Optimization, Personalization & Testing

Coveo Reports Third Quarter Fiscal 2023 Financial Results


Third quarter SaaS Subscription Revenue grew 25% year-over-year to $26.4 million
Third quarter total revenue increased 23% year-over-year to $28.5 million
Current SaaS Subscription Remaining Performance Obligations grew 28% year-over-year to
$92.1 million as of December 31, 2022

Coveo reports in U.S. dollars and in accordance with International Financial Reporting Standards (“IFRS”)

Coveo Solutions Inc. (“Coveo” or the “Company”) (TSX: CVO), a leader in AI-powered relevance platforms that transform search, recommendations, personalization, and merchandising intelligence within digital experiences, today announced financial results for its third quarter of fiscal 2023, ended December 31, 2022.

“Coveo once again delivered solid results, in-line with our expectations and demonstrating an accelerated path to profitability,” said Louis Têtu, Chairman and CEO of Coveo. “The trend of large enterprises investing in AI-powered customer experience platforms to drive business optimization – an imperative – continues. We had a number of significant transactions in the quarter and continued to see demand for our solutions across all lines of business, which we believe bodes well for our future growth prospects.”

Third Quarter Fiscal 2023 Financial Highlights
(All comparisons are relative to the three-month period ended December 31, 2021, unless otherwise stated)

  • SaaS Subscription Revenue(1) grew 25% to $26.4 million compared to $21.2 million.
  • Total revenue was $28.5 million, an increase of 23% compared to $23.2 million.
  • Current SaaS Subscription Remaining Performance Obligations(1) of $92.1 million as of December 31, 2022, up 28% compared to $72.2 million as of December 31, 2021.
  • Gross profit (%) was 77%, an increase of 3%, and product gross profit (%) was 81%, an increase of 2%. Adjusted Gross Profit (%)(2) was 78%, an increase of 2%, and Adjusted Product Gross Profit (%)(2) was 82%, an increase of 2%.
  • Operating loss was $10.7 million and Adjusted Operating Loss(3) was $3.9 million.
  • Net loss was $10.0 million, compared to net income of $426.3 million. Net income in the comparable period was impacted by a non-cash gain of $269.2 million and an associated income tax recovery of $184.4 million, both related to the Company’s preferred shares converted immediately prior to the initial public offering of the Company in November 2021.
  • Cash and cash equivalents were $207.6 million as of December 31, 2022.

Third Quarter Fiscal 2023 Operational Highlights

  • Net Expansion Rate(1) of 107% as of December 31, 2022.
  • Announced the Coveo Relevance Cloud™ for Financial Services to help meet the demands of today’s retail banks, insurance companies, and wealth management organizations. The Coveo Relevance Cloud for Financial Services is used by over 50 leading, diverse institutions across the financial services sector including the Royal Bank of Canada, Manulife, and United Wholesale Mortgage, to help them realize tangible ROI.
  • Named the winner for Ecommerce Innovation by the UK Ecommerce Awards 2022 for Coveo’s Personalization-as-you-go capability. With 86% of ecommerce shopping sessions coming from anonymous users, this feature enables brands to deliver highly relevant and personalized query suggestions, product rankings, and product recommendations without the need for high volumes of data, pre-defined persona segments, or logged in user profiles.
  • Named a Leader in the 2022 Gartner® Magic Quadrant™ for Insight Engines(4) for the fifth consecutive time for its Completeness of Vision and Ability to Execute.
  • Launched an intelligent, out-of-the-box Facet Generator that automatically returns all relevant search facets for a given search or listing page to provide a best-in-class navigation experience for large enterprises with complex needs. This feature works with zero traffic, leveraging the intelligence within Coveo’s unified index to return the most relevant results.
  • Released analytics and developer tools for use within Snowflake. The new features provide real-time access to Coveo Analytics through Snowflake’s reader account where data can be leveraged in any business intelligence tool – and even combined with other external data sources – for a more complete visualization of search engagement and business performance.

Financial Outlook

Coveo anticipates SaaS Subscription Revenue(1), Total Revenue, Adjusted Operating Loss(3), and Weighted Average Shares Outstanding to be in the following ranges:

Q4 FY’23 Full Year FY’23
SaaS Subscription Revenue(1) $26.6 – $27.1 million $102.5 – $103.0 million
Total Revenue $28.6 – $29.1 million $111.5 – $112.0 million
Adjusted Operating Loss(3) $5.0 – $6.0 million $20.9 – $21.9 million
Weighted Average Shares Outstanding 105.5 – 106.0 million 104.0 – 105.0 million

These guidance ranges are based on several assumptions, including the following, in addition to those set forth under the “Forward-Looking Information” section below:

  • Achieving expected levels of sales of SaaS subscriptions to new and existing customers, including timing of those sales, as well as expected levels of renewals of SaaS subscriptions with existing customers.
  • Achieving expected levels of implementations and other sources of professional services revenue.
  • Maintaining planned levels of operating margin represented by our Adjusted Gross Profit Measures(3) (as defined below) and Adjusted Gross Profit (%) Measures(2) (as defined below).
  • Expected financial performance as measured by our Adjusted Operating Expense Measures(3) (as defined below) and Adjusted Operating Expense (%) Measures (as defined below).
  • Stabilization of ongoing headwinds, including those related to economic and geopolitical factors, impacting sales cycles, pricing and the ability to generate new business.
  • No drastic strengthening or re-strengthening of the strict measures put in place to help slow the transmission of COVID-19 or its new variants in the jurisdictions in which we have significant operations.
  • Our ability to attract and retain key personnel required to achieve our plans.
  • Similar inflation rates, interest rates, customer spending, foreign exchange rates, and other macro-economic conditions.
  • Our financial outlook does not factor the impact of acquisitions that may be announced or closed from time to time.
  • Weighted average shares outstanding assumes no share buyback activity.

These statements are forward-looking and actual results may differ materially. Coveo’s outlook constitutes “financial outlook” within the meaning of applicable securities laws and is provided for the purpose of, among other things, assisting the reader in understanding the Company’s financial performance and measuring progress toward management’s objectives, and the reader is cautioned that it may not be appropriate for other purposes. Please refer to the “Forward-Looking Information” section below for additional information on the factors that could cause our actual results to differ materially from these forward-looking statements and a description of the assumptions thereof.

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