Coveo Solutions Inc.

Good afternoon. My name is Alan and I will be your conference operator today. At this time, I would like to welcome everyone to the CAVEYO third 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, 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, Cobeo's Chairman and Chief Executive Officer, and Brandon Nessie, Cobeo's Chief Financial Officer. 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 fourth 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 and the section Key Factors Affecting Our Performance in the company's most recently filed MD&A, which are available under our CDAR Plus profile at www.cdarplus.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. Finally, presentation slides accompanying this conference call can be accessed on our IR website under the News and Events section. Following our prepared remarks, we will be conducting a Q&A session for analysts. To foster an inclusive discussion, we kindly request analysts to limit their questions to a maximum of two. Your cooperation is greatly appreciated, and thank you for your understanding. 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 delighted with Coveo's third quarter performance, which exceeded the high end of our guidance on revenue and is also well ahead of our guidance on the bottom line, all keeping us on track to achieve positive operating cash flow in fiscal 2025. This is a testament to our team's capabilities and dedication. and to the value of our technology and our business model resilience in the current macroeconomic environment. Q3 fiscal 2024 was our best total bookings quarter since fiscal 2022. Additionally, it was our best new logo land bookings quarter with the highest mix of land bookings since fiscal 2022. We believe this has been driven in part by the differentiation and strong early interest in our relevance augmented generative answering technology, turning into tangible opportunities with customers, by the continued ramp of our partnerships, in particular with SAP, and generally customers starting to move from the experimentation cycle of Gen AI to real buying cycles where they see clear evidence of tangible ROI. As I highlighted during our Capitals Market Day this past November, for over a dozen years, Coveo has been innovating with forward-thinking global enterprises, bringing AI to their digital experiences, and with a true obsession to drive the best possible relevance and business outcomes from all their digital interactions. We started integrating machine learning within search and digital experiences in 2012. Over the years, we gradually integrated deep learning, intent detection, large language models, and today, semantic search, generative AI, and other new optimization AI models. This decade plus collaboration with large and global clients has enabled us to build the market leading AI search and personalization platform for enterprises, one that has been recognized as a Gartner leader for seven years, a Forrester leader for six years, and an IDC leader for three years. In turn, our platform has enabled those enterprise customers to gain a trusted AI experience advantage within their digital experiences, powered by vector and semantic search, AI recommendations, and now generative experiences that personalize and augment every buyer, every customer, partner, and employee touchpoints delighting users and driving high business ROI at the same time. Reiterating what you heard at our Capital Markets Day, we are emphasizing again the enormous market opportunity ahead of us to execute on and capture as we approach the start of our next fiscal year. We believe the market is only beginning to embrace AI to enable individualization and optimization of digital experiences at large scale. business leaders increasingly understand the benefits of bringing AI to every point of experience to drive superior relevance and outcomes across commerce, customer service, websites, and into the workplace. This is something not humanly possible to achieve without AI. Significantly, we're proud to announce that in December, Coveo Relevance Augmented Generative Answering became generally available after several months of live beta tests with enterprise customers at large scale. The collaboration and trust shown by our enterprise customers in this groundbreaking platform enhancement resulted in Coveo's most successful product launch to date. We are thrilled to share that we closed transactions for relevance augmented generative answering at an accelerating rate in the quarter. We have completed a transaction for our GenAI product across each of our solution areas in commerce, in service, in websites, and in workplace use cases. We're very encouraged by the strong demand in the market for this solution with the value we measure for our customers. and with our distinctive competitive advantage in generative AI at the point of experience. This is evidenced by our continued growth in transactions and pipeline related to GenAI and the similarly accelerating number of enterprise customers currently in the process of testing our solution. The testing and implementation of relevance augmented generative answering has been highly successful to date. and we're pleased to report that we had additional customers that moved beyond experimentation and went live with our GenAI solution so far this year. While most of these applications so far have been in the customer service, websites, and workplace knowledge areas, we're pleased to report that Coveo has also officially gone live with a commerce generative AI solution at a large home improvement and construction supplies retail chain in the U.S. with our technology improving their live digital buyer experience. Customers have reported significantly superior performance when A-B testing Coveo versus other solutions tested and compared, particularly in terms of completeness, accuracy of responses, and hallucinations avoidance that surpass the performance of other generative answering offerings in the market. We believe this is due to the superior performance of our underlying AI search and relevance capabilities, which I will explain later. Moreover, our ability to control and combine AI search and results, navigation, answering, and conversations all together in one single digital experience with the security, currency, and traceability of answers and across many content sources is in our view what enterprises need. In fact, we heard that one competing solution that we were A-B tested against actually generated negative ROI for the customer by generating inaccurate and low-quality answers, which would have increased case submissions and customer service. In summary, relevance matters, relevance wins, and it is a deep science. After these tests and measures, we observe and firmly believe that the integration of our generative AI solution, powered by vector search and built on top of and augmented by our leading AI search and relevance platform, not only ensures rapid time to value, but also delivers a high ROI, offering unparalleled benefits to enterprises navigating this dynamic landscape. And it is available in full production now. More specifically, Last quarter, we talked about how Xero Software, a leading provider of SMB accounting software with 3.9 million businesses customers across the globe, deployed Coveo after several months of tests. Xero has now reported seeing the average customer search time