Coveo Reports Fourth Quarter and Fiscal Year 2022 Financial Results

Fourth quarter SaaS Subscription Revenue grew 52% year-over-year to $23.1 million
Fourth quarter total revenue increased 46% percent year-over-year to $25.5 million
Current SaaS Subscription Remaining Performance Obligations grew 52% year-over-year to $80.6 million as of the fourth quarter

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

MONTREAL and SAN FRANCISCO, June 14, 2022 (GLOBE NEWSWIRE) -- Coveo Solutions Inc. (“Coveo” or the “Company”) (TSX: CVO), a leader in AI-powered relevance platforms that transform search, recommendations, and personalization within digital experiences, today announced financial results for its fourth quarter and fiscal year 2022, ended March 31, 2022.

“We are continuing to see strong demand for the Coveo Relevance Cloud™ platform in the market, which helped us to deliver another record quarter with revenue that exceeded our expectations,” said Louis Têtu, Chairman and CEO of Coveo. “Our mission is to accelerate the application of AI platforms in enterprises to deliver great customer experiences while improving business outcomes, and we believe that our performance demonstrates that this mission is resonating in the market. As we look ahead to fiscal year 2023 and beyond, we firmly believe in the significant opportunity in front of us to deliver relevant digital experiences at scale for all businesses.”

Fourth Quarter Fiscal 2022 Financial Highlights

• SaaS Subscription Revenue grew 52% year-over-year to $23.1 million.
• Total revenue was $25.5 million, an increase of 46% year-over-year compared to $17.4 million in the fourth quarter of fiscal 2021.
• Gross profit (%) was 73%, a decrease of 3% year-over-year, and product gross profit (%) was 79%, a decrease of 1% year-over-year. Adjusted Gross Profit (%) ⁽¹⁾ was 76%, in-line with the fourth quarter of fiscal 2021. Adjusted Product Gross Profit (%) ⁽¹⁾ was 81%, an increase of 1% compared to the fourth quarter of fiscal 2021.
• Operating loss was $19.4 million and Adjusted Operating Loss ⁽²⁾ was $8.6 million.
• Net loss was $19.4 million, compared to a net loss of $384.9 million in the fourth quarter of fiscal 2021. Net loss per share was $0.19, compared to a net loss per share of $20.66 in the fourth quarter of fiscal 2021. Net loss in the fourth quarter of fiscal 2021 was impacted by a non-cash loss of $300.4 million and an associated income tax expense of $76.1 million, each related to our preferred shares, which were converted into multiple voting shares immediately prior to our IPO.
• Cash flows used in operations was $11.9 million, and cash and cash equivalents were $223.1 million as of March 31, 2022.

Full Year Fiscal 2022 Financial Highlights

• SaaS Subscription Revenue grew 41% year-over-year to $77.9 million.
• Total revenue was $86.5 million, an increase of 33% year-over-year compared to $64.9 million in fiscal 2021.
• Current SaaS Subscription Remaining Performance Obligations of $80.6 million as of March 31, 2022, up 52% year-over-year compared to $53.1 million in the fourth quarter of fiscal 2021.
• Gross profit (%) was 75%, which was in-line with fiscal 2021. Product gross profit (%) was 80%, an increase of 1% compared to fiscal 2021. Adjusted Gross Profit (%) ⁽¹⁾ was 77%, a 2% increase compared to fiscal 2021. Adjusted Product Gross Profit (%) ⁽¹⁾ was 81%, an increase of 2% compared to fiscal 2021.
• Operating loss was $57.3 million and Adjusted Operating Loss ⁽²⁾ was $28.1 million.
• Net income was $418.3 million, compared to a net loss of $600.0 million in fiscal 2021. Net income per share was $8.23, compared to a net loss per share of $32.64 in fiscal 2021. Net income in fiscal 2022 was impacted by a non-cash gain of $299.4 million and an associated income tax recovery of $189.7 million, each related to our preferred shares, which were converted into multiple voting shares immediately prior to our IPO. Net loss in fiscal 2021 was impacted by a non-cash loss of $451.9 million and an associated income tax expense of $116.8 million, each also related to our preferred shares.
• Cash flows used in operations was $35.4 million.
  

