Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

Commission File Number 001-39750

DOCEBO INC.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name)

366 Adelaide St. West

Suite 701

Toronto, Ontario, Canada M5V 1R7

(800) 681-4601

(Address and telephone number of registrant’s principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F

☐

Form 40-F

☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

INCORPORATION BY REFERENCE

Exhibits 99.1, 99.2, 99.4 and 99.5 of this Form 6-K are incorporated by reference to the registrant's Registration Statement on Form F-10 (File No. 333-251046), the registrant’s Registration Statement on Form S-8 (File No. 333-251417) and the registrant’s Registration Statement on Form F-3 (File No. 333-262000).

DOCUMENTS INCLUDED AS PART OF THIS REPORT


Exhibit
99.1			Unaudited Condensed Consolidated Interim Financial Statements of Financial Position of the Registrant for the Three and Six Months Ended June 30 , 2023
99.2			Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Registrant for the Three and Six Months Ended June 30 , 2023
99.3			Press Release of Docebo Inc., dated August 10 , 2023, titled “Docebo Reports Second Quarter 2023 Results”
99.4			Docebo Inc. – Form 52-109F2 Certificate of Interim Filings by CEO (pursuant to Canadian regulations)
99.5			Docebo Inc. – Form 52-109F2 Certificate of Interim Filings by CFO (pursuant to Canadian regulations)
101.INS			Inline XBRL Instance Document.
101.SCH			Inline XBRL Taxonomy Schema Linkbase Document.
101.CAL			Inline XBRL Taxonomy Calculation Linkbase Document.
101.DEF			Inline XBRL Taxonomy Definition Linkbase Document.
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			Inline XBRL Taxonomy Presentation Linkbase Document.
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Docebo Inc.

Date:

August 10, 2023

By:

/s/ Sukaran Mehta

Name:

Sukaran Mehta

Title:

Chief Financial Officer



DOCEBO INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(expressed in thousands of United States dollars)



	June 30,	December 31,
	2023	2022
	$	$
Assets
Current assets:
Cash and cash equivalents	203,923	216,293
Trade and other receivables (Note 5)	39,414	37,527
Income taxes receivable	40	435
Prepaids and deposits	9,848	6,378
Net investment in finance lease	83	174
Contract costs, net	5,545	2,778
	258,853	263,585
Non-current assets:
Contract costs, net	8,884	7,931
Net investment in finance lease	83	241
Deferred tax asset	163	118
Right-of-use assets, net (Note 6)	1,790	2,038
Property and equipment, net (Note 7)	2,339	2,624
Intangible assets, net (Note 8)	6,812	1,150
Goodwill (Note 9)	10,039	5,982
	288,963	283,669
Liabilities
Current liabilities:
Trade and other payables	31,498	26,025
Automatic share repurchase plan liability (Note 11)	41,958	—
Income taxes payable	171	101
Deferred revenue	61,294	55,779
Contingent consideration	1,136	1,083
Lease obligations (Note 6)	1,544	1,374

	137,601	84,362
Non-current liabilities:
Acquisition holdback payables	1,022	—
Contingent consideration	—	1,177
Deferred revenue	316	528
Lease obligations (Note 6)	1,169	1,692
Employee benefit obligations	2,794	2,423
Deferred tax liability	1,523	1,276

	144,425	91,458
Shareholders’ equity
Share capital (Note 11)	268,701	268,194
Contributed surplus	10,291	8,458
Accumulated other comprehensive loss	(5,203)	(9,571)
Deficit	(129,251)	(74,870)
Total equity	144,538	192,211
	288,963	283,669

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


DOCEBO INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE LOSS

(expressed in thousands of United States dollars, except per share amounts)


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Revenue (Note 14)	43,594	34,936	85,053	66,991
Cost of revenue (Note 15 and 16)	8,410	6,979	16,464	13,531
Gross profit	35,184	27,957	68,589	53,460

Operating expenses
General and administrative (Note 16)	9,345	7,597	16,901	14,972
Sales and marketing (Note 16)	18,048	14,880	34,820	28,627
Research and development (Note 16)	8,808	6,110	16,185	12,296
Share-based compensation (Note 12)	1,326	1,530	2,593	2,624
Foreign exchange loss (gain)	4,355	(4,854)	4,457	(1,463)
Depreciation and amortization (Note 6, 7 and 8)	824	587	1,531	1,167
	42,706	25,850	76,487	58,223
Operating (loss) income	(7,522)	2,107	(7,898)	(4,763)

Finance income, net (Note 10)	(2,406)	(333)	(4,573)	(352)
Other (income) expense, net	—	(22)	183	(43)
(Loss) income before income taxes	(5,116)	2,462	(3,508)	(4,368)

Income tax expense	558	359	921	488

Net (loss) income for the periods	(5,674)	2,103	(4,429)	(4,856)

Other comprehensive (income) loss
Item that may be reclassified subsequently to income:
Exchange (gain) loss on translation of foreign operations	(4,209)	5,155	(4,368)	1,943




Comprehensive loss	(1,465)	(3,052)	(61)	(6,799)



Income (loss) per share - basic	(0.17)	0.06	(0.13)	(0.15)
Income (loss) per share - diluted	(0.17)	0.06	(0.13)	(0.15)

Weighted average number of common shares outstanding - basic (Note 13)	33,151,370	33,022,813	33,127,156	33,015,045
Weighted average number of common shares outstanding - diluted (Note 13)	33,151,370	34,019,120	33,127,156	33,015,045

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


DOCEBO INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(expressed in thousands of United States dollars, except number of shares)


	Share capital		Contributed surplus	Accumulated other comprehensive income (loss)	Deficit	Total
	#	$	$	$	$	$

Balance, December 31, 2021	32,857,422	266,119	4,312	2,113	(81,888)	190,656
Exercise of stock options (Note 11 and 12)	6,409	101	(48)	—	—	53
Share-based compensation (Note 12)	—	—	2,624	—	—	2,624

Issuance of common shares related to business combination	15,364	700	—	—	—	700
Share issuance under employee share purchase plan (Note 11 and 12)	6,377	361	(57)	—	—	304
Comprehensive loss	—	—	—	(1,943)	(4,856)	(6,799)
Balance, June 30, 2022	32,885,572	267,281	6,831	170	(86,744)	187,538

Balance, December 31, 2022	32,913,955	268,194	8,458	(9,571)	(74,870)	192,211
Exercise of stock options (Note 11 and 12)	8,735	149	(49)	—	—	100
Share-based compensation (Note 12)	—	—	2,593	—	—	2,593
Share issuance under employee share purchase plan (Note 11 and 12)	8,785	322	(58)	—	—	264
Release of restricted share units (Note 11 and 12)	18,442	653	(653)	—	—	—
Shares issued related to contingent consideration	50,550	1,625	—	—	—	1,625
Shares repurchased for cancellation under normal course issuer bid (Note 11)	(279,676)	(2,242)	—	—	(7,994)	(10,236)
Share repurchase commitment under the automatic share purchase plan (Note 11)	—	—	—	—	(41,958)	(41,958)
Comprehensive loss	—	—	—	4,368	(4,429)	(61)
Balance, June 30, 2023	32,720,791	268,701	10,291	(5,203)	(129,251)	144,538

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


DOCEBO INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(expressed in thousands of United States dollars)


	Six months ended June 30,
	2023	2022
	$	$
Cash flows from (used in) operating activities
Net loss	(4,429)	(4,856)
Adjustments to reconcile net loss to net cash from (used in) operating activities:
Depreciation and amortization	1,531	1,167
Share-based compensation	2,593	2,624
Loss on disposal of asset	197	11
Unrealized foreign exchange loss (gain)	4,408	(1,383)
Income tax expense	921	488
Finance income, net	(4,573)	(352)
Changes in non-cash working capital items:
Trade and other receivables	(912)	(1,840)

Prepaids and deposits	(3,361)	(1,175)
Contract costs	(3,590)	(3,756)
Trade and other payables	5,575	1,033

Employee benefit obligations	335	284
Deferred revenue	4,877	6,416
Income taxes (paid) received	(299)	459
Cash from (used in) operating activities	3,273	(880)

Cash flows used in investing activities
Purchase of property and equipment	(266)	(509)

Payments of contingent consideration from acquisitions	(216)	(93)
Acquisition of business, net of cash acquired	(8,671)	(1,071)
Cash used in investing activities	(9,153)	(1,673)

Cash flows (used in) from financing activities
Payments received on net investment in finance lease	64	70
Repayment of lease obligations	(850)	(700)
Interest received	4,056	537
Proceeds from exercise of stock options	100	53

Proceeds from share issuance under employee share purchase plan	264	304

Shares repurchased for cancellation under normal course issuer bid	(10,236)	—


Cash (used in) from financing activities	(6,602)	264

Net change in cash and cash equivalents during the period	(12,482)	(2,289)
Effect of foreign exchange on cash and cash equivalents	112	(699)
Cash and cash equivalents, beginning of the period	216,293	215,323
Cash and cash equivalents, end of the period	203,923	212,335

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
June 30, 2023
(expressed in thousands of US dollars, except share amounts)


1			Nature of business

Docebo Inc. (the “Company” or “Docebo”) is a provider of cloud-based learning management systems. The Company was incorporated on April 21, 2016 under the laws of the Province of Ontario. The Company’s head office is located at Suite 701, 366 Adelaide Street West, Toronto, Canada, M5V 1R9.

The Company’s shares are listed on both the Toronto Stock Exchange (“TSX”), as of October 8, 2019, and the Nasdaq Global Select Market (“Nasdaq”), as of December 3, 2020, under the stock symbol “DCBO”.

The Company has the following subsidiaries:


Entity name	Country	Ownership percentage June 30, 2023	Ownership percentage December 31, 2022
		%	%
Docebo S.p.A	Italy	100	100
Docebo NA, Inc.	United States	100	100
Docebo EMEA FZ-LLC	Dubai	100	100
Docebo UK Limited	England	100	100
Docebo France Société par Actions Simplifiée (“Docebo France”)	France	100	100
Docebo DACH GmbH (“Docebo Germany”)	Germany	100	100
Docebo Australia Pty Ltd. ("Docebo Australia")	Australia	100	100
Docebo Ireland Limited	Ireland	100	100
Circles Collective Inc. ("PeerBoard")	United States	100	—
Edugo AI HK Limited	Hong Kong	100	—


2			Basis of preparation

Statement of compliance

The unaudited condensed consolidated interim financial statements (“financial statements”) have been prepared by management using the same accounting policies and methods as those used in the Company’s consolidated financial statements for the year ended December 31, 2022. These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting. Accordingly, certain disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) have been omitted or condensed. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2022.

These financial statements were approved and authorized for issuance by the Board of Directors of the Company on August 9, 2023.

