All right, everyone, thanks for joining this morning. Welcome to day two of the TMT Conference. I hope yesterday was a great day for you. We're looking forward to kicking things off with an AI-inspired SaaS company, Docebo. I think it's very fitting, given the theme of demystifying AI. I've got with me today Brandon Farber, SVP Finance at Docebo. Welcome. Thank you. Thank you very much. Let's get right into it. So, you reported a good quarter recently, end of the year. I think the stock was up quite nicely. I think in my coverage it's the only one that did the best, so congrats there. You did that, amidst a tough macro, though. Macro is still tough. You did talk about some potential, you know, emerging signs of positivity in Europe. Can you just talk about what you're seeing in macro, geo-wise, vertical-wise? What? How's it looking? Yeah, for sure. We really break our macro into four different buckets. So we have the SMB players in North America. We have mid-market enterprise in North America, and then we group EMEA or the rest of the world as one, just 'cause there's very similar dynamics. So when we think about 2023, the SMB market has been cautious all year. Even into Q4, we still saw cautious behavior. Budgets were getting cut. There wasn't a clear path to signature, and it's just a very price-sensitive market. If I shift to mid-market and enterprise, if I compare it to 2022, what we're seeing is people didn't really understand if they had the budget to spend. People didn't understand how to even get a contract signed because, similar at Docebo, any software spend over $50,000 all of a sudden had to get signed by me. Over $100,000 had to get signed by Sukaran. So these new processes were getting implemented because there was more stress to become a more efficient company. And part of that more efficient company is, you know, watch where you're spending and to make sure you're earning true ROI on all your software, any vendor employee spend. That behavior did change a little bit in 2023 where we saw budgets being set, budgets being set and people really understanding that they're willing and able to spend that budget. They knew how to get a contract signed. So there was just a lot more certainty in our pipeline. You know, we were able to forecast our deals in quarters better because our prospects were able to tell us and understand internally whether they could get the contract signed in time. When I contrast that with EMEA, they were really cautious all throughout the year until maybe, you know, November and December. I usually like to say EMEA is about two quarters behind North America. And if you think about inflation, they're probably running about 10%-18%, 10%-8% in Q1 and Q2 of this year. You really only saw inflation come down in EMEA at the end of Q4, and that's where we started to see the behaviors change similar to what we saw in North America in June. So, you know, EMEA is definitely a tailwind for us. It was a tailwind in Q4. And I think going into 2024, you know, we should expect a little bit more strength in EMEA than we saw in 2023. Good. Yeah, good stuff. And, you know, certainly we've seen. I'm gonna switch a little bit away from macro and go specific to your, your market and what you serve. We've all seen the headlines of, you know, employees, headcount being reduced. In some cases, though, what we're seeing is employees being retrained. There's reskilling. I've seen this being a theme. SAP and their, you know, in press release said, "We're laying off a whole bunch of people, but the headcount's gonna be the same. We're pushing on reskilling." That was in the press release. So can you talk maybe about how that might benefit you? Is this something that you could see impacting you more near term, just given what you do? This'll give you an opportunity to talk about Docebo's reskilling and kind of what you do. Is it more like a mid- to long-term type benefit that you could see from this disruption that we're seeing with all the headcount reductions? Yeah. I, I think it's both a short-term and a long-term headwind. And when you think about reskilling, it is a little bit more focused on an internal use case. And just to remind everyone, Docebo, we're about, you know, 35% of our revenues is internal only. 65% is what we call external/hybrid, where someone uses us for both internal and external use case. From a prospecting perspective, the way we've focused is that, you know, we've targeted certain industries that are a lot more focused on this reskilling and retraining. So if we think about manufacturing, there's this onshoring trend where a lot of the skills of manufacturing is coming back from whether it's Asia or Europe, back to North America. If you think about the shift from, you know, gas to EV cars, there's certain segments where there's a high focus on retraining and reskilling. So from a prospecting perspective, every year, you know, we give our sellers a new prospecting list. We target, you know, industries that are doing well in the current economy. So we've definitely targeted, from a prospecting perspective, more potential customers that are focused on this reskilling. From a product perspective, you know, we're very focused on how do we implement not only AI but generative AI to enhance what we call skill tagging and skill ontology. And what that does is that creates a hyper-personalized learning experience. So if I'm an SVP of Finance versus my financial analyst, when we log into our LMS, we're gonna