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01/11 16:17
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed sentiment. Positive aspects include strong generative AI revenue growth and successful commerce bookings. However, the renegotiated Salesforce contract and negative cash flow are concerns. The Q&A reveals some uncertainties, such as delayed deals and the impact of the Salesforce contract on guidance. Overall, these factors balance each other, leading to a neutral sentiment. Without market cap data, the stock's reaction is uncertain, but the mixed signals suggest limited short-term movement.
SaaS subscription revenue $35.9 million, grew 15% year-over-year. Growth driven by continued momentum of generative AI solutions, commerce use cases, and expansion within the base.
Coveo Core Platform revenue $35.0 million, up 17% year-over-year. Represented the highest growth rate in nearly 5 quarters.
Qubit Platform revenue $0.9 million, down 24% year-over-year. Expected to fully churn by the end of the fiscal year.
Total revenue $37.3 million, up 14% year-over-year.
Net Expansion Rate (NER) for Coveo Core 105%, down from 108% last quarter but up from 104% a year ago. Decline due to a renegotiated customer contract with Salesforce, representing approximately 3% of ARR.
Adjusted EBITDA $0.6 million, slightly ahead of guidance range, compared to $1.5 million a year ago.
Cash flow from operating activities Negative $10.8 million, compared to positive $1.4 million last year. Decline due to timing of working capital.
Generative AI solutions revenue growth Approximately 150% year-over-year. Near perfect retention rates with NER of more than 150%.
Commerce use case new business bookings One of the best quarters ever, driven by ongoing successful partnership with SAP.
Generative AI solutions: Represented more than 35% of new business bookings this quarter, reflecting continued strong momentum. Customers like Halliburton, Deckers Outdoors, and Intermountain Healthcare adopted these solutions. Existing customers such as NVIDIA, Intel, and GE expanded their investments in these solutions.
Commerce segment: Fastest-growing segment, driving nearly 50% of new business bookings this quarter. Customer wins included HORNBACH, Solar, and Carlton One. SAP partnership influenced 50% of commerce bookings.
Agentic and generative AI: Coveo's platform powers search with relevant content, enabling agentic and generative AI solutions that deliver tangible business outcomes. Examples include SAP's deployment, which saved over EUR 100 million annually.
Commerce growth: Commerce remains the fastest-growing segment, benefiting from multiple tailwinds such as leadership in B2B commerce and convergence of commerce and knowledge into a single integrated capability.
SAP partnership: Continues to show momentum, influencing 50% of commerce bookings. SAP's deployment of Coveo saved over EUR 100 million annually.
Revenue growth: Subscription revenue for the Coveo Core Platform accelerated to 17%, the highest growth rate in nearly 5 quarters. Adjusted EBITDA was above guidance at $0.6 million.
Customer retention: Generative AI solutions maintained near-perfect retention rates with NER over 150%. Excluding Salesforce, churn was the lowest in 7 quarters.
Operational adjustments: Proactive targeted investment adjustments within the go-to-market organization to align resources with high-return opportunities.
Strategic partnerships: Salesforce remains a customer and strategic partner despite a renegotiated contract. Coveo's solutions are becoming more strategic for customers, requiring additional stakeholder approvals.
Market positioning: Coveo is positioned as a leader in AI-powered search and commerce solutions, with a focus on delivering measurable ROI and addressing enterprise data complexities.
Renegotiated Salesforce Contract: The renegotiated contract with Salesforce resulted in a 3% reduction in ARR growth rates and net expansion rate (NER). This was due to Salesforce's internal mandate to use its own Data Cloud, which is an isolated event but impacts revenue growth.
Delayed Deal Closures: Some deals forecasted to close in Q2 were delayed to Q3 and beyond, requiring additional stakeholder approvals. This delay impacts short-term revenue and bookings.
Qubit Platform Revenue Decline: Revenue from the Qubit Platform declined by 24% year-over-year and is expected to fully churn by the end of the fiscal year, negatively impacting overall revenue.
Customer-Specific Churn: Excluding Salesforce, churn was the lowest in 7 quarters, but the Salesforce contract renegotiation highlights potential risks with large, strategic customers.
Economic Uncertainty in Deal Approvals: Deals requiring more stakeholder approvals indicate potential economic uncertainty or increased scrutiny in customer spending, which could slow down revenue realization.
SaaS subscription revenue for Q3 FY2026: Expected to be between $35.7 million to $36.2 million.
Total revenue for Q3 FY2026: Expected to be between $37.1 million and $37.6 million.
SaaS subscription revenue for FY2026: Expected to be between $141.5 million to $142.5 million, adjusted from $141.5 million to $144.5 million.
Total revenue for FY2026: Expected to be between $147.5 million to $148.5 million, adjusted from $147.5 million to $150.5 million.
ARR growth by end of FY2026: Expected to be roughly mid-teens.
Adjusted EBITDA for Q3 FY2026 and FY2026: Expected to be approximately breakeven for both periods.
Operating cash flow for FY2026: Expected to be positive, adjusted from approximately $10 million due to renegotiated customer contract and other factors.
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The earnings call presents a mixed sentiment. Positive aspects include strong generative AI revenue growth and successful commerce bookings. However, the renegotiated Salesforce contract and negative cash flow are concerns. The Q&A reveals some uncertainties, such as delayed deals and the impact of the Salesforce contract on guidance. Overall, these factors balance each other, leading to a neutral sentiment. Without market cap data, the stock's reaction is uncertain, but the mixed signals suggest limited short-term movement.
The earnings call reveals several negative factors: a delay in the XPro FDA meeting, limited efficacy in the INKmune trial, and cautious partnership progress. While financial losses decreased and cash runway extends to Q4 2026, the need for additional financing looms. The Q&A session highlights uncertainties and management's reluctance to provide detailed guidance. These elements, combined with the lack of a new partnership announcement or strong guidance, suggest a negative stock price movement in the short term.
The earnings call presents a mixed picture. Financial performance shows a significant net loss due to impairment, but cost-saving measures are in place. Product development is promising with positive feedback on XPro, but faces delays and dependence on partnerships. Market strategy is cautious, focusing on rare diseases. Cash reserves are adequate for the near term. Q&A highlights potential partnerships post-FDA meeting, but uncertainties remain. Overall, the sentiment balances out, leading to a neutral rating, with no strong catalysts for a significant stock price movement in the short term.
The earnings call highlights several concerns: regulatory challenges, financial sustainability issues, and market competition. The Q&A section reveals management's reluctance to provide clear timelines or metrics, which may unsettle investors. The net loss and limited cash reserves further exacerbate financial worries. While there is potential excitement for new therapies, the overall sentiment leans negative due to uncertainties and lack of strong positive catalysts.
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