Good morning, everybody. Welcome to Docebo Inspire 2023's Analyst Investor Presentation. I'm Mike McCarthy, Vice President of Investor Relations. This morning we have presentations by Claudio Erba, our CEO; Alessio Artuffo, our President Chief Operating Officer; and Sukaran Mehta, our CFO. After which, we'll tackle some questions. During that part of the program, I ask that you raise your hand. Sukaran will point you out. I'll bring over a handheld microphone and ask that you give us your name, your firm, ask your question, hold it to a follow on, and then we'll move the mic to the next person. Joining us today for the Q&A, in addition to the exec team, will be Fabio Pirovano, our Chief Product Officer; Giuseppe Tomasello, who's Head of AI, many of you probably heard their presentations this morning as well; and Harvey Morrison, who heads up our government sales unit. So with that, I would just remind you that during the presentation and during the Q&A, we will be making some forward-looking statements, and please make note of the cautionary statements here on the screen and in the presentation on the website. So with that, I'd like to hand the clicker off to Claudio Erba. Claudio? Thank you. So first of all, welcome, and I'm happy to have you here finally in person, because I think we met in person with very few of you, but we've been in touch since now four years. Quick story, really, Docebo is an outlier in terms of the kind of company that you know went public and became now the best of breed in the learning management system space now that you know our biggest competitors are having their own troubles and we have a lot of RFPs coming from there, stuff like that. We always approach it. The strange things for myself and Fabio is that we started the company without being a subject matter expert. This probably has been the biggest competitive advantage because it allowed us to approach the learning space with a fresh mind, without the bias of the other players. At that time, they were like IBM learning space and those dinosaur or fossils. When we met Alessio, the story was nice, and I'm gonna tell you now, but Alessio was already working in the United States, selling learning content management system, which is very similar segment to us. I provided him $65,000 to open the Athens office. True story. He said $45,000. It was $65,000. It was 30. The market was so interested to buy our solution that we never recapitalized the United States entity. We were self, you know, sufficient. Then we have opened up the Atlanta office, and in 2014, we signed the first American customer, thanks to Alessio, and if I'm not wrong, it was Zendesk, that churned one year after. Why churn one year after? Because we had to learn how to serve United States-based customer. Professional services and support was delivered from Italy, and this didn't work. The journey from 2014 - 2016 was to set up the best team in town, to set up the sales organization, and everything went well, and then we started working with Klass Capital and then with Intercap. In 2016, we raised another few millions. You all know that to create $1.3 billion-$1.4 billion of market cap, we have invested only $14 million. First IPO, second IPO, et cetera, et cetera, et cetera. We started in 2021 to launch what was the Docebo Learning Suite that now have been reshaped into modules for the Docebo Learning Management System. All the technologies that we have been built have been the result of what you have seen in the product stage, because the Docebo Flow is now the underlying technology for Microsoft Teams integration. The Docebo Insight was part of the technology that we have built because of the acquisition of forMetris. Also, by the way, this was not celebrated enough, but Docebo Insights is also thanks to an alliance of Amazon AWS. I mean, we are probably the main contributor on the ideas that have been bring inside the AWS roadmap. So we have a lot of leverage on what QuickSight is doing on in term of roadmap. And then we have acquired PeerBoard a day ago. What I was impressed is about the presentation today is that what we have seen for Docebo Shape is three months of work. We have closed the deal three months ago, and then we already have a prototype in our hands. PeerBoard were closed probably five months ago, and we are already having in our hands something tangible that is proving that Docebo is capable to execute and digest and integrate the key acquisition very quickly... So we have deployed capital, but it's not an investment that is gonna pay in five years. It's something that is happening already. I think that this was better crafted in Alessio's slides, where, you know, in my-- one of my first customer in 2008 was Technogym. Technogym was which you all know, because they do gym equipments in all this gym Technogym equipment. And they started training... We used the Technogym as external training for the Beijing Olympic Games, to train all the people in Beijing on how to explain how the hardware training machine works during the Olympic Games. That was an early glimpse of external training, but that was an outlier. Like another outlier was Ducati, that was training in 2008 all their dealers. But the real market in early 2000 was centralized HR, soft skills, and maybe some compliance. And now we have seen this shift on departmental adoption, which is multi-use cases, where our biggest competitive advantage is that we are horizontal enough and customizable enough to support multiple use cases. Now, external training and training monetization is the main topic. By the way, there is a partner called Honorlock here, which we are working for the big deal with one of the tech companies. I know it's recorded. With one of the five big tech companies, and they are running certification. So they needed a proctoring system, and the feedback is 50 customers of ours that are here, they have asked an integration with Honorlock. That means that the external training is what is happening now. Very, very little companies are still monetizing, but when I say very little, then I do see that our e-commerce system run 131 million of transaction every year. I mean, the number is something, and we are still in the early stage. So this is where the AI, the LMS market is going. Total addressable market is shifting toward internal and the total addressable market for to the external. I do think that the real opportunities sit not only in North America, but especially in Europe and in other areas, especially now that the world is decoupling, that India is becoming a big, big, big superpower. And, Fabio is busy many things. He's now deploying the FedRAMP environment. He's now deploying this big infrastructure for this big customer we have signed. But not only, we are opening an AWS region in India to serve our new OEM partner that we have announced, Darwinbox. So, I mean, our ambition is to be global by any means, geographically, covering multi-use cases, and so on, and so on, and so on. I do see trends which are the classical one that are at the bottom, upskilling and reskilling. I mean, the problem now, geopolitically and demographically speaking, and no one is realizing yet, is that the population is shrinking, not in term of total population, but especially in term of employable population. There are less workers. I was speaking with someone today at breakfast, and he said, "You know, I do see that all your partners are stealing employees across themselves because there are no resources." The fact that there is a short, a small, a smaller number of employable people require, as a strategy of attraction and retention, that you prove to invest in people. And anecdotally... Guys, give me the time, Mike, give me the time, because if I, if I'm going to- Can I go? Okay. We have built in Docebo our internal coding school, because the idea is to give them internal career opportunities that are not only bottom-up. I mean, otherwise, everyone is competing to become the next Docebo CEO. 1,000 employees, one prize, and what about the other 999 people? So we decided to create also horizontal career path through especially regarding technology and software. So we have