All right, let's get kicked off here. Thanks everyone for joining us here at the 45th running of this Annual Growth Conference in Boston. My name is Rob Young. I'm a Canadian technology analyst. Despite the fact that Docebo is a U.S.-listed company, it did start its public journey in Canada with a TSX listing. Now it's dual-listed. This fireside chat is with Docebo, which is a global cloud-based learning technology software company that's pivoting towards an AI-first positioning. Beside me, we have Brandon Farber, who is, I don't want to say newly minted because it's not quite that, but as you've been doing the job for a while. A newly appointed CFO. Here at the front, we have Mike McCarthy, who is the Head of Investor Relations and would be very happy to follow up with any questions that you have. I think what we'll do, maybe why don't we, you just put out a nice set of quarterly results. Why don't we start with just a quick overview of that and the guidance, and then we'll get into questions, which I have a lot of, but would love to get some questions from the floor. Yep. We just reported Q2 earnings. We beat and raised on our revenue guidance. We increased our revenue guidance by roughly 1%. What we saw from a macro perspective, last quarter, Rob, if you remember, we did lower our revenue guidance. We saw some real macro weakness, and we called out three segments in particular: manufacturing, retail, and auto, which was roughly 1/3 of our pipeline coming into the year. From a conservative perspective, when we reported Q1, we lowered our new logo assumptions, and we saw real hesitation in the market. If you recall, when we last reported, we were about 30 days post-Liberation Day, and there was a lot of noise in the market. It was very chaotic. We saw companies were choosing to deal with the chaos first. Once they could control, they knew exactly what level, you know, what their cost structure was going to look like going forward. They started opening up their wallets. During the current quarter, we actually saw a very strong performance in our mid-market segments, which we typically call out as contracts between $50,000 - $100,000. We saw a return to spend. These mid-market customers, March 31st, they were very hesitant. They wanted to see what was going to happen. We saw a lot more confidence in June, and we finally saw these contracts getting signed. From an enterprise perspective, we still saw elongated sales cycles. In Q1, we called this out. Q2, we're still calling it out. As a reminder, from an enterprise perspective, we always see H2 being a stronger enterprise. Even Q4 is our strongest. Coming into the year, our pipeline was always geared towards more H2. We continue to see very good opportunities in our enterprise pipeline. It's more about execution. It's about getting these deals signed. Looking into Q3 and Q4, we're seeing positive signs. Great, great. In the enterprise, larger enterprise, which is over $100,000 in annual contract value, that's more of a continuation of the deal elongation and slower, more scrutiny on deals, more of a continuation. We really saw no change from Q1 to Q2 in that segment. Right. Okay. The other narrative around that is maybe some slowdown, people trying to assess whether AI is an issue or trying to figure out how they're going to, like, might have to change their IT spend. Have you seen anything around that? As of now, we haven't seen anything. Okay. The increase to the annual guidance, which is great to see, was more of a return. It was a risk that you saw around tariffs and uncertainty in the market there. Yeah, there's really three things. We saw an improvement in FX. There's no two ways about it. The U.S. dollar weakened. We had improvement in GBP, Euro, which benefited us. We saw stronger professional services during the quarter, and we saw improved macro in the mid-market that gave us confidence to raise the guidance. Right, right. FX is relatively a bigger factor for Docebo because it started out as such an international footprint. It was about 25% - 30%. 25% - 30%. Yeah, I guess most of that is Canada or like what? No, actually, we're not that big in Canada. It's split between Euro and GBP. We did enter in the London market probably six years ago, but for the past three years, it's probably been one of our fastest growing segments from a regional perspective. That currency has grown faster than the overall book of business as well. Yeah, that makes perfect sense because it started in Italy, obviously. Exactly. There's a long tail of smaller clients, I would assume, that would be in Italy. Is that? Absolutely. Yeah. Italy, we focus on Italy, France, Germany. All those regions are good markets for us. That long tail of smaller customers, you know, you've been de-emphasizing them for several years now. Has that become a bigger issue or is it a stable part of the business? No, it's a stable part of the business. It's about 20% of our overall book of business. While it does have a lower gross retention than the mid-market and enterprise space, it's still high-quality customers. It's an attractive end segment because they come inbound. They look at our websites, very low cost of acquisition, and very quick sales cycles. We could close a commercial contract in 30 days. They just come inbound. It's funny, some of our old colleagues used to call our commercial sellers paper pushers because the demand is there. They come inbound and you really just got to close the deal. Yeah, most of the business growth today is in the quota-carrying outbound sales effort, I would think. Correct. Yeah. Okay. The other big thing that came out of the quarter was this expansion with what you'd call the big five global technology vendor. You only have two of those. One is AWS and the other is Google. I'm going to guess it's Google. I'm not going to say anything. It is very interesting that they are replacing an internal system. Yep. With Docebo at exactly the same time that Amazon is replacing Docebo with an internal system. Correct. Maybe if you could just talk a little bit through the decision that Google is making here, why are they doing it? If you can contrast