have a completely different experience. They're gonna know exactly, you know, my learning path based off my skills, my weaknesses. And generative AI could actually create content based off of how you're skill tagging your learning journey and create content so that you have a learning path with the new company. So, you know, we're really focused on that hyper-personalization. And, you know, part of that is the reskilling and retraining trend as well. Yeah. We're gonna get to AI later on. Really cool stuff there. Before we dig into the business, some interesting, you know, moves happened recently. I think over the weekend, the founder and CEO, Claudio, officially became Chief Innovation Officer. Yep. I'd like to know what that entails, what he's gonna be involved with. And then, you know, along with that, Alessio, you know, is now the CEO, Docebo. So wondering if there's any sort of changes in priorities, how to think about that move, and what would he bring that maybe Claudio didn't have. How do you think about the recent changes in the executive suite? Yeah, that's a good question. So, you know, Claudio's founder and CEO of the company, Docebo, was created about 18-19 years ago. So he's been with the company for a long time. His passion he's a true product-led founder and CEO. He, he loves innovation. If you talk to him, he's always forward-thinking on, you know, what is Docebo gonna look like in the next 5-10 years. He's not as focused on, you know, Q1 versus Q2. Alessio's been with the business since 2012. He was the first U.S. employee. He grew the business from 0 ARR to, you know, now U.S. is about 70% of our business. He signed our first enterprise customer, Thomson Reuters, back, you know, 5-6 years ago. So he's, he's been an integral part of the business. This transition has been a natural transition for us. If you look, probably 5, 6 quarters ago, he started attending conference calls. So it's, you know, we've been grooving him for this position for a while. So this is a natural transition where Claudio could really focus on his passion, which is product. It's innovation. It's, you know, how does Docebo look in the next 2, 3 years as opposed to how does Docebo look today? Of course, he's very excited with the, you know, generative AI. He's spending a lot of time in Dubai with Giuseppe. And, you know, how do we expedite some of the generative AI features within Docebo and some new product sets as well? The one thing that I'd say is a bit of a different view from Claudio to Alessio is that in five years from now, Alessio views Docebo more as a learning company as opposed to an LMS. So today, you know, 100% of our revenues are LMS-focused. We are an LMS company. In five years, five years from now, you know, LMS will still be the majority of our revenues. But he sees different, you know, learning within learning within the tech stack that could be a very interesting way to either develop or acquire adjacencies. If I think about, you know, there's technology called LearnOps, which is learning operations. There's certification and proctoring. There's virtual labs. So there's a lot of different stuff in the learning ecosystem that would be a very nice adjacency to cross-sell to our existing customer base, have different tools for our sellers to go to market. They're all within the learning tech stack, and there's no true one company that you could just go to to get all these bundles together. So, you know, Alessio's very focused on, you know, how do we turn Docebo to not just an LMS, but more as to a learning company where you can come to Docebo and get all your learning technology stack needs? Yeah. And that'll again, that'll speak to the theme of your continuing to gain share of wallet, within the, you know, an enterprise, away from their traditional HR, right, software, HRM, HCM, LMS, learning, training, proctoring. And these all could target the same user base. Exactly. Exactly. Yep. Let's talk about where Docebo has come from and where it's going. I think maybe historically, it had much more of an SMB or mid-market base. You've been moving up market. Can you talk about where you are on that journey, how that's progressing, how you've been able to do that? Yep. So when Docebo went public, our average contract value is roughly $25,000. I think today, we're slightly above $50,000. And our new customer set, the contract value's even higher. You know, our average ticket on new customers is roughly $70,000. So we've really moved away from the lower end where the unit economics from both the gross retention and net retention is not as superior as the enterprise space where we see, you know, very sticky customers, customers that are growing from a headcount. You know, they're making acquisitions. They're going from internal to external. So, you know, the ticket size of how we could land and expand is much greater in the enterprise space as well. So, you know, in our prospectus and our IPO documents, we talked about, you know, we're gonna deliberately churn as a subset of our customers. You know, we're, you know, we're rooted in Italy where we had small customers. They were even paying us monthly on our credit cards. So we were deliberately churning some of that customer base that was suboptimal. And then our move to enterprise, you know, it started five years ago with Thomson Reuters. One of the great things about getting these enterprise logos is you have a bit of a flywheel effect where, you know, once you get one enterprise, you