created the Docebo Coding School where quality assurance, quality control, support people can become cloud engineer, AI engineer, and software developers. And the number of people that have enrolled in the academy is 20% of the workforce. Part of them want to change the role. Part of them want to learn more to better perform in their career. So the workforce upskilling and reskilling is a secular macro trend, and this is the only way you can—you have to do, you can do it, is through a learning management system. Authoring capabilities is heavily tied to AI. AI, in my opinion, will have two different impacts. One is on productivity, automation of the admin part of the learning management system, which is tied to the decrease of employable people, because if there are less people that can... Less LMS admin because they can find a job in two hours going in some other company, so there is a lack of resources. We need to ask AI to do some work. But the second is in content production. I like to use, but Alessio don't like it, and Alessio is the man of the brand, the concept of GLMS, Generative LMS, where the LMS, thanks to generative AI, can create content on its own without the need to connect with content libraries. The public, and this is not something is gonna happen tomorrow, but you have seen already a glimpse on what can be achieved, just giving AI some instruction. It will build the content without the need of going, you know, to buy content from our, from other libraries. The other topic is extended enterprise. Now, learning is decentralized. Decentralized means that the stakeholders that manage learning management system are different, with different skills, different need, different success, KPI of success, and so on, and so on, and so on. Providing multi-experience and multi-admin capability is the only way to train people without a centralized, bureaucratic, slow, HR-driven learning strategy. By the way, we have announced Project Aria. It's fantastic to be here with you all. It's really good to see you all in person and have a personal experience after the many questions you've asked in earnings, earnings calls. Today I'm gonna talk to you a little bit about our strategic initiatives from the go-to-market standpoint, how they attach our product strategy, and so on and so forth. Let's dive in. First and foremost, the chart is self-explanatory. All of you are pretty good at math, so you can see percentages right there. The reason why that's happening is we've been running the company with a posture from a GTM standpoint, decisions we're making on people and marketing, and really in sync with Fabio's organization to build a company that succeeds and focuses on winning the best brands in the world. Claudio has been a little cheeky in the reference to our big customer that we announced, although unnamed in a way. That really is just an example of a more pervasive strategy that across the company means that we're extremely focused on winning more strategic enterprise business as Docebo Enterprise is currently defined as an organization that has more than 5,000 employees. We recognize that there's even a another layer, perhaps from a segmentation standpoint, above 10,000 employees, where organizations are rather complex, and their complex needs reflect an opportunity for us to serve them with multiple use cases, which I'll address in just a minute. From a market perspective, this chart outlines a little bit our coverage in terms of ARR distribution against industries. What I'd like to emphasize here is, we are distributing our efforts, our successes being across various industries. We've been able, over the past year or so, in which we've seen softening in the tech spend, we were very fortunate to have a business that was succeeding tremendously in other industries that were actually growing. You know, our efforts continue to become really good at marketing, selling, and executing in professional services, in industries, and getting really specific about it. What does that mean? It means that while little to no effort up until now. That government 5% is primarily state, local, and education, actually 100% of it, and it's been very organic by serving the needs of organizations in that segment that needed an LMS. But the reality is, let me just be very clear, we treated that segment up until now, just like every other commercial segment. We were not very intentional in the way we went about it. We went about it uneducated on how you actually commercialize in gov, and just by doing that, it's already 5% of the revenue of the company. Imagine a world in which we knew what we're actually doing. Imagine a world where we understand that the buying cycle of a state is very different from a commercial enterprise, and that world is starting to be now. We brought on board Harvey, that has been in the government space for software companies and consulting companies for his entire career, and his biggest job in the first few months at Docebo was to educate us to understand all the dynamics that occur across state, local education and federal, which we haven't even scratched the surface of that because we haven't even sold a single dollar in federal. However, when you look at the past five years spend in LMS in federal, which is massive, you will notice that the vendors that play in that space are rather... How can I be, in clear but not demeaning towards those vendors? Legacy. How about legacy? Not exciting. Contrary to the perhaps myth that government organizations are not as innovation-driven, they actually are very, very, very focused on bringing on board technologies that are more modern, different, and up-to-date with the commercial standards that exist out there. Here comes Docebo. We're gonna go in that market. We're going to disrupt it. We're gonna win out those legacy players because we already do on the commercial side. It's not gonna be different. We just gotta be smarter in the way we manage the bids. We're gonna have to have FedRAMP, which we're acutely aware of. We have a plan to achieve it, we've already started working on it. We have engaged with UberEther as our provider to accelerate the FedRAMP ATO and our product team, IT team, security, security teams, all, are all over it. We have timelines, a project governance management, and we've already bid several federal opportunities in search for a so-called sponsor that's gonna allow us to actually have our FedRAMP certification in the marketplace. That's exactly how I feel with all the things we gotta do. But this is really exciting, and it's a tremendous opportunity for us to grow and to hedge against any volatility in the commercial markets. Commercial markets in which we're seeing specialization opportunities in a few sectors. We're not going to be clear to just spend a lot of resources and create expensive organizations where we now create a banking segment and a retail segment, and healthcare segment. Not outright. We're gonna be intentional about developing playbooks and naming certain reps that are gonna be more specialized in certain areas. And then when we get the traction and we have evidence that it's time to make slightly bigger bets for these verticals, we will do it, but it will be gradual. We've been studying playbooks from Salesforce. We're a customer of theirs. We've been studying a lot on how they actually have chosen to do verticalization over a course of 10-year strategy, and we believe we have now what it takes to commence that journey, and it will be a, you know, a long-term journey, and it starts now. We're extremely fortunate, and the job is challenging altogether, which makes the job real fun. We're fortunate because every time we get in a company, you heard me say this multiple times, we have multiple buyers, not just one. Challenging because marketing a product to multiple personas that have sometimes very different needs and underlying motives and emotions, can be different. If you sit down in a room with a customer education organization and with a compliance organization, you're gonna have very different conversations. Now, their end goal is still the same, training people. The outcomes that they expect