some of the financial measures and ratios discussed on this call are either non-IFRS measures or operating metrics used in our industry. A discussion on why we use these results and where applicable, a reconciliation schedule showing IFRS versus non-IFRS results are available in our press release and our MD&A issue today which may be found on our investor relations website at ir.coveo.com and our CDAR Plus profile. Please note that unless otherwise stated, all references to financial figures are in U.S. dollars. Lastly, slides accompanying this conference call are available for viewing and accessible on our IR website under the News and Events section. I will now turn the call over to Louis to begin. Louis?

Thank you, Paul, and thank you all for joining us today. I'm very excited to share with all of you the significant progress we've made during the quarter on many fronts. Last quarter, we announced our Coveo Relevance Generative Answering capability, a powerful and natural extension of our industry-leading solution that combines large language model technology with the secure indexing and relevance capabilities of the Coveo Relevance Cloud AI platform. We saw unprecedented demand for this capability, particularly among our existing enterprise customers, seeking to incorporate generative AI solutions that are secure, accurate, and trusted. I am pleased to report that this demand has further accelerated in the first quarter, and we have launched our design partner and advisory group program, with a total of 45 enterprise customers, including companies such as Informatica, Synopsys, VMware, Xero Software, and Zoom Communications. Our first quarter SaaS subscription and total revenue grew 20% and 16% respectively, both on a constant currency basis. Adjusted operating loss for Q1 was $2.8 million, compared to 7.5 million last year, coming in well ahead of our guidance and representing a significant year over year improvement. I'm also pleased to report that we are improving our adjusted operating laws guidance for the fiscal year while reiterating our full year revenue guidance. In addition to these exciting developments with Coveo Relevance Generative Answering and our financial results in Q1, we had multiple six-figure new land transactions with SAP Commerce customers, and bookings with Salesforce customers came in ahead of our expectations. Additionally, we had a record quarter in terms of both total and SAP Commerce pipeline generation. While we remain optimistic due to these positive developments, we continue to experience a macroeconomic environment that is similarly challenging to last quarter, in particular for sales conversion with new customers. During our last conference call, I spent a lot of time discussing the recent breakthroughs of generative AI and the immense potential of using large language models, or LLMs, within enterprises. Importantly, I emphasized the existing shortcomings of many solutions in terms of accuracy, content currency, security, and cost. and presented how Coveo Relevance Generative Answering can effectively overcome these challenges. Our enterprise clients' brands cannot hallucinate in answering their customers and stakeholders. Security cannot be compromised, and the content needed to feed generative AI comes from multiple sources. By combining LLMs with our leading Coveo Relevance Cloud AI platform, we can address critical enterprise use cases as we ensure secure consolidation of content and delivery of precise, contextually relevant information to end users. In essence, Coveo Relevance Generative Answering is a natural extension of our commitment to power the most trusted digital experiences for enterprises because we own the software stack necessary to handle the real-time unified indexing, security, precision, and relevance, all necessary to feed generative AI at a global scale. For the enterprise generative AI use cases we see, we believe that the prompt engineering and grounding we provide is a critical element and we are just scratching the surface of its potential. With the customer-facing events we have organized so far, including webinars and one-on-one meetings, We have recently showcased our groundbreaking Coveo Relevance answering solution to more than 600 people across hundreds of enterprises, many of them CIOs and senior IT and digital leaders among the top 200 companies within the Forbes Global 2000. Due to the high demand, we have additional customer meetings and demos planned for the rest of the summer and into the fall. The feedback from these meetings has been unequivocal. With Coveo Relevance Generative Answering, we are addressing the most pressing challenges discussed at the executive, board, and IT levels of an organization and where stakeholder pressure is felt the most. And with a recent CNBC survey published online on June 23rd indicating that nearly half of tech spend from companies is going into AI, Enterprises have the added pressure of evaluating and selecting the right solutions with fast time to value that will show positive results. Since launching our Coveo Relevance Generative Answering beta program in June, we've seen an overwhelming response from our existing customers looking to leverage our AI platform, expertise, and trusted partnership to collaborate on effective solutions. As I mentioned previously, we have carefully selected a total of 45 customers to be part of our Early Access Program, including 20 premier and standard design partners, along with 25 customers in our Coveo Relevance Generative Answering Advisory Group. Additionally, a number of other customers have expressed a keen interest in our product as part of our Early Access Program. As per the current timeline, Our 20 design partners can expect staggered product access during this quarter, with the advisory group receiving product access starting in the fall, followed by general availability during fiscal 24. To encourage early adoption, we are offering attractive pricing for Coveo relevance generative answering, with long-term pricing expected to be launched later this fiscal year. With Coveo Relevance Generative Answering, we have started with service, workplace, and website use cases, which are an immediate fit for the solution. We also see an interest in Relevance Generative Answering from commerce customers who require a combination of catalog and rich content search. As we've done with almost all of the solutions we provide to our customers, Coveo is customer zero for Coveo Relevance Generative Answering which went live on our customer documentation site on July 19th. This creates a secure, accurate, and relevant generative AI experience to help improve the ability of Coveo users and customers to self-serve by providing direct written answers generated in response to questions and links to the relevant source documentation, both integrated with the full power and security of Coveo AI-powered search and navigation. The strength of our Coveo Relevance Cloud AI platform is our ability to index and securely unify disparate sources of content and understand the intent of each user. Our search and recommendations capabilities and ability to do true one-to-one