it with what's going on at Amazon, that would be, I think, really an interesting conversation. Yeah, to make it even more interesting, it's the exact same use case. Right. AWS used us to certify any cloud engineer. If you're a student, if you're working at another company, if you want to enhance your skills and become an AWS certified engineer, you previously would go on, or still until December 31st, go on a Docebo-led customer academy and you could become certified. They decided to insource that project because it really became so successful. They trained 19 million users on that platform and they really wanted to control the roadmap. It became so successful, the data became integral. If you look at the history of AWS, even AWS itself got created because they decided to serve Amazon and create their own database and servers. AWS has a history of building internally, and that's exactly what they did with not only Docebo, but a number of their technology learning tech stack. When we hear about their vision and their strategy, it almost feels like they're building something bigger than just a learning platform. Okay. To contrast that with Google, which is a very segregated contract with that, the other big five U.S. tech company, they're very segregated, right? The cloud division, the search division, they all, they don't really talk to each other. They're almost their own organization. They don't have a, let's say, a consolidation build internal system strategy. They'd rather focus their core engineering focus on what they're good at and use best-in-class software and build on top of it because they don't want to deal with the backend security, scalability. They really want to leverage existing technology. Yeah. That is really why we won the business. They loved us from the other use case. We got introduced to another department. They were having a lot of pains with their internal system. They were wasting a lot of developer time, a lot of cost. They looked for a best-in-breed system that is secure, scalable, and they could actually build on top from an API perspective. They will actually be controlling the front end, and we are the backbone experience for this use case. Yeah, if Amazon was worried that, or they needed to control the roadmap, I guess that implies that some of the things they wanted you to do. Did not make sense for our other customer base. Right. Google is willing to make that compromise. Is that because the application in the backend is maybe broader and they're controlling the front end, which is where they have, I'm just trying to understand the difference in philosophy there. They almost want to, similar to like there's LXPs out there, and Google wants to create the front end look and feel of it. They don't want to deal with all the backbone, the learning logic, the scalability. If you want 200,000 active users to go to the platform, it takes years of scalability and code to actually get there. Right. Amazon, it was a five-year contract, and they went right to the end of that five-year contract. A little bit longer. Based on what you see now, is it likely that they'll be able to cut things over? It is a very meaningful program for them. You said 19 million users, that's not an easy thing to stand up. Yeah. How does Docebo think about supporting them, you know, going forward if they're not able to do it? Is that something that's a potential scenario? I mean, our main thesis is that it's going to end on December 31st. That's what they've told us. That's what they're working towards. Obviously, we're going to be there. We're going to be great partners. We still have different use cases with Amazon and actually opportunities in the pipeline with Amazon. We're going to do everything we could to support them, make sure the migration is successful. If it's not successful, we'll be there and support them as well. We have to take their word and assume that the contract's done at the end of December. The other work that they do with Docebo, I understand it's much smaller. I think this customer education application was by far the largest piece of it. Correct. Correct. By By far. On December 31st, you lose somewhere around $4 million of ARR. In 2026, you'll lose, you know, whatever, $1 million a quarter of revenue. Yeah. You'll have to make that up with new business. Yep. All right. Is there opportunity to grow even more with the large top five? Yeah, of course. I mean, listen, we have two large customer academies. From what we know, they have at least two more, and they use two different LMSs for that. Okay. They use another LMS for their internal employee experience that they train. There are three use cases. The internal is probably a very large chunky one, but each one of these are large, close to $1 million opportunities for us. Okay. It's an interesting application because when Amazon embarked on this, I'm sure they didn't know how successful or how many customers it would be. If you compare that with a learning management system used internally, like you know how many employees you have, you can make a reasonable assumption how many are going to use it. It's a different application when it's external, particularly when it's going to scale to 19 million users. I was curious about how visible the contract is at the beginning, how do you account for that growth in users? Maybe another question that's connected would be, are there applications that are in your pipeline similar to this or at this level of scale? Are there large applications, large opportunities that are being chased by your sales team today? Yeah, I mean, we don't put in our guidance, but we do have seven-figure deals in our pipeline. Very hard to predict if they will close and when they will close. These contracts, sales cycles are anywhere from 12 - 24 months, and they're very hard to predict. Are there opportunities? Yes. On your first question, I think you're trying to get is, you know, is there any other AWSs out there that are big enough that we'd want to internalize that? Is that kind of the, yeah. I mean, the other one would be the other one that we just talked about, and they're doing the