are different. So what we're getting good at? We're getting good at injecting value engineering and value services inside our GTM team. So when we sit down with a compliance officer or with a customer ed officer, we don't just talk about features and functions, which is great, but we talk to them about what they're gonna be accomplishing, thanks to us. That's, we're elevating the conversation, and that is necessary as we work with these big enterprises. I spoke about government already a little bit. Harvey is the subject matter expert. He's gonna be here to answer any specific questions you have. I was very fortunate to learn a lot from him and by, so to speak, rolling up sleeves and getting hands dirty in this world over the past few months. I'm more than ever excited then to share a few things. Some of these points already covered. You know, there's a focus on Fed and SLED opportunities. This, the second point is extremely important. We, you- some of you may have been in the room with our partners at Deloitte. Eric was presenting on stage, and that relationship is extremely solid. We, we are building together a very material pipeline, across both Fed and SLED. I don't like to word, use the word exclusive, because in this world, nothing is exclusive. But I would say it's a preferential, is that a good terminology? Choice that Deloitte's been making in the federal and state and local space, and recognizing there are capabilities in the commercial market can reflect in big money for them in the government space as an asset, that can replace a legacy incumbent vendor that they used to use as a preferred, and take us to market in these agencies where they're ready. And so we're gonna bear the benefits of that in two ways. One way, we're gonna be with them across multiple agencies that are gonna open new bids. The second one is, we already know which of those companies that Deloitte is already in as a legacy vendor. We know how to swap them out, and we're gonna be after that. I spoke about FedRAMP certification, and listen, yeah, we, we believe that while the Deloitte relationship is extremely meaningful, the partnership traction is equally really good. We are working also with a company that was here today. If you haven't met them, you should. Really, really, experts at both the business of learning and government. They call, they call this eSkillz. They're, they're fantastic, and we're doing work together with them. They, they are used to be our also a cornerstone on-demand practice and, and a couple of other assets. They've chosen to get closer to the Docebo because they believe in our technology, and together with them, we're bidding on significant state and local and federal agencies. And again, it's a partners, it's a partners motion. We are acutely aware of that, and we're not gonna stop at just these two partners. There's a lot more to do. Just zooming back out for a minute. It was covered today in the product keynote, but the reality is, as we think about the future of the company, we recognize that our strategy of building products that yield more usage from a use case standpoint eventually lends itself in better unit economics. That's why we're doing it. We're not just doing the PeerBoard and the Edugo.AI of the world for the sake of being technologically advanced, which we want to be, but it's with the end goal in mind of increasing our penetration and satisfying more buyers. Because we have proof in the pudding that if we do that, then we have way better unit economics, and the data that we're presenting today says that customers with more than three use cases have 95%+ gross retention and a way higher, and I would say top quartile, net retention rate. With that in mind, I pass it over to Sukaran, and I look forward to your questions later. Thank you. Thanks, Alessio. Just my sweater was a bit different color, but the same theme, basically. I just have two slides. I know that I'm mindful of time and want to give some time from a Q&A perspective. I want to summarize in two slides. One, what's the pillars of growth? When you think about pillars of growth, what drives revenue growth over the next horizon? When you think about the 3-5-year cycle, what are the five pillars of growth that are gonna do it? I'm just trying to put it together in what we heard this morning. External use case, we talked about it. If you looked at the TAM numbers earlier, when you look at the external use case opportunity, and 70% of that opportunity is greenfield, that's what drives consistently our pipeline. That's why we have the highest win rates, and if we continue to be the leaders in that space, we can continue to maintain that momentum from a growth perspective. For us, this is one of the most important pillars of growth, combined with the second part, which is moving up to the enterprise segment, moving upmarket into large organizations such as the big techs and other customers that use our platform. As you know, 65% of our customers use our platform beyond the employees. At a minimum, they're using us for a customer, partner, retail, external user, which is tied to revenue generation or tied to some sort of customer retention exercise. Very different profile than just onboarding your employees or retaining your employees. To the extent we can combine all of that between the external use case and moving upmarket, that two pillars combined have consistently given us good growth over time. I won't spend too much time on the enterprise, into the third piece, which is the government segment, but I think some numbers are helpful. These are all publicly available. In the last three years, in the federal space, $261 million was spent by the federal government. Legacy players that we talked about, that have won some of that business. There's a lot of interesting opportunities with some of the legacy players that also have not delivered on those opportunities, and we certainly see an opportunity, see ourselves as leading into that, as we've talked about this morning. Land and expand is important. We've got 3,600 customers, give or take, today. We have an interesting. You've heard a lot of product roadmap items. We have an interesting opportunity, not only to retain the customers, but grow that base over time. There's a few ways. You can see the expansion. People ask a lot of questions around that. There's seed expansion, and there's cross-selling. What I say is when you start from a one burger chain that's owned to sell to multiple burger chains of that same... another franchisee of that burger chain, or you start from an AWS, and you win Amazon Logistics, Fannie Mae internal use case to external, that is what we call a land and expand strategy. It's not just about seed, seed expansion. It is about going to different divisions or multiple subsidiaries of that parent entity. Finally, I think this is, you know, we spoke about it, but the role of OEMs and system integrators, I think we, this is one area that we've talked about in the Q2 print. We announced firstly, that we partnered with Darwinbox. You know, it's a market where personally, it's not a market that Docebo can enter themselves. India is a very difficult market. By partnering with folks like Darwinbox, we have an opportunity with a player in the market to be able to sell into one of the biggest populations in the world and growing at a faster pace than any other country. At the same time, we also announced a partnership with a Big Four consulting firm, where we-- they will white label our product in terms of their future of learning exercise. So the OEM channel, with some of the, you know, initiatives that Alessio has started in the team, is starting to now come back. And then the role of system integrators, I think we've talked about the fact that, as you think about the source attribution and how we will continue to grow this business- you know, the business from an outbound and system integrators perspective is going to materially-- That's what contributes to the expansion in the enterprise segment, too, as well as the government side. You've heard from our friends at Deloitte present yesterday, but that is how you drive that motion of moving