personalization securely a differentiator of the Coveo Relevance Cloud AI platform, becomes the key foundation for what we're doing in Coveo Relevance Generative Answering. This is an AI platform we have been developing for over a decade and continues to be why we believe we are uniquely positioned to be one of the first companies to solve the challenges of providing generative AI solutions that enterprises can trust at scale. The final thought on perhaps the most critical factor in successfully deploying covalent relevance generative answering for our enterprise customers is cost. As many of you have likely seen, some of the large software companies have released pricing for their co-pilot generative AI solutions, which result in at least a 50% increase in price for customers. Similarly, Any existing Coveo customer adding relevance-generative answering will trigger an upsell and increase their ACV. However, at Coveo, we believe we are uniquely positioned with a technical approach that effectively addresses this concern by offering a cost-effective solution for managing LLM adoption. By limiting the corpus of information fed to the LLM, exploring the use of different LLMs, managing the prompt size and answer length according to specific use cases, utilizing pre-selected queries, and employing various other strategies, we enable our customers to access the benefits of generative AI commensurate with the cost, ensuring a high ROI. Before moving on from the topic of coveo relevance generative answering, I would be remiss not to mention our recent win at the 2023 AI Breakthrough Awards, where our Smart Snippets feature, which we introduced back in 2021, won for Best LLM Application. Utilizing Coveo's AI platform alongside an LLM framework, Smart Snippets interprets user queries and provides the most relevant paragraph or answer without requiring users to click through links. As we've said previously, we have been working with LLMs long before they became a buzzword this year, and we believe this award further reinforces our AI leadership. From a go-to-market perspective, we believe we have the right partners in place to pursue our growth ambition. As an SAP endorsed app, Coveo is not just a partner, but the partner of choice globally for SAP Commerce customers who require best-of-breed AI-powered search and recommendation solutions to help them compete with digital experience leaders. And with SAP's go-to-market teams fully aligned with ours and the advantage of full commission and quota relief for their sales personnel for selling Coveo products, we have a significant opportunity to co-sell alongside their global sales team. SAP serves 96% of the largest 2,000 enterprises globally and has the largest e-commerce enterprise install base as measured by gross merchandise value, valued at more than $1.5 trillion across both B2C and B2B customers. In our service line of business, Salesforce remains an important partner and customer given their global reach and undeniable success. As a Salesforce Submit ISV Force partner, we stand among the top 1% of partners within their ecosystem dedicated to delivering innovative service solutions to enterprises worldwide. Through various customer engagements, including those related to generative AI for service, We actively participate in major events like Salesforce's Dreamforce to communicate and demonstrate how our complementary solutions drive value for our customers. And recently, Coveo became an Adobe Gold partner, which provides us access to technical expertise as well as program and marketing resources that can help drive our business with Adobe customers in our website line of business. We are pleased with this expanding partnership in which our platform's scalability and rapid time to value has helped to set us apart with many joint enterprise customers. We had a number of exciting wins during the quarter. In commerce, we won significant new work with one of the largest wine and spirits distributors in the U.S. This customer had previously launched their own B2B commerce portal that had a subpar search experience and they realized this would negatively impact their business in the long run. After a competitive process involving other competitive package solutions with a bias towards one particular provider and built-it-yourself tools, we ultimately won due to three key factors. First, the maturity of our enterprise AI platform. Second, our unique ability to handle the complexity of their B2B catalog. And third, our strong partnership with SAP. By implementing Coveo, this customer expects to significantly improve product search relevancy, reducing the time and effort customers need to build orders, leading to increased adoption, revenue growth, and the ability to leverage product and content recommendations for upselling and cross-selling. Future plans include extending Coveo to their sales portal to benefit internal sales staff and enhance customer support. Also in commerce, we won new work with a pioneer in the automotive industry with a global presence in wholesale, retail, and franchise operations, offering products from top brands, supply chain services, and automotive maintenance. We demonstrated the value of our mature AI infrastructure through a business value assessment that highlighted the rapid time to value that Coveo could offer. With Coveo, the customer can easily scale its search functionality across various brands and use cases, while managing everything through a single platform and index. We demonstrated how Coveo was the only suitable solution to support search in their intricate B2B environment, including complex catalogs and customer entitlements. In service, we recently secured a significant project with a prominent leader in higher education for search and knowledge management and to improve end user proficiency. Our success in winning against the search as a service provider can be attributed to our trusted partnership with Salesforce, superior technical and AI capabilities, and the ability to reduce resource maintenance. The customer recognized the value we bring through improved customer and employee experiences, particularly in enhancing self-service proficiency and agent interactions for students and staff. Finally, we won a significant workplace contract with a leading financial services company specializing in investment advice and retirement planning. During the competitive process where several providers were evaluated, we won the contract by demonstrating Coveo's maturity as a leading AI SaaS solution with a strong focus on user experience. Coveo's value proposition centered on relevant workplace search for their extensive employee base of over 50,000 people, with a primary focus on enhancing the experience for approximately 20,000 financial advisors and supporting office admins. Collectively, These customers have recognized the value of our leading platform and that working with Coveo is a subscription to AI innovation and a strong on-ramp for enterprises seeking to deploy our innovative and high ROI offerings quickly and securely. With that, I will now hand the call over to Brandon to discuss our quarterly results in more detail. Brandon?