exact opposite with AWS. If I look at my other top 10 customers, it's roughly 7.5% of ARR. It's fairly unconcentrated. We have two that are technology players that could actually internalize this. Others are QSR companies, healthcare, they're in the banking industry. These are not companies that are going to want to invest in developers and build their own internal systems that they have to maintain. The other big one you announced this year was an oil company for the QuickServe elements of their business at the gas bar. Maybe talk about the opportunity there. You've had a lot of luck with QuickServe, and I think you highlighted that as one of the areas that are potentially impacted by the macro earlier this year, or retail in general. Maybe you can talk about, you know, the opportunity with that oil company. That opens up a whole new vector of growth. Yeah. Are there others that you're potentially having in the pipeline, that sort of thing? Yeah, and this is the interesting thing about Docebo is that because we solve multiple different use cases, sometimes we start with sales enablement. Sometimes we start with customer education. This one, we're starting more on the retail, what we call franchisee experience. From there, you know, this contract could, I mean, 10 x- 20x. We are in a very small department within a very large organization. We need to do a great job of implementation. We need to do a great job of support and then get introduced to these other departments. One thing that's maybe not well understood is that these are completely different buyer personas. The person who, the sales enablement use cases, we typically sell to the CRO. Customer education is someone in sales, someone in customer education. The internal use case is an HR buyer persona. These are all, you know, or the CFO. Or the Chief Financial Officer. CFO is usually the, like, when it's just a big consolidated spend. Right. Yeah. You've had a lot of luck in QSR because it's easy, as I understand it, it's easy to understand ROI. If you have a franchise-based business and you're struggling to push your brand and your methods down into the end user or the end, you know, the person who's on the front line, you can deploy the training and then you can see an ROI. You've had a tremendous amount of luck in that end market around QSR. Is that why? Is this a repeatable recipe? It's because of that. It's because QSR tends to be a high turnover employee base. Every year they have to replenish 20% of their employees because it tends to be low labor, low skill. Some of our QSRs are so sophisticated in how they use their platform that they share their best practices and they're a referenceable company to Docebo. One company will literally look at how each product is selling at different stores. Let's say they're in Florida and they'll say, "Hey, my one in Boca Raton is selling a Whopper really well and the other one isn't. Let's push training to the one that isn't because they're doing something wrong from a positioning. They're making the product wrong and they actually force training on when they see certain products or certain foods under delivered compared to a store that's two blocks away." They become very sophisticated on ROI. Yeah, that's an interesting growth factor, in my view anyway. We're at seven minutes. If you have a question, jump in. The other big area of growth obviously is FedRAMP. Yes. We have to talk about that. This has moved more quickly, I think, than people expected. Than they expected. Yes. I think the new U.S. administration was initially looking for ways to save money in the U.S. federal government. I think that has morphed into an opportunity where the U.S. federal government is trying to push commercial off-the-shelf solutions and non-customized software, get rid of on-prem and push it into, I guess, lower cost solutions like Docebo. There are only two vendors, as I understand it, who are approved, yourself and Cornerstone. There's one more. Yeah. There's a legacy LMS that's typically geared towards universities. It's called Moodle. Oh yeah. They go to market called Powertrain in the FedRAMP program. Right. Okay. Still a very limited competitive set compared to the enterprise. Maybe you compare the competitive opportunity in FedRAMP versus, you know, what you've been doing in the enterprise space. It's limited because it's very expensive, and it takes a long time to do. You have to be crazy enough, you have to have a certain amount of scale, and you have to be willing to invest for two years before seeing a return. That actually limits the barrier of competition. Yeah. From a FedRAMP perspective, it feels like at the beginning of the year, everyone was discounting the opportunity to zero because of Docebo. Yes. The more that came out, it's actually been an accelerant. We got FedRAMP faster. We originally thought we'd get it in Q4 of this year. We got it in May. We've been building pipeline faster than we expected. Our current guidance is that we'll start winning more material business in Q3 of 2026 because typically the U.S. government buys in Q3, which is when their budget cycle ends. Right. Now we do have a couple of opportunities that could close this year. We're just trying to be cautious and prudent because this is a brand new vertical that we're learning. We're learning, right? When I've talked to your channel partners in the space, I think Carousel and Deloitte are the two that have been named. They seem to be very, very bullish on the opportunity in front of Docebo. Maybe you can confirm this. I think Deloitte is actually selling or. Correct. Which is. There are two ways we're using Deloitte. Yeah. They're an implementation partner, a referral partner, and they also go to market and sell Docebo directly. We take a rev share, or they take a rev share, I should say. Which I think that alone suggests, I mean, that the competitive dynamic is far more in your favor in FedRAMP, it would appear to me. Would that be a fair statement? Yeah, absolutely. Yeah. Okay, you gave a TAM for Fed and SLED. Yep. Your investor day, has that changed at all? Is the assessment still the same? Yeah. I mean, we'll