Docebo, Inc. Q3 FY2024 earnings call

• Execution in a tough macro environment: The team has executed well, with customers appreciating the ability to serve multiple use cases (EX and CX). - Partnerships: Advanced with system integrators like Accenture in Europe, and partnered with Deloitte in the government space. - Pricing strategy: Shifted to core bundle pricing, driving value-driven conversations and higher ACV. - AI offering: Set to launch in 11 days, with significant beta interest. - Communities product: Developed from an acquisition, with potential for internal and external use cases. - Organizational focus: Adjusted structure to focus on mid-market and enterprise, using ABM approach and strategic revenue analysis.

The enterprise segment grew 25% this quarter. The SMB segment saw growth in the single digits. The company focuses on mid-market and enterprise segments, with the enterprise being a key area of focus.

• Q4 revenue guidance is 14% growth. - 2025 focus on enterprise segment, particularly external use cases like CX. - Pipeline in mid-market and enterprise segments is strong, with opportunity to maintain growth. - Will provide annual guidance for 2025 in February.

• Uncertainty around FedRAMP certification timeline as it's outside the company's control. - Impact of new administration on government contract processes. - Working capital timing affecting free cash flow, with annual bonuses paid semiannually.

Q: How has the company been executing well in a tough macro environment?

A: The company's ability to serve multiple use cases (EX and CX) is a superpower, and investments in partnerships and go-to-market strategies are paying off.

Q: Update on FedRAMP certification?

A: Docebo is audit ready, working actively to finalize a sponsor relationship, but timeline is uncertain.

Q: Update on pricing strategy?

A: Shift to core bundle pricing has driven value-driven conversations, higher ACV, and new deals are priced at the new price book.

Q: Growth by cohort?

A: Enterprise segment grew 25% this quarter, SMB in single digits; Q3 is seasonally slower, and prior year had a large deal (Google) as a comp.

Q: OEM strategy and Ceridian/Dayforce?

A: Partner strategy is strong, focusing on expanding partner wallet, with focus on supporting large enterprises and SI relationships.

Q: Sales and marketing organization structure?

A: Structured by region for international markets, and by segment (mid-market and enterprise) in North America, with partnerships supporting sales efforts.

Q: AI offering and margin?

A: AI offering set to launch soon, with strong beta interest; details on margin and cost savings to come after launch.

Q: Partnerships strategy?

A: Prioritize build where synergies exist, partner for product integrations, and consider acquisitions for healthy assets.

Q: Free cash flow and working capital?

A: Free cash flow impacted by working capital timing, with annual bonuses paid semiannually; trailing 12-month free cash flow consistent with adjusted EBITDA.

Q: FedRAMP and large RFPs?

A: FedRAMP certification is priority for federal market TAM, and participation in RFPs tied to achieving certification.

Q: ACV stabilization and levers?

A: ACV showed strength in Q3, with pipeline increasing upmarket; expected to stabilize and increase steadily with pipeline and pricing changes.

Q: ARR book trend and Q4?

A: Pipeline heavy in mid-market and enterprise, deals taking longer but execution improving; guidance for 2024 targets uplifted.

Q: Improving pipeline?

A: Focus on mid-market and enterprise, using ABM approach and strategic revenue analysis to improve pipeline.

Q: Senior leadership and hiring priorities?

A: New executives hired (Chief of Staff, EVP of Corporate Development, SVP of Product Management, CMO); hiring priorities focus on strengthening organization in people, products, and services.

Q: Communities product and M&A?

A: Communities product has beta success, with internal and external use cases; M&A active, selective, focusing on accretive, value-creating opportunities with healthy businesses.