decrease approximately 40%. Search sessions requiring additional customer support decreased by more than 20%. with the use of relevance augmented generative answers on top of the existing benefits brought before by our AI search. This is something everyone on this call can experiment with yourself by visiting the Xero Central website and just asking a how-to question, for example. Another large technology customer found that generated answers allowed end users to save nearly 10 minutes searching for an answer. Beyond the high financial value of this on a large scale, this is a game changer for both the customer and the employee experience as it empowers them to become more proficient instantly. We at Covail found that across our own customer self-service experience, our self-service success rate improved by approximately 40% for visits using relevance augmented generative AI. This is something everyone on this call can experiment with yourself by visiting the public global Coveo partner service community at partners.coveo.com. In summary, our analysis has found that self-service success improvements from Coveo relevance augmented generative answering could lead to an additional reduction of up to 25% in the overall cost to serve. This is on top of the double-digit self-service improvements and case reduction our customers were already seeing from our AI search platform. Folks, to be clear, this technology is ready. In our view, it's a big deal, and this is exceptional in this market. It is a game changer, and it is a game changer. We believe our market is quickly realizing that delivering on the promise of generative AI in real time at the point of experience is now a reality, but that it absolutely requires a solid search and relevance foundation to ground answers from a secure corpus of information consisting of multiple sources of content that is both current and contextually relevant. In other terms, And for those of you more familiar with generative AI, in our opinion, simply using retrieval augmented generation or RAG, particularly at larger scale and with more complex content, will not provide the capabilities necessary for real-time answering use cases without the kind of relevance technology that Coveo has built over a decade. Let's now talk some specifics about Transactions. Among our new generative AI expansion transactions, two were secured with major financial services companies overseeing nearly $10 trillion in global assets. Both are utilizing relevance augmented generative answering within the workplace solution area, with one also expanding its use for their website. In each instance, these enterprises chose Coveo after rigorous testing, validating our solution as a far superior alternative including internal build options they were considering the deciding factor was the demonstrated value through enhanced content findability answers accuracy and the improved experiences productivity gains and fast time to market compared to alternative solutions in our website solution area Coveo was selected by one of the largest US airlines to implement relevance augmented generative answering on their customer-facing website. A proof of concept developed with the help of our development and data science teams was tested and shared internally, including with their chief information officer. Through this process, they achieved fast, accurate responses to improve overall customer self-service, and relieving pressure from their contact center. This customer is competing to be the most innovative airline in the industry, so it's gratifying that they have chosen us, and we look forward to their formal go-live in the near future. In service, a major U.S. cybersecurity company selected our Gen AI offering to help improve their customer self-service metrics by at least 20%. and to enhance their agents' effectiveness. After evaluating several vendors, our customer reported that Coveo ultimately won given our platform's unified index, tight integrations, GenAI Answers superiority, and our established presence within their digital properties. By enhancing their self-service portal, we aim to alleviate pressure on their contact center allowing their support personnel to focus on the highest priority cases. As a second phase, they intend to implement relevance-augmented generative answering within their contact center to enable their agents to find more efficiently the intricate knowledge and answers they require, improving the overall customer service experience and reducing the time to proficiency for their agent. Other relevance augmented generative answering transactions signed in the quarter include SAP, Concur, Blackbaud, a leader in electronic system design, and a global pharmaceutical company. We are thrilled that these major enterprises have tested and selected Coveo to deliver even more value in ROI, building upon the strong partnerships and success we've already established to date. Their ongoing partnership not only demonstrates their trust in our platform, but also how they subscribe to our vision and our fast ongoing innovation and AI experiences fueled by our customer community of leading enterprises. Outside of relevance augmented generative answering, in the third quarter, we secured our largest new customer land within our commerce solutions area. an exciting near seven-figure SaaS ACV deal with a global automotive company. The choice to partner with Coveo was due to the feature-rich, out-of-the-box AI capabilities of our platform, offering superior relevance and personalization to the shopping experience, supporting their goal of improving revenue per visit. We are excited to demonstrate the value we bring with our platform, with an eye on introducing to them other complementary solution areas over time, including our relevance augmented generative answering capabilities. Before I hand the call off to Brandon for the financial update, and just to wrap up my comments, I want to reiterate that I could not be more excited about the opportunities that lie ahead of us as we approach the end of our fiscal 2024 and gear up for the next fiscal year. 2023 was marked by discovery and experimentation around generative AI, which also and more broadly democratized the quantum leap opportunity of AI within the enterprise, something Coveo has been specialized in and has embedded in our platform for over a decade. A recent January 2024 BCG survey of 1,400 executives revealed that AI and Gen AI rank as a top three tech priority for 2024, and 51% put it at the top of their list, targeting greater than a 10% productivity gain and revenue uplift. These secular tailwinds in the AI space are supported by the undeniable power of AI search and generative AI at the point of experience. And we see a trend by enterprises to consolidate with leading platform vendors like Coveo, who can make this work in full production and at scale beyond the experiment and with demonstrable and high ROI. With our pipeline steadily expanding, the strong partnerships we anticipate will help to accelerate our go-to-market motion and the continued and disciplined management of our business. We believe Coveo is highly differentiated and well-positioned as we look forward to fiscal 2025 and beyond, and it is our intent to capitalize on that advantage and invest for growth and market share gain. With that, I will now hand the call over to Brandon to discuss our quarterly results in more detail. Brandon?