update it at our next investor day. You know, the headcount of the U.S. government's changing on a daily basis. For now, we're sticking to the $2.7 billion TAM. Right. I think there's, I mean, at the initial stages of this opportunity, your predecessor suggested that the opportunity might be replacing existing cloud vendors. I think the bigger opportunity is replacing some of the on-prem solutions. Yeah. Maybe you could talk about that, how that TAM is split up. We've seen of our current pipeline that we've been building, or even current departments we're talking about, about 50% of them have an existing cloud solution that they're looking to move off of. Yeah. Fifty percent of them are actually moving from on-prem to the cloud. That's actually much higher than we expected from a pipeline perspective. Yeah. We thought it'd be closer to 70/30. We're very pleased that the mandates from the government are actually resulting in organizations starting to think about how do we actually modernize our tech stack and how do we stop spending so much money with consultants on these systems that were built by IBM on COBOL 20, 30, 15 years ago. I guess the other factor is the cloud vendors would be on probably a five, maybe seven-year contract, the longer contracts in the government. Whereas the on-prem wouldn't be subject to any kind of maybe a one-year maintenance contract. There wouldn't be something to break or it could happen that suggests that it could happen quickly. Yeah. Yeah. It tends to be a longer implementation because you have to go from on-prem to the cloud. Yeah. You're right. You know, these customers have existing contracts. We have to look at terms. Typically, we've seen lately the government's pushing for much shorter durations. We're seeing contracts actually for, you know, one to three years. We're not seeing many for the seven to five years anymore. Okay. Does anyone have any questions from the audience here? Okay. At the most recent Insight Conference, there was a lot of AI product rolled out. Yep. A lot of roadmap. Maybe just what gives you the most excitement or, you know, sitting from the CFO seat on what products you're rolling out now, like they're literally rolling out right now. Yeah, I’ve recorded it. What gives you the most excitement? What's the. Am I allowed to say all of them or is that too much? I'll give you a breakdown. We launched Docebo Creator, which is a way through utilizing AI, you could create content, you could personalize learning to different languages, to podcasts, to videos. That product is just getting better every quarter. There's what we call Harmony Search, where similar to ChatGPT, historically your first interaction with LMS is the search bar. In order to get your answer, you have to do about five different clicks because you have to search for what you want, you have to read the content, and then you have to go through a 10-page document to figure out the answer. Right. Now through Harmony Search, you could write the answer, the question, you know, can I fly premium economy if I'm a VP at Docebo? Instead of showing you the content, it will actually just give you the answer. Yeah. That's a huge productivity gain. We're launching copilots aimed at the administrator and then more agentic AI focusing on the learning experience. There's a lot of things coming out. Definitely, the pace of innovation is accelerating, but also the expectations of AI features and functionalities are being raised by our customers as well. They expect it. Yeah. A question I get often is whether Docebo can continue to drive the same free cash flow margin, same EBITDA margins with the aggressive R&D roadmap. I mean, Alessio, the CEO, said that he wants, you know, better quality support. You're growing your sales team in the enterprise space. How do you balance as the CFO the, you know, the EBITDA margins and the free cash flow against the pressures from Alessio? Should I get our CTO sitting right there? Maybe I should get a chance at that one. Listen, we're utilizing AI tools to become more efficient internally. There are two things that we're balancing. We need to deliver more and faster, but we also need to be more productive internally. We're purchasing a lot of tools to supplement and improve code writing. From a customer support perspective, we're deflecting a lot of questions through use of AI. While the expectations have risen, we need to get more efficient internally, and that's what we're focused on. Now you've said that you'd like to build a business along the lines of a rule of 40, which would suggest that growth would have to accelerate from here, and/or free cash flow and EBITDA margins have to stay here or expand. Is that still the expectation from the management team? Yeah, yeah. I mean, we put out a three-year expense guidance that roughly gets us to 25% EBITDA margins. Next quarter, we guided to just below 20%. We're getting there slowly and methodically. We're not a company that's just going to focus on the rule of 40 just to say we're a rule of 40 company. We want to make sure that we're balanced. We're not sacrificing any growth levers, and we do that over a period of time as opposed to just one quarter where we cut all our spend and sacrifice something in the business. Okay, we're almost, we're basically done. I'll just say you're generating a lot of cash. What are you doing with it all? Then we'll close the session. Famous cash question. Yeah. Drawer question. We have a session. We have three areas that we look to. We invest it back in the business where we see growth avenues. We strategically buy back shares when we see our shares dislocated. We're certainly not a buyback at every share price. We are methodical on when we buy back. From an M&A perspective, we're looking at for, you know, right product, right people, and the right price. Getting all those three things together is very hard these days. The private market valuations are a little bit dislocated from public markets. We are trying to be smart and allocate capital appropriately. Okay. I think we're done. We got people at the back waiting. Thanks everyone for joining us at this session.