Fourth Quarter Fiscal 2022 Operational Highlights

• Net Expansion Rate of 110% as of March 31, 2022.
• Over 600 SaaS subscription customers as of March 31, 2022, compared to over 475 SaaS subscription customers as of September 30, 2021.
• Over 725 employees as of March 31, 2022.
• Recognized as a gold medalist and leader in the 2022 Enterprise Search Data Quadrant report from SoftwareReviews, a division of IT research and consulting firm Info-Tech Research Group. The award is based on the collective knowledge of real users and placement is based on satisfaction with product features, vendor experience, capabilities, and emotional sentiment.
• Launched intent aware re-ranking that personalizes search behavior on a website even for first-time shoppers or customers who haven’t yet logged in. Coveo’s machine learning algorithms capture intent after just a few clicks, resulting in product rankings that are truly relevant and adapt to each shopper’s interactions.
• Introduced the Coveo for Slack app integration, which enables Slack users to find relevant content from any external source. With a simple slash command from any channel, employees can easily find the content they need while staying in the flow of work.
• Released embedded AppExchange Chat functionality within the Coveo AI-Powered Search & Recommendations listing on Salesforce AppExchange, empowering customers to connect with Coveo experts in real time and make better business decisions.
  

Financial Outlook

Coveo anticipates SaaS Subscription Revenue, Total Revenue, Adjusted Operating Loss, and Weighted Average Shares Outstanding to be in the following ranges:

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

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

Conference Call Information

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

Non-IFRS Financial Measures, Non-IFRS Ratios, and Key Performance Indicators

Coveo’s audited annual consolidated 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 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 of the Company’s operating performance and thus highlight trends in Coveo’s core business that may not otherwise be apparent when relying solely on IFRS measures. The Company’s management also believes that securities analysts, investors, and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Coveo’s management uses and intends to continue to use non-IFRS measures in order to facilitate operating performance comparisons from period to period, and to prepare annual operating budgets and forecasts.

See the “Non-IFRS Financial Measures and Ratios and Reconciliation of Non-IFRS Financial Measures and Ratios” section of our management’s discussion and analysis for the three months and years ended March 31, 2022 and March 31, 2021, dated June 14, 2022 (the “MD&A”), which is available under our profile on SEDAR at www.sedar.com, for a description of these measures which is incorporated by reference hereto. See the financial tables below for reconciliations 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.

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

Forward-Looking Information

This press release contains “forward-looking information” within the meaning of applicable securities laws, including Coveo’s financial outlook on SaaS Subscription Revenue, Total Revenue, Adjusted Operating Loss, and Weighted Average Shares Outstanding for the three months ending on June 30, 2022 and the year ending on March 31, 2023. This forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “might”, “will”, “achieve”, “occur”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “target”, “opportunity”, “strategy”, “scheduled”, “outlook”, “forecast”, “projection”, or “prospect”, the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. In addition, any statements that refer to expectations, intentions, projections, or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates, and projections regarding future events or circumstances.

Coveo’s financial outlook on SaaS Subscription Revenue, Total Revenue, Adjusted Operating Loss, and Weighted Average Shares Outstanding also constitutes “financial outlook” within the meaning of applicable securities laws and is provided for the purposes of assisting the reader in understanding the Company’s financial performance and measuring progress toward management’s objectives and the reader is cautioned that it may not be appropriate for other purposes.

Forward-looking information is necessarily based on a number of opinions, estimates, and assumptions that we considered appropriate and reasonable as of the date such statements are made. 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: 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; assumptions regarding our future capital requirements; assumptions regarding 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; and our ability to execute on our expansion plans. 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 the risk factors described under “Risk Factors” in the Company’s most recently filed Annual Information Form, which is available under our profile on SEDAR at www.sedar.com. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, prospective investors should not place undue reliance on forward-looking information, which speaks only as of the date made.

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

About Coveo Solutions Inc.

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

Coveo is a trademark of Coveo Solutions, Inc.

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Contact Information

Nick Goode
Investor Relations