get a customer like AWS. When you go to market in the enterprise space, they wanna have customer proof points, customer case studies. They wanna have references. You know, are you, as an enterprise company, are you gonna go to an LMS company that has no enterprise logos, or are you gonna go to a company that's been in the enterprise space for five years? You have the scalability of having millions of concurrent users, which, you know, AWS required us to do in order to win that contract. So there, there's benefits of time in the market. Claudio have really mentioned this really nicely in our earnings call where it's very hard for a new LMS to come to market and compete in the enterprise space because Docebo, we have five years of scalability of feature enhancements. And these are all, you know, even security is massive in the enterprise space. And, you know, we've had five years to develop this in the enterprise space. So it, it's not as easy as, you know, building an LMS and you win an enterprise customer. It's a journey. And we've been on this journey for five years, and I think we're still pretty early in that journey. Beyond, you know, just an enterprise getting a customer reference and looking at what other, you know, peers are doing, and that's validation, how do you think about how do enterprises think about the ROI, you know, that they're getting? They're spending X dollars on Docebo, whether it's, you know, a classic enterprise use case or it's these external training, AWS, GCP. They're paying X dollars to Docebo. How are they measuring the ROI against that spend? Yeah. So I'll give you examples of a lot of our top 10 customers. So one of them being AWS. They have Skills Builder Academy where you pay $199. You could become an AWS certified engineer. You get this certificate at the end. So for them, it's a very easy ROI. How much revenue am I generating from our customer academy versus how much am I paying to Docebo? You know, another great example is L'Oréal where you become a certified makeup artist. You kinda take a whole training course on L'Oréal's website. You pay $400. And at the end of it, you're a certified makeup artist. So, you know, the one difference is historically, LMS has been thought about as a software used to onboard and do annual compliance. We've turned the LMS into more of a revenue generator for our customers. We have plugins with Stripe. Customers are really using us as a product SKU to improve their top line. Another really interesting, unique example is with a pet insurance in Europe where they actually came to us with this use case where they said, "We're gonna we're gonna force anyone who wants to have pet insurance with us watch videos on an LMS. If they choose to watch a video and get the certification at the end, we're gonna lower their premiums because they now know how to take care of their pets properly, and that's gonna result into less, less claims." So that's another, you know, very unique, bit of an edge case situation. But you could think about how many different ways you could spin this. Then even an internal use case, you know, we announced that we want a large bank in the US. If you think about how important compliance is, if you think about how many fines they've had due to compliance issues, if we could even stop one of those massive multi-hundred-million-dollar fines that they get through, you know, hyper-personalized compliance training, you know, that's gonna pay off from an ROI perspective very easily. Yeah. It's important. I get a reminder every month from Scotia on the compliance training. Exactly. Yeah. So a lot of what you talked about, though, is interesting. It's the external use case, right, sales enablement. How is it why Docebo? Like, how was Docebo able to identify this opportunity? Maybe you've talked about you've sized it. I think you've given metrics on how big you think it is. You know, you're clearly a market leader there. But I'm curious as to why. How did an upstart here, you know, in the sea of HCM, there's the biggest, you know, Cornerstone, Saba, all of these guys, players. How did Docebo kinda carve out this niche? Yeah. That's a great question. And just on the sizing, you know, we disclosed that, you know, our TAM on the LMS space is about $25 billion. $15 billion of that is external use case. And just to give you the size and scope - and I love to give this example - is, you know, Docebo itself, we're 1,000 employees. So if someone were to sell to us an LMS, the potential is 1,000 registered users times an average sale price. Whereas if I'm Docebo and I wanna create an external use case to train my customers, I have 3,700 customers. Let's say I wanna train to create a training course on becoming a certified LMS administrator on Docebo. On average, a company has, you know, two LMS admins. So 3,700 times two, that's my total population on my external use case versus 1,000 employees. So I'm talking about a 6x ticket size on the external use case versus internal. To go back to your question, you know, this really goes back to Claudio being a visionary in the learning space. He viewed, you know, he wanted to create a platform that was horizontal from a use case perspective where the back end of Docebo is one Docebo, and the admin could, you know, administrate two different platforms, one from internal, one from external, and kinda plug and play and have two different completely views and platforms. A lot of our competitors, where it's Cornerstone and Workday, they're