Coveo Solutions Inc. (“Coveo” or the “Company”) (TSX: CVO), a
leader in AI-powered relevance platforms that transform search,
recommendations, personalization, and merchandising intelligence
within digital experiences, today announced financial results for
its third quarter of fiscal 2023, ended December 31, 2022.
“Coveo once again delivered solid results,
in-line with our expectations and demonstrating an accelerated path
to profitability," said Louis Têtu, Chairman and CEO of Coveo. “The
trend of large enterprises investing in AI-powered customer
experience platforms to drive business optimization – an imperative
– continues. We had a number of significant transactions in the
quarter and continued to see demand for our solutions across all
lines of business, which we believe bodes well for our future
growth prospects.”
Third Quarter Fiscal 2023 Financial
Highlights(All comparisons are relative to the
three-month period ended December 31, 2021, unless otherwise
stated)
- SaaS Subscription Revenue(1) grew 25% to $26.4 million compared
to $21.2 million.
- Total revenue was $28.5 million, an increase of 23% compared to
$23.2 million.
- Current SaaS Subscription Remaining Performance Obligations(1)
of $92.1 million as of December 31, 2022, up 28% compared to $72.2
million as of December 31, 2021.
- Gross profit (%) was 77%, an increase of 3%, and product gross
profit (%) was 81%, an increase of 2%. Adjusted Gross Profit (%)(2)
was 78%, an increase of 2%, and Adjusted Product Gross Profit
(%)(2) was 82%, an increase of 2%.
- Operating loss was $10.7 million and Adjusted Operating Loss(3)
was $3.9 million.
- Net loss was $10.0 million, compared to net income of $426.3
million. Net income in the comparable period was impacted by a
non-cash gain of $269.2 million and an associated income tax
recovery of $184.4 million, both related to the Company’s preferred
shares converted immediately prior to the initial public offering
of the Company in November 2021.
- Cash and cash equivalents were $207.6 million as of December
31, 2022.
Third Quarter Fiscal 2023 Operational
Highlights
- Net Expansion Rate(1) of 107% as of
December 31, 2022.
- Announced the Coveo Relevance
Cloud™ for Financial Services to help meet the demands of today’s
retail banks, insurance companies, and wealth management
organizations. The Coveo Relevance Cloud for Financial Services is
used by over 50 leading, diverse institutions across the financial
services sector including the Royal Bank of Canada, Manulife, and
United Wholesale Mortgage, to help them realize tangible ROI.
- Named the winner for Ecommerce
Innovation by the UK Ecommerce Awards 2022 for Coveo’s
Personalization-as-you-go capability. With 86% of ecommerce
shopping sessions coming from anonymous users, this feature enables
brands to deliver highly relevant and personalized query
suggestions, product rankings, and product recommendations without
the need for high volumes of data, pre-defined persona segments, or
logged in user profiles.
- Named a Leader in the 2022 Gartner®
Magic Quadrant™ for Insight Engines(4) for the fifth consecutive
time for its Completeness of Vision and Ability to Execute.
- Launched an intelligent,
out-of-the-box Facet Generator that automatically returns all
relevant search facets for a given search or listing page to
provide a best-in-class navigation experience for large enterprises
with complex needs. This feature works with zero traffic,
leveraging the intelligence within Coveo’s unified index to return
the most relevant results.
- Released analytics and developer
tools for use within Snowflake. The new features provide real-time
access to Coveo Analytics through Snowflake’s reader account where
data can be leveraged in any business intelligence tool – and even
combined with other external data sources – for a more complete
visualization of search engagement and business performance.
Financial Outlook
Coveo anticipates SaaS Subscription Revenue(1),
Total Revenue, Adjusted Operating Loss(3), and Weighted Average
Shares Outstanding to be in the following ranges:
|
Q4 FY’23 |
Full Year FY’23 |
SaaS Subscription Revenue(1) |
$26.6 – $27.1 million |
$102.5 – $103.0 million |
Total Revenue |
$28.6 – $29.1 million |
$111.5 – $112.0 million |
Adjusted Operating Loss(3) |
$5.0 – $6.0 million |
$20.9 – $21.9 million |
Weighted Average Shares Outstanding |
105.5 – 106.0 million |
104.0 – 105.0 million |
These guidance ranges are based on several
assumptions, including the following, in addition to those set
forth under the “Forward-Looking Information” section below:
- Achieving expected levels of sales
of SaaS subscriptions to new and existing customers, including
timing of those sales, as well as expected levels of renewals of
SaaS subscriptions with existing customers.