Use of estimates, assumptions and judgments

The preparation of these financial statements in conformity with IFRS requires management to make estimates, assumptions and judgments that affect the application of accounting policies and the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from those estimates.

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)

Estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

In preparing these financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of uncertainty are the same as those applied and described in the Company’s annual audited consolidated financial statements for the year ended December 31, 2022.


3			Summary of significant accounting policies

The significant accounting policies applied in these financial statements are the same as those applied and described in the Company’s annual audited consolidated financial statements as at and for the year ended December 31, 2022.


4			Business combinations

Circles Collective Inc.

On April 3, 2023, the Company acquired all of the issued and outstanding shares of Circles Collective Inc. (o/a PeerBoard), a plug and play community-as-a-service platform based in the United States. The acquisition of PeerBoard will expand Docebo’s external training offering and enhance the Company’s social learning capabilities.

Total purchase consideration of $2,991, consisting of: (i) cash paid on closing of $2,526; and (ii) a cash holdback amount of $466 (maximum undiscounted amount of $500) payable on the second year anniversary of the acquisition. The issuance of an additional 26,185 common shares, at a fair value of $40.74 (C$51.68) per share, is payable through April 2026 to an employee of the acquiree contingent on continued employment and is accounted for as compensation for post-acquisition services. Additional cash may be paid by (or returned to) the Company due to a post-closing working capital adjustment.

In addition, potential future consideration of up to $4,000 in cash over the three years following the closing date is owing to an employee of the acquiree based on the achievement of both performance milestones and continued employment. Given the continued employment requirement, these earn-out payouts will be accounted for as compensation for post-acquisition services and are not considered purchase consideration in the business combination.

Transaction costs relating to due diligence fees, legal costs, accounting fees, advisory fees and other professional fees for the three and six months ended June 30, 2023 amounting to $245 and $499, respectively, were incurred in relation to the acquisition. These amounts have been included in general and administrative expenses in the Company's condensed consolidated interim statements of (loss) income and comprehensive loss.

The acquisition has been accounted for as a business combination in accordance with IFRS 3, Business Combinations, using the acquisition method whereby the net assets acquired and the liabilities assumed are recorded at fair value.

The following table summarizes the preliminary allocations of the consideration paid and the amounts of fair value of the assets acquired and liabilities assumed at the acquisition date:


			Fair value recognized on acquisition
			$
Assets

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)


Current assets:
Cash and cash equivalents			2


			2
Non-current assets:



Technology			1,830

Goodwill			1,210

Total assets			3,042

Liabilities
Current liabilities:
Trade and other payables			2
Deferred revenue			1

			3
Non-current liabilities:


Deferred tax liability			48
Total liabilities			51
Fair value of net assets acquired			2,991


Paid in cash			2,526
Holdback payable			466
Working capital adjustment			(1)
Total purchase consideration			2,991

The goodwill related to the acquisition of PeerBoard reflects the benefits attributable to future market development and the fair value of an assembled workforce. These benefits were not recognized separately from goodwill because they did not meet the recognition criteria for identifiable intangible assets. This goodwill is not deductible for income tax purposes.

The technology acquired is amortized on a straight-line basis over the estimated useful life of 5 years.

The allocation of the purchase price to assets acquired and liabilities assumed was based upon a preliminary valuation for all items and may be subject to adjustment during the 12-month measurement period following the acquisition date.

Edugo AI HK Limited

On June 9, 2023, the Company acquired all of the issued and outstanding shares of Edugo AI HK Limited (“Edugo.AI”), a Generative AI-based Learning Technology that uses advanced Large Language Models and algorithms to optimize learning paths and adapt to individual learner needs.

Total purchase consideration of $6,741 consisted of: (i) cash paid on closing of $6,151; (ii) a cash holdback amount of $552 (maximum undiscounted amount of $603) payable on the second year anniversary of the acquisition; and (iii) a pre-closing expense advance of $38. Additional cash may be paid by (or returned to) the Company due to a post-closing working capital adjustment.

In addition, potential future consideration of up to $8,028 in cash over the three years following the closing date is owing to an employee of the acquiree based on the achievement of both performance milestones and continued employment. Given the continued employment requirement, these earn-out payouts will be accounted for as compensation for post-acquisition services and are not considered purchase consideration in the business combination.

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)

Transaction costs relating to due diligence fees, legal costs, accounting fees, advisory fees and other professional fees for the three and six months ended June 30, 2023 amounting to $304 were incurred in relation to the acquisition. These amounts have been included in general and administrative expenses in the Company's condensed consolidated interim statements of (loss) income and comprehensive loss.

The following table summarizes the preliminary allocations of the consideration paid and the amounts of fair value of the assets acquired and liabilities assumed at the acquisition date:


			Fair value recognized on acquisition
			$
Assets
Current assets:
Cash and cash equivalents			4


			4
Non-current assets:



Technology			4,126

Goodwill			2,798

Total assets			6,928

Liabilities
Current liabilities:
Trade and other payables			187







Total liabilities			187
Fair value of net assets acquired			6,741


Paid in cash			6,151
Holdback payable			552
Pre-funded expenses			38
Total purchase consideration			6,741

The goodwill related to the acquisition of Edugo.AI reflects the benefits attributable to future market development and the fair value of an assembled workforce. These benefits were not recognized separately from goodwill because they did not meet the recognition criteria for identifiable intangible assets. This goodwill is not deductible for income tax purposes.

The technology acquired is amortized on a straight-line basis over the estimated useful life of 5 years.

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)


5			Trade and other receivables

The Company’s trade and other receivables as at June 30, 2023 and December 31, 2022 include the following:


	2023	2022
	$	$
Trade receivables	33,250	29,128
Accrued revenues	3,191	3,288
Tax credits receivable	2,195	3,054
Interest receivable	657	1,662
Other receivables	121	395
	39,414	37,527

Included in trade receivables is a loss allowance of $1,007 as at June 30, 2023 and $719 as at December 31, 2022.


6			Leases

The Company’s right-of-use assets by class of assets are as follows:


	Premises	Others	Total
	$	$	$
Costs




Balance – December 31, 2022	4,717	382	5,099
Additions	357	—	357

Effects of foreign exchange	105	5	110
Balance – June 30, 2023	5,179	387	5,566

Accumulated amortization




Balance – December 31, 2022	2,796	265	3,061
Amortization	616	27	643

Effects of foreign exchange	60	12	72
Balance – June 30, 2023	3,472	304	3,776

Carrying value
Net balance – December 31, 2022	1,921	117	2,038
Net balance – June 30, 2023	1,707	83	1,790

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)

The Company’s lease obligations are as follows:


						2023
						$
Balance – January 1						3,066
Additions						357

Interest accretion						112
Lease repayments						(850)
Effects of foreign exchange						28
Balance – June 30						2,713

Current						1,544
Non-current						1,169
						2,713

Expenses incurred for the three and six months ended June 30, 2023 relating to short-term leases and leases of low-value assets were $30 and $68, respectively (2022 - $54 and $116).


7			Property and equipment


	Furniture and office equipment	Leasehold improvements	Land and Building	Total
	$	$	$	$
Cost




Balance – December 31, 2022	2,983	1,864	332	5,179
Additions	245	21	—	266

Effects of foreign exchange	40	22	7	69
Balance – June 30, 2023	3,268	1,907	339	5,514

Accumulated depreciation



Balance – December 31, 2022	1,493	979	83	2,555
Depreciation	409	162	6	577
Effects of foreign exchange	27	13	3	43
Balance – June 30, 2023	1,929	1,154	92	3,175

Carrying value
Balance – December 31, 2022	1,490	885	249	2,624
Balance – June 30, 2023	1,339	753	247	2,339


8			Intangible assets


	Acquired
	Customer relationships	Technology	Trademarks	Total
	$	$	$	$
Cost



Balance – December 31, 2022	1,335	502	43	1,880
Acquisitions through business combinations	—	5,956	—	5,956
Effects of foreign exchange	20	7	1	28
Balance – June 30, 2023	1,355	6,465	44	7,864

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)


	Acquired
	Customer relationships	Technology	Trademarks	Total





Balance – December 31, 2022	483	218	29	730
Amortization	113	191	7	311
Effects of foreign exchange	7	3	1	11
Balance – June 30, 2023	603	412	37	1,052

Carrying value
Balance – December 31, 2022	852	284	14	1,150
Balance – June 30, 2023	752	6,053	7	6,812


9			Goodwill


			$



Balance – December 31, 2022			5,982
Additions			4,008
Effects of foreign exchange			49
Balance – June 30, 2023			10,039


10			Finance income and expenses

Finance income for the three and six months ended June 30, 2023 and 2022 is comprised of:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$

Interest on acquisition related consideration	20	39	36	55
Interest on lease obligations	53	69	112	144

Interest income	(2,479)	(443)	(4,721)	(553)
Bank fees and other	—	2	—	2
	(2,406)	(333)	(4,573)	(352)


11			Share capital


Authorized:
Unlimited common shares with no par value
Issued and outstanding:
	Number of shares	Amount
	#	$

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)


Balance – December 31, 2022	32,913,955	268,194
Exercise of stock options	8,735	149
Issuance of common shares under employee share purchase plan	8,785	322
Release of restricted share units	18,442	653
Issuance of common shares related to contingent consideration	50,550	1,625
Purchase of common shares held for cancellation under normal course issuer bid	(279,676)	(2,242)

Balance – June 30, 2023	32,720,791	268,701

On April 27, 2023, the Company issued a total of 50,550 common shares from treasury as part of the contingent consideration earn-out payments due to the sellers of forMetris Société par Actions Simplifiée for meeting certain revenue conditions in the second year following the date of acquisition. The shares were issued based on the fair value thereof, which was determined to be $32.09 (C$44.74). The equity settlement resulted in a reduction to the contingent consideration balance as at June 30, 2022.

On May 15, 2023, the Company announced the commencement of a normal course issuer bid (“NCIB”) to repurchase and cancel up to 1,650,672 of its common shares, representing approximately 5% of the public float, over the 12-month period commencing May 18, 2023, and ending no later than May 17, 2024. All repurchases are made through the facilities of the Toronto Stock Exchange and are done at market prices. The amounts paid above the average book value of the common shares are charged to retained earnings. During the three and six months ended June 30, 2023, the Company repurchased a total of 279,676 common shares for cancellation at an average price of $36.60 (C$48.43) per common share for total cash consideration of $10,236. As at June 30, 2023, $429 of cash consideration related to common share repurchases was recorded in accounts payable and accrued liabilities.

In connection with the NCIB, the Company entered into an automatic share purchase plan ("ASPP") with a designated broker for the purpose of allowing the Company to purchase its common shares under the NCIB during self-imposed trading blackout periods. Under the ASPP, the broker is authorized to repurchase common shares during blackout periods, without consultation with the Company, on predefined terms, including share price, time period and subject to other limitations imposed by the Company and subject to rules and policies of the TSX and applicable securities laws, such as a daily purchase restriction.