focused on the employee experience. So Workday is a HRIS suite. They really care about the employee experience from onboarding to performance reviews. They're just. They don't have the experience of selling to the customer education that is and not a HR buyer. You know, a lot of the times, we're dealing with CTOs. We're dealing with chief strategy officers. We're dealing with customer education. So that's a completely different buyer persona than what Cornerstone and our enterprise competitors are going after. So we've covered this niche. And, you know, we have I would say we have more competitors that are niched to a specific use case. So, you know, we have a competitor that only does customer education in the enterprise space. But they don't have that whole 360 view of external, internal, and do it very well. So that's where Docebo's really winning. Maybe we can, you know, segue this into the sort of the go-to-market motion. You've obviously got a direct sales channel, but you do rely on other channels, the SIs, the OEMs. I'm sure they've got great partnerships with some of those end markets that, you know, those other bigger players are not in. So can you talk about how you're leveraging the channel, and what you're seeing there? Yeah. And, you know, to be frank, some of our efficiency that you've seen in sales and marketing is definitely from the fact that we're enhancing our strategic partners. When I think about enterprise, you know, the big technology company we announced in Q2, Q3, that was with a strategic partner. You know, it's one of the largest SIs in the world, and we're now going to market with them in the other regions in Europe and North America. And the benefits for them is they're they win the managed service, you know, of the whole learning journey for this company. So they outsource it to this consulting company. They're getting, you know, $ millions in consulting fees a year to run their learning program, and we're getting the software revenue. So that's the play with the large strategics is that they want the onboarding fees, and they also want the ongoing consulting fees. We also have a great partner in the federal space that we're working with both in the SLED and Fed space, which is state legislation and federal. They're a Big Four accounting firm, and they're very well connected in the U.S. market. They were previously exclusive to Cornerstone. They've kicked them out of the door, and now they're, you know, not officially, but, you know, they're more or less officially exclusive to Docebo. So we've been building a very strong pipeline with this company. We've won a couple state-level deals, and we expect to continue to grow in that space. In Europe, we've been working with resellers because, you know, the regional aspect is so unique. For example, we have what we call a value-added reseller. It's, you know, very similar. But, you know, they specialize in the Nordic regions. They know all the local languages, the local nuances. So they go to market with Docebo. They're the ones who onboard support. And, you know, we give them a little bit of a rep share. Right. You talked a bit about government there with that top four accounting firm. What else do you need? You talked about FedRAMP. You know, what's the timing there? Maybe just talk about the government opportunity. This is something I think it's no more than 5% of your ARR. Yeah. Right now, but you've got that number without that much work, right? So I think your next phase here is to actually go really a bit harder on government. Maybe just talk about what you're doing there. Yeah. Absolutely. So we did a study at the beginning of 2023. In the FedRAMP space specifically, there was about $260 million worth of contract value awarded over the past three years. We looked at the competition. It was a lot of custom builds by either IBM, or more LMSs that are geared towards universities, whether I talk about Moodle or Cornerstone as well. So from a business case perspective, we saw the competition very attractive. One of the reasons why there is limited competition is because it's very expensive. To become FedRAMP compliant, you have to spend a lot of money. We're spending about 2% of our revenues in R&D right now to enhance our security, do annual audits, improve our code up to speed, hire some people in the US. So there's definitely a cost base and investment that you could only do at a certain scale. But we view the opportunity extremely attractive. We have two sponsors that we're working with. We're close to announcing. Once you have a sponsor in the federal space, it essentially speeds up the timeline to become FedRAMP compliant. So, you know, we'll announce once we have a sponsor. We'll, you know, announce it whenever we get that sponsor. But, you know, we're hoping in the coming months, we'll be able to announce that. Once we have that sponsor, we could bid on RFPs. We could even win contracts. It's just we can't actually sign the physical contract until we become FedRAMP-ready. And then on the state level, a lot of these state-level governments, they don't require FedRAMP. So we're winning contracts today. You know, we have a very healthy pipeline throughout 2024 on the state-level side. So we're, you know, we're very excited about the opportunity. These are massive contracts, you know, a lot of seven-figure deals out there. So, you know, we see a lot of growth potential from the government sector. So you might not necessarily see some of that. You