upmarket, as well as moving into certain verticals where we need to partner with an SI. We are not an organization that can support the requirements on managed services and on doing all the content management that has to be done for federal agencies. That is what the world of our partners do from a system integrator perspective, too, such as Deloitte. Finally, this is one that will be helpful for folks. It's a bit of a refresher. We will. will. I wanted to give some perspective on where we see operating leverage on a three-year goal basis. I'll start with... I didn't have gross margin here. I'm sure you guys will ask me some questions. You should expect our gross margin to be relatively stable, and that is irrespective of the investments we are making from an AI perspective. We are confident in our capabilities to deliver the margin that we have today, but we are also mindful that we have to invest in our services, professional services, customer support, organization. As we win with these large customers, I am not going to drive higher operating leverage and gross margin because it's at 81%. We're very confident to maintain that. Maybe a small bit of operating leverage comes through there, but I rather reinvest that in terms of maintain that gross margin where it's at, to support happy implementation, happy customer, happy expansion. I just keep it simple that way. Sales and marketing, you know, there's an interesting dynamic. I would say that Alessio will chime in as well, is that, you know, there's some dynamics that have changed since 2021, 2020 era. Of course, there is - there's, you know, events are back. This is an incredible event. This is the first time being back. There's costs that are coming back, such as events, being in person. But being in person also drives higher quality leads. Being in person also drives higher retention. If you meet a customer once a year, there's an incredible statistic that you have a 3x probability of retaining that customer over time. But that said, from a sales and marketing perspective, this year, we will exit 2023 Q4 with the lowest attrition we have seen in the past three years. What that really tells you is that if it takes us nine months to fully ramp a quota carrier, and that inefficiency from a quota capacity is not there anymore, plus the fact that on the inbound. So, plus the fact that the SIs are also helping us drive that pipeline, alongside the fact that the auctioning on the lead gen spend is no longer as competitive that it used to be because you were competing with the private capital market on lead gen spend, you are going to start seeing efficiency in the sales and marketing engine. And we've started to see that in Q2, where sales and marketing as a percentage of revenue, sort of showed efficiency. But this is a reasonable place where we feel confident to deliver quality growth. This is just natural leverage of some of the smart moves we've made from how we work with SIs and others, as well as seeing the market not being as crazy from a hiring perspective, too, and productivity gains. R&D, I like my job, I'm glad, you know, Claudio needs to. I just enjoy, you know, making sure that I, I'm employed, so I give Claudio whatever budget he requires in life. In general, 16- Not true. Not true. That's true. 16%-18% of revenue is a good range to consistently invest. I would remind folks, because there's a lot of North-- all of you guys are North American based, but one of the biggest benefits we have from an R&D perspective is we have an incredible team in Milan and in Paris, primarily, at a much lower cost base compared to... Forget about U.S., even Canada, north of the border, that number will be 25%-30% if we had that same workforce in North America. So people have to be mindful of the fact that not only that workforce is from a cost perspective, beneficial, but from an attrition perspective, it has-- I talked about sales and marketing, the lowest attrition. Our R&D team has the lowest attrition in the history of the company. We have an incredible brand in Italy, and we are able to retain and get talent that we don't have to compete with the Shopifys and the Lightspeeds and the Kinaxis of the world in Toronto. I'm not even talking about the U.S. Finally, G&A. I mean, I've said this a few times, this is the part that is straightforward. If you look at companies that scale, where sub 200 million ARR, companies at 300 million ARR, are give or take, at 10%-11% of G&A as a percentage of revenue. The simple math is here: For the last four quarters, if you look at my numbers, G&A's [held]. G&A has been held flat. We have made investments in technology. Some of the work that we've done in my prior roles is what we've executed here, where we've invested in the infrastructure that maintains that G&A cost flat, relatively flat. And as you look forward, this is the one area that you should consistently, every quarter, see operating leverage come through. If you do the math overall, you get a good perspective of where, from an EBITDA free cash flow perspective, we've already said to the street that we will exit Q4 2023, 10%+ EBITDA free cash flow. And as you move forward, you can figure out, I'm sure I'll get some questions, but our final point and most important point, we are a company that focuses on growth... Sorry, on Rule of 40, where growth is the primary factor. All of what I've said here has nothing to do with cutting any investments. This is just the natural operating leverage that you're gonna see in the system just come through as we scale our business and we maintain those investments. Without compromising investment in sales and marketing and R&D, you are going to see a healthy Rule of 40 business, where growth will be the primary contributor and the remaining coming from EBITDA free cash flow. With that, I'll pause and I'll leave it to questions. One point about investment in product and, say, in SIs. The new technology that you have seen during the product keynote have been built keeping in mind that SI's can create value on top of those new features. And, let me give you a couple of examples. Example number one: Docebo Insights. Docebo Insights is a system where SI's can help the customer to create as many reporting as they want. Project Aria is the framework where SI's can build additional user experience or front-end experiences for enterprise customers. AI, there is an underestimated problem, which is content curation on how to train AI and which content to use and which not to use, which is a consulting project. So now Docebo is becoming, over time and more and more, an SI-friendly platform, because we are giving them the possibility to make a shitload of money out of that. We'll have to edit that part slightly, but in the transcript. But, folks, I know I'm mindful of time, from our perspective, we can stay longer, and we'd be happy to take questions and answers. Suthan, please. Should we stand up? Yeah. Yeah, Yeah, please. Yes. Hey, guys. Hey, guys. This is Suthan Sukumar from Stifel. You know, obviously, we heard a lot of pretty compelling product innovations this morning, but I'm gonna lead with a financial question. You know, it sounds like what I'm hearing sounds like you have a lot of levers here to manage this visibility that you have into margin expansion. If you were to think about pulling that forward, what would be the implications for from a top-line growth perspective? Yeah, that's a good question. I mean, Suthan, if you do the math, it's pretty straightforward. If I'm gonna exit 10%, I'm just gonna start from a Rule of 40 perspective. We don't give revenue guidance as of this moment, but this will help perhaps position from a long-term CAGR, where you may wanna think about it. If you think about a healthy Rule of 40 company, which is exiting 10% EBITDA, free cash flow, Q4 2023, and you look at the numbers specifically in G&A and sales and marketing, if you have another, let's call it 7%-8% coming from G&A, and you've seen perhaps we've dropped a percent a quarter in G&A in terms of operating leverage. Then, you look at sales and marketing sitting today at 38%, give or take, and if it's gonna give you some more operating