- Achieving expected levels of
implementations and other sources of professional services
revenue.
- Maintaining planned levels of
operating margin represented by our Adjusted Gross Profit
Measures(3) (as defined below) and Adjusted Gross Profit (%)
Measures(2) (as defined below).
- Expected financial performance as
measured by our Adjusted Operating Expense Measures(3) (as defined
below) and Adjusted Operating Expense (%) Measures (as defined
below).
- Stabilization of ongoing headwinds,
including those related to economic and geopolitical factors,
impacting sales cycles, pricing and the ability to generate new
business.
- No drastic strengthening or
re-strengthening of the strict measures put in place to help slow
the transmission of COVID-19 or its new variants in the
jurisdictions in which we have significant operations.
- Our ability to attract and retain
key personnel required to achieve our plans.
- Similar inflation rates, interest
rates, customer spending, foreign exchange rates, and other
macro-economic conditions.
- Our financial outlook does not
factor the impact of acquisitions that may be announced or closed
from time to time.
- Weighted average shares outstanding
assumes no share buyback activity.
These statements are forward-looking and actual
results may differ materially. Coveo’s outlook constitutes
“financial outlook” within the meaning of applicable securities
laws and is provided for the purpose of, among other things,
assisting the reader in understanding the Company’s financial
performance and measuring progress toward management’s objectives,
and the reader is cautioned that it may not be appropriate for
other purposes. Please refer to the “Forward-Looking Information”
section below for additional information on the factors that could
cause our actual results to differ materially from these
forward-looking statements and a description of the assumptions
thereof.
* * * * *
(1) |
|
SaaS Subscription Revenue,
Current SaaS Subscription Remaining Performance Obligations, and
Net Expansion Rate are Key Performance Indicators of Coveo. Please
see the “Key Performance Indicators” section below. |
(2) |
|
Adjusted Gross Profit (%) and
Adjusted Product Gross Profit (%) are non-IFRS ratios. Please see
the “Non-IFRS Measures and Ratios” section below and the
reconciliation tables at the end of this release. |
(3) |
|
Adjusted Operating Loss, Adjusted
Gross Profit, and Adjusted Operating Expense are non-IFRS measures.
Please see the “Non-IFRS Measures and Ratios” section below and the
reconciliation tables at the end of this release. |
(4) |
|
Gartner, Magic Quadrant for
Insight Engines, Stephen Emmott, Anthony Mullen, David Pidsley, Tim
Nelms. December 12, 2022. Gartner Disclaimer: Gartner does not
endorse any vendor, product or service depicted in its research
publications, and does not advise technology users to select only
those vendors with the highest ratings or other designation.
Gartner research publications consist of the opinions of Gartner’s
research organization and should not be construed as statements of
fact. Gartner disclaims all warranties, expressed or implied, with
respect to this research, including any warranties of
merchantability or fitness for a particular purpose. GARTNER and
Magic Quadrant are registered trademarks of Gartner, Inc. and/or
its affiliates in the U.S. and internationally and is used herein
with permission. All rights reserved. |
Q3 Conference Call and Webcast Information
Coveo will host a conference call today at 5:00
p.m. Eastern Time to discuss its financial results for its fiscal
third quarter 2023. The call will be hosted by Louis Têtu, Chairman
and CEO, and Jean Lavigueur, CFO.
Dial-in number: |
|
1-888-664-6392; Confirmation #: 16289972 |
Live webcast: |
|
https://app.webinar.net/YyGvJqW46A9 |
Replay: |
|
ir.coveo.com under the “News & Events” section |
Non-IFRS Measures and Ratios
Coveo’s unaudited condensed interim financial
statements have been prepared in accordance with IFRS as issued by
the International Accounting Standards Board. The information
presented in this press release includes non-IFRS financial
measures and ratios, namely (i) Adjusted Operating Loss; (ii)
Adjusted Gross Profit, Adjusted Product Gross Profit, and Adjusted
Professional Services Gross Profit (collectively referred to as our
“Adjusted Gross Profit Measures”); (iii) Adjusted Gross Profit (%),
Adjusted Product Gross Profit (%), and Adjusted Professional
Services Gross Profit (%) (collectively referred to as our
“Adjusted Gross Profit (%) Measures”); (iv) Adjusted Sales and
Marketing Expenses, Adjusted Research and Product Development
Expenses, and Adjusted General and Administrative Expenses
(collectively referred to as our “Adjusted Operating Expense
Measures”); and (v) Adjusted Sales and Marketing Expenses (%),
Adjusted Research and Product Development Expenses (%), and
Adjusted General and Administrative Expenses (%) (collectively
referred to as our “Adjusted Operating Expense (%) Measures”).
These measures and ratios are not recognized measures under IFRS
and do not have standardized meanings prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other companies. Rather, these measures and ratios are provided
as additional information to complement IFRS measures by providing
further understanding of the Company’s results of operations from
management’s perspective.
Accordingly, these measures and ratios should
not be considered in isolation nor as a substitute for analysis of
the Company’s financial information reported under IFRS. Adjusted
Operating Loss, the Adjusted Gross Profit Measures, the Adjusted
Gross Profit (%) Measures, the Adjusted Operating Expense Measures,
and the Adjusted Operating Expense (%) Measures are used to provide
investors with supplemental measures and ratios of the Company’s
operating performance and thus highlight trends in Coveo’s core
business that may not otherwise be apparent when relying solely on
IFRS measures and ratios. The Company’s management also believes
that securities analysts, investors, and other interested parties
frequently use non-IFRS measures and ratios in the evaluation of
issuers. Coveo’s management uses and intends to continue to use
non-IFRS measures and ratios in order to facilitate operating
performance comparisons from period to period, and to prepare
annual operating budgets and
forecasts.
See the “Non-IFRS Measures” section of our
latest MD&A, which is available under our profile on SEDAR at
www.sedar.com, for a description of these measures. Please also see
the financial tables below for a description of such measures and a
reconciliation of (i) Adjusted Operating Loss to operating loss;
(ii) Adjusted Gross Profit to gross profit; (iii) Adjusted Product
Gross Profit to product gross profit; (iv) Adjusted Professional
Services Gross Profit to professional services gross profit; (v)
Adjusted Sales and Marketing Expenses to sales and marketing
expenses; (vi) Adjusted Research and Product Development Expenses
to research and product development expenses; and (vii) Adjusted
General and Administrative Expenses to general and administrative
expenses.
Key Performance Indicators
This press release refers to “SaaS Subscription
Revenue”, “Current SaaS Subscription Remaining Performance
Obligations” and “Net Expansion Rate”, which are operating metrics
used in Coveo’s industry. We monitor such key performance
indicators to help us evaluate our business, measure our
performance, identify trends, formulate business plans and make
strategic decisions. These key performance indicators provide
investors with supplemental measures of our operating performance
and thus highlight trends in our core 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 industry metrics in the evaluation of
issuers. Our key performance indicators may be calculated in a
manner different than similar key performance indicators used by
other companies.
“SaaS Subscription Revenue” means Coveo’s SaaS
subscription revenue, as presented in our financial statements in
accordance with IFRS.
“Current SaaS Subscription Remaining Performance
Obligations” is a forward-looking indicator of anticipated future
revenue under contract that has not yet been recognized as revenue
but that is expected to be recognized over the next 12 months, as
presented in our financial statements in accordance with IFRS.
“Net Expansion Rate” is calculated by
considering a cohort of customers at the end of the period 12
months prior to the end of the period selected and dividing the
SaaS Annualized Contract Value (as defined below) attributable to
that cohort at the end of the current period selected, by the SaaS
Annualized Contract Value attributable to that cohort at the
beginning of the period 12 months prior to the end of the period
selected. Expressed as a percentage, the ratio (i) excludes any
SaaS Annualized Contract Value from new customers added during the
12 months preceding the end of the period selected; (ii) includes
incremental SaaS Annualized Contract Value made to the cohort over
the 12 months preceding the end of the period selected; (iii) is
net of the SaaS Annualized Contract Value from any customers whose
subscriptions terminated or decreased over the 12 months preceding
the end of the period selected; and (iv) includes customers who
converted from self-managed (on-premise) licenses and maintenance
services to SaaS subscriptions during the 12 months preceding the
end of the period selected.
“SaaS Annualized Contract Value” means the SaaS
annualized contract value of a customer’s commitments calculated
based on the terms of that customer’s subscriptions, and represents
the committed annualized subscription amount as of the measurement
date.
Please also refer to the “Key Performance
Indicators” section of our latest MD&A, which is available
under our profile on SEDAR at www.sedar.com, for additional details
on the abovementioned key performance indicators.
Forward-Looking Information
This press release contains “forward-looking
information” and “forward-looking statements” within the meaning of
applicable securities laws, including Coveo’s financial outlook on
SaaS Subscription Revenue, Total Revenue, Adjusted Operating Loss,
and Weighted Average Shares Outstanding for the three months and
the year ending March 31, 2023 (collectively, “forward-looking
information”). This forward-looking information is identified by
the use of terms and phrases such as “may”, “would”, “should”,
”could”, “might”, “will”, “achieve”, “occur”, “expect”, “intend”,
“estimate”, “anticipate”, “plan”, “foresee”, “believe”, “continue”,
“target”, “opportunity”, “strategy”, “scheduled”, “outlook”,
“forecast”, “projection”, or “prospect”, the negative of these
terms and similar terminology, including references to assumptions,
although not all forward-looking information contains these terms
and phrases. In addition, any statements that refer to
expectations, intentions, projections, or other characterizations
of future events or circumstances contain forward-looking
information. Statements containing forward-looking information are
not historical facts but instead represent management’s
expectations, estimates, and projections regarding future events or
circumstances.
Coveo’s financial outlook on SaaS Subscription
Revenue, Total Revenue, Adjusted Operating Loss, and Weighted
Average Shares Outstanding also constitutes “financial outlook”
within the meaning of applicable securities laws and is provided
for the purposes of assisting the reader in understanding the
Company’s financial performance and measuring progress toward
management’s objectives and the reader is cautioned that it may not
be appropriate for other purposes. Please refer to “Financial
Outlook” above for more information.
Forward-looking information is necessarily based
on a number of opinions, estimates, and assumptions (including
those discussed under “Financial Outlook” above and those discussed
immediately hereunder) that we considered appropriate and
reasonable as of the date such statements are made. Although the
forward-looking information contained herein is based upon what we
believe are reasonable assumptions, actual results may vary from
the forward-looking information contained herein. Certain
assumptions made in preparing the forward-looking information
contained in herein include, without limitation (and in addition to
those discussed under “Financial Outlook” above): our ability to
capitalize on growth opportunities and implement our growth
strategy; our ability to attract new customers, both domestically
and internationally; the success of our efforts to expand our
product portfolio and market reach; our ability to maintain
successful strategic relationships with partners and other third
parties; our future capital requirements; the available liquidity
under our revolving credit facility; the accuracy of our estimates
of market opportunity and growth forecasts; our success in
identifying and evaluating, as well as financing and integrating,
any acquisitions, partnerships, or joint ventures; our ability to
execute on our expansion plans; and the future impact of the
COVID-19 pandemic. Moreover, forward-looking information is subject
to known and unknown risks, uncertainties, and other factors, many
of which are beyond our control, 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 macro-economic
uncertainties and the risk factors described under “Risk Factors”
in the Company’s most recently filed Annual Information Form
available under our profile on SEDAR at www.sedar.com. There can be
no assurance that such forward-looking information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. Accordingly,
prospective investors should not place undue reliance on
forward-looking information, which speaks only as of the date
made.
Moreover, we operate in a very competitive and
rapidly changing environment. 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.
You should not rely on this forward-looking
information, as actual outcomes and results may differ materially
from those contemplated by this forward-looking information as a
result of such risks and uncertainties. Additional information will
also be set forth in other public filings that we make available
under our profile on SEDAR at www.sedar.com from time to time. The
forward-looking information provided in this press release relates
only to events or information as of the date hereof, and are
expressly qualified in their entirety by this cautionary statement.
Except as required by law, we do not assume any obligation to
update or revise any forward-looking information, whether as a
result of new information, future events, or otherwise, after the
date on which the statements are made or to reflect the occurrence
of unanticipated events.
About Coveo Solutions Inc.
We believe that relevance is critical for
businesses to win in the new digital experience economy and to
serve people the way they expect while ensuring optimal business
performance, and that applied AI is an imperative to achieve these
goals.
Coveo is a market-leading AI-powered relevance
platform that injects search, recommendations, personalization, and
merchandising intelligence into digital experiences such as
commerce, service, website, and workplace applications. Coveo's
platform is cloud-native SaaS, multi-tenant, API-first, and
headless, and can easily integrate into almost any digital
experience. Our solutions are designed to provide tangible value to
our customers by helping to drive improvements in conversion,
revenue, and margins, reduce customer support costs, increase
customer satisfaction and website engagement, and improve employee
proficiency and satisfaction.
Our AI platform powers digital experience
relevance for many of the world’s most innovative brands, serving
millions of people and billions of interactions, and is supported
by a large network of global systems integrators and implementation
partners. Coveo is a Salesforce ISV Partner, a Global SAP CX
Partner, and an Adobe Accelerate Exchange Partner.
Coveo is a trademark of Coveo Solutions Inc.
Stay up to date on the latest Coveo news and
content by subscribing to the Coveo blog, and following Coveo
on LinkedIn, Twitter, and YouTube.
Contact Information
Paul MoonHead of Investor Relationsinvestors@coveo.com
Kiyomi HarringtonPR Leadkharrington@coveo.com
Condensed Interim Consolidated
Statements of Income (Loss) and Comprehensive Income
(Loss)(expressed in thousands of US dollars,
except share and per share data, unaudited)
|
|
|
|
|
|
Three months endedDecember
31, |
|
Nine months endedDecember
31, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Revenue |
|
|
|
|
SaaS subscription |
26,389 |
|
21,153 |
|
75,861 |
|
54,782 |
|
Self-managed licenses and maintenance |
298 |
|
487 |
|
912 |
|
2,042 |
|
Product
revenue |
26,687 |
|
21,640 |
|
76,773 |
|
56,824 |
|
Professional services |
1,810 |
|
1,603 |
|
6,119 |
|
4,155 |
|
Total
revenue |
28,497 |
|
23,243 |
|
82,892 |
|
60,979 |
|
|
|
|
|
|
Cost of
revenue |
|
|
|
|
Product |
4,948 |
|
4,476 |
|
14,455 |
|
11,215 |
|
Professional services |
1,656 |
|
1,566 |
|
5,455 |
|
3,406 |
|
Total cost of
revenue |
6,604 |
|
6,042 |
|
19,910 |
|
14,621 |
|
Gross
profit |
21,893 |
|
17,201 |
|
62,982 |
|
46,358 |
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Sales and marketing |
13,728 |
|
12,182 |
|
42,450 |
|
33,650 |
|
Research and product development |
8,705 |
|
9,076 |
|
26,800 |
|
19,446 |
|
General and administrative |
8,102 |
|
17,277 |
|
22,917 |
|
26,939 |
|
Depreciation of property and equipment |
599 |
|
684 |
|
1,951 |
|
1,985 |
|
Amortization of intangible assets |
1,072 |
|
1,042 |
|
3,337 |
|
1,098 |
|
Depreciation of right-of-use assets |
388 |
|
377 |
|
1,181 |
|
1,138 |
|
Total operating
expenses |
32,594 |
|
40,638 |
|
98,636 |
|
84,256 |
|
Operating
loss |
(10,701 |
) |
(23,437 |
) |
(35,654 |
) |
(37,898 |
) |
|
|
|
|
|
Change in redeemable preferred shares – conversion rights component
fair value |
- |
|
(269,200 |
) |
- |
|
(299,428 |
) |
Net financial expenses (income) |
(1,485 |
) |
2,930 |
|
(2,904 |
) |
12,560 |
|
Foreign exchange loss (gain) |
735 |
|
628 |
|
(581 |
) |
281 |
|
Income (loss) before
income tax expense (recovery) |
(9,951 |
) |
242,205 |
|
(32,169 |
) |
248,689 |
|
Income tax expense
(recovery) |
96 |
|
(184,108 |
) |
330 |
|
(188,972 |
) |
Net income
(loss) |
(10,047 |
) |
426,313 |
|
(32,499 |
) |
437,661 |
|
|
|
|
|
|
Other comprehensive
income (loss) |
|
|
|
|
Items that may be reclassified to the consolidated statements of
income (loss): |
|
|
|
|
Foreign currency differences on translation to presentation
currency |
5,282 |
|
(6,989 |
) |
(17,281 |
) |
(2,637 |
) |
Total comprehensive
income (loss) |
(4,765 |
) |
419,324 |
|
(49,780 |
) |
435,024 |
|
Net income (loss) per
share |
|
|
|
|
Basic |
(0.10 |
) |
7.65 |
|
(0.31 |
) |
13.05 |
|
Diluted |
(0.10 |
) |
(0.24 |
) |
(0.31 |
) |
(0.41 |
) |
|
|
|
|
|
Weighted average number of
shares outstanding |
|
|
|
|
Basic |
104,825,521 |
|
55,701,559 |
|
104,336,957 |
|
33,537,536 |
|
Diluted |
104,825,521 |
|
101,636,633 |
|
104,336,957 |
|
96,272,762 |
|
Condensed Interim Consolidated
Statements of Income (Loss) and Comprehensive Income
(Loss)(expressed in thousands of US dollars,
unaudited)
|
The following
table presents share-based payments and related expenses recognized
by the Company: |
|
|
Three months ended December
31, |
|
Nine months ended December
31, |
|
2022 |
2021 |
|
2022 |
2021 |
|
$ |
$ |
|
$ |
$ |
Share-based payments
and related expenses |
|
|
|
|
|
Product cost of revenue |
182 |
140 |
|
574 |
230 |
Professional services cost of revenue |
157 |
132 |
|
466 |
206 |
Sales and marketing |
1,375 |
695 |
|
4,445 |
1,153 |
Research and product development |
1,487 |
1,100 |
|
4,608 |
1,537 |
General and administrative |
2,163 |
786 |
|
5,406 |
1,201 |
Share-based payments
and related expenses |
5,364 |
2,853 |
|
15,499 |
4,327 |
|
|
|
|
Reconciliation of Adjusted
Operating Loss to Operating Loss(expressed in
thousands of US dollars, unaudited)
|
|
|
|
|
Three months ended December
31, |
|
|
Nine months ended December
31, |
|
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
Operating
loss |
(10,701 |
) |
(23,437 |
) |
|
(35,654 |
) |
(37,898 |
) |
Share-based payments and related expenses (1) |
5,364 |
|
2,853 |
|
|
15,499 |
|
4,327 |
|
Amortization of acquired intangible assets (2) |
1,070 |
|
1,003 |
|
|
3,333 |
|
1,003 |
|
Acquisition-related compensation (3) |
21 |
|
502 |
|
|
407 |
|
744 |
|
Transaction-related expenses (4) |
324 |
|
509 |
|
|
324 |
|
1,839 |
|
Charitable contributions |
66 |
|
10,420 |
|
|
165 |
|
10,479 |
|
Adjusted Operating
Loss |
(3,856 |
) |
(8,150 |
) |
|
(15,926 |
) |
(19,506 |
) |
|
|
|
(1) |
|
These expenses relate to issued
stock options, restricted shares units, and other awards under
share-based plans to our employees and directors as well as related
payroll taxes that are directly attributable to the share-based
payments. These costs are included in product and professional
services cost of revenue, sales and marketing, research and product
development, and general and administrative expenses. |
(2) |
|
These expenses represent the
amortization of intangible assets acquired through the acquisition
of Qubit Digital Ltd (“Qubit”). These costs are included in
amortization of intangible assets. |
(3) |
|
These expenses relate to
non-recurring acquisition-related compensation in connection with
acquisitions. These costs are included in product and professional
services cost of revenue, and sales and marketing, research and
product development, and general and administrative expenses. |
(4) |
|
These expenses relate to
professional, legal, consulting, accounting, advisory, and other
fees relating to transactions that would otherwise not have been
incurred. These costs are included in general and administrative
expenses. |
Reconciliation of Adjusted
Gross Profit Measures and Adjusted Gross Profit (%)
Measures(expressed in thousands of US dollars,
unaudited)
|
|
|
|
|
|
|
Three months ended December
31, |
|
|
Nine months ended December
31, |
|
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
Total
revenue |
28,497 |
|
23,243 |
|
|
82,892 |
|
60,979 |
|
Gross
profit |
21,893 |
|
17,201 |
|
|
62,982 |
|
46,358 |
|
Gross profit (%) |
77 |
% |
74 |
% |
|
76 |
% |
76 |
% |
Add: Share-based payments and
related expenses |
339 |
|
272 |
|
|
1,040 |
|
436 |
|
Add: Acquisition-related
compensation |
6 |
|
156 |
|
|
172 |
|
156 |
|
Adjusted Gross
Profit |
22,238 |
|
17,629 |
|
|
64,194 |
|
46,950 |
|
Adjusted Gross Profit (%) |
78 |
% |
76 |
% |
|
77 |
% |
77 |
% |
|
|
|
|
|
|
Product
revenue |
26,687 |
|
21,640 |
|
|
76,773 |
|
56,824 |
|
Product cost of
revenue |
4,948 |
|
4,476 |
|
|
14,455 |
|
11,215 |
|
Product gross
profit |
21,739 |
|
17,164 |
|
|
62,318 |
|
45,609 |
|
Product gross profit (%) |
81 |
% |
79 |
% |
|
81 |
% |
80 |
% |
Add: Share-based payments and
related expenses |
182 |
|
140 |
|
|
574 |
|
230 |
|
Add: Acquisition-related
compensation |
4 |
|
30 |
|
|
134 |
|
30 |
|
Adjusted Product Gross
Profit |
21,925 |
|
17,334 |
|
|
63,026 |
|
45,869 |
|
Adjusted Product Gross Profit
(%) |
82 |
% |
80 |
% |
|
82 |
% |
81 |
% |
|
|
|
|
|
|
Professional services
revenue |
1,810 |
|
1,603 |
|
|
6,119 |
|
4,155 |
|
Professional services
cost of revenue |
1,656 |
|
1,566 |
|
|
5,455 |
|
3,406 |
|
Professional services
gross profit |
154 |
|
37 |
|
|
664 |
|
749 |
|
Professional services gross
profit (%) |
9 |
% |
2 |
% |
|
11 |
% |
18 |
% |
Add: Share-based payments and
related expenses |
157 |
|
132 |
|
|
466 |
|
206 |
|
Add: Acquisition-related
compensation |
2 |
|
126 |
|
|
38 |
|
126 |
|
Adjusted Professional
Services Gross Profit |
313 |
|
295 |
|
|
1,168 |
|
1,081 |
|
Adjusted Professional Services
Gross Profit (%) |
17 |
% |
18 |
% |
|
19 |
% |
26 |
% |
|
|
|
|
Reconciliation of Adjusted
Operating Expense Measures and Adjusted Operating Expense (%)
Measures(expressed in thousands of US dollars,
unaudited)
|
|
|
|
|
|
|
Three months ended December
31, |
|
|
Nine months ended December
31, |
|
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
|
$ |
|
$ |
|
|
$ |
|
$ |
|
Sales and marketing
expenses |
13,728 |
|
12,182 |
|
|
42,450 |
|
33,650 |
|
Sales and marketing expenses
(%) |
48 |
% |
52 |
% |
|
51 |
% |
55 |
% |
Less: Share-based payments and
related expenses |
1,375 |
|
695 |
|
|
4,445 |
|
1,153 |
|
Less: Acquisition-related
compensation |
6 |
|
67 |
|
|
77 |
|
67 |
|
Adjusted Sales and
Marketing Expenses |
12,347 |
|
11,420 |
|
|
37,928 |
|
32,430 |
|
Adjusted Sales and Marketing
Expenses (%) |
43 |
% |
49 |
% |
|
46 |
% |
53 |
% |
|
|
|
|
|
|
Research and product
development expenses |
8,705 |
|
9,076 |
|
|
26,800 |
|
19,446 |
|
Research and product
development expenses (%) |
31 |
% |
39 |
% |
|
32 |
% |
32 |
% |
Less: Share-based payments and
related expenses |
1,487 |
|
1,100 |
|
|
4,608 |
|
1,537 |
|
Less: Acquisition-related
compensation |
8 |
|
270 |
|
|
143 |
|
512 |
|
Adjusted Research and
Product Development Expenses |
7,210 |
|
7,706 |
|
|
22,049 |
|
17,397 |
|
Adjusted Research and Product
Development Expenses (%) |
25 |
% |
33 |
% |
|
27 |
% |
29 |
% |
|
|
|
|
|
|
General and
administrative expenses |
8,102 |
|
17,277 |
|
|
22,917 |
|
26,939 |
|
General and administrative
expenses (%) |
28 |
% |
74 |
% |
|
28 |
% |
44 |
% |
Less: Share-based payments and
related expenses |
2,163 |
|
786 |
|
|
5,406 |
|
1,201 |
|
Less: Acquisition-related
compensation |
1 |
|
9 |
|
|
15 |
|
9 |
|
Less: Transaction-related
expenses |
324 |
|
509 |
|
|
324 |
|
1,839 |
|
Less: Charitable
contributions |
66 |
|
10,420 |
|
|
165 |
|
10,479 |
|
Adjusted General and
Administrative Expenses |
5,548 |
|
5,553 |
|
|
17,007 |
|
13,411 |
|
Adjusted General and
Administrative Expenses (%) |
19 |
% |
24 |
% |
|
21 |
% |
22 |
% |
Condensed Interim Consolidated
Statements of Financial Position(expressed in
thousands of US dollars, unaudited)
|
|
|
|
December 31,2022 |
|
March 31,2022 |
|
|
$ |
|
$ |
|
Assets |
|
|
Current
assets |
|
|
Cash and cash equivalents |
207,565 |
|
223,072 |
|
Trade and other receivables |
20,266 |
|
25,476 |
|
Refundable tax credits |
7,225 |
|
10,443 |
|
Prepaid expenses |
4,573 |
|
5,861 |
|
|
