February 7, 2022 | Montreal, QC and San Francisco, CA

Coveo Reports Third Quarter Fiscal 2022 Financial Results

SaaS Subscription Revenue grew 50% year-over-year to $21.2 million

Total revenue increased 39% percent year-over-year to $23.2 million

Current SaaS Subscription Remaining Performance Obligations grew 49% to $72.2 million

 

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

Coveo Solutions Inc. (“Coveo” or the “Company”) (TSX: CVO), a leader in AI-powered relevance platforms that helps to transform search, recommendations, and personalization within digital experiences, today announced financial results for its third quarter of fiscal 2022, ended December 31, 2021. 

We delivered record results in the third quarter demonstrating the demand for AI-powered relevance within modern digital businesses,” said Louis Têtu, Chairman and CEO of Coveo. “People expect personalized and relevant digital experiences when interacting with businesses across commerce, websites, customer service, and in the workplace, and this can only be achieved by leveraging sophisticated AI. For more than a decade, Coveo and now the Coveo Relevance Cloud™ platform have been at the forefront of a sizeable opportunity for AI to transform business at scale. We are well positioned to capture this demand across industries and pursue our mission of democratizing AI-powered digital experiences for every business.

Third Quarter Fiscal 2022 Financial Highlights
  • SaaS Subscription Revenue grew 50% year-over-year to $21.2 million.
  • Total revenue was $23.2 million, an increase of 39% year-over-year compared to $16.8 million in the third quarter of fiscal 2021.
  • Current SaaS Subscription Remaining Performance Obligations of $72.2 million as of December 31, 2021, up 49% year-over-year compared to $48.5 million in the third quarter of fiscal 2021.
  • Gross profit percentage was 74%, an increase of 55 basis points compared to the third quarter of fiscal 2021.
  • Operating loss was $23.4 million and Adjusted Operating Loss (1) was $8.1 million.
  • Net income was $426.3 million, compared to a net loss of $101.7 million in the third quarter of fiscal 2021. Net income in the third quarter of fiscal 2022 was impacted by a non-cash gain of $269.2 million and an associated income tax recovery of $184.4 million, each related to our preferred shares, which were converted into multiple voting shares immediately prior to our IPO.
  • Net income per share was $7.65, compared to a net loss per share of $5.55 in the third quarter of fiscal 2021.
  • Net cash used in operations was $7.9 million, and cash was $233.7 million as of December 31, 2021.
Third Quarter Fiscal 2022 Operational Highlights
  • Net Expansion Rate of 112% as of December 31, 2021.
  • Completed the acquisition of Qubit Digital Ltd, a UK-based leader in AI-powered personalization for merchandising teams, on October 14, 2021.
  • Raised $195.9 million in gross proceeds ($179.9 million in net proceeds) from our initial public offering of 14,340,000 subordinate voting shares and concurrent private placement of 129,996 additional subordinate voting shares, which closed on November 24, 2021, and the exercise of the over-allotment option for an additional 2,151,000 subordinate voting shares, which closed on December 1, 2021.
  • Released Deep Learning Case Classification model, which greatly improves the quality of support cases submitted by users through automatic prompting of relevant classification tags.
  • Introduced our Smart Snippets feature, which automatically extracts answer snippets from content to enable users to get direct answers to their queries without having to navigate away from the results page.
  • Announced a deeper integration with Adobe Experience Manager, including the release of Coveo for Adobe Experience Manager on the Adobe Exchange marketplace, to make it easier for digital leaders and developers to bring robust, relevant search experiences to Adobe-powered websites, intranets, online stores, and technical documentation.
  • Launched Coveo Search and Recommendations for SAP Commerce on the SAP® Store to allow retailers and manufacturers to leverage Coveo’s complementary enterprise-class AI to get even more out of SAP Commerce Cloud and deliver the buying experience today’s consumers expect.
Financial Outlook
Coveo anticipates SaaS Subscription Revenue, Total Revenue, Adjusted Operating Loss, and Weighted Average Shares Outstanding to be in the following ranges:
 