A liability representing the maximum amount that the Company could be required to pay the designated broker under the ASPP of $41,958 as at June 30, 2023. The amount was charged to retained earnings.


12			Share-based compensation

The Company has five components of its share-based compensation plan: stock options, deferred share units (“DSUs”), restricted share units (“RSUs”), performance share units (“PSUs”) and employee share purchase plan (“ESPP”). Share-based compensation expense for the three and six months ended June 30, 2023 was $1,326 and $2,593, respectively (2022 - $1,530 and $2,624). The expense associated with each component is as follows:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Stock options	460	651	1,026	1,048
DSUs	224	195	453	399
RSUs	619	652	1,056	1,101
ESPP	23	32	58	76
	1,326	1,530	2,593	2,624

There were no PSUs issued and outstanding for the three and six months ended June 30, 2023 and 2022.

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)

The following table presents share-based compensation expense by function for the three and six months ended June 30:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Cost of revenue	91	88	116	195
General and administrative	792	987	1,525	1,662
Sales and marketing	59	406	504	752
Research and development	384	49	448	15
	1,326	1,530	2,593	2,624

The changes in the number of stock options during the six months ended June 30, 2023 and 2022 were as follows:


	2023		2022
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
	#	C$	#	C$
Options outstanding – January 1	1,349,001	13.60	1,283,088	12.00
Options granted	215,575	52.15	146,119	45.09
Options forfeited	(77,523)	40.30	(45,697)	41.84
Options exercised	(8,735)	16.00	(6,409)	13.89

Options outstanding – June 30	1,478,318	17.81	1,377,101	14.51
Options exercisable – June 30	1,030,186	6.81	891,673	4.11

The weighted average fair value of share options granted during the six months ended June 30, 2023 and 2022 was estimated at the date of grant using the Black-Scholes option pricing model using the following inputs:



	2023			2022
	C$			C$
Weighted average stock price valuation	$	52.15		$	45.09
Weighted average exercise price	$	52.15		$	45.09
Risk-free interest rate	3.00		%	2.51		%
Expected life in years	4.5			6.25
Expected dividend yield	—		%	—		%
Volatility	65		%	62		%
Weighted average fair value of options issued	$	28.14		$	26.78

The following table is a summary of the Company’s stock options outstanding as at June 30, 2023:

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)


Options outstanding			Options exercisable
Exercise price range	Number outstanding	Weighted average remaining contractual life (years)	Exercise price range	Number exercisable
C$	#	#	C$	#
0.0001 - 1.09	784,368	2.49	0.0001 - 1.09	784,368

8.86 - 11.06	51,811	7.46	8.86 - 11.06	35,126
15.79 - 16.00	228,509	5.67	15.79 - 16.00	139,060
26.43 - 95.12	413,630	6.61	26.43 - 95.12	71,632
	1,478,318	4.31		1,030,186

The following table is a summary of the Company’s stock options outstanding as at June 30, 2022:


Options outstanding			Options exercisable
Exercise price range	Number outstanding	Weighted average remaining contractual life (years)	Exercise price range	Number exercisable
C$	#	#	C$	#
0.0001 - 1.09	784,368	4.96	0.0001 - 1.09	748,368

8.86 - 11.06	51,811	8.46	8.86 - 11.06	21,084
15.79 - 16.00	273,927	7.28	15.79 - 16.00	98,739
26.43 - 95.12	266,995	9.42	26.43 - 95.12	23,482
	1,377,101	6.42		891,673

DSUs

The following table presents information concerning the number of DSUs granted by the Company:


			#





DSUs – December 31, 2022			87,222
Granted (at C$43.93 - $53.15 per unit)			3,391


DSUs - June 30, 2023			90,613

RSUs

The following table presents information concerning the number of RSUs granted by the Company:


			#


RSUs – December 31, 2022			103,626
Granted (at C$43.55 - $52.38 per unit)			116,301
Released (at C$42.24 - $86.38 per unit)			(18,442)
Forfeited (at C$42.24 - $86.38 per unit)			(30,076)
RSUs - June 30, 2023			171,409


13			Net (loss) income per share

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)

Basic and diluted net (loss) income per share for the three and six months ended June 30 are calculated as follows:


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022

Net (loss) income attributable to common shareholders	(5,674)		2,103		$	(4,429)	$	(4,856)

Basic weighted average number of common shares outstanding	33,151,370		33,022,813		33,127,156		33,015,045
Stock options	—		845,038		—		—
DSUs	—		61,350		—		—
RSUs	—		89,919		—		—
Diluted weighted average number of common shares outstanding	33,151,370		34,019,120		33,127,156		33,015,045

Basic net loss (income) per common share	$	(0.17)	$	0.06	$	(0.13)	$	(0.15)
Diluted net loss (income) per common share	$	(0.17)	$	0.06	$	(0.13)	$	(0.15)

The Company has three categories of potentially dilutive securities outstanding: stock options, DSUs and RSUs. All potentially dilutive securities have been excluded from the calculation of diluted loss per share for the period in which the Company is in a net loss position. Including the dilutive securities in this period would be anti-dilutive; therefore, basic and diluted number of shares used in the calculation is the same for the period presented.

The weighted average outstanding number and type of securities that could potentially dilute basic net income per share in the future but would have decreased the loss per share (anti-dilutive) for the periods in which the Company is in a net loss position are as follows:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	#	#	#	#
Stock options	793,887	—	798,376	865,822
DSUs	89,764	—	89,409	60,868
RSUs	205,759	—	160,610	69,245
	1,089,410	—	1,048,395	995,935


14			Revenue and related balances

Disaggregated revenue

The Company derives its revenues from two main sources, subscription to its SaaS application, and professional services revenue, which includes services such as initial implementation, project management, and training.

The following table presents a disaggregation of revenue for the three and six months ended June 30:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Subscription revenue	40,846	31,916	79,690	61,044
Professional services	2,748	3,020	5,363	5,947
	43,594	34,936	85,053	66,991

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)


15			Cost of revenue

The following table represents cost of revenue for the three and six months ended June 30:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Employee salaries and benefits	4,713	4,117	9,299	8,276
Web hosting fees	1,225	1,203	2,402	2,260
Third party service fees	2,150	1,425	4,273	2,598
Other	322	234	490	397
	8,410	6,979	16,464	13,531


16			Employee compensation

The total employee compensation comprising salaries and benefits, and excluding share-based compensation, for the three and six months ended June 30, 2023 was $28,755 and $54,823, respectively (2022 - $22,714 and $44,589).

Employee compensation costs were included in the following expenses for the three and six months ended June 30:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Cost of revenue	4,713	4,117	9,299	8,276
General and administrative	4,310	3,381	7,820	6,746
Sales and marketing	12,610	10,406	24,577	20,113
Research and development	7,122	4,810	13,127	9,454
	28,755	22,714	54,823	44,589


17			Related party transactions

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling activities of the Company, directly or indirectly, including the Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer, Chief Product Officer, Chief Corporate Development Officer, Chief Human Resource Officer, Chief Legal Officer and Directors.

Compensation expense for the Company’s key management personnel for the three and six months ended June 30, 2023 and 2022 is as follows:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Salaries and benefits	1,335	701	2,281	1,508
Share-based compensation	1,031	1,013	2,137	1,681
	2,366	1,714	4,418	3,189


18			Financial instruments and risk management

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from deposits with banks and outstanding receivables. The

DOCEBO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2023

(expressed in thousands of US dollars, except share amounts)

Company trades only with recognized, creditworthy third parties. Due to the Company’s diversified customer base, there is no particular concentration of credit risk related to the Company’s trade and other receivables. Trade and other receivables are monitored on an ongoing basis to ensure timely collection of amounts.

The carrying values of cash and cash equivalents, trade and other receivables, trade and other payables, and ASPP liability approximate fair values due to the short-term nature of these items or being carried at fair value. The risk of material change in fair value is not considered to be significant. The Company does not use derivative financial instruments to manage this risk.

Contingent consideration is classified as a Level 3 financial instrument. The fair value of the contingent consideration was calculated using discounted cash flows. During the three and six months ended June 30, 2023, there were no transfers of amounts between levels in the fair value hierarchy.


19			Segment information

The Company reports segment information based on internal reports used by the chief operating decision maker (“CODM”) to make operating and resource allocation decisions and to assess performance. The CODM is the Chief Executive Officer. The CODM makes decisions and assesses performance of the Company on a consolidated basis such that the Company is a single reportable operating segment.

The following tables present details on revenues derived in the following geographical locations for the three and six months ended June 30, 2023 and 2022.


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
North America	32,895	26,437	64,372	50,292
Rest of World	10,699	8,499	20,681	16,699
	43,594	34,936	85,053	66,991

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

As used in this management’s discussion and analysis of financial condition and results of operations (“MD&A”), unless the context indicates or requires otherwise, all references to the “Company”, “Docebo”, “we”, “us” or “our” refer to Docebo Inc., together with our subsidiaries, on a consolidated basis as constituted on June 30, 2023.

This MD&A for the three and six months ended June 30, 2023 and 2022 should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements and accompanying notes thereto for the three and six months ended June 30, 2023 and 2022, and the Company's audited annual consolidated financial statements and accompanying notes thereto for the year ended December 31, 2022. The financial information presented in this MD&A is derived from the Company’s unaudited condensed consolidated interim financial statements for the six months ended June 30, 2023 and 2022 which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All amounts are in thousands of United States dollars except where otherwise indicated.

This MD&A is dated as of August 9, 2023.

Forward-looking Information

This MD&A 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; 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; our ability to successfully integrate the companies we have acquired and to derive the benefits we expect from the acquisition thereof; 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 MD&A, 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.

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 “Summary of Factors Affecting our Performance” 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 MD&A 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 MD&A 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.

Overview

At Docebo, our mission is to redefine the way enterprises, including their internal and external workforces, partners and customers, learn by applying new technologies to the traditional corporate Learning Management System (“LMS”) market. Founded in 2005, we provide an easy-to-use, highly configurable and affordable learning platform with the end-to-end capabilities and critical functionality needed to train internal and external workforces, partners and customers. Our solution allows our customers to take control of their desired training strategies and retain institutional knowledge, while providing efficient course delivery, tracking of learning progress, advanced reporting tools and analytics. Our robust platform helps our customers centralize a broad range of learning materials from peer

enterprises and learners into one LMS to expedite and enrich the learning process, increase productivity and grow teams uniformly.

Our platform is now used by almost 3,600 companies of all sizes, providing access to learners situated around the world in a variety of languages. Our clients range from select small local businesses, with a focus on mid-sized enterprises, to large multi-nationals, including service, financial, technology and resource-based companies and consulting firms. We have registered offices in Toronto, Canada, Athens, Georgia (USA), Wilmington, Delaware (USA), Biassono, Italy, Dubai, United Arab Emirates, London, England, Paris, France, Frankfurt, Germany, Melbourne, Australia, and Dublin, Ireland. Our platform is sold primarily through a direct sales force located in several of these offices. We also have some relationships with resellers and other channel partners, such as human resource and payroll services providers.

