Docebo Reports Second Quarter 2023 Results

Docebo Inc. (NASDAQ: DCBO; TSX:DCBO) (“Docebo” or the “Company”), a leading learning platform provider with a foundation in artificial intelligence (AI) and innovation, announced financial results for the three and six months ended June 30, 2023. All amounts are expressed in US dollars unless otherwise stated.

"In the second quarter, we exceeded the upper end of our revenue and profitability guidance by focusing on enterprise accounts across multiple verticals. Despite macroeconomic headwinds, this progress carried into Q3 as we signed a Big 5 US-based global technology leader," said Claudio Erba, Founder and Chief Executive Officer. "Furthermore, we strengthened our leadership position with the acquisition of Edugo and Peerboard which expands our AI and customer community learning capabilities. These provide technology and expertise that support both competitive differentiation and serving multi-use case requirements.”

Second Quarter 2023 Financial Highlights

• Revenue of $43.6 million, an increase of 25% from the comparative period in the prior year.
• Subscription revenue of $40.8 million, represented 94% of total revenue, an increase of 28% from the comparative period in the prior year.
• Gross profit of $35.2 million, an increase of 26% from the comparative period in the prior year, or 81% of revenue, compared to 80% of revenue for the comparative period in the prior year.
• Net loss of $(5.7) million, or $(0.17) per share, compared to net income of $2.1 million, or $0.06 per share for the comparative period in the prior year.
• Adjusted Net Income¹ of $4.7 million, or adjusted net income per share of $0.14, compared to Adjusted Net Loss of $(0.7) million, or adjusted net loss per share of $(0.02).
• Annual Recurring Revenue¹ as at June 30, 2023 of $172.9 million, an increase of $34.7 million from $138.2 million at the end of the second quarter of 2022, or an increase of 25%.
• Adjusted EBITDA¹ income of $3.1 million, representing 7.0% of total revenue, compared to Adjusted EBITDA loss of $(0.3) million, representing (0.9)% of total revenue, for the comparative period in the prior year.
• Cash flow from operating activities of $5.5 million, compared to $1.1 million for the comparative period in the prior year.
• Free Cash Flow¹ of $7.0 million, representing 16% of total revenue, compared to $1.0 million, representing 3% of total revenue, for the comparative period in the prior year.

Second Quarter 2023 Business Highlights

• Docebo is now used by 3,591 customers, an increase from 3,106 customers at the end of June 30, 2022.
• Strong growth in Average Contract Value¹, calculated as total Annual Recurring Revenue divided by the number of active customers, an increase from $44,495 as at June 30, 2022 to $48,148 as at June 30, 2023.
• Notable new customer wins include a major deal with another Big 5 US-based global technology leader after the June Quarter closed. The partnership will support multiple use cases, including a large external audience. Docebo will also utilize their generative AI services to transform the delivery of personalized learning at scale.
• Other notable customer wins signed during the June Quarter included a large provincial government agency in Ontario, Canada that chose Docebo for its track record for service, AI-powered global search and content creation capabilities to support their onboarding and professional development training requirements.
• Working closely with a large systems integrator, Docebo was selected to address an external compliance training use case for a major department within the State of Georgia.
• Rolls Royce Power Systems selected Docebo to address multiple use cases including external customer training, franchisee training and memberships, internal onboarding, compliance, and sales enablement.
• Unity Health Toronto, a Catholic hospital network serving the greater metropolitan area of Toronto, Canada selected Docebo to address their onboarding and ongoing training initiatives for their Physicians, Nurses, and Staff and Medical University Students.
• The Royal College of Physicians and Surgeons of Canada chose Docebo as its future platform to provide its members with flexible access to continuing education, communities of practice, and the maintenance of its certification program. Docebo's integrations through APIs, Discover Coach and Share, and overall simplicity of UI made it the top choice for the Royal College's technology stack transformation.
• Acuity Brands is a lighting, controls and building management systems firm with about 13,000 employees headquartered in Atlanta, Georgia and operations throughout North America, Europe and Asia. They selected Docebo to address multiple internal and external use cases, including their customer and partner training requirements, onboarding, and professional development in part for the company’s ability to deliver content generated from their authoring tools.
• HEI Hotels & Resorts, a hotel investment and management company with over 100 properties, with brands that include Hyatt, Hilton, Marriott, Sheraton, and Westin, chose Docebo for the company’s functionality, scalability, and content offerings to support their brands for onboarding, compliance, and management training requirements.
• VMWare expanded its use of Docebo’s platform for a variety of external and internal use cases including customer training, channel training, and membership training.
• Docebo entered into a global OEM alliance with a Big 4 professional services partnership which will white label Docebo Learn LMS technology and roadmap as the underlying technology used to address their customers and workforce upskilling and reskilling requirements.
• Darwinbox, the fastest growing HCM in India and Southeast Asia, signed an OEM alliance agreement with Docebo that enables them to offer a learning technology platform that is complimentary to their existing suite and go-to-market strategy.