239,629 |
|
264,852 |
|
Non-current
assets |
|
|
Contract acquisition costs |
11,091 |
|
10,858 |
|
Property and equipment |
6,971 |
|
8,704 |
|
Intangible assets |
15,966 |
|
20,605 |
|
Right-of-use assets |
8,032 |
|
9,255 |
|
Deferred tax assets |
3,794 |
|
4,616 |
|
Goodwill |
25,314 |
|
26,610 |
|
Total
assets |
310,797 |
|
345,500 |
|
|
|
|
|
Liabilities |
|
|
Current
liabilities |
|
|
Trade payable and accrued liabilities |
21,420 |
|
22,910 |
|
Current portion of deferred revenue |
52,656 |
|
49,879 |
|
Current portion of lease obligations |
1,902 |
|
1,916 |
|
|
75,978 |
|
74,705 |
|
Non-current
liabilities |
|
|
Deferred revenue |
265 |
|
513 |
|
Lease obligations |
9,443 |
|
11,169 |
|
Deferred tax liabilities |
2,884 |
|
3,677 |
|
Total liabilities |
88,570 |
|
90,064 |
|
Shareholders'
equity |
|
|
Share capital |
865,861 |
|
859,944 |
|
Contributed surplus |
25,949 |
|
15,295 |
|
Deficit |
(624,755 |
) |
(592,256 |
) |
Accumulated other comprehensive loss |
(44,828 |
) |
(27,547 |
) |
Total shareholders' equity |
222,227 |
|
255,436 |
|
Total liabilities and
shareholders' equity |
310,797 |
|
345,500 |
|
|
|
|
|
|
Condensed Interim Consolidated
Statements of Cash Flows(expressed in thousands of
US dollars, unaudited)
|
|
|
|
Nine months ended December 31, |
|
|
2022 |
|
2021 |
|
|
$ |
|
$ |
|
Cash flows from (used
in) operating activities |
|
|
Net income (loss) |
(32,499 |
) |
437,661 |
|
Items not affecting cash |
|
|
Amortization of contract acquisition costs |
3,302 |
|
2,797 |
|
Depreciation of property and equipment |
1,951 |
|
1,985 |
|
Amortization of intangible assets |
3,337 |
|
1,098 |
|
Depreciation of right-of-use assets |
1,181 |
|
1,138 |
|
Interest accretion |
- |
|
11,906 |
|
Change in redeemable preferred shares – conversion rightscomponent
fair value |
- |
|
(299,428 |
) |
Donation of share capital |
- |
|
10,379 |
|
Share-based payments |
15,628 |
|
4,327 |
|
Interest on lease obligations |
482 |
|
550 |
|
Change in fair value of short-term investments |
- |
|
103 |
|
Variation of deferred tax assets and liabilities |
323 |
|
(189,062 |
) |
Unrealized foreign exchange loss (gain) |
(581 |
) |
232 |
|
|
|
|
Changes in non-cash working capital items |
7,728 |
|
(7,254 |
) |
|
852 |
|
(23,568 |
) |
|
|
|
Cash flows from (used
in) investing activities |
|
|
Business combination, net of cash acquired |
(475 |
) |
(38,667 |
) |
Proceeds from disposal of short-term investments |
- |
|
76,351 |
|
Additions to property and equipment |
(1,046 |
) |
(1,118 |
) |
Additions to intangible assets |
(5 |
) |
(756 |
) |
|
(1,526 |
) |
35,810 |
|
|
|
|
Cash flows from (used
in) financing activities |
|
|
Share capital issued |
- |
|
195,920 |
|
Share capital issuance costs |
- |
|
(14,477 |
) |
Consideration to a shareholder |
- |
|
(14,758 |
) |
Proceeds from exercise of stock options |
1,579 |
|
337 |
|
Tax withholding for net share settlement |
(599 |
) |
- |
|
Payments on lease obligations |
(1,889 |
) |
(1,683 |
) |
|
(909 |
) |
165,339 |
|
|
|
|
Effect of foreign exchange
rate changes on cash and cash equivalents |
(13,924 |
) |
703 |
|
|
|
|
Increase (decrease) in
cash and cash equivalents during the period |
(15,507 |
) |
178,284 |
|
|
|
|
Cash and cash equivalents –
beginning of period |
223,072 |
|
55,399 |
|
|
|
|
Cash and cash
equivalents – end of period |
207,565 |
|
233,683 |
|
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