The Docebo Learning Platform currently includes: (i) “Docebo Learn LMS”, (ii) “Docebo Shape”, (iii) “Docebo Content”, (iv) “Docebo Learning Impact”, (v) “Docebo Learn Data”, (vi) “Docebo Connect” and (vii) “Docebo Flow”.

•Docebo Learn LMS is a cloud-based learning platform that allows learning administrators to deliver scalable and flexible personalized learning experiences, from formal training to social learning, to multiple internal, external and blended audiences.

•Docebo Shape is an AI-powered learning content creation tool that enables users to turn internal and external resources into engaging, multilingual microlearning content to share across their business in minutes, without needing months to master the tool.

•With over 200,000 courses and programs, Docebo Content allows learning administrators to unlock the industry’s best-learning content and get high-quality, off-the-shelf learning content from the world’s top publishers in front of your learners. Learning administrators can select the most impactful e-learning content by partnering with a Docebo Content specialist to help curate the right resources.

•Docebo Learning Impact is a learning measurement tool that enables learning administrators to prove and improve the impact of their training programs and validate their company’s investment in learning with optimized questionnaires, learning benchmarks and actionable next steps.

•Docebo Learn Data allows learning administrators to securely integrate their own internal data warehouse and any other business intelligence tool with both the raw data from Docebo Learn LMS and the learning key performance learning analytics to gain a comprehensive view into how their learning programs are powering their business; connecting learning data to business results.

•Docebo Connect enables organizations to seamlessly connect Docebo to any custom tech stack, making integrations faster and more effective.

•Docebo Flow is a product that allows businesses to directly inject learning into other software environments, helping organizations to create contextual in-product training and learning experience.

Additional modules can also be purchased with the LMS platform including: “Docebo for Salesforce”, “Docebo Embed (OEM)”, “Docebo Mobile App Publisher”, “Docebo Extended Enterprise”, and “Docebo Discover, Coach & Share”. Docebo for Salesforce is a native integration that leverages Salesforce’s API and technology architecture to produce a learning experience that remains uniform no matter the use-case. Docebo Embed (OEM) eliminates disjointed learner experiences, long development cycles and ineffective partner models by allowing original equipment manufacturers (“OEMs”) to embed and re-sell the Docebo learning suite as a part of their software. Docebo’s Mobile App Publisher product allows companies to create their own branded version of the award-winning “Docebo Go.Learn” mobile learning application and publish it as their own in Apple’s App Store, the Google Play Store or in their own Apple Store for Enterprise. Docebo Extended Enterprise breeds customer education, partner enablement, and retention by allowing customers to train multiple external audiences with a single

LMS solution. Lastly, Docebo Discover, Coach & Share enhances the learning experience by going beyond the limits of formal training by bringing social learning into their LMS to create a culture of social learning.

We generate revenue primarily from the provision of access to our platform, which is typically provided on the basis of an annual subscription fee and prepaid on a quarterly or annual basis. We offer our customers the flexibility to choose annual or multi-year contract terms, with the majority of our enterprise customers choosing three years. This results in a relatively smooth revenue curve with good visibility into near-term revenue growth. We typically enter into subscription agreements with our customers, with pricing based on the number of active or registered users, with minimum user commitment levels, in a measured time period, and the number of modules requested by the customer. Our goal is to continue to grow revenues arising from our existing customer base as well as adding new subscription customers to our platform. Our business does not have significant seasonal attributes, although historically the sales in the fourth quarter have tended to be slightly stronger than the first three. The Company operates on a global basis and for this reason has decided to report its consolidated financial results in U.S. dollars notwithstanding that the Company’s functional currency is the Canadian dollar. The Company does not currently hedge its exposure to currencies different than its functional currency.

The Company’s shares are listed under the symbol “DCBO” on both the Toronto Stock Exchange, as of October 8, 2019, following the completion of its public offering in Canada (the “TSX IPO”) and the Nasdaq Global Select Market (the “Nasdaq”), as of December 3, 2020, following the completion of its initial public offering in the United States (the “Nasdaq IPO” and together with the TSX IPO, the “IPOs”).

Non-IFRS Measures and Reconciliation of Non-IFRS Measures

This MD&A makes reference to certain non-IFRS measures including key performance indicators used by management and typically used by our competitors in the software-as-a-service (“SaaS”) industry. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures are used to provide investors with alternative measures of our operating performance and liquidity and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including SaaS industry metrics, in the evaluation of companies in the SaaS industry. Management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation. The non-IFRS measures referred to in this MD&A include “Annual Recurring Revenue”, “Average Contract Value”, “Adjusted EBITDA”, “Adjusted Net Income (Loss)”, “Adjusted Net Income (Loss) per Share - Basic and Diluted” “Working Capital” and “Free Cash Flow”.

Key Performance Indicators

We recognize subscription revenues ratably over the term of the subscription period under the provisions of our agreements with customers. The terms of our agreements, combined with high customer retention rates, provides us with a significant degree of visibility into our near-term revenues. Management uses a number of metrics, including the ones identified below, to measure the Company’s performance and customer trends, which are used to prepare financial plans and shape future strategy. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.

Annual Recurring Revenue. We define Annual Recurring Revenue as the annualized equivalent value of the subscription revenue of all existing contracts (including OEM contracts) as at the date being measured, excluding non-recurring revenues from implementation, support and maintenance fees. Our customers generally enter into one to three year contracts which are non-cancellable or cancellable with penalty. Accordingly, our calculation of Annual Recurring Revenue assumes that customers will renew the contractual commitments on a periodic basis as those commitments come up for renewal. Subscription agreements may be subject to price increases upon renewal

reflecting both inflationary increases and the additional value provided by our solutions. In addition to the expected increase in subscription revenue from price increases over time, existing customers may subscribe for additional features, learners or services during the term. We believe that this measure provides a fair real-time measure of performance in a subscription-based environment. Annual Recurring Revenue provides us with visibility for consistent and predictable growth to our cash flows. Our strong total revenue growth coupled with increasing Annual Recurring Revenue indicates the continued strength in the expansion of our business and will continue to be our focus on a go-forward basis.

Average Contract Value. Average Contract Value is calculated as total Annual Recurring Revenue divided by the number of active customers.

Annual Recurring Revenue and Average Contract Value as at June 30 was as follows:


	2023	2022	Change	Change %
Annual Recurring Revenue (in millions of US dollars)	172.9	138.2	34.7	25.1%
Average Contract Value (in thousands of US dollars)	48.1	44.5	3.6	8.1%

Adjusted EBITDA

Adjusted EBITDA is defined as net (loss) income excluding net finance income, depreciation and amortization, income taxes, share-based compensation and related payroll taxes, other income, foreign exchange gains and losses, loss on disposal of assets (if applicable), acquisition related compensation, transaction related expenses and restructuring costs.

The IFRS measure most directly comparable to Adjusted EBITDA presented in our financial statements is net (loss) income.

The following table reconciles Adjusted EBITDA to net (loss) income for the periods indicated:


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
	$		$		$		$
Net (loss) income for the period	(5,674)		2,103		(4,429)		(4,856)
Finance income, net(1)	(2,406)		(333)		(4,573)		(352)
Depreciation and amortization(2)	824		587		1,531		1,167
Income tax expense	558		359		921		488
Share-based compensation(3)	1,326		1,530		2,593		2,745
Other (income) expense(4)	—		(22)		183		(43)
Foreign exchange loss (gain)(5)	4,355		(4,854)		4,457		(1,463)

Acquisition related compensation(6)	732		317		988		612
Transaction related expenses(7)	556		—		810		101
Restructuring(8)	2,784		—		2,784		—
Adjusted EBITDA	3,055		(313)		5,265		(1,601)
Adjusted EBITDA as a percentage of total revenue	7.0	%	(0.9)	%	6.2	%	(2.4)	%

(1)Finance income, net, is primarily related to interest income earned on the net proceeds from the IPOs as the funds are invested in highly liquid short-term interest-bearing marketable securities which is offset by interest expenses incurred on lease obligations, and contingent consideration.

(2)Depreciation and amortization expense is primarily related to depreciation expense on right-of-use assets (“ROU assets”), property and equipment and acquired intangible assets.

(3)These expenses represent non-cash expenditures recognized in connection with the issuance of share-based compensation to our employees and directors and cash payroll taxes paid on gains earned by option holders when stock options are exercised.

(4)Other (income) expense is primarily comprised of rental income from subleasing office space.

(5)These non-cash gains and losses relate to foreign exchange translation.

(6)These costs represent the earn-out portion of the consideration paid to acquired businesses that is associated with the achievement of both quarterly and yearly performance obligations and ongoing employment obligations for employees of the acquiree.

(7)These expenses relate to professional, legal, consulting, accounting and other fees related to acquisition activities that would otherwise have not been incurred and are not considered an expense indicative of continuing operations.

(8) There was a reduction in workforce during the second quarter of 2023 that resulted in severance payments to employees. Certain functions and the associated management structure were reorganized to realize synergies and ensure organizational agility.

Adjusted Net (Loss) Income and Adjusted (Loss) Income per Share - Basic and Diluted

Adjusted Net (Loss) Income is defined as net (loss) income excluding amortization of intangible assets, share-based compensation and related payroll taxes, acquisition related compensation, transaction related expenses, restructuring costs, foreign exchange gains and losses, and income taxes.

Adjusted Net (Loss) Income per share - basic and diluted is defined as Adjusted Net (Loss) Income divided by the weighted average number of common shares (basic and diluted).

The IFRS measure most directly comparable to Adjusted Net Income (Loss) presented in our financial statements is net (loss) income.

The following table reconciles net (loss) income to Adjusted Net (Loss) Income for the periods indicated:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Net (loss) income for the period	(5,674)	2,103	(4,429)	(4,856)
Amortization of intangible assets	226	84	311	172
Share-based compensation	1,326	1,530	2,593	2,745
Acquisition related compensation	732	317	988	612
Transaction related expenses	556	60	810	101
Restructuring	2,784	—	2,784	—
Foreign exchange loss (gain)	4,355	(4,854)	4,457	(1,463)
Income tax expense related to adjustments(1)	372	31	390	123

Adjusted net income (loss)	4,677	(729)	7,904	(2,566)

Weighted average number of common shares - basic	33,151,370	33,022,813	33,127,156	33,015,045
Weighted average number of common shares - diluted	33,151,370	34,019,120	33,127,156	33,015,045
Adjusted net income (loss) per share - basic	0.14	(0.02)	0.24	(0.08)
Adjusted net income (loss) per share - diluted	0.14	(0.02)	0.24	(0.08)

(1) This line item reflects income tax expense on taxable adjustments using the tax rate of the applicable jurisdiction.