leverage as we move forward, this is a business that is, you know, well-positioned to be close to, you know, 18%-20%, if not higher, at some point in terms of EBITDA free cash flow, just through natural operating leverage. What I'm trying to get to is that helps you understand that we can consistently drive healthy revenue CAGR over the next three years, where growth will be a higher contributor to the Rule of 40. But, the components that I just explained give you the aspects of how much of that Rule of 40 can come through, EBITDA free cash flow. I like the word free cash flow 'cause, you know, that's just my style, but EBITDA is an... EBITDA and free cash flow are words, so I use that all the time, is the same thing, but it basically follow each other, give or take. We had another hand raised there before. Is it, is it? You still wanna go with the question? I saw your hand raised before anybody else. Guys, thanks for the... Is this on? Thanks for the presentation. It's Matt Saltzman, Morgan Stanley. When you think about the comments that you just made around the potential for margins and the fact that you're targeting Rule of 40, from a top-line perspective, that outlook for you, are you accounting for any of the FedRAMP in that today when you think about the growth rate? Listen, Matt, this is our world. In my world, or our world, I should say, Claudio has been very clear, if you've heard us in the past calls, Matt, is that those are large elephant deals that we do not like to forecast in our numbers because they are. There's a lot of things that need to happen and need to be successful. And we certainly, when we think about our, you know, our capabilities on the federal level, specifically, these are large opportunities, and for me to forecast them, because there's a lot of, you know, risks or like, puts and takes that happen by the time you close these deals. We do not forecast large elephant deals that may be in the pipeline generally as a principle because they can, anything can happen. Even in the large customer win we did this quarter that we pre-announced, that was a deal 18 months in making that, you know, took a lot more effort, and we thought it would close probably six months earlier than in reality, but you just-- that's the reality of the world, but generally, we do, we do not forecast them. Let me add one thing to that. We will not—what we will do, we will get really good at learning our federal territories, and as we work with partners, we're gonna learn and educate ourselves as to what the top federal agencies are using and are planning on... And when they're planning on going up for re, for renewal. Everything will be public. So I think over time, this will take a while. We're- ... I think, and in particular, kind of the land and expand strategy, right? I think, you know, there's multiple personas with, and you're doing these departmental wins. So just curious from kind of the Salesforce perspective, what are they doing to really kind of drive that land and expand and attack all those different multiple personas? Sure. Well, it all starts with building champions among customers. In order to expand the customer, it's really important that the people that made the choice number one, say, a given use case, say, starting with a sales enablement function or an onboarding function. To gain the trust of the other departments, you have to make those functions successful so they can tell a story of success. And even actually more realistically, they don't even go and tell a story. Folks in the organization see the success, and they go to them and say, "Hey, we want in." This is the conversation I've been having over the past few days with customers that I've met with. There's interesting, this, this organization in the medical, healthcare, software space, that have started with a really large number, more than 400,000 users. They've been working very hard to manage the platform and make it incredibly productive, and they're now onboarding, and sales enablement teams that are running on a legacy vendor are going to them and saying, "Hey, we want in." And they're saying, "Hey, okay, one second." And so we're there to really foster all of that. The way you do that is great products, sure. Then the second thing is having great customer success on the account, alongside account management. What I was trying to [audio distortion] is org. We're not 100% there. Let me be clear, we're not perfect by any means, but we have a view that if we become more consultative with our enterprise teams, we're gonna bear more results. By doing that, we can do it directly or we have awesome partners. Finally, I will mention one thing that we haven't spoken about that really is important for the enterprise motion. That is the concept of leveraging our ISV world. We work with so many companies. Yesterday, we had partners, a number of 37 or so in a room, where we had partner day. Some of them were not VARs and resellers. Some of them were pure play technology vendors, like Totango. Totango is a 150-200 employees company that's really disrupting the customer success space. Now, why is that important? It's important because when we have conversations with customers that are doing customer ed, we can speak from a place of authority by having a list of partners and related integrations, where we can say, "Hey, we can help you directly with this, and indirectly by introducing you to them. By the way, our technologies are, you know, they play really nicely together, and this is how." That conversation builds a ton of trust and solves your problems and saves them months in selection. I think, you know, it's a multifaceted, the enterprise motion. It goes across sales, product, services, implementation, customer success, partnerships, and, you know, we just get smarter every day. Hi, Daniel Chan with TD Cowen. Nice to see that Gen AI is a big part of the roadmap going forward, but we know Gen AI can be very costly. In some workloads, we've seen it be 10x more than traditional ways of doing things. But you've committed to getting gross margins to be consistent. So can you talk about how you're thinking about pricing your Gen AI solutions to offset some of these higher costs to maintain that gross margin? Yeah. At the same time, maybe talk about your software architecture, how you're doing that differently to manage those costs. Why don't we talk... I'm gonna talk software architecture and the cost side, and I'll come back on the, on the revenue side. Yeah. I mean, about the cost, and Fabio can give us some clue and/or comfort. We don't see this big impact into the architecture and spending on AWS or other. For sure, if you buy everything as API service from OpenAI, which now is the vendor, probably there is some cost, but we have our own algorithm already in place. We have a partner with other vendors. And, tied to government and space, Giuseppe is now building open source version of LLM models. Because if you want to run AI inside the government space, you need to stay inside a FedRAMP-certified environment. Okay. We don't see an impact so material that would move the needle into our cost of AWS infrastructure or other services. Yeah, I would just like to add to what Claudio just said. In terms of cost and the reason why we are able to mitigate the cost, is because we are having an approach that is actually multiple—we are using multiple. The reason why in Docebo we don't need to have this high, intensive [audio distortion]. Okay. Me? Richard Tse with National Bank Financial. Alessio, you talked about government. There's a lot of talk today about government as being a bit of a focus for you, but the interesting comment you made was that without doing anything, you got to 5%. Can you maybe talk about, like, how that happened, like, the source of that? Like, why did this kind of just turn on all of a sudden, if you weren't doing anything? Sure. Well, look, the way I can best define it is, we treated them, SLED opportunities or state and local and education opportunities, with the same operating life cycle in the company that we would treat an opportunity coming in from a tech company or a bank. We put it through