Q4 FY’22

Full Year FY’22

SaaS Subscription Revenue

$21.5 – $22.0 million

$76.3 – $76.8 million

Total Revenue

$23.5 – $24.0 million

$84.5 – $85.0 million

Adjusted Operating Loss (1)

$9.5 – $10.5 million

$29.0 – $30.0 million

Weighted Average Shares Outstanding

103.4 – 103.9 million

50.8 – 51.3 million

These statements are forward-looking and actual results may differ materially. Please refer to the “Forward-Looking Information” section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Coveo’s outlook also constitutes a "financial outlook" within the meaning of applicable securities laws and is provided for the purposes of assisting the reader in understanding the Company's financial performance and measuring progress toward management's objectives and the reader is cautioned that it may not be appropriate for other purposes.

* * * * *
(1) Adjusted Operating Loss is a non-IFRS measure. Please see the “Non-IFRS Measures and Key Performance Indicators” section below.

Conference Call Information

Coveo will host a conference call today at 5:00 p.m. Eastern time today to discuss its financial results for its fiscal third quarter 2022. The call will be hosted by Louis Têtu, Chairman and CEO, and Jean Lavigueur, CFO.

Date: Monday, February 7, 2022
Time: 5:00 p.m. Eastern time
Dial in number: Canada/US: 888-394-8218
Confirmation Code: 6876328
Live webcast: ir.coveo.com under the “News & Events” section
 
Webcast will be available for one year at ir.coveo.com
 
Non-IFRS Measures and Key Performance Indicators
Coveo’s unaudited interim financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board. The information presented in this press release includes a non-IFRS financial measure, namely Adjusted Operating Loss. This measure is not a recognized measure under IFRS and does not have standardized meanings prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Rather, this measure is provided as additional information to complement IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. 
 
Accordingly, this measure should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. Adjusted Operating Loss is used to provide investors with a supplemental measure of the Company’s operating performance and thus highlight trends in Coveo’s core business that may not otherwise be apparent when relying solely on IFRS measures. The Company’s management also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Coveo’s management uses and intends to continue to use non-IFRS measures in order to facilitate operating performance comparisons from period to period, and to prepare annual operating budgets and forecasts.
 
See the “Non-IFRS Measures” section of our interim management’s discussion and analysis dated February 7, 2022 (the “MD&A”), which is available under our profile on SEDAR at www.sedar.com, for a description of this measure. See the financial tables below for a reconciliation of Adjusted Operating Loss to operating loss.

This press release also refers to SaaS Subscription Revenue, Current SaaS Subscription Remaining Performance Obligations and Net Expansion Rate, which are operating metrics used in Coveo’s industry. Please refer to the “Key Performance Indicators” section of our MD&A for a description of these metrics.

 

Forward-Looking Information

This press release contains “forward-looking information” within the meaning of applicable securities laws, including Coveo’s financial outlook on SaaS Subscription Revenue, Total Revenue, Adjusted Operating Loss, and Weighted Average Shares Outstanding for the three months and the year ending on March 31, 2022. This forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “might”, “will”, “achieve”, “occur”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “target”, “opportunity”, “strategy”, “scheduled”, “outlook”, “forecast”, “projection”, or “prospect”, the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. In addition, any statements that refer to expectations, intentions, projections, or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates, and projections regarding future events or circumstances. 
 
Coveo’s financial outlook on SaaS Subscription Revenue, Total Revenue, Adjusted Operating Loss, and Weighted Average Shares Outstanding also constitutes “financial outlook” within the meaning of applicable securities laws and is provided for the purposes of assisting the reader in understanding the Company’s financial performance and measuring progress toward management’s objectives and the reader is cautioned that it may not be appropriate for other purposes.
 
Forward-looking information is necessarily based on a number of opinions, estimates, and assumptions that we considered appropriate and reasonable as of the date such statements are made, and is subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, level of activity, performance, or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the risk factors described under “Risk Factors” in the Company’s final supplemented PREP prospectus dated November 17, 2021, which is available under our profile on SEDAR at www.sedar.com. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, prospective investors should not place undue reliance on forward-looking information, which speaks only as of the date made.

You should not rely on these forward-looking statements, as actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such risks and uncertainties. Additional information will also be set forth in other filings that we make with the CSA from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

 

About Coveo Solutions Inc.

We believe that relevance and personalization are critical for businesses to win in the new digital experience economy, to serve people the way they expect, and that applied AI is an imperative. Coveo is a market‐leading AI‐powered relevance platform. Our SaaS‐native, multi‐tenant platform injects search, recommendations, and personalization solutions into digital experiences. We provide solutions for commerce, service, website, and workplace applications. Our solutions are designed to provide tangible value to our customers by helping drive conversion and revenue growth, reduce customer support costs, increase self‐service, customer satisfaction and website engagement, and improve employee proficiency and satisfaction. Our AI powers relevant interactions for hundreds of the world’s most innovative brands and is supported by a large network of global system integrators and implementation partners.

Coveo is a trademark of Coveo Solutions Inc.

 

Contact Information

Nick Goode
Investor Relations
investors@coveo.com

Kiyomi Harrington
PR Lead
kharrington@coveo.com

 

Condensed Interim Consolidated Statements of Financial Position

(expressed in thousands of US dollars, unaudited)

 

 

 

 

Three months ended

December 31,

Nine months ended

December 31,

 

 

2021

$

2020

$

2021

$

2020

$

Revenue

 

 

 

 

 

SaaS subscription

 

21,153

14,120

54,782

40,057

Self-managed licenses and maintenance

 

487

1,405

2,042

4,002

Product revenue

 

21,640

15,525

56,824

44,059

Professional services

 

1,603

1,237

4,155

3,364

Total revenue

 

23,243

16,762

60,979

47,423

 

 

 

 

 

 

Cost of revenue

 

 

 

 

 

Product

 

4,476

3,585

11,215

9,555

Professional services

 

1,566

865

3,406

2,615

Total cost of revenue

 

6,042

4,450

14,621

12,170

 

 

 

 

 

 

Gross profit

 

17,201

12,312

46,358

35,253

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

Sales and marketing

 

12,182

8,514

33,650

22,375

Research and product development

 

9,076

3,766

19,446

10,454

General and administrative

 

17,277

3,560

26,939

9,079

Depreciation of property and equipment

 

684

491

1,985

1,403

Amortization of intangible assets

 

1,042

62

1,098

182

Depreciation of right-of-use assets

 

377

402

1,138

1,161

 

 

 

 

 

 

Total operating expenses

 

40,638

16,795

84,256

44,654

 

 

 

 

 

 

Operating loss

 

(23,437)

(4,483)

(37,898)

(9,401)

 

 

 

 

 

 

Change in redeemable preferred shares – conversion rights

component fair value

 

(269,200)

72,749

(299,428)

151,557

Net financial expenses

 

2,930

4,262

12,560

11,888

Foreign exchange loss

 

628

997

281

1,532

 

 

 

 

 

 

Income (loss) before income taxes

 

242,205

(82,491)

248,689

(174,378)

 

 

 

 

 

 

Income tax expense (recovery)

 

(184,108)

19,163

(188,972)

40,716

 

 

 

 

 

 

Net income (loss)

 

426,313

(101,654)

437,661

(215,094)

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

Items that may be reclassified to the consolidated statements of income (loss)

 

 

 

Foreign currency differences on translation to presentation currency

 

(6,989)

 

(25,113)

(2,637)

 

(47,299)

Total comprehensive income (loss)

 

419,324

 

(126,767)

435,024

 

(262,393)

 

Net income (loss) per share

 

 

 

 

 

Basic

 

7.65

(5.55)

13.05

(11.74)

Diluted

 

(0.24)

(5.55)

(0.41)

(11.74)

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

Basic

 

55,701,559

18,326,538

33,537,536

18,314,865

Diluted

 

101,636,633

18,326,538

96,272,762

18,314,865

Condensed Interim Consolidated Statements of Financial Position

(expressed in thousands of US dollars, unaudited)

 

The following table presents share-based compensation and related expenses recognized by the Company:

 

Three months ended

December 31,

Nine months ended

December 31,

 

2021

$

2020

$

2021

$

2020

$

 

 

 

 

 

Cost of revenue – Product

140

24

230

51

Cost of revenue – Professional services

132

16

206

33

Sales and marketing

695

131

1,153

312

Research and product development

1,100

130

1,537

287

General and administrative

786

202

1,201

545

 

 

 

 

 

 

2,853

503

4,327

1,228

Reconciliation of Adjusted Operating Loss to operating loss

 (expressed in thousands of US dollars, unaudited)

 

 

Three months ended

December 31,

Nine months ended

December 31,

 

2021

$

2020

$

2021

$

2020

$

 

 

 

 

 

Operating loss

(23,437)

(4,483)

(37,898)

(9,401)

Share-based compensation and related expenses (1)

2,853

503

4,327

1,228

Amortization of acquired intangible assets (2)

1,003

41

1,003

83

Acquisition-related compensation (3)

502

121

744

363

Transaction-related expenses (4)

509

-

1,839

-

Charitable contributions (5)

10,420

28

10,479

60

 

 

 

 

 

Adjusted Operating Loss

(8,150)

(3,790)

(19,506)

(7,667)

(1) These expenses represent non-cash expenditures recognized in connection with issued stock options and other awards under share-based plans to our employees and directors as well as related payroll taxes given that they are directly attributable to share-based compensation. 
(2) This expense represents the amortization of intangible assets acquired through the Tooso, Inc. and Qubit acquisitions. 
(3) These expenses relate to non-recurring compensation that is associated with the ongoing employment obligations for certain employees in connection with the Tooso, Inc. and Qubit acquisitions.
(4) These expenses represent expenses related to professional, legal, consulting, and accounting fees relating to the IPO and the acquisition of Qubit.
(5) These expenses represent charitable contributions of the Company, including the one-time 1% pledge of our equity. 

Condensed Interim Consolidated Statements of Financial Position

(expressed in thousands of US dollars, unaudited)

 

 

 

 

Dec 31,

2021

$

 

March 31,

2021

$

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash

 

 

233,683

 

55,399

Short-term investments

 

 

-

 

76,472

Trade and other receivables

 

 

19,676

 

18,056

Government assistance and refundable tax credits

 

 

9,284

 

4,189

Prepaid expenses

 

 

4,495

 

3,953

 

 

 

267,138

 

158,069

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Contract acquisition costs

 

 

10,538

 

8,624

Property and equipment

 

 

8,745

 

9,577

Intangible assets

 

 

23,437

 

584

Right-of-use assets

 

 

9,142

 

10,268

Deferred tax assets

 

 

5,011

 

5,672

Goodwill

 

 

22,232

 

1,247

 

 

 

 

 

 

Total assets

 

 

346,243

 

194,041

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade payable and accrued liabilities

 

 

21,057

 

16,550

Current portion of deferred revenue

 

 

45,242

 

37,144

Current portion of lease obligations

 

 

1,807

 

1,555

 

 

 

68,106

 

55,249

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Deferred revenue

 

 

569

 

680

Lease obligations

 

 

11,188

 

12,588

Redeemable preferred shares

 

 

 

 

 

Debt component

 

 

-

 

195,701

Conversion rights component

 

 

-

 

742,653

Deferred tax liabilities

 

 

-

 

186,249

Total liabilities

 

 

79,863

 

1,193,120

 

 

 

 

 

 

Shareholders' Equity (Deficiency)

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

859,065

 

16,957

Conversion rights – Series A

 

 

-

 

1,105

Contributed surplus

 

 

9,984

 

5,794

Deficit

 

 

(572,871)

 

(995,774)

Accumulated other comprehensive loss

 

 

(29,798)

 

(27,161)

Total shareholders' equity (deficiency)

 

 

266,380

 

(999,079)

 

 

 

 

 

 

Total liabilities and shareholders' equity (deficiency)

 

 

346,243

 

194,041

 

Condensed Interim Consolidated Statements of Cash Flows

(expressed in thousands of US dollars, unaudited)

 


 

 

 

Three months ended

December 31,

Nine months ended

December 31,

 

 

 

2021

$

2020

$

2021

$

2020

$

 

 

 

 

 

 

 

Cash flows from (used in) operating activities

 

 

 

 

 

 

Net income (loss)

 

 

426,313

(101,654)

437,661

(215,094)

Items not affecting cash

 

 

 

 

 

 

 

 

 

 

 

 

 

Bad debt expense

 

 

8

-

31

-

Amortization of contract acquisition costs

 

 

987

832

2,797

2,468

Depreciation of property and equipment

 

 

684

491

1,985

1,403

Amortization of intangible assets

 

 

1,042

62

1,098

182

Depreciation of right-of-use assets

 

 

377

402

1,138

1,161

Interest accretion

 

 

2,753

4,040

11,906

11,574

Change in redeemable preferred shares – conversion rights

component fair value

 

 

(269,200)

72,749

(299,428)

151,557

Donation of shares

 

 

10,379

-

10,379

-

Share-based compensation

 

 

2,853

503

4,327

1,228

Change in fair value of short-term investments

 

 

12

46

103

(201)

Interest on lease obligations

 

 

176

184

550

538

Variation of deferred tax assets and liabilities

 

 

(184,118)

19,154

(189,062)

40,661

Unrealized foreign exchange loss

 

 

679

988

232

1,533

 

 

 

 

 

 

 

Changes in non-cash working capital items

 

 

(868)

2,519

(7,285)

8,361

 

 

 

 

 

 

 

 

 

 

(7,923)

316

(23,568)

5,371

 

 

 

 

 

 

 

Cash flows from (used in) investing activities

 

 

 

 

 

 

Business combination, net of cash acquired

 

 

(38,667)

-

(38,667)

-

Proceeds from disposal of short-term investments

 

 

46,479

7,611

76,351

26,066

Additions to property and equipment

 

 

(451)

(821)

(1,118)

(2,240)

Additions to intangible assets

 

 

(155)

(115)

(756)

(115)

 

 

 

 

 

 

 

 

 

 

7,206

6,675

35,810

23,711

 

 

 

 

 

 

 

Cash flows from (used in) financing activities

 

 

 

 

 

 

Share capital issued

 

 

195,920

-

195,920

-

Share capital issuance costs

 

 

(14,477)

-

(14,477)

-

Consideration to a shareholder

 

 

(14,758)

-

(14,758)

-

Proceeds from exercise of stock options

 

 

215

22

337

72

Payments on lease obligations net of lease incentives received

 

 

(551)

(125)

(1,683)

(386)

 

 

 

 

 

 

 

 

 

 

166,349

(103)

165,339

(314)

 

 

 

 

 

 

 

Effect of foreign exchange rate changes on cash

 

 

874

344

703

677

 

 

 

 

 

 

 

Increase in cash during the period

 

 

166,506

7,232

178,284

29,445

 

 

 

 

 

 

 

Cash – beginning of period

 

 

67,177

38,304

55,399

16,091

 

 

 

 

 

 

 

Cash – end of period

 

 

233,683

45,536

233,683

45,536

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