See “Liquidity, Capital Resources and Financing - Working Capital” and “Liquidity, Capital Resources and Financing - Free Cash Flow” in this MD&A for an explanation of Working Capital and Free Cash Flow (and, in the case of Free Cash Flow, a reconciliation of such measure to the most directly comparable IFRS measure presented in our financial statements).

Summary of Factors Affecting Our Performance

We believe that the growth and future success of our business depends on many factors, including those described below. While each of these factors presents significant opportunities for our business, they also pose important challenges, some of which are discussed below and in the “Risk Factors” section of the AIF.

Market adoption of our SaaS platform

We intend to continue to drive adoption of our SaaS platform by scaling our solutions to meet the needs of both new and existing customers. We believe that there is significant potential to increase penetration of our total addressable market and attract new customers. We plan to do this by further developing our products and services as well as continuing to invest in marketing strategies tailored to attract new businesses to our platform, both in our existing geographies and new markets around the world. We plan to continue to invest in our platform to expand our customer base and drive market adoption. The success of our operations may fluctuate as we make these investments.

Up-selling with existing customers

Our existing customers represent a significant opportunity to up-sell additional functionality with limited incremental sales and marketing expense. We plan to continually invest in product development and sales and marketing to add additional solutions to our platform as well as increase the usage and awareness of our platform. Our future revenue growth and our ability to achieve and maintain profitability is dependent upon our ability to maintain existing customer relationships and to continue to expand our customers’ use of our platform.

The length and complexity of our sales cycle may fluctuate significantly which could result in significant fluctuations in revenues being recognized from quarter to quarter

The decision by a customer to use our platform may involve a comprehensive implementation process across the customer's network or networks. As a result, use of our platform and any related professional services may entail a significant commitment of resources by prospective customers, accompanied by the attendant risks and delays frequently associated with significant technology implementation projects. Given the investment and commitment of resources required by an organization to implement our platform, in particular of larger enterprise customers, our sales cycle may be longer compared to other companies within our industry, as well as companies in other industries. If there is a reduction in information technology spending, due to weak economic conditions or otherwise, it may take several months, or even several quarters, for marketing opportunities to materialize. Additionally, due in part to the effects of the recent macroeconomic uncertainty, we have experienced and may continue to experience longer sales cycles for new customers and existing customer expansions, as existing and potential customers have increased scrutiny on information technology spending and budgets.

Scaling our sales and marketing team

Our ability to achieve significant growth in future revenue will largely depend upon the effectiveness of our sales and marketing efforts. The majority of our sales and marketing efforts are accomplished in-house and we believe the strength of our sales and marketing team is critical to our success. We have invested, and intend to continue to invest meaningfully, in the expansion of our sales force and consequently, we anticipate that our headcount will continue to increase as a result of these investments.

Foreign currency

The Company’s functional currency is Canadian dollars, the functional currency for our subsidiaries is the local currency of the country the foreign operation is located in and our presentation currency is the U.S. dollar. Our results of operations are converted from our functional currency to U.S. dollars using the average foreign exchange rates for each period presented. As a result, our results of operations will be adversely impacted by a decrease in the value of the U.S. dollar relative to the Euro and Canadian dollar. See “Risk Factors” section of our AIF for a discussion on exchange rate fluctuations and their potential negative effect on our results of operations.

Natural disasters, public health crises, political crises, or other catastrophic events

Our business and financial condition have been, and we believe will continue to be, impacted by adverse and uncertain macroeconomic conditions, including higher inflation, higher interest rates, and supply chain challenges, fluctuations or volatility in capital markets or foreign currency exchange rates, the collapse of financial institutions, such as Silicon Valley Bank, and related uncertainty, the COVID-19 pandemic, and geopolitical events such as the

ongoing conflict between Russia and Ukraine. In particular, we have experienced in certain instances, and we believe we will continue to experience, longer sales cycles or generally increased scrutiny on spending from existing and potential customers due to macroeconomic uncertainty. We cannot be certain how long these uncertain macroeconomic conditions and the resulting effects on our industry, our business strategy, and customers will persist.

If we fail to retain key employees or to recruit qualified technical and sales personnel, our business could be harmed.

We believe that our success depends on the continued employment of our senior management and other key employees. In addition, because our future success is dependent on our ability to continue to enhance and introduce new platform features, we are heavily dependent on our ability to attract and retain qualified personnel with the requisite education, background, and industry experience. As we expand our business, our continued success will also depend, in part, on our ability to attract and retain qualified sales, marketing, and operational personnel capable of supporting a larger and more diverse customer base. We and our competitors continue to face significant turnover in our employee base. Qualified individuals are in high demand in our industry, and we may incur significant costs to attract and retain them. The loss of the services of a significant number of our technology or sales personnel could be disruptive to our business development efforts or customer relationships. In addition, if any of our key employees join a competitor or decides to otherwise compete with us, we may experience a material disruption of our operations and business strategy, which may cause us to lose customers or increase operating expenses and may divert our attention as we seek to recruit replacements for the departed employees. Further, changes we make to our current and future work environments (including in connection with COVID-19, such as remote or in-office environments and health and safety matters) may not meet the needs or expectations of our employees or may be perceived as less favourable compared to other companies’ policies, which could negatively impact our ability to hire and retain qualified personnel. Our future work strategy and continued efforts related to employee onboarding, training and development and retention may not be successful. Further, our future work strategy is continuing to evolve and may not meet the needs of our existing and potential future employees and they may prefer work models offered by other companies.

Issues in the use of AI in our platform may result in reputational harm or liability

Our platform uses AI, and we expect to continue building AI into our platform in the future. We envision a future in which AI operates within our cloud-based platform to offer an efficient and effective e-learning solution for our customers. As with many disruptive innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. AI algorithms may be flawed. Datasets may be insufficient or contain biased information. Inappropriate or controversial data practices by us or others could impair the acceptance, utility and effectiveness of AI solutions. These deficiencies could undermine the decisions, predictions, or analysis AI applications produce, subjecting us to competitive harm, legal liability, and brand or reputational harm. Some AI scenarios present ethical issues. If we enable or offer AI solutions that are controversial because of their impact on human rights, privacy, employment, equity, accessibility or other social issues, we may experience brand or reputational harm.

Key Components of Results of Operations

Docebo has always been operated and managed as a single economic entity, notwithstanding the fact that it has operations in several different countries. There is one management team that directs the activities of all aspects of the Company and it is managed globally through global department heads. As a result, we believe that we have one operating segment, being the consolidated company. Over time, this may change as the Company grows and when this occurs we will reflect the change in our reporting practice.

Revenue

We generate revenue from the following two primary sources:

•Recurring Subscriptions to Our Learning Platform and Related Products. Our customers enter into agreements that provide for recurring subscription fees. The majority of the customer agreements currently

being entered into have a term of one to three years and are non-cancellable or cancellable with penalty. Subscription revenue per contract will vary depending upon the particular products that each customer subscribes for, the number and type of learners intended to utilize the platform and the term of the agreement. Subscription revenue is typically recognized evenly over the enforceable term of a contract, commencing on the in-service date.

•Professional Services. Our customers generally require support in implementing our product and training their learners. This support can include system integration, application integration, learner training and any required process-change analysis. Normally, these services are purchased at the same time as the original customer agreement is completed and while they are usually delivered during the 60-120 days immediately following the effective date of the customer agreement, timing can vary. As a result, unlike the recognition of recurring subscription revenue, the recognition of professional service revenue can be recorded unevenly from period to period. When customer agreements are renewed, there is not typically a need for additional professional services so as overall revenue increases over time, the percentage of revenue that is generated from professional services will decrease. Revenues derived from professional services are recognized over the term that the service is provided.

Our agreements generally do not contain any cancellation or refund provisions without penalty, other than in the case of our default.

Cost of Revenue

Cost of revenue is comprised of costs related to provisioning and hosting our learning platform and related products, the delivery of professional services, and customer support. Significant expenses included in cost of revenue include employee salaries and benefits expenses, web hosting fees, third party service fees, and software costs. Share-based compensation and depreciation and amortization are excluded.

Operating Expenses

Our primary operating expenses are as follows:

•General and Administrative. General and administrative expenses consist of employee salaries and benefits expenses for our finance, legal, administrative, human resources, and information technology and security teams. These costs also include consulting and professional service fees, transaction costs related to our acquisitions, software, travel, general office and administrative expenses, credit impairment losses, as well as public company costs including directors and officers liability insurance.

•Sales and Marketing. Sales and marketing expenses are comprised primarily of employee salaries and benefits expenses for our sales and marketing teams, amortization of contract acquisition costs, software, travel and advertising and marketing events. We intend to continue to grow our sales and marketing teams to support our growth strategy.

•Research and Development. Research and development expenses are comprised primarily of employee salaries and benefits for our product and innovation-related functions (net of tax credits), consulting and professional fees, software, travel and web hosting fees. Our research and development team is focused on both continuous improvement of our existing learning platform, as well as developing new product modules and features. In the immediate future, as Docebo’s growth continues, we expect our research and development costs to increase proportionately, however, over time we believe it is reasonable to expect that they will decline as a percentage of revenue.

•Share-based Compensation. Share-based compensation expenses are comprised of the value of stock options granted to employees expensed over the vesting period of the options, deferred share units (“DSUs”), restricted stock units (“RSUs”) and shares issued pursuant to the Employee Share Purchase Plan (“ESPP”). In addition, the Company’s board of directors may fix, from time to time, a portion of the total compensation (including an annual retainer) paid by the Company to a director in a calendar year for service on the Board (the “Director

Fees”) and directors may elect to receive a portion of their total compensation (including cash retainer) in the form of DSUs.

•Foreign Exchange Loss (Income). Foreign exchange loss primarily relates to translation of monetary assets and liabilities denominated in foreign currencies being translated into functional currencies at the foreign exchange rate applicable at the end of each period.

•Depreciation and Amortization. Depreciation and amortization expense primarily relates to depreciation on property and equipment, and amortization of ROU assets and intangible assets. Property and equipment are comprised of furniture and office equipment, leasehold improvements and land and building. ROU assets are comprised of capitalized leases. Intangible assets are comprised of acquired intangible assets.

Other Expenses

•Finance Income, net. This includes costs related to interest income less interest on lease obligations, accretion of interest on contingent consideration and acquisition holdback payables, and bank fees.

•Other (Income) Expense, net. These costs are comprised of rental income from subleasing office space, offset by losses incurred upon termination of a sublease.

Results of Operations

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


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Revenue	43,594	34,936	85,053	66,991
Cost of revenue(1)	8,410	6,979	16,464	13,531
Gross profit	35,184	27,957	68,589	53,460

Operating expenses
General and administrative(1)	9,345	7,597	16,901	14,972
Sales and marketing(1)	18,048	14,880	34,820	28,627
Research and development(1)	8,808	6,110	16,185	12,296
Share-based compensation	1,326	1,530	2,593	2,624
Foreign exchange loss (gain)	4,355	(4,854)	4,457	(1,463)
Depreciation and amortization	824	587	1,531	1,167
	42,706	25,850	76,487	58,223
Operating (loss) income	(7,522)	2,107	(7,898)	(4,763)

Finance income, net	(2,406)	(333)	(4,573)	(352)
Other (income) expense, net	0	(22)	183	(43)
(Loss) income before income taxes	(5,116)	2,462	(3,508)	(4,368)

Income tax expense	558	359	921	488

Net (loss) income for the period	(5,674)	2,103	(4,429)	(4,856)

Other comprehensive (income) loss
Item that may be reclassified subsequently to income:
Exchange (gain) loss on translation of foreign operations	(4,209)	5,155	(4,368)	1,943


Comprehensive loss	(1,465)	(3,052)	(61)	(6,799)

Income (loss) per share - basic	(0.17)	0.06	(0.13)	(0.15)
Income (loss) per share - diluted	(0.17)	0.06	(0.13)	(0.15)

Weighted average number of common shares outstanding - basic	33,151,370	33,022,813	33,127,156	33,015,045
Weighted average number of common shares outstanding - diluted	33,151,370	34,019,120	33,127,156	33,015,045

(1) In the second quarter of 2023, the Company incurred a total of $2.8 million of severance related costs associated with a one-time reduction in workforce, comprised of $0.1 million in cost of revenue, $0.8 million in general and administrative, $1.5 million in sales and marketing, and $0.3 million in research and development.

Review of Operations for the three and six months ended June 30, 2023

Revenue


	Three months ended June 30,					Six months ended June 30,
	2023	2022	Change	Change		2023	2022	Change	Change
	$	$	$	%		$	$	$	%
Subscription revenue	40,846	31,916	8,930	28	%	79,690	61,044	18,646	31	%
Professional services	2,748	3,020	(272)	(9)	%	5,363	5,947	(584)	(10)	%
Total revenue	43,594	34,936	8,658	25	%	85,053	66,991	18,062	27	%

Total revenue increased by $8.7 million or 25% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and increased by $18.1 million or 27% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase in both periods was primarily due to growth in our customer base, as well as up-selling to existing customers, as the number of customers rose from 3,106 as at June 30, 2022 to 3,591 as at June 30, 2023 and the Average Contract Value per customer increased from approximately $45 thousand as at June 30, 2022 to approximately $48 thousand as at June 30, 2023. Average Contract Value is not a recognized measure under IFRS. See “Non-IFRS Measures and Reconciliation of Non-IFRS Measures”.

Subscription revenue increased by $8.9 million or 28% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and increased by $18.6 million or 31% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase in both periods was due to initial revenues from customers who did not contribute to subscription revenue during the prior period, and growth from existing customers.

Professional services revenue decreased by $0.3 million or 9% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and decreased by $0.6 million or 10% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Cost of Revenue


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
Cost of revenue	8,410		6,979		1,431	21	%	16,464		13,531		2,933	22	%
Percentage of total revenue	19.3	%	20.0	%				19.4	%	20.2	%

Cost of revenue increased by $1.4 million or 21% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and increased by $2.9 million or 22% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The period over period increases in cost of revenue were primarily

driven by the Company’s continued investment in headcount to support delivery to, and ongoing success of, new customers. Web hosting fees and third party service fees also increased as a result of higher revenues.

Gross Profit


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
Gross profit	35,184		27,957		7,227	26	%	68,589		53,460		15,129	28	%
Percentage of total revenue	80.7	%	80.0	%				80.6	%	79.8	%

Gross profit for the three months ended June 30, 2023 increased by $7.2 million or 25.9% and increased to 80.7% of revenue compared to 80.0% for the three months ended June 30, 2022. Gross profit for the six months ended June 30, 2023 increased by $15.1 million or 28.3% and increased to 80.6% of revenue compared to 79.8% for the six months ended June 30, 2022.

Operating Expenses


	Three months ended June 30,					Six months ended June 30,
	2023	2022	Change	Change		2023	2022	Change	Change
	$	$	$	%		$	$	$	%
General and administrative	9,345	7,597	1,748	23	%	16,901	14,972	1,929	13	%
Sales and marketing	18,048	14,880	3,168	21	%	34,820	28,627	6,193	22	%
Research and development	8,808	6,110	2,698	44	%	16,185	12,296	3,889	32	%
Share-based compensation	1,326	1,530	(204)	(13)	%	2,593	2,624	(31)	(1)	%
Foreign exchange loss (gain)	4,355	(4,854)	9,209	(190)	%	4,457	(1,463)	5,920	(405)	%
Depreciation and amortization	824	587	237	40	%	1,531	1,167	364	31	%
Total operating expenses	42,706	25,850	16,856	65	%	76,487	58,223	18,264	31	%

General and Administrative Expenses


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
General and administrative	9,345		7,597		1,748	23	%	16,901		14,972		1,929	13	%
Percentage of total revenue	21.4	%	21.7	%				19.9	%	22.3	%

General and administrative expenses increased by $1.7 million or 23% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and increased by $1.9 million or 13% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

For the three months ended June 30, 2023, general and administrative expenses included $0.6 million in transaction-related costs and $0.8 million in restructuring costs. Excluding these costs, general and administrative expenses increased by $0.4 million or 5% representing 18.3% of total revenue due to higher employee compensation-related expenses, as well as software and IT licensing costs. For the six months ended June 30, 2023, general and administrative expenses included $0.8 million in transaction-related costs and $0.8 million in restructuring costs. Excluding these costs, general and administrative expenses increased by $0.3 million or 2% representing 18.0% of total revenue.

Our general and administrative expenses as a percentage of total revenue decreased from 21.7% to 21.4% for the three months ended June 30, 2022 and June 30, 2023, respectively, and decreased from 22.3% to 19.9% for the six months ended June 30, 2022 and June 30, 2023, respectively.

Sales and Marketing Expenses


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
Sales and marketing	18,048		14,880		3,168	21	%	34,820		28,627		6,193	22	%
Percentage of total revenue	41.4	%	42.6	%				40.9	%	42.7	%

Sales and marketing expenses increased by $3.2 million or 21% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and increased by $6.2 million or 22% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

For the three months ended June 30, 2023, sales and marketing expenses included $1.5 million in restructuring costs. Excluding these costs, sales and marketing expenses increased by $1.5 million or 11% representing 37.8% of total revenue driven by higher marketing and advertising spend, as well as an increase in sales-related travel costs. For the six months ended June 30, 2023, sales and marketing expenses included $1.5 million in restructuring costs. Excluding these costs, sales and marketing expenses increased by $4.6 million or 16% representing 39.1%. of total revenue. We expect to continue to grow our sales and marketing team and incrementally invest in advertising and marketing events for so long as we can efficiently increase our revenue base.

Our sales and marketing expenses as a percentage of total revenue decreased from 42.6% to 41.4% for the three months ended June 30, 2022 and June 30, 2023, respectively, and decreased from 42.7% to 40.9% for the six months ended June 30, 2022 and June 30, 2023, respectively.

Our sales and marketing expenses as a percentage of total revenue generally fluctuate quarterly within any given year based on the timing of advertising and marketing events; therefore, expressing sales and marketing expenses as a percentage of total revenue for any given quarter is not necessarily indicative of annual results. As we grow, we expect these fluctuations in sales and marketing expenses as a percentage of total revenue that are attributable to the fluctuations in the timing of advertising and marketing events will moderate.

Research and Development Expenses


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
Research and development	8,808		6,110		2,698	44	%	16,185		12,296		3,889	32	%
Percentage of total revenue	20.2	%	17.5	%				19.0	%	18.4	%

Research and development expenses increased by $2.7 million or 44% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and increased by $3.9 million or 32% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

For the three months ended June 30, 2023, research and development expenses included $0.7 million in acquisition related compensation and $0.3 million in restructuring costs. Excluding these costs, research and development expenses increased by $1.7 million or 28% representing 17.9% of total revenue. For the six months ended June 30, 2023, research and development expenses included $1.0 million in acquisition related compensation and $0.3 million in restructuring costs. Excluding these costs, research and development expenses increased by $2.6 million or 21% representing 17.5% of total revenue. The increase in both periods was driven by the Company’s continued focus on maintaining and improving its existing platform and the development of new products, which also resulted in higher personnel costs due to an increase in headcount. On an absolute basis, we expect that research and development expenses will likely continue to grow as the Company maintains its efforts to keep its product at the leading edge of learning technology but will likely decrease as a percentage of revenue over time.

Our research and development expenses as a percentage of total revenue increased from 17.5% to 20.2% for the three months ended June 30, 2022 and June 30, 2023, respectively, and increased from 18.4% to 19.0% for the six months ended June 30, 2022 and June 30, 2023, respectively.

Share-Based Compensation


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
Share-based compensation	1,326		1,530		(204)	-13	%	2,593		2,624		(31)	-1	%
Percentage of total revenue	3.0	%	4.4	%				3.0	%	3.9	%

Share-based compensation expense decreased by $0.2 million or 13% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and remained essentially flat for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The decrease was driven by the reorganization of certain Company functions and the associated management structure resulted in a number of forfeitures .

Foreign Exchange Loss (Gain)


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
Foreign exchange loss (gain)	4,355		(4,854)		9,209	(190)	%	4,457		(1,463)		5,920	(405)	%
Percentage of total revenue	10.0	%	(13.9)	%				5.2	%	(2.2)	%

Foreign exchange loss (gain) primarily relates to translation of monetary assets and liabilities denominated in foreign currencies into functional currencies at the foreign exchange rate applicable at the end of each period. The Company invested the proceeds from the TSX IPO, the bought deal offering of common shares of the Company which closed on August 27, 2020 (the “Bought Deal”) and the Nasdaq IPO in cash equivalents denominated in United States dollars. As a result of the movement of the United States dollar in comparison to the Canadian dollar, the Company’s functional currency, an unrealized foreign exchange loss was recorded for the three month and six months ended June 30, 2023, which represents a significant portion of the movement during the periods.

Depreciation and Amortization


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
Depreciation and amortization	824		587		237	40	%	1,531		1,167		364	31	%
Percentage of total revenue	1.9	%	1.7	%				1.8	%	1.7	%

Depreciation and amortization expense increased by 40% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and increased by $0.4 million or 31% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase in depreciation and amortization expense relates primarily to intangible assets acquired through the acquisitions of PeerBoard, operated by Circles Collective Inc. (“PeerBoard”) and Edugo AI HK Limited (“Edugo.AI”).