an inbound BDR organization that would receive either an RFP or a lead by individual. And we treated it with account executives that at that time, didn't have a specialization or a training in how public officers go about buying software, what specific regulations they obey by. You know, there's and we have a couple of funny stories from the older days of Docebo in which maybe some VP of sales would send an email to the head of a given county or city, trying to accelerate a deal, right? With a tone and a language that it's normal in the commercial space, but perhaps not appropriate in the way these more public entities buy. And you know, we learned over time that you need to treat these differently. And today, you know, when we started a true government practice, while our training was, let's say, learning by mistake, when Harvey joined us, he introduced us to certain pieces of the puzzle that we were missing. I'll give you an example. We didn't know anything about the world of government sector software distribution. We partnered with Carahsoft. For those of you that don't know Carahsoft, it's a, it's a genius. I mean, I sat with their, their CEO for one hour. I wanted to hug him. He's- he runs a $13 billion company, adds $1 billion a quarter. Is that- Well, they had $2 billion a year in the last 3 years. Sorry. Yeah, yeah. Last week of the government's year, so the federal government year ends October first, they'll do over $1 billion in just that last week in government sales. What that means is that, you know, these guys have built an infrastructure that is so deep, across every single agency, and they have, you know, they work with AWS, Salesforce, the NetSuites, the Palo Alto Networks of the world, and generate hundreds of millions of dollars for these companies just by distributing. We now finally got in the ecosystem. We have access to contracting vehicles. I didn't even know what a contracting vehicle was, frankly. I didn't know what NASPO was. I mean, I'd Googled it in the past, but now we're in it. We have customers that come to us and say, "Hey, I can't... You know, I can buy from you, but I can only buy if you have access, to this contracting vehicle." We now have it, and we've done deals like that. It's just scratching the surface. We're the first five and 10. Imagine, now that we have this preparedness, and we have this knowledge, what can happen by being very intentional and educated. Yeah, and also, Ale, the buyer at the government space, at any level, is becoming more sophisticated because what we are seeing now is that they are starting deploying solution for external training. I mean, government trying to train their citizens, the educators, and not only in North America, there is Banca d'Italia, which is the Federal Reserve of Italy, whatever, that is now there is an RFP to train all the Italian population about financial awareness. So they are approaching external training where Docebo is the best in the market, the best of breed. Yeah, if you look, the Biden administration has released two memos telling agencies that interact with citizens that they have to improve the interaction that they have with citizens, improve that experience. Yeah, you know, we call it Customer Experience here, they call it citizen engagement in the government, and they're really grading agencies and agency, you know, directors around, "How are you engaging with citizens?" You know, VA is a really good example. They've got a, an LMS, and they're looking to not only train internal employees, but if you're a veteran and you log in and go, "Hey, how do I access all of my benefits? Or what am I-- Where do I go in this system or that system?" That's an external training use case. Department of Education has external training use cases, you know, Federal Student Aid. "How do I, how do I sign up for a student loan? What are the systems? How do I use those?" All those are external use cases. And these agencies are getting graded on, "Hey, what's, what's the feedback are you getting from citizens? How easy is it to access? How easy is it to use?" So it really plays well with Docebo's message. You know, we are always concerned with maintaining a very high sales efficiency. Sales efficiency is defined by the ability to maintain a, you know, a CAC per plan. And I really like the government business in the way that it's shaping up because we've put together certain resources dedicated to it, starting again, very conservative, but in just a few months, we've been able to load the pipeline up in an insane way, right? We're seeing a clear trajectory where these sellers will be wildly successful, and it's just a matter now of ramping up that model. Hi, Rob. Rob Young, Canaccord Genuity. I just wanted to get into some of the growth implied in the model you're presenting here. If I just do the math on the ranges here, it looks like 15% EBITDA would be the model here, if I think of gross margins of 80%. And so are you implying that a Rule of 40 company, the growth would be 25% plus large deals? Would that be a good summary of what you've already talked about? I don't give guidance, Rob, but at this point, but I would say that I think the EBITDA, probably, just at a high level, is lower. If you kind of look at the math out there, because from a G&A perspective, you got 8%, and then if you get another few percent, so if you exit 10% this year, and let's say it's another 6% or 7% in G&A, plus maybe another few percent, probably gets you more closer to the 20% than the 15% from an EBITDA free cash flow perspective. But the, without commenting on the kind of long-term revenue CAGR, because I've got my legal counsel listening to this, but I would say in general, when you think about a healthy Rule of 40, maintaining that revenue CAGR, and that kind of give or take range, which you can back the math, is, yes, it is something we are looking to, consistently deliver without the large federal opportunities factored into that number. And I'm-- and I wanna repeat one point, I wanna be clear: we are very comfortable with our 81%-82% gross margin. What I'm not going to do is try and drive that leverage in the 81%-82% - 85%, because we need to consistently think about the upmarket motion support from, investments we are making c ost, cost around AWS Gov. Right, even in this year's number, just, just overall, I think people have kind of, maybe heard me say this, we, we said we're gonna exit 10%+ EBITDA free cash flow in Q4 2023. We're probably, with even giving that number, we're probably investing 2% in this year into our FedRAMP strategy. That's an investment I'm making from a 3-year, 5-year cycle, but I will still exit Q4 2023 10%. Okay, and maybe one little one on clarification there. When you say big deals, in reference to the last question around government- I'm specifically talking large federal contracts. And big deals. Large federal contracts that we are not factoring into that. Harvey, can you- Just federal, not larger deals in general? No, Federal specifically. Harvey, can you give us a sense of what means a large deal in the federal space? Sure. I mean, software-wise, the VA, for example, is probably an interesting one. This is publicly available. It's publicly available. Yeah. Yeah. It's... They'll do a one-year base plus, you know, say, five option years, and it'll scale to be... a million users, potentially. So I mean, we're talking... a base year, maybe $3.5 million for software, and then the out years, it could be $7+ for software. I mean, that's, that's an enterprise federal government deal. State and local opportunities, we're seeing RFPs coming out across state and local that are 100-120,000 users. And some of these deals can be up to 10 years in length, where they'll do a base year plus eight or nine option years. And if you see what an agency has to go through to even release an RFP and go through a process, the cost of switching is astronomical. So once you get in and you get integrated, I mean, you really have to screw up to have them go, "We're not gonna pick up those option years." So, you know, that, that's the goal. They, they'll never do—the federal will never do or commit to anything other than an option year because the budgets have to get reapproved every year by Congress, so they won't do that. But if you get the option years on the contract, you really have to screw up not to pick those up. Oh, Stephanie. Yeah. Good morning. Stephanie Price with CIBC. So I wanted to switch a little bit and maybe move more towards your more traditional business. One of the themes of the conference seems to be the integration between HR and learning, just given a focus on skills development and hyper-personalized learning. Just curious how that changes Docebo's competitive advantage within the internal use cases, and how you think about HR and the potential to move outside, maybe even LMS, and, and offer additional services there. Yeah. Philosophically speaking, we don't want to move into HR, but we want to leverage the data that HR can provide to optimize and personalize the internal training. And I'm mainly referring to a couple of points. One is skills. Usually, you don't measure... If you are a mid-large enterprise, you have your own tools to measure your skill assessment systems. And or you have modules of big platforms like the Workday of the world and whatever, or you have best of breed like Gloat Fuel50. They assess the skills, but then when you have assessed the skills, to increase the skills or to fill a feature, skill gaps, sorry, feature gap is a software thing, you need to do some action, and usually one of the actions is training. So you need to feed the LMS with this data, and the LMS can suggest the right training for you to fill the feature gap. Second is career planning, which is also tied to skill gaps, but the ATS portal or stuff like that, if you want to apply for a specific role inside the organization, switching from a previous role, you have some new skills to develop. So those system need, again, to feed the LMS, saying, "Hey, look, the user, Stephanie, want to move from, financial market analyst to AI. What are the feature gaps?" So the skill gaps. So the platform is taking charge of the curri-- of building a curricula that build the necessary skills for you to apply, for the new role you want to, to have in the, in the s- in the company. So this is where HR, talents, need to communicate with the Docebo with the LMS. How we are doing this? We are doing this, building through the Docebo Connect, integration recipes to receive and to send back the data when the skill is mapped, and then, we need to tell the LMS that there is some job to do, and when the job has been done, we need to send back the result to the other HR software in the organization. Martin? Hi, Martin Toner, ATB Capital. What's a good range for when you'll achieve, FedRAMP? Fabio? ... just me, because it's a motion that goes through sales, finance, as well as- IT, security ... internal IT, security, and, and product. We selected UberEther as a partner because it can give us an accelerated path, given that they are able to lift some of the control on their side, because they provide us a pre-configured environment that takes care of a lot of the documentation and similar, functionality changes that will be needed on our side to achieve FedRAMP. We are confident this will greatly reduce the time to be able to apply and then be certified as FedRAMP moderate. It's gonna—looking also at Harvey, I think it's gonna be throughout 2024. I think we will. We can generally say we've said in the earnings call in the next few quarters, looking into 2024, give or take. But I think Harvey, it'd be helpful to kinda give a perspective of how you actually get to that between a sponsor or not. That'd be great. Yeah. What we're in the process now is just being FedRAMP Ready. If you think about it, there's three pieces to that. There's FedRAMP Ready, and then in process, and then you've got your certification. FedRAMP Ready really has two pieces to it, two tracks. One is getting all your documentation put together, which we'll have that done mid-October, is where we're targeting right now. It's a software security plan. It's about a 400-page document that outlines everything that we're doing. The next piece of that is you have to get your software into the AWS hardened environment, and then you have to start having logs come out of that environment so they can start to run audits on those logs. That should happen for us in the November, December timeframe. Once we get those logs starting to come out and we have the SSP in place, we can then go find a FedRAMP sponsor, an agency that would say, "Hey, we'll, we'll sponsor you for this FedRAMP certification." We secure that sponsor, then we're considered FedRAMP in process. Once they go through their internal process, which will take 3-4 months, potentially, then they can turn all of our documentation over to FedRAMP Program Office, who then reviews all that and stamps us. We're in the FedRAMP marketplace. Now, from our perspective, where we really wanna get to is FedRAMP Ready. Documentation done, all the, all the logs done, 'cause then every agency in the world knows it's just a, it's just a process to get it done, and they'll give us provisional ATOs to be able to, to operate in those environments and be able to sell and buy those solutions. We're really hoping by end of year, I think we've got everything from our documentation and our logs in place, and we can start actively pursuing, and we are now, agencies to be sponsors for us. It just opens more opportunities for us to participate, because if you have that, then the RFPs that we can participate will enlarge. And just for clarity, while there are some RFPs right now that have been exiting that state, you can apply if you have achieved already. There are equally many RFPs that keep that option open, and as long as you can prove that you're processing your FedRAMP process, we're still bidding. So that is how we're building our pipeline of agencies that are gonna be candidate sponsors, to be ready to have them join us in the final certification once our bid is won. And- I've been with multiple companies through this process, and where you'll get shut down is if an agency says: "Okay, you're not FedRAMP. I got it. Where are you in the process?" And you go: "Well, we're looking for a sponsor. We haven't started anything yet." They know that's gonna take 6-8 months, so just... Same thing with a contract vehicle. "Hey, how do we buy you?" "We don't have a contract vehicle yet, but we can get one." They know that's a 6-8 process. They'll say: "Go away." We're putting all the foundations in place. When they say: "Hey, where are you in FedRAMP?" We can look right back and go, "We need a sponsor. We're ready. Would you, would you be that sponsor for us? Yeah, and the last building block is hiring people. I mean, we have a local team of American people living on American soil that are ready to deploy the customer in the AWS GovCloud- Yep ... because we cannot do it from other places. Well, the- Those hiring have been already done. Still exiting 10% EBITDA forecast. Well, and I will tell you, we're actually starting to see, 'cause we're getting... I've been on a couple of calls here recently, where there are commercial clients that actually are doing business with the government that say, "Hey, we feel like it'd be a differentiator for us as a commercial client if we were on your FedRAMP cloud. When is that gonna be available for us? And, and- What do we have to do to get into that cloud? Harvey, also about the state, just FedRAMP from a state perspective also as well. Yeah, and so it helps with the states as well. But, you know, state, more and more, we're seeing StateRAMP certification as a requirement. I see. But really, from our perspective, once we get our FedRAMP certification- Yeah ... we can walk right over to the StateRAMP office, and they'll grandfather that right in for us. So we'll be able to have both a FedRAMP and a StateRAMP. And I know it was on the slide, you may have missed it, but we're also going after a CJIS certification, which is the Criminal Justice Information Services. So we'll be able to work with, like, all law enforcement agencies, 'cause we'll be able to handle that criminal justice data as well. Because we are not, we don't hold any PII, we also, just for clarification, we are a moderate IL4, IL2- IL2. IL2. IL2. IL4 will be if we sell to the DoD. So... And- That's great to give. Thanks. ... and one piece of information as well. It is pretty common practice for software companies that develop their own Gov version, to actually have, very interesting unit economics from a revenue standpoint, and, and have increased, or better pricing, on the Gov version as a result of the fact that there are investments, related to it. And so, you know, we, we actually, in our new website of docebo.com, you will notice under the Solutions, a page that is now called Under Products, Learn Gov version, that will, be priced relatively to our calculations, and market benchmarks we're seeing out there. Yeah, and Ale, I understand we are stressing the concept of FedRAMP and stuff like that, but it's new and makes us excited to learn something new. We are still learning as individuals. But, is it correct to say that some private entities, especially banks, are willing to run their instance because of security and compliance inside the FedRAMP environment? But this is not the juicy part. The juicy part is that they are willing to pay a premium on the infrastructure to run inside FedRAMP. But, you know, we don't wanna sugarcoat it too much. We're just saying what the sheer facts are, and then we'll see. We're at the beginning of this journey. We have to achieve this. We have a timeline, a plan, a project. The market is ripe. Competition is... We like the makeup of the competition, and, yeah, let's- I think I just wanna- Let's do it. ... reiterate one point: It's about the pillars. It's not about all the pillars firing it. It gives us opportunities- Absolutely ... to be able to execute in multiple pillars and drive consistent growth. Exactly. Always comes down to that. That's great, thank you. Once you're ready, how long are sales cycles, typically? From a federal government perspective, right, being FedRAMP ready doesn't shrink the sales cycle for you. It's still, you know, an RFI, an RFP, similar sorts of things. When it gets to contracting, having your FedRAMP and having a contracting vehicle that we're working with makes that part of the equation so much quicker, so much faster, so much more predictable as well for us. That is the nice thing about a government business. When they release an RFP, they're gonna make an award. They won't release an RFP unless there's moneys in the bank and they can do it. Very rarely do they pull it back. So it won't be a situation where we invest in it, we submit the RFP, and the government goes, "Hey, we're, we're not gonna award anything." So we, when we talk about predictability in the business, we can start to look at the RFPs that are coming out and know those things are gonna be awarded, and that's the market that we're gonna go after. Kevin? Hey there, Kevin Krishnaratne at Scotiabank. Maybe for Sukaran, on revenue growth, land and expand, how do we think about how pricing might figure into that? You announced a bunch of product releases today. Do we see any uplift there? Can you also talk about how pricing might figure into your relationship with partners, and if there's any sort of sharing there? Just a clarification. Thanks. Yeah. Yeah, good question. I would say, in terms of pricing, when you think about... I'm not as, when you think about the uplift in terms of, you know, annual increases, that's just relative to what the inflation, give or take, is, right? I think a lot of the companies in, you know, have done reasonable lifts in the past two years. I don't think there's gonna be a lot more of that. There'll be reasonable pricing lift in terms of book that the market's willing to accept going forward. That's our perspective. This is, from a pricing perspective, our viewpoint is this: as you move forward, you're going to see us position ourselves based on solving the problem for the customer, bundling the solution they need, not the products and modules. As we look into January of next year, where we price our new customers, it will be more around: "Here's a prob-- Here's what they're trying to solve for. Here's a bundle of products and modules that they will receive." Some of the features and functionalities that you saw, for example, today, AWS Quick, the, the, sorry, the, the data, Learn Insights as an example, where we are giving certain functionality to the customer embedded in the Learn platform, but there is an incrementally much more valuable proposition that will be an additional module that the customer will be able to purchase. Similarly, on the customer education use case, there are certain features and functions that are not part of the bundle that are incremental from a module perspective. As you think about us in the future, we will package bundling, add more features for the customer that drives higher adoption because you're not doing products and modules. At the same time, based on the use case of the customer and the value we drive in certain instances, like customer community, learn insights, and so on, so forth, there will be certain modules that will be incremental to even those bundles. I don't know if you guys wanna add anything to it, Ale or Fabio. I think you said it well. I think we— You move at your hands like a real Italian, by the way. There's one thing I will say is that as we think about our new modules, it's not just a pricing uplift direction, it's to increase or to improve our win rates and to improve our retention strategy as well, because the more problems we solve for them, the more we get stick in the base. We view that as a multi-factor choice, as opposed to just a single one, it being upselling. We haven't even spoken, by the way, today, about expansion in the logic of cross-selling, which is an additional layer that we really think about a lot, because we're working with the companies, and those big companies have multi subs and/or dependent brands. We tackled that today to an extent, successfully, but it is our view that there is a lot more to be done, from a cross-selling standpoint, and we're focusing on, you know, designing even better organization to extract more value out of it. I think your question around the last part of the question was specific- Partners. ... partners. Yeah. It's an important one. We call it a Q1, if my memory is right. The reality on the partner side is pretty straightforward. Services is their world. Like, even the government sector, they're gonna make 3, 4, 5x, I have no idea, but they will... This is Deloitte's world, where our focus, and this is an important part, we will think about services and investment because I, we know from an LTV to CAC perspective, that customer is gonna be 7x-8x over time, and we will continue to invest more services, spec, do everything right to get them onboarded, be on multiple use cases, be in multiple departments, because that's where the stickiness comes from. We are concentrating ourself from a subscription point of view, and if I have to give up some of my services revenue, which is, what, 6% of my total base, we will do that because that drives the pipeline, that drives the higher software revenue. I think we'll wrap it there. We appreciate everyone coming in. I know, Fabio, you're gonna say some final words, but I just wanna say, you know, we appreciate everyone coming in person. Very much. I hope we, you know, you enjoyed, and there's still more to go today, so there's more sessions, please-- and we're also gonna be around for any Q&A afterwards, offline. We sincerely appreciate you coming in person, and, you know, this has been great, and we'd love to take any feedback as well. Bye. Yeah, don't forget to go to speak with our partners as well. I mean, they have all the booth, and so you can understand the logic of ecosystem. I mean, asking for specific demo, there is a demo corner there. You will have demo of Docebo Insights, Shape, and, and, and, and every, every new feature- You can do virtual role playing, but I don't know if you can... Well, that's alright. Well, we appreciate you very much. Thank you. Thank you. Thank you. Thank you. Thanks so much.