Coveo Solutions Inc.

Good afternoon. My name is Konstantin and I will be your conference operator today. At this time, I would like to welcome everyone to the Covio third quarter fiscal 2025 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. I'll now turn the conference over to James Bowen, head of investor relations. Mr. Bowen, you may now begin your conference.

Good afternoon, and thank you for joining us today for Coveo's third quarter fiscal 2025 financial results conference call and webcast. With me on the call are Louis Taitou, Coveo's chairman and chief executive officer, Brandon Nussie, chief financial officer, and Laurent Simonot, co-founder, president, and chief technology officer. A reminder that many remarks made during today's call are forward-looking statements within the meaning of applicable securities laws, including without limitation those regarding our plans, objectives, expected performance, and our outlook for the fourth quarter and fiscal year 2025. These forward-looking statements are given as of today, and while we believe any statements we make are reasonable, they are based on current expectations, which are subject to risk and uncertainties. Actual results can differ materially from those expressed or implied. CLAO disclaims any intent or obligation to update our forward-looking statements, whether as a result of new information, future events, or otherwise. Further information on factors that could affect the company's financial results are included in the filings with Canadian securities regulators, including in the Risk Factors section of the company's most recently filed Annual Information Form, as well as key factors affecting our performance in the company's most recently filed MD&A. both of which are available under our CDARplus profile at www.cdarplus.ca and on ir.cobayo.com. Additionally, some of the financial measures and ratios discussed on this call are either non-IFRS measures or ratios or operating metrics used in our industry. A discussion on why we use these measures, ratios, and metrics, and where applicable, a reconciliation schedule going IFRS versus non-IFRS results are available in our press release and our MD&A issued today, which may be found on ir.cova.com and our CDAR Plus profile. Please note that unless otherwise stated, all references to financial figures made today 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. I'll start by handing the call over to Louis, who will walk us through the key highlights of our third quarter and comment on market dynamics and the growth opportunity ahead. Following that, Laurent will provide an update on our technology success, and Brandon will dive into our financial results and outlook for Q4 and fiscal 2025. After their remarks, we'll open up the line for Q&A. To ensure everyone has a chance to participate, we kindly ask you limit yourself to one question at a time. Louis, over to you.

Good afternoon, everyone, and thank you all for joining us today. I am pleased to share that our third quarter financial results were at the upper end of our revenue guidance range, with fast subscription revenue reaching 32.3 million U.S. dollars, total revenue improving to 34 million, and adjusted EBITDA reaching 0.6 million. I'm also pleased to share that in the quarter, we achieved record high new bookings in the history of the company, demonstrating continued growth, momentum, and generative AI, where we grew our customer base 36% on a sequential basis, as well as strong growth in commerce with a record number of new clients selecting Covil for commerce search intelligence and AI merchandising over alternatives. We believe these results further demonstrate what we communicated over this past year, that the market for applied AI is inflecting, particularly in the field of digital experiences augmentation. Businesses have gained knowledge and awareness about the application of AI, the technical constraints, challenges, and opportunities for business gains within areas such as commerce, customer service, and knowledge experiences. We're selling to a far more educated buyer that now understands and recognizes the uniqueness and importance of what Coveo offers. For more than a decade, Coveo has been committed to augmenting the relevance of digital experiences through the transformative power of search, semantic, advanced applied AI, and now generative AI. We've been successful and have unlocked substantial financial value by enabling hyper-personalization at every customer touchpoint, and our technology augmented digital experiences that drove meaningful financial outcomes in commerce, customer service, website, and also workplace applications. We see a market moving from this past two-year period of discovery and experimentation with AI since the launch of ChatGPT into now a period of deployment and results expectations. To a degree, AI has been a technology in search of problems for many companies, and we're seeing that fatigue. We're entering the, of course it's AI, show me period, where companies are eager to operationalize AI on their actual data and deliver real-world financial outcomes. A recent January 25 BCG report found that while executives' AI and Gen AI ambitions will be growing by 60% over the next three years, with 75% of them ranking AI as a top three priority, that only 25% are seeing significant value from AI. While customers and investors have questioned where AI would be applied and whether companies like Coveo would be disrupted or rather benefit from AI, Our growing pipeline and record bookings clearly indicate that Coveo is positioned as a highly differentiated market taker in applied AI. We're witnessing demand recovery and growing momentum across our business, as we can easily demonstrate that our AI relevance platform delivers superior results in key competitive areas that will be disrupted by AI within most industries. Before diving into the details of the quarter and highlighting some of our exciting client wins, I'll take a moment to emphasize the significance of relevance for enterprises in the age of AI and the strength, uniqueness, and necessity of our AI relevance platform for our enterprise customers. Relevance significantly augments digital experiences and is quickly growing as a competitive imperative, particularly in the age of AI. Every enterprise delivers digital experiences to all their stakeholders, websites, commerce, customer service, and in the workplace. Everyone engages digitally. Digital is table stakes, but relevance is not. Relevance impacts business in significant ways. If your experience is archaic, your better competitor is one click away, one browser window away. And once people experience a new digital paradigm that makes life easier, It becomes the new normal and they won't settle for less. And what people online are essentially telling businesses is simple. Don't waste my time because alternatives are a browser window away. In digital experiences, relevance refers to how well content, products, recommendations, and now with generative AI, advice aligns with an online person's context and intent. AI relevance seeks to achieve maximum personalization at every touchpoint, delivering accurate and actionable insights. By aligning experiences with individual needs, Coveo drives engagement, increases revenue, reduces costs, and creates significant value for our clients. It's our firm belief that unified relevance sets the new bar as the foundation to create the remarkable experiences in the future. These experiences will be generative, advisory, recommend content and products in the context of personalization and business imperatives. Equally importantly, search is not going away and needs to work alongside recommendations and generative AI from a common source of truth in a fully unified content, advice, and product experience. We can do this today. Bring your enterprise to every person, maximizing every journey, ditch rules and personas. Customers expect individualization across all touchpoints, served by numerous apps. Consider search's power across enterprise content, personalized for each customer. Imagine generative AI grounded in search and relevance, providing precise answers and advice. Visualize AI optimizing commerce, scaling revenue and margins, creating literally a million stores for a million shoppers. This is Coveo's AI capability. Over the past two years, while many companies have made bold AI claims, fewer have delivered. Coveo has consistently proven that its AI relevance technology generates tangible real-world results. Throughout a decade in AI search and relevance, a history of firsts in the space. Coveo has consistently witnessed massive financial gains by driving more relevance into digital experiences for leading companies like Zoom, Xero, Nespresso, Kalaris, SAP, F5, and many others. Today, the integration of generative AI within the Coveo stack is even more transformative, unlocking unprecedented opportunities for all experiences, including agent tech. AI relevance is now recognized as a critical need that Coveo fulfills. Achieving that, that relevance is complex due to the vast data needed, which sits everywhere, which is compounded by large and diverse audiences requiring personalized experiences and fragmented interactions. This complexity requires AI to solve, especially when business outcomes are at stake. AI relevance is a real science, and Coveo is at the forefront of that innovation. We consistently rank superior in A-B tests because the key challenge for large-scale enterprises, especially in generative AI, lies in the long tail of complex content. Enterprises need scale, speed, and precision, and that's where we excel. Our enterprise customers love Coveo's superior relevance. designed to easily connect to any content and deliver unified relevance everywhere, grounding AI in all their secure data. Poveo injects coherent search recommendations and generative answers, augmenting experiences across the board. Customers love the flexible, API-first, headless architecture and its ability to connect to all their content, context, and experiences apps, working out of the box in days or weeks not months and years. Enterprise data, content, but also context data is everywhere in databases and documents, customer conversations, and across multiple apps and repositories. At the same time, digital journeys are disjointed across multiple points of experiences and many apps, websites, commerce, customer service, workplace channels. Moreover, relevance in general is poor. poor in every app as most do not leverage broad enterprise data, let alone powerful AI search, semantic, and generative AI capabilities. Since we started in search personalization and machine learning in 2012, we have built the industry's leading platform that combines the power of unified secure indexing and vectorization with the precision of hybrid search relevance and semantics to create unified relevance from any source of data into any experience that the enterprise delivers. What our enterprise customers love about Coveo, aside from its superior relevance capabilities, is that it's designed as the one spinal ability to easily connect to any content and deliver pinnacle unified relevance easily everywhere, in any app or agent, grounding AI in all enterprise data securely and at high performance. Coveo can inject search, recommendations, generative answering of products and content that is all coherent from a unified source of truth, augmenting experiences easily across the board. Coveo is flexible. It's offered as an API-first and headless stack that connects the content, context data, and experiences app. It works out of the box in days and weeks, not months and years. That is why Coveo is being adopted. These recent customers have large-scale deployments of our relevance augmented generation techs and understand the imperative for generative AI grounded in search and relevance. We're proud of this success, which proves our technology's uniqueness and value. Laurent will soon explain the sophistication involved and why search and relevance is paramount for generative AI. For the technically inclined on the call, the hard part of RAG is R. And R is relevance. Digital experiences require grounding in powerful search and semantic to make generative AI work at scale. Overall, our third quarter results tracked well against expectations with record new booking, reflecting resumed buying behavior and a more educated market, a market that expects results with AI. Success with customers and a growing pipeline gives us confidence in our leadership position and continued acceleration. Our Coveo AI Commerce business saw strong acceleration in Q3, driving product discovery, recommendations, merchandising, and generative experiences for our clients. Laurent will provide further insights shortly about our commerce innovation. We're pleased to report strong momentum in commerce with a record number of new clients. This includes XXXLux, Agilent Technologies, and Trek Bicycles, adopting Coveo's AI Commerce stack, many acquired through our SAP partnership. XXXLuts, the largest furniture retailer in Europe with revenues of over 6 billion euros and over 370 stores and 24 different online shops, faced scaling challenges due to their vast catalog and lacked personalization. This is why they chose Coveo. Trek Bicycle, was significantly influenced by our SAP partnership, enabling us to demonstrate Coveo's AI power. Trek recognized the value of our seamless integration and commerce platform's flexibility to manage personalization at scale across their multiple brands and geographies. The third quarter also showed continuous momentum with Coveo relevance augmented generative answering and strong sequential customer count growth. Various analytics, A data analytics and risk assessment firm adopted our solution across multiple business lines. Our platform will support customer self-service for extreme event services. Verisk valued our enterprise-grade capabilities, flexibility, scalability, and security, plus our ability to reduce support costs and improve satisfaction with an easy-to-use, out-of-the-box solution. A large Australian DIY hardware and garden center chain retailer selected our solution to create generative shopping experiences. Doubling their investment with us, they're pioneering Gen AI use cases. We've proven here to be not just a technology supplier, but a trusted partner for AI commerce innovation, driving customer experience, revenue, and margins for them. These are just a few of several other examples of existing customers, such as SAP, Vanguard, and Edward Jones, who expanded their use of Coveo's generative AI solutions during the third quarter. Turning now to our partners, the third quarter saw accelerating traction from our SAP Commerce Cloud partnership. Half of our new commerce logos were influenced by our SAP Alliance, demonstrating the strength and value of our global collaboration. In March 23, we launched Coveo for SAP Commerce Cloud on the SAP Store, bringing AI-powered search, recommendations, and personalization to storefronts. SAP chose Coveo as an endorsed partner, offering sales incentives to their sellers, given the importance of our AI within SAP CX. Building on that commerce momentum with SAP, we've expanded our partnership in customer service. SAP certified a new SAP endorsed Coveo app for SAP Service Cloud, enabling enterprises to leverage Coveo's AI search and AI relevance models across SAP Commerce Cloud, SAP Service Cloud, and SAP CX. Our AI-driven experiences help SAP customers find products, resolve issues, and access support content driving engagement across the entire customer journey from purchase to service. We look forward to continuing that innovation with SAP, helping customers unlock AI-driven experiences. We also see progress in our Shopify alliance, offering AI-driven search recommendations and personalization for large merchants. As their needs evolve, Coveo AI and Shopify will deliver intelligent commerce experiences at scale, in both large-scale enterprise B2B and B2C commerce. Integrations between Coveo and Shopify were introduced at NRF in New York this January, a large global commerce conference, with positive reception. We're deepening our Shopify work and excited about the growth opportunities. Our AWS partnership is also now in full execution, targeting joint accounts with sales incentives. We're co-selling with AWS in high-growth industries like high-tech, financial services, retail, and many others. And finally, we're also continuing to invest in our partnership with Salesforce and their agent force teams in particular to scale Coveo's capabilities for large-scale requirements within agent tech and knowledge areas. In summary, Coveo's leadership continues to strengthen through the speed of innovation of our AI relevance platform driven by real-world tangible benefits we've delivered to leading enterprises globally. Looking ahead, the momentum from a transformative fiscal 25 continues as we secure new customers, expand partnerships, execute on customer value delivery with our platform, and continue to gain market recognition. As AI's role grows and enterprises demand results from AI, we remain excited about our future and position as a leader in this fast-evolving landscape. In anticipation of this accelerated growth and the inflection we see in market demand, we continue to focus on the expansion of our leadership team and the strengthening of our execution. With our business on a strong trajectory, a robust pipeline, and accelerated booking, we're confident in our ability to seize growth opportunities. As we scale and strengthen operations, we're making some thoughtful adjustments to our leadership structure to support our next phase of growth. Before I hand the call over to Laurent, I'd like to take a moment to address the leadership transition and redeployment plan we announced today. As part of our strategic succession planning and commitment to strong corporate governance, we're separating the roles of chairman and CEO. Effective April 1st, 2015, I'll take the full-time role of executive chairman and Laurent Simonot, our co-founder, CTO, and president, will step into the position of chief executive officer. Laurent has been the driving force in shaping Coveo's vision and driving our technological innovation and differentiation. And I'm confident his leadership, vision, and stellar reputation with customers will take Coveo into its next phase of growth and innovation. My personal commitment to Coveo is unwavering, and my energy will now be 100% focused on business development with Coveo's customers, partners, and the many growth opportunities that are available to us. In addition, John Gross Hands, our Chief Revenue Officer, will transition to the role of Chief Operating Officer, enhancing our operational capabilities as we continue to scale. Lastly, Marc Saint-Façon, co-founder of Coveo and current Senior Vice President of R&D, will transition to the role of Chief Technology Officer. This transition reflects our commitment to positioning Coveo for long-term success, and I look forward to working with Laurent, John, Marc, the leadership team, and all our amazing Coveo colleagues to pursue our growth as a market leader. On the whole, backed by a solid capital position, an exceptional team, customer results, and strategic leadership, we're well prepared for continued success in the fourth quarter and into fiscal 26. With that said, I will pass the call over to you, Laurent.