Non-Operating Income


	Three months ended June 30,					Six months ended June 30,
	2023	2022	Change	Change		2023	2022	Change	Change
	$	$	$	%		$	$	$	%
Finance income, net	(2,406)	(333)	(2,073)	623	%	(4,573)	(352)	(4,221)	1,199	%
Other (income) expense, net	—	(22)	22	(100)	%	183	(43)	226	(526)	%

Finance Income, net

Finance income expense, net, increased by $2.1 million or 622.5% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 and increased by $4.2 million or 1199.1% for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 due to an increase in interest income earned on cash and cash equivalents that include short-term investments in highly liquid marketable securities, having a term to maturity of one year or less, and earning interest income, as a result of higher interest rates.

Other (Income) Expense, net

Other (income) expense is primarily comprised of losses incurred as a result of a terminated sublease offset by rental income from subleasing office space.

Key Statement of Financial Position Information


	June 30, 2023	December 31, 2022	Change	Change
	$	$	$	%
Cash and cash equivalents	203,923	216,293	(12,370)	(6)	%
Total assets	288,963	283,669	5,294	2	%
Total long-term liabilities	6,824	7,096	(272)	(4)	%
Total liabilities	144,425	91,458	52,967	58	%

Total Assets

June 30, 2023 compared to December 31, 2022

Total assets increased by $5.3 million from December 31, 2022 to June 30, 2023. The movement in assets was driven by an increase in contract costs, trade and other receivables, prepaids and deposits, and intangible assets and goodwill offset by a reduction in cash and cash equivalents. The increase in contract costs and trade and other receivables of $3.7 million and $1.9 million, respectively, was a result of higher revenue recognized and the related receivables along with increased contract commission and fulfillment costs. The increase in prepaid and deposits of $3.5 million was a result of software purchases made in the first quarter of 2023. The increase in intangible assets and goodwill of $9.7 million was a result of the PeerBoard and Edugo.AI acquisitions. These increases were offset by a decrease in cash and cash equivalents of $12.4 million driven by purchases made under the NCIB as well as cash consideration paid in connection with the PeerBoard and Edugo.AI acquisitions during the second quarter of 2023.

Total Liabilities

June 30, 2023 compared to December 31, 2022

Total liabilities increased by $53.0 million or 58% from December 31, 2022 to June 30, 2023. The movement in liabilities was driven by an increase in the ASPP liability, trade and other payables and deferred revenue. A liability was recorded in the amount of $42.0 million related to the ASPP under the NCIB, each as defined under “Normal

Course Issuer Bid” in this MD&A. The increase in trade and other payables of $5.5 million was driven by timing of payments to vendors while deferred revenue increased by $5.3 million driven by the growth in revenue.

Quarterly Results of Operations

The following table sets forth selected unaudited quarterly statements of operations data for each of the eight quarters ended September 30, 2021 to ended June 30, 2023. The information for each of these quarters has been prepared on the same basis as the audited annual financial statements for the year ended December 31, 2022 and the unaudited condensed consolidated interim financial statements for the period ended June 30, 2023. This data should be read in conjunction with our audited annual financial statements for the year ended December 31, 2022 and the unaudited condensed consolidated interim financial statements for the period ended June 30, 2023. These quarterly operating results are not necessarily indicative of our operating results for a full year or any future period.


	Three months ended
(In thousands of US dollars, except per share data)	Q2 2023	Q1 2023	Q4 2022	Q3 2022	Q2 2022	Q1 2022	Q4 2021	Q3 2021
	$	$	$	$	$	$	$	$
Revenue	43,594	41,459	38,955	36,966	34,936	32,055	29,801	27,068
Net (loss) income before taxes	(5,116)	1,608	1,781	10,369	2,462	(6,830)	(2,887)	1,456
Net (loss) income attributable to equity owners of the Company	(5,674)	1,245	1,600	10,274	2,103	(6,959)	(1,428)	661
(Loss) income per share - basic	(0.17)	0.04	0.05	0.31	0.06	(0.21)	(0.04)	0.02
(Loss) income per share - diluted	(0.17)	0.04	0.05	0.30	0.06	(0.21)	(0.04)	0.02

Revenue

Our total quarterly revenue increased sequentially for all periods presented which was primarily attributable to revenue from new customers, strong revenue retention and up-selling from existing customers, and delivery of professional services to customers. We cannot provide assurance that this pattern of sequential growth in revenue will continue.

Net (Loss) Income

Net loss in the three months ended June 30, 2023 included a loss of $4.4 million on foreign currency exchange mainly due to the U.S. dollar weakening compared to the Canadian dollar, as well as acquisition related compensation and transactions costs of $0.7 million and $0.8 million, respectively. Net loss was also impacted by restructuring costs of $2.8 million. Previous quarter net income has improved relative to preceding periods as the Company continues to grow its revenue base while costs continue to decrease as a percentage of revenue. The net losses incurred in prior periods were primarily attributable to unrealized losses in foreign exchange due to the weakening of the Canadian dollar relative to the US dollar.

See "Results of Operations" in this MD&A for a more detailed discussion of the year-over-year changes in revenues and net (loss) income.

Liquidity, Capital Resources and Financing

Overview

The general objectives of our capital management strategy are to preserve our capacity to continue operating, provide benefits to our stakeholders and provide an adequate return on investment to our shareholders by selling our platform and services at a price that is commensurate with the level of operating risk we assume. We thus determine the total amount of capital required consistent with risk levels. This capital structure is adjusted on a timely basis depending on changes in the economic environment and risks of the underlying assets. We are not subject to any externally imposed capital requirements.

Working Capital

Our primary source of cash flow is revenue from operations and equity capital raises totaling $225.4 million including net proceeds from the IPOs and the Bought Deal. Our approach to managing liquidity is to ensure, to the extent possible, that we always have sufficient liquidity to meet our liabilities as they become due. We do so by monitoring cash flow and performing budget-to-actual analysis on a regular basis.

Working Capital as at June 30, 2023 and 2022 was $118.3 million and $175.4 million, respectively. Working Capital is defined as current assets, excluding the current portion of the net investment in finance lease and contract costs, minus current liabilities, excluding borrowings, if any, and the current portion of contingent consideration and lease obligations. Working Capital is not a recognized measure under IFRS. See “Non-IFRS Measures and Reconciliation of Non-IFRS Measures”.

The following table represents the Company’s Working Capital position as at June 30:


	2023	2022
	$	$
Current assets	258,853	251,840
Less: Current portion of net investment in finance lease	(83)	(182)
Less: Current portion of contract costs	(5,545)	(2,487)
Current assets, net of net investment in finance lease and contract costs	253,225	249,171

Current liabilities	137,601	76,339
Less: Current portion of contingent consideration	(1,136)	(1,168)
Less: Current portion of lease obligations	(1,544)	(1,364)

Current liabilities, net of borrowings, contingent consideration and lease obligations	134,921	73,807
Working Capital	118,304	175,364

Our principal cash requirements are for Working Capital. Given our existing cash and cash equivalents, along with net proceeds obtained from our capital raises as described above, we believe there is sufficient liquidity to meet our current and short-term growth requirements in addition to our long-term strategic objectives.

Cash Flows

The following table presents cash and cash equivalents as at June 30, 2023 and 2022, and cash flows from operating, investing, and financing activities for the three and six months ended June 30, 2023 and 2022:


	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
	$	$	$	$
Cash and cash equivalents	203,923	212,335	203,923	212,335
Net cash provided by (used in):
Operating activities	5,454	1,092	3,273	(880)
Investing activities	(9,046)	(206)	(9,153)	(1,673)
Financing activities	(8,297)	68	(6,602)	264
Effect of foreign exchange on cash and cash equivalents	(19)	(601)	112	(699)
Net (decrease) increase in cash and cash equivalents	(11,908)	353	(12,370)	(2,988)

Cash flows from operating activities for the three months ended June 30, 2023 were $5.5 million compared to $1.1 million for the three months ended June 30, 2022. This change was primarily attributable to Working Capital movements including a decrease in trade and other accounts receivable of $6.4 million due to the receipt of customer collections, and increases in trade and other payables of $2.4 million due to the timing of vendor payments

Cash flows from operating activities for the six months ended June 30, 2023 were $3.3 million compared to cash flows used in operating activities of $0.9 million for the six months ended June 30, 2022. The $3.3 million generated from operating activities reflects a net loss of $4.4 million, offset by $5.1 million in non-cash expenses and $2.6 million generated by changes in Working Capital accounts. Non-cash expenses primarily consisted of share-based compensation, depreciation and amortization, income tax expense, foreign currency gains, partially offset by interest income. Cash generated by changes in Working Capital accounts was principally a function of a $4.9 million increase in deferred revenue, as we expanded our customer base and renewed existing customers, and a $5.6 million increase in trade and other payables. The cash generated by Working Capital accounts was partially offset by a $3.4 million increase in prepaids and other deposits for software purchases, payments of $3.6 million of deferred contract costs, which consisted primarily of sales commissions and a $0.9 million increase in trade and other accounts receivable due to the timing of collections from customers.

Cash Flows Used in Investing Activities

Cash flows used in investing activities for the three months ended June 30, 2023 were $9.0 million compared to $0.2 million for the three months ended June 30, 2022. Cash outflows for investing activities primarily related to approximately $2.5 million cash consideration paid in connection with the acquisition of PeerBoard in April 2023 and approximately $6.2 million of cash consideration paid in connection with the acquisition of Edugo.AI in June 2023.

Cash flows used in investing activities for the six months ended June 30, 2023 were $9.2 million compared to $1.7 million for the six months ended June 30, 2022. Cash outflows for investing activities primarily related to approximately $2.5 million cash consideration paid in connection with the acquisition of PeerBoard in April 2023 and approximately $6.2 million of cash consideration paid in connection with the acquisition of Edugo.AI in June 2023.

Cash Flows (Used in) from Financing Activities

Cash flows used in financing activities for the three months ended June 30, 2023 were $8.3 million compared to cash flows from financing activities of $0.1 million for the three months ended June 30, 2022. Financing activities for the three months ended June 30, 2023 primarily relate to the $10.2 million repurchase of common shares for cancellation, partially offset by interest income of $2.3 million earned on cash and cash equivalents due to higher interest rates.

Cash flows used in financing activities for the six months ended June 30, 2023 were $6.6 million compared to cash flows from financing activities of $0.3 million for the six months ended June 30, 2022. Financing activities for the six months ended June 30, 2023 primarily related to the $10.2 million repurchase of common shares for cancellation, partially offset by interest income of $4.1 million earned on cash and cash equivalents due to higher interest rates.

Free Cash Flow

Free Cash Flow is defined as cash used in operating activities less cash used for purchases of property and equipment and capitalized internal-use software costs, plus non-recurring expenditures such as the payment of acquisition-related compensation, the payment of transaction-related costs, and the payment of restructuring costs. Free Cash Flow is not a recognized measure under IFRS. See “Non-IFRS Measures and Reconciliation of Non-IFRS Measures”. The IFRS measure most directly comparable to Free Cash Flow presented in our financial statements is cash flow used in operating activities.