Second Quarter 2023 Results

Selected Financial Measures

Key Performance Indicators and Non-IFRS Measures

Financial Outlook

Docebo is providing financial guidance for the three months ended September 30, 2023 as follows:

• Total revenue between $45.9 and $46.1 million
• Gross profit margin between 80.0% and 81.0%
• Adjusted EBITDA as a percentage of total revenue between 7.5% to 8.0%

The information in this section is forward-looking. Please see the sections entitled “Non-IFRS Measures and Reconciliation of Non-IFRS Measures” and “Key Performance Indicators” in this press release for how we define “Adjusted EBITDA” and the section entitled “Forward-Looking Information.” A reconciliation of forward-looking “Adjusted EBITDA” to the most directly comparable IFRS measure is not available without unreasonable effort, as certain items cannot be reasonably predicted because of their high variability, complexity and low visibility. Docebo believes that this type of guidance provides useful insight into the anticipated performance of its business.

Conference Call

Management will host a conference call on Thursday, August 10, 2023 at 8:00 am ET to discuss these second quarter results. To access the conference call, please dial 416-764-8624 or 1-888-259-6580 or access the webcast at https://docebo.inc/events-and-presentations/default.aspx. The unaudited condensed consolidated interim financial statements for the six months ended June 30, 2023 and Management’s Discussion & Analysis for the same period have been filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Alternatively, these documents along with a presentation in connection with the conference call can be accessed online at https://investors.docebo.com.

An archived recording of the conference call will be available until August 17, 2023 and for 90 days on our website. To listen to the recording, please visit the webcast link which can be found on Docebo’s investor relations website at https://docebo.inc/events-and-presntations/default.aspx or call 416-764-8692 or 1-877-674-7070 and enter passcode 324996#.

Forward-Looking Information

This press release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities laws. Forward-looking information may relate to our future financial outlook and anticipated events or results and may include information regarding our financial position, business strategy, macroeconomic conditions and global economic uncertainty, the war in Ukraine and inflation, including actions of Central banks to contain it, on our business, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information.

In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or, “will”, “occur” or “be achieved”, and similar words or the negative of these terms and similar terminology. 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.

This forward-looking information includes, but is not limited to, statements regarding the Company’s business; the guidance for the three months ended September 30, 2023 in respect of total revenue, gross profit margin and Adjusted EBITDA as a percentage of total revenue discussed under “Financial Outlook” in this press release; future financial position and business strategy; the learning management industry; our growth rates and growth strategies; addressable markets for our solutions; the achievement of advances in and expansion of our platform; expectations regarding our revenue and the revenue generation potential of our platform and other products; our business plans and strategies; and our competitive position in our industry. This forward-looking information is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions include: our ability to build our market share and enter new markets and industry verticals; our ability to attract and retain key personnel; our ability to maintain and expand geographic scope; our ability to execute on our expansion plans; our ability to continue investing in infrastructure to support our growth; our ability to obtain and maintain existing financing on acceptable terms; our ability to execute on profitability initiatives; currency exchange and interest rates; the impact of inflation and global macroeconomic conditions; the impact of competition; our ability to respond to the changes and trends in our industry or the global economy; and the changes in laws, rules, regulations, and global standards are material factors made in preparing forward-looking information and management’s expectations.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that, while considered by the Company to be appropriate and reasonable as of the date of this press release, are 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 Company’s ability to execute its growth strategies;
• the impact of changing conditions in the global corporate e-learning market;
• increasing competition in the global corporate e-learning market in which the Company operates;
• fluctuations in currency exchange rates and volatility in financial markets;
• changes in the attitudes, financial condition and demand of our target market;
• the Company’s ability to operate its business and effectively manage its growth under evolving macroeconomic conditions, such as high inflation and recessionary environments;
• developments and changes in applicable laws and regulations;
• fluctuations in the length and complexity of the sales cycle for our platform, especially for sales to larger enterprises;
• issues in the use of AI in our platform may result in reputational harm or liability; and
• such other factors discussed in greater detail under the “Risk Factors” section of our Annual Information Form dated March 8, 2023 (“AIF”), which is available under our profile on SEDAR at www.sedar.com.

Our guidance for the three months ended September 30, 2023 in respect of total revenue, gross profit margin, and Adjusted EBITDA as a percentage of total revenue is subject to certain assumptions and associated risks as stated under “Forward-Looking Statements,” and in particular the following:

• our ability to win business from new customers and expand business from existing customers;
• the timing of new customer wins and expansion decisions by our existing customers;
• maintaining our customer retention levels, and specifically, that customers will renew contractual commitments on a periodic basis as those commitments come up for renewal, at rates consistent with our historical experience; and
• with respect to gross profit margin and Adjusted EBITDA as a percentage of revenue, our ability to contain expense levels while expanding our business.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in greater detail in the “Summary of Factors Affecting our Performance” section of our MD&A for the three and six months ended June 30, 2023 and in the “Risk Factors” section of our AIF, should be considered carefully by prospective investors.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents our expectations as of the date specified herein, and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements.

Additional information relating to Docebo, including our AIF, can be found on SEDAR at www.sedar.com.

About Docebo

Docebo is redefining the way enterprises leverage technology to create and manage content, deliver training, and measure the business impact of their learning programs. With Docebo’s end-to-end learning platform, organizations worldwide are equipped to deliver scaled, personalized learning across all their audiences and use cases, driving growth and powering their business..

Results of Operations

The following table outlines our unaudited condensed consolidated interim statements of (loss) income and comprehensive loss for the following periods: