Coveo Solutions Inc. (CVO) Earnings Call Transcript & Summary

Good morning ladies and gentlemen, and welcome to Coveo's 2026 Annual General Meeting of Shareholders. [Foreign Language] My name is Laurent Simoneau, and I'm the CEO of the company. With me here on this virtual AGM Karine Hamel, the Chief Financial Officer of Coveo; and Jeremie Ste-Marie, the Senior Vice President and General Counsel of Coveo, as well as a number of other executives and board vendors in listen-only mode. As you know, the company has decided this year again conducted this meeting virtually by way of a live broadcast, live webcast, I should say, to maximize shareholder attendance for those who would be unable to attend the meeting in the person. By holding the meeting virtually all shareholders, regardless of their geographic location, have an equal opportunity to participate in real time and involved at the meeting. Dear shareholders, this is an exciting time for Coveo. Over the past several years, the conversation around enterprise AI has evolved rapidly from experimentation to implementation and now operational scale. Organizations are no longer asking whether AI can deliver value. They are focused on deploying AI across critical business processes while ensuring reliability, governance, miserable outcomes and return on investment. As AI becomes increasingly embedded in the enterprise, the ability to deliver trusted and contextually relevant information has become foundational. We believe this shift plays directly to Coveo's strengths. Against this backdrop, fiscal 2026 was another year of strong execution. We continue to expand our SaaS business, strengthened relationships with strategic customers and drove meaningful adoption of our AI relevance platform across both knowledge and commerce seasons. We remain disciplined in balancing growth with profitability, generated strong cash flow and continue to operate an efficient business model while investing in the innovation required to capture the significant opportunity ahead. We believe these results reinforce the durability of our strategy and our ability to create long-term shareholder value. Innovation continues to be at the heart of Coveo. As enterprises move beyond isolated AI applications towards connected agentic workflows, the challenge is no longer simply generating answers. It is entering those answers are grounded and trusted, relevant enterprise knowledge. Organizations continue to struggle with fragmented data spread across Compass business obligations and reposits. Coveo's AI relevance platform was purpose-built to address these challenges like [indiscernible] and connecting, indexing, understanding and retrieving enterprise content with a precision required for modern AI applications. Today, our platform powers AI search, generative experiences, recommendations and emerging genetic use cases serving as the intelligence layer that enables enterprise AI to consistently deliver accurate, personalized and explainable outcomes. We believe retrieval, relevance and business aware optimization is becoming increasingly essential as enterprises deploying AI at scale and that Coveo is uniquely positioned to provide this foundation. Our continued investments in AI relevance, generative search, genetic AI and connectivity and interoperability capabilities position us to help organizations on a greater value from their enterprise knowledge while accelerating digital transformation. I'll end where I started, I'm excited for the future of Coveo. We believe that price AI is entering its next phase, one defined by scale adoption, intelligent automation and measurable business impact. With our differentiated technology disciplined execution, exceptional team, we believe Coveo is well positioned to lead in this evolving market. Most of all, thank you to all Coveoants for your dedication to our customers for your continued trust and partnership and to our shareholders for your ongoing support and confidence. Now for the formal part of the meeting, I would like to make a motion to have Karine Hamel, our CFO, act as Chairperson of this AGM in accordance with Section 11.8 of our general bylaws. This motion has already been seconded by Marc Sanfacon, our Chief Technology Officer, who is also a shareholder of the company. Any questions for position? Right. I can now confirm that Kevin Emel will act as Chairperson of this meeting. Kevin, over to you.

Thank you, Laurent. Good morning, everyone. This is Karine Hamel, Chief Financial Officer of the company. [Foreign Language] Before we start the formal portion of the meeting, I'd like to make a motion to have Jeremie Ste-Marie, our Senior Vice President and General Counsel at as a secretary of this AGM, also in accordance with Section 11.8 of our general bylaws. This motion has already been suggested by Marc Sanfacon, our Chief Technology Officer, with also a shareholder of the company. Any questions or a position? All right. I can now confirm that Jeremie Ste-Marie will act as a secretary of this meeting. Before we begin with the formal portion of the meeting, I will hand it over to Jeremie, who will quickly go through the meeting rules.

Thank you, Karine. Good morning, everyone. [Foreign Language]. To ensure that the meeting proceeds in a more fashion, we wanted to communicate with you some information regarding the conduct of the meeting. First, today's meeting will be conducted in English and the management presentation at the end of the meeting will also be given in English as our shareholder base is diverse and shareholders and proxy holders are attending the meeting from all over the world. As you can see for convenience, a live fresh translation is being provided. Copies of all of the documents related to today's meeting in both English and French are available on SEDAR+ under Coveo's profile at www.sedarplus.ca and on our Investor Relations website. Questions may be asked in English or French throughout the meeting. Second, as this meeting is being held online. Here are a few rules governing in today's meeting. All registered shareholders and duly appointed proxy holders that have completed all prerequisite steps to enter this meeting as such, will be able to ask questions and communicate with each other during the meeting via the chat function of the meeting platform. Questions submitted during the formal portion of the meeting may be addressed by the appropriate person during the relevant order of business if appropriate or if be more appropriate at the formal Q&A section of the meeting, which will occur after the management presentation. Following adjournment of the formal business meeting, management will give a presentation about the company's business and activities. At the conclusion of the presentation, the company will hold a live Q&A session to address general questions submitted during the meeting. We have allocated a certain amount of time for today's AGM as a whole, and we'll answer as many questions as we can in that period of time. In order to allow the company to answer as many questions as possible from shareholders, please ensure your questions are succinct and cover only one topic for questions. Questions from multiple shareholders on the same topic or that are otherwise related may be group, summarize or answer it together. Follow-up questions will only be addressed via e-mail to investors at coveo.com. The Chair of the meeting, Karine Hamel, reserves the right to edit or reject questions she deems inappropriate or to limit the number of questions per shareholder or duly appointed proxy holder in order to ensure that as many persons as possible to have the opportunity to ask questions. The Chair of the meeting has broad authority to conduct a meeting in an orderly map to ensure the meeting is conducted in a manner that is fair to all shareholders. The Chair may exercise broad expression in the order of which questions are asked and the amount of time devoted to any one question. The company does not intend to address during this meeting, any questions that are either are relevant to the business of the company or the business of the meeting related to material nonpublic information of a personal nature, including any questions related to personal grievances, there are derogatory references to individuals or that are otherwise in bad taste, hostile or otherwise disruptive to the order and conduction meeting, how order or otherwise suitable for the coming meeting each are determined by the Chair of the meeting in her reasonable judgment. A Coveo representative will contact you after the meeting if your question is of a personal nature and best addressed privately. Today's folks on the items of business will be conducted via electronic ballots and you will be required to vote each item of business in real time. Voting will open upon commencement of the formal portion of the meeting and remain all open for you to vote at any time until the polls are closed. You may choose to vote on each resolution immediately or wait until the conclusion of discussion on all resolutions prior to casting your vote. When you are asked to vote, you will receive a message within the online interface requiring you to register your votes. If you have already submitted your voting instructions or have already voted prior to today's meeting, you are not required to vote again today. If you decide to vote again today, you will be revoking your previous vote instructions. Finally, we want to remind shareholders and duly appointed proxy holders that in the event of a technical function or other significant problem that disrupts the meeting. the Chair of the meeting may adjourn, recess or expedite the meeting or take such other action as she determines appropriate considering the circumstances. Okay. Thank you all for listening to these rules. With that, let's call the meeting to order. Karine, over to you.

Thank you, Jeremie. The meeting will now come to order and per the powers vested in me by our bylaws, I appoint Francine Beausejour and [ Jenny Koncam ] of TSX cross company here with us today in listening mode to act as the scrutineers for the meeting. I wish to know that in addition to folks at TSX Trust company, we have a few other people here with us in listening only mode today, including certain executives of the company, our director nominees and our external auditors PricewaterhouseCoopers. The Secretary has confirmed that the meeting notice, the notice of availability of materials our management proxy circular, our annual report, including our annual financial statements and the corresponding MDA and all the required meeting materials or be available to all shareholders. All such materials can be found under the company's profile on Sedar+ at www.cedarplus.ca a nd on our Investor Relations website. Secretary further confirmed that the notice of the meeting, the notice of availability of material and a form of processing and/or VIF as applicable were mailed on August 20, 2026 to all shareholders of record as of July 31, 2026, as evidenced by an affidavit of meeting provided to us by the company's transfer agent, TSX Trust Company. The affidavit of mailing is available for inspection by any shareholder. I asked that -- I ask that the secretary of the meeting, file a copy of such affidavit with the minutes of today's meeting. We also have been advised by the transfer agent and the meeting scrutineers that the holders of at least 25% of the aggregated number of votes attached to all of the company's shares entitled to vote at this meeting are virtually present or represented by proxy, and at least 2 persons entitled to vote at this meeting are virtually present or represented by proxy such that we have or for the meeting per the company's bylaws. I ask the secretary of this meeting to file up a copy of the scrutineers' report with the minute of today's meeting. Therefore, I declare this Annual General Meeting to be regularly called and properly constitute for the transaction of business. The voting polls will now be open for our resolution. They will close approximately 1 minute after the last item of business. Each item of business to be considered today requires that a majority of the vote cast be voted in favor of the item of business in order for the corresponding resolution to be passed. I wish to inform each of every one of you that we've been informed by the transfer agent and scrutineers that given the number of votes received prior to the proxy product each motion presented before you today is currently expected to be carried. Finally, I note that given today's meeting for our Chief Technology Officer, Marc Sanfacon and our Chief Marketing Officer, Pranshu Tewari, both of whom are shareholders of the company have agreed as shareholders in advance of the meeting to move and second all motions presented to you today in an effort to be as efficient as possible and to allow as much time as possible for questions at the end of the meeting. As such, all motions presented before you today are considered and deemed to have been moved and seconded. If you have any questions or motions presented before you today, please let us note by writing in a chat function of the meeting platform, and we will address such questions at the appropriate time. Today's first order of business is to receive the company's consolidated financial statement for the fiscal year ended March 31, 2026, and the auditor's report thereon. First, I submit the company's consolidated financial statements for the fiscal year ended March 31, 2026, and the auditor's report there on to this meeting. These statements have been reviewed and approved by the company's Audit Committee and Board of Directors. The company's annual report comprising of the company's financial statement for fiscal year 2026 was made available to shareholders in accordance -- pardon me, with applicable laws and exemption therefrom. Having considered the length of time needed to reap all pages of our financial statements I have moved that the requirement to present and read the financial statements for the fiscal year ended March 31, 2026, and the auditors report thereon, we wait. And I now place the company's consolidated financial statements for the -- for the fiscal year 2026 and the auditor's report thereon before the shareholders. Are there any questions? As there are no relevant questions on this item of business, I declare that the company's financial statements for the fiscal 2026 and the auditors' report thereon have been duly presented and received. The next item of business is the election of the directors of Coveo for the ensuing year or until their successors are duly elected or appointed as applicable. As required by available securities laws, we will be nominating and approving directors individually and not by slate. The number of directors to be elected at today's meeting has been fixed by the Board of Directors at 7. All directors currently sitting on the Board of Directors of the company are standing for reelection at the meeting. Further information on the 7 directors standing for election today is set forth in the company's management proxy circular a copy of which is available on our IR website and our Sedar+ profile. I confirm that all nominees are eligible for election and have accepted to serve as directors of the company should be reelected. As previously mentioned, all motions have been preapproved and pre-seconded. So I hereby confirm that each of the 7 persons nominated to be elected as directors as set forth in our management proxy circular are up for election to old office until next Annual Meeting of Shareholders or until a successor is duly elected or appointed as applicable. Are there any questions? As there are no relevant questions on this item of business, I now call a vote on the election of each individual standing for election in today's Board of Directors. With all shareholders and duly appointed proxy holders, please enter their votes. We will give you 1 minute to do so and then continue with the next item of business. The carrying of all motions presented before you today will be formally confirmed at the end of the formal portion of the meeting. [Voting]

Thank you all for your votes. The last item of business today is the appointment of our current auditors, PricewaterhouseCoopers LLP, chartered professional accountants, as auditors of the company for the ensuing year and authorizing the Board of Directors to fix their remuneration. PwC has been the auditors of the company since in preparation in 2004. As previously mentioned, all motions have been preapproved and pre-seconded. So I hereby confirm that a vote can be taken on the appointment of our current auditors, PricewaterhouseCoopers LLP as auditor of the company for the ensuing year and the authorization of the Board of Directors to fix their remuneration. Are there any questions? As there are no relevant questions of this item of business, I now call a vote as regard to the appointment of our auditors and the authorization of the Board of Directors to fix their remuneration. With all shareholders and duly appointed proxy holders, please enter their votes. We will give you 6 seconds to do so and to complete any other missing boats and then officially close the vote for this year's meeting. The carrying of all motions presented before our view today will be subsequently formally confirmed. [Voting]

Thank you all for your votes. The polls are now closed. We will now take a brief recess for our scrutineers to compile the votes, and we will be back with preliminary results and announcement regarding the carrying of the motions presented before you today. Thank you all for your patience. It is my pleasure to confirm that all resolutions presented before you to date have been formally carried and adopted with a substantial -- with a substantial majority of the votes cast in favor of each resolution. As such, the Secretary and I hereby confirm that the 7 directors standing for election as set forth in our management proxy circular have been duly elected and that PricewaterhouseCoopers have been appointed as auditors for the company, and the Board is authorized to fix their remuneration. Final voting results will be published today in a press release and a report of billing results, which will be both via our Sedar+ profile. And there -- there's no further business to be brought before this meeting, I hereby declare the formal portion of this meeting to be concluded. Now that the formal portion of the meeting has concluded, I will provide an overview of Coveo's business, review our progress during fiscal '26 and discussed the year ahead. Questions that do not relate to an item of formal business will be addressed at the end of the presentation. Fiscal '26 was an important year of progress for Coveo. We delivered the best bookings performance in our store, including several of the largest deals in our history. We advanced our innovation thus, deepening important and prepriced relationships and invested in our strongest long-term opportunities. We could not have had those results without the trust of our customers. the hard work of our employees and the continued support of our investors, and I want to thank all of them. At Coveo, we help large and complex organizations use AI to drive meaningful business outcomes. We empower enterprise to compete in today's experienced AI era by delivering the best experiences in their industry while generating financial returns at scale. These experiences save people time provide customers with the need, increase revenue and conversion, reduce costs and help employees learn resolve issues and complete task more quickly. Today, we support more than 1,000 use case across verticals such as manufacturing, distribution, retail and brand technology and financial services and several others. These customers operate across many technology systems, geo rams, languages and permission structures creating a vast and highly complex data corporates. In order for this organization to leverage the capabilities of AI, Coveo's unified enterprise content, product catalogs, behavioral data and permission from across the unit products, our platform did use that context to orchestrate fair generalized conversations, round assistant and agents and first governance and operate reliably at enterprise scale. This is where the depth of our platform is in both with all. With our user, sorry, wants to buy a product, sign information, fix an issue or complete a task, Coveo is designed to understand their objective and provides the most relevant next step. We apply that capabilities across cars, website, service and workplace experiences to support higher revenue, stronger engagement, faster resolution, greater cell service and improve productivity. Importantly, these experience are increasingly converging. A customer journey need to begin with a product discovery, move into education and purchasing guidance and later shift into technical support or service. Coveo allows enterprises to support that entire journey through a common intelligence layer, preserving context as the user needs involved. The value of this approach is demonstrated through customers' outcomes across both B2B and B2C corners, generative and product experiences and AI-powered staff service, customers have reported an improvement in revenue conversion, case avoidance and cost to serve. The following example span visit industry, but share the same requirement using complex enterprise information to provide a more relevant AI experience. SAP is one of our most significant examples in customer service. Coveo supports SAP's global self-service environment by bringing together content from dozens of stores and more than 10 million documents while respecting the security information attached to that information, reported avoiding approximately 1.6 million support cases annually and estimated significant annual savings when leveraging the Coveo platform. The deployment shows what we can achieve when generative AI is grounded in relevant govern enterprise more. It also illustrates our expansion model initial SAP Concur deployment developed into a broader role supporting SAP's global customer experience. In B2C commerce, Nespresso illustrates the effect that relevant and personalization can have on the buying journey. Following its deployment of Coveo AI search, Nespresso reported 182% higher conversion amongst customers using search and a 30% increase in search adoption. Recommendations presented on no result pages also contributed to a 10% increase in average order value. These outcomes show how AI search can move beyond navigation. I understanding Antin and responding with rather than products and recommendation it can reduce friction and contribute directly commercial performance. AEI demonstrates the same principle in a more complex B2B environment. Its customer must navigate our broad technical catalogs, making relevance and product findability, especially important. Since implementing Coveo, AEI reported a 20% increase in value tied to on-site a 16% improvement in conversion and an 91% reduction in its rate of search returning no results. This aligns mostly with our strength. We are seeing particularly strong momentum in B2B, especially across the industrial, manufacturing and distribution sectors. These organizations manage large technical catalogs, fragmented product and service content, complex entitlement and highly specialized buying journeys. Those requirements align directly with Coveo's platform stream and are creating a growing pipeline of opportunities as customers seek to identify product discovery purchasing guidance and both purchase support through a single intelligence layer. Coveo brings those inputs together so buyers can find the right product and information with less effort. Finally, F5 provides another example of generative AI delivering tangible operation and benefits, by using Coveo generative answering questions -- sorry, by using Coveo generative question-answering capabilities, F5 reported an 11% improvement in self-service success and approximately $150,000 in savings during the first 30 days. The company also experienced a 63% of lift in feedback on knowledge articles, above the industry benchmark referenced by the cost up. In enterprise setting, generating an answer is not enough. It must be rev transparent and supported by trusted source material requirements that are fundamental to adoption and measurable return on investment. Taken together, those customer outcomes provide compelling validation of the Coveo platform and the measurable that can develop. That demonstrates Coveo's ability to transform complex enterprise data into relevant trusted experience. that produces meaningful quantifiable business results. Another important growth opportunity is our partner that technology partners and system integrators, including Bell, ethical, SAP, Perfusion, AWS and Deloitte are bringing Coveo into a broader enterprise transformation programs. These relationships extend our reach and support successful customer implementations. That brings me to our platform and innovation strategy. Coveo's position in the mother AI technology stack begins with a unified index that securely connects enterprise knowledge, product catalogs and behavioral information. When then we then apply security, hybrid relevance and behavioral analytics to determine what is the most useful for particular user end use cases. We may have intelligence available in 3 ways through fully managed Coveo's applications through specialized search, discovering merchandising agents and through APIs in our Boston MCV server, which allowed personal assistance and third-party agentic platforms to access enterprise information through Coveo. This architecture reflects an important principle, customers should repay choice. As such, our strategy is deliberately and [indiscernible]. Customers to use Coveo's application, connect Coveo to leading AI assistants or embed or capabilities with their own agentic platforms. Enterprises are adopting multiple models and agentic frameworks that will continue to change. Coveo remains agnostic to the source system, an experienced and large language model. providing consistent material context, security and governance across the environment. This flexibility protects the customers' investment and expand the experiences our platform can support as commerce service, workplace and website journeys become more conversational and turbine. I will now turn to our financial profile. Come operates a subscription-based business model with contractually committed volumes for the term of the agreement. Our contracts are predominant in multiyear generating 3 years or longer, with annual billing typically upon. This structure provides a high degree of recurring revenue visited. We finally sort of enterprise customers with average ARR of more than 220,000 per cost up. Under our [indiscernible] motion model, as customers adopt additional use cases and platform engagement growth, consumption can exceed committed level, creating opportunities for incremental revenue over time. We believe our continued pace of innovation supports customer expansion and increased platform consumption over time. Last year, we said that we expected revenue growth to accelerate in fiscal '26. And I am pleased to say that we delivered on that expectation. We generated $142.5 million in SaaS subscription revenue, representing 15% year-over-year growth in our or Coveo platform. Our product gross margin was above 80% for the year. We generated $10.5 million of operating cash flow, and we ended the year with approximately $102 million in cash and no debt. This provides a strong foundation from which to continue investing in growth. Over the past several years, we have steadily scaled our recurring revenue will materially improve operating cash flows. That progress reflects the economic of our subscription model, but it also deliberate, but it is also deliberate choices around investment and operating efficiency. Turning to fiscal '27, we are approaching a year with a clear focus, investing behind our strongest opportunities while maintaining financial discipline and positive operating cash flow. What excites us is how enterprise conversations are evolving. Generative AI is now of nearly every single new customer discussion and it is increasingly opening the door to broader platform adoption. Customers are looking for more than a point solution. The needs to occur rather than cover AI experience. We are particularly excited by the opportunity in commerce, both in complex B2B environment with large distributor and manufacturer and with large BSC retailer and brands. We are also excited by the expansion we see when customers adopt Coveo across multiple use cases. At the end of the first quarter of fiscal 2027, we have completed 4 consecutive quarters with at least one 7-figure transaction. Furthermore, in early fiscal '27, we secured our first customer with total ARR reaching 8 figures. These transactions reinforce the effectiveness of our strategy and demonstrate the confidence customers place in our technology platform and long-term roadmap. We intend to pursue these larger and more strategic opportunities with discipline by deepening our customer relationships, continuing to invest in core, generative AI and agent experiences preserving strong gross margin and generating positive operating cash. In closing, fiscal 2026 demonstrated progress in customer outcome strategy bookings platform, innovation and financial discipline. We entered fiscal '27 with a differentiated platform, a disciplined financial approach and clear priorities. We will deepen our relationship with the world's largest enterprises, continue to lead through innovation and grow our business efficiently. We have made meaningful progress, and these priorities will continue to die our efforts moving forward. With that, I will conclude the meeting, the management presentation and turn the meeting back to Jeremie for the next steps.

All right, folks. This is Jeremie Ste-Marie, Senior Vice President and General Counsel and Secretary of this meeting. Before we conclude this meeting, we would be pleased to answer questions received from shareholders during the meeting and the presentation that were not yet addressed. For each question we answer, I will read out the question as well as the name of the first ones to question, and one of the people here with me today will answer. We will now give shareholders an additional 30 seconds to ask questions through the chat function of this meeting. Thank you all. It seems like there are no questions at this time. As such, this concludes this year's Annual Meeting, and I am hereby fully declaring the meeting closed. Thank you all very much for joining us today. We are looking forward to seeing you next year.