may see some of that revenue in 2024. It's probably not necessarily contemplated fully in your guidance. Correct. Probably not in analyst estimate for exit ARR for the year either. Yeah. I think, well, we've more or less guided it. It includes some state-level wins. Yeah. But FedRAMP, no. No. Because even if we win FedRAMP deals starting in Q4, we won't see much revenue from it this year anyway. It's just how SaaS works. So it's really a 25-growth story. Got it. Before we go into some numbers, can't not talk about AI. Docebo's had an AI product for several years, now 3 years. You know, how do we think about how AI is being used? You, you touched a little bit on it earlier. Let me just talk about that, the advantages it brings, and how you're positioned. Yeah. So we're actually creating two new product SKUs that are leveraging generative AI, in H2 of this year. So we have this product called Shape where you could essentially upload a document. It will create a presentation for you. So if we wanted to upload our Q2 conference call transcript and show a presentation to the whole company on how we did and what were the key topics, we could literally just shove the transcript into our Shape model, and it will create a, you know, 10-page presentation with all the key highlights, what were the key comments that we've mentioned. Internally, the way we're referring to we're referring to a product called Shape 2.0. It's kind of what we call Shape on steroids, where it's really gonna leverage generative AI and improve the content creation. One of the things that's becoming a little bit table stakes is, you know, the ability to have a content authoring tool within your LMS. But there's no one really leveraging generative AI within that content authoring tool. So the acquisition we did with Edugo, Edugo was really to get these generative AI engineers who've been living and breathing OpenAI, you know, for the past five years. You know, they've created these products extremely fast. We're gonna go to market with a new content generative AI authoring tool, that will be a separate product SKU. And then another one that we're really excited about is virtual role-play where, essentially, if you're someone new in the sales team at Docebo, you could pitch to a virtual avatar Docebo, as if it was a prospect. At the end of the pitch, the avatar will give you feedback on everything you did well, from your body language to your tone, how you pitched your product, how you pitched pricing, and how you could do it better. How it does that is it uses all the company data, which minimizes our AI costs because we're ingesting data from our CRM, Salesforce, and Gong, which tracks and, you know, records all our calls. So it triangulates Gong calls to deals that we've closed lost and closed won and says, "What are we doing well in closed-won deals versus what are we doing bad in closed-lost?" And that's how it's generating this information. And obviously, as you use it, it gets better and better. So we're gonna price that as on a consumption basis because that's how the cost will be incurred as well and that will be launched sometime in H2 as well. Look forward to it. Just a few minutes left, so let's just talk numbers. You're basically a Rule of 40 company right now. Congratulations. Skewing towards growth, more towards revenue growth. Expecting, maybe this year, 25% revenue growth. I think you've guided 15% margins. You were not profitable that long ago. So, you're spending on R&D. You talked about the, the government, you know, spending as well. Where's the leverage coming from? How have you done it? Where do you think margins are going? So I'd really bucketize it in two different groups. Firstly, G&A. We went public. Our G&A was about 30%-31% of revenues. When you go public, you have a lot of fixed costs inherent in your G&A, whether it's D&O insurance, listing fees. We actually have dual listing fees since we're on the NASDAQ as well. So, you know, as you scale up and scale up, you're naturally gonna get leverage in G&A. So we've gone from 31% to 17% as a percentage of revenue in G&A. We still think that we could give 7 more percent, you know, to go from 17%-10%, in the next three years. So that's another 7% of leverage without impacting our product innovation or our go-to-market. Another aspect is sales and marketing. It was, you know, in the mid-40s% at some point. It was roughly 32%-33% in the last quarter. There's two efficiencies that's driving it. First of all, as we discussed the work with strategic partners, you know, they're the ones feeding us the opportunities. They're very well-qualified deals with higher win rates because, you know, a partner only brings you a deal if they think they can win it. Otherwise, they're not gonna bring you the deal. Secondly, the move to enterprise is actually a little bit more efficient because it's more of an RFP market. It's more of an outbound market compared to SMB where you have to feed the Google engine, the LinkedIn ads. It's more of an inbound motion that's heavy on external ad spend. We've seen the ROI on our external ad spend since 2021 come down. And that works well with us 'cause we've been shifting enterprise anyways. So we're seeing, you know, natural efficiency as we move to the enterprise and have to spend less money to get new opportunities. Good to hear. Great to see. Right on time. I think we'll have to leave it there. Thank you. Thanks again for joining us. No problem. Thanks. Thanks, everyone.