The following table reconciles our cash flow used in operating activities to Free Cash Flow:


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
	$		$		$		$
Cash flow from (used in) operating activities	5,454		1,092		3,273		(880)
Purchases of property and equipment	(159)		(206)		(266)		(509)

Acquisition related compensation paid	189		82		189		82
Transaction related expenses paid	440		—		440		141
Restructuring costs paid	1,124		—		1,124		—
Free Cash Flow	7,048		968		4,760		(1,166)
Free Cash Flow as a percentage of total revenue	16.2	%	2.8	%	5.6	%	(1.7)	%

Use of Proceeds from the Nasdaq IPO and the Bought Deal

As a result of the Bought Deal, the Company raised net proceeds of $18.1 million. These proceeds have been placed in cash and cash equivalents that include short-term investments in highly liquid marketable securities, having a term to maturity of one year or less. The Company’s use of proceeds from the Bought Deal has not changed from the disclosure set forth in the “Use of Proceeds” section of our short form prospectus dated August 24, 2020 to the date of this MD&A.

Additionally, as a result of the Nasdaq IPO, the Company raised net proceeds of $154.9 million. These proceeds have been placed in cash and cash equivalents that include short-term investments in highly liquid marketable securities, having a term to maturity of one year or less. The Company’s use of proceeds from the Nasdaq IPO has not changed from the disclosure set forth in the “Use of Proceeds” section of our prospectus supplement dated December 2, 2020 to the short form base shelf prospectus dated October 22, 2020 to the date of this MD&A.

Normal Course Issuer Bid

In May 2023, the Company also entered into an automatic share purchase plan ("ASPP") with a third-party broker for purposes of allowing the Company to purchase common shares under the NCIB during the Company's self-imposed trading blackout periods. Under the ASPP, the broker is authorized to repurchase common shares during blackout periods, without consultation with the Company, on predefined terms, including share price, time period and subject to other limitations imposed by the Company and subject to rules and policies of the TSX and applicable securities laws, such as a daily purchase restriction.

During the three and six months ended June 30, 2023, the Company repurchased and cancelled a total of 279,676 common shares for total cash consideration, including transaction costs, of $10.2 million. A liability representing the maximum amount that the Company could be required to pay the designated broker under the ASPP of $42.0 million was recorded as at June 30, 2023.

Off-Balance Sheet Arrangements

In relation to the PeerBoard acquisition on April 3, 2023, potential future consideration of up to $4.0 million in cash over the three years following the closing date is owing to an employee of the acquiree based on the achievement of both performance milestones and continued employment.

In relation to the Edugo.AI acquisition on June 9, 2023, potential future consideration of up to $8.0 million in cash over the three years following the closing date is owing to an employee of the acquiree based on the achievement of both performance milestones and continued employment.

We have no other material off-balance sheet arrangements, other than operating leases not recognized as ROU assets under IFRS 16. From time to time, we may be contingently liable with respect to litigation and claims that arise in the normal course of operations.

Related Party Transactions

In the ordinary course of business, we may provide services (including our Platform) to, and enter into contracts with, related parties on terms similar to those offered to non-related parties. We have no related party transactions, other than those noted in Note 17 in our unaudited condensed consolidated interim financial statements.

Financial Instruments and Other Instruments

Credit Risk

Generally, the carrying amount in our consolidated statement of financial position exposed to credit risk, net of any applicable provisions for losses, represents the maximum amount exposed to credit risk.

Our credit risk is primarily attributable to our cash and cash equivalents and trade and other receivables. We do not require guarantees from our customers. Credit risk with respect to cash and cash equivalents is managed by maintaining balances only with high credit quality financial institutions.

Due to our diverse customer base, there is no particular concentration of credit risk related to our trade and other receivables. Moreover, balances for trade and other receivables are managed and analyzed on an ongoing basis to ensure allowances for doubtful accounts are established and maintained at an appropriate amount.

We estimate anticipated losses from doubtful accounts based upon the expected collectability of all trade and other receivables, which estimate takes into account the number of days past due, collection history, identification of specific customer exposure and current economic trends. An impairment loss on trade and other receivables is calculated as the difference between the carrying amount and the present value of the estimated future cash flow. Impairment losses are charged to general and administrative expense in the consolidated statements of (loss) income and comprehensive loss. Receivables for which an impairment provision was recognized are written off against the corresponding provision when they are deemed uncollectible. Impairment losses for trade receivables are based on the expected credit loss model. The Company applies the simplified approach to impairment for trade and other receivables by recognizing lifetime expected losses on initial recognition through both the analysis of historical defaults and a reassessment of counterparty credit risk in revenue contracts on an annual basis.

The maximum exposure to credit risk at the date hereof is the carrying value of each class of receivables mentioned above. We do not hold any collateral as security.

Foreign Currency Exchange Risk

We are exposed to currency risk due to financial instruments denominated in foreign currencies. The Company’s primary exposure with respect to foreign currencies is from U.S. dollar denominated cash and cash equivalents, trade and other receivables, and trade and other payables in entities whose functional currency is other than U.S. dollars.

We have not entered into arrangements to hedge our exposure to currency risk.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We review these estimates on an ongoing basis based on management’s best knowledge of current events and actions that we may undertake in the future. Actual results could differ from these estimates. Areas requiring the most significant estimates and judgments which are deemed critical are outlined below.

Revenue Recognition

Revenue recognition requires judgment and the use of estimates, especially in evaluating the various non-standard terms and conditions in our contracts with customers as to their effect on reported revenue.

The Company derives its revenues from two main sources: subscription and professional services revenue, which includes services such as initial project management and training and integration. Professional services do not include significant customization to, or development of, the software. Revenue is recognized by applying the five-step framework under IFRS 15 Revenue from contracts with customers, as described in Note 3 of our audited annual consolidated financial statements for the year ended December 31, 2022.

The Company enters into significant revenue contracts with certain large enterprise customers that contain non-standard terms and conditions, pricing and promised services. Significant management judgement can be required to assess the impact of these items on the amount and timing of revenue recognition for these contracts including the determination of performance obligations, calculation of transaction price, allocation of transaction price across performance obligations, and timing of revenue recognition.

Outstanding Share Information

We are currently authorized to issue an unlimited number of common shares. As of the date hereof, 32,053,911 common shares, 1,445,510 stock options, 114,035 DSUs and 168,274 RSUs are issued and outstanding.

Foreign Currency Exchange (“FX”) Rates

Although our functional currency is the Canadian dollar, we have elected to report our financial results in U.S. dollars to improve the comparability of our financial results with our peers. Reporting our financial results in U.S. dollars also reduces the impact of foreign currency exchange fluctuations in the Company’s reported amounts, as our transactions denominated in U.S. dollars are significantly larger than Canadian dollars or Euros.

Our consolidated financial position and operating results have been translated to U.S. dollars applying FX rates outlined in the table below. FX rates are expressed as the amount of U.S. dollars required to purchase one Canadian dollar. FX rates represent the daily closing rate published by Thomson Reuters.


Period	Consolidated Statement of Financial Position	Consolidated Statement of Income (Loss) and Comprehensive Loss
	Current Rate	Average Rate
Three months ended June 30, 2022	$0.7744	$0.7852
Three months ended June 30, 2023	$0.7545	$0.7399

Disclosure Controls and Procedures and Internal Controls over Financial Reporting

Management of the Company, under the supervision of the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining disclosure controls and procedures (as defined under applicable Canadian securities laws and by the United States Securities and Exchange Commission (“SEC”) in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“the Exchange Act”) for the Company to ensure that material information relating to the Company, including its consolidated subsidiaries, that is required to be made known to the Chief Executive Officer and Chief Financial Officer by others within the Company and disclosed by the Company in reports filed or submitted by it under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer and effected by the Company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Management determined that there were no material weaknesses in the Company’s internal control over financial reporting as of June 30, 2023.

In the three months ended June 30, 2023, we completed our migration of certain financial reporting systems and their accompanying financial information, which included changes to our underlying information technology infrastructure and internal controls over financial reporting.

Other than the system migration as described above, there have been no changes to the Company’s internal controls over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.

Docebo Reports Second Quarter 2023 Results

TORONTO, ONTARIO - August 10, 2023 - 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.

1 Please refer to “Non-IFRS Measures and Reconciliation of Non-IFRS Measures” section of this press release.

Second Quarter 2023 Results

Selected Financial Measures


	Three months ended June 30,							Six months ended June 30,
	2023		2022		Change	Change		2023		2022		Change	Change
	$		$		$	%		$		$		$	%
Subscription Revenue	40,846		31,916		8,930	28.0	%	79,690		61,044		18,646	30.5	%
Professional Services	2,748		3,020		(272)	(9.0)	%	5,363		5,947		(584)	(9.8)	%
Total Revenue	43,594		34,936		8,658	24.8	%	85,053		66,991		18,062	27.0	%

Gross Profit Margin	35,184		27,957		7,227	25.9	%	68,589		53,460		15,129	28.3	%
Percentage of Total Revenue	80.7	%	80.0	%				80.6	%	79.8	%

Net (Loss) Income	(5,674)		2,103		(7,777)	(369.8)	%	(4,429)		(4,856)		427	8.8	%

Cash Used from (in) Operating Activities	5,454		1,092		4,362	399.5	%	3,273		(880)		4,153	471.9	%

Key Performance Indicators and Non-IFRS Measures


	As at June 30,
	2023	2022	Change	Change %
Annual Recurring Revenue (in millions of US dollars)	172.9	138.2	34.7	25.1	%
Average Contract Value (in thousands of US dollars)	48.1	44.5	3.6	8.1	%

Customers	3,591	3,106	485	15.6	%


	Three months ended June 30,					Six months ended June 30,
	2023	2022	Change	Change		2023	2022	Change	Change
	$	$	$	%		$	$	$	%
Adjusted EBITDA	3,055	(313)	3,368	1076.0	%	5,265	(1,601)	6,866	428.9	%
Adjusted Net Income (Loss)	4,677	(729)	5,406	741.6	%	7,904	(2,566)	10,470	408.0	%
Adjusted Net Income (Loss) per Share - Basic	0.14	(0.02)	0.16	800.0	%	0.24	(0.08)	0.32	400.0	%
Adjusted Net Income (Loss) per Share - Diluted	0.14	(0.02)	0.16	800.0	%	0.24	(0.08)	0.32	400.0	%
Working Capital	118,304	175,364	(57,060)	(32.5)	%	118,304	175,364	(57,060)	(32.5)	%
Free Cash Flow	7,048	968	6,080	628.1	%	4,760	(1,166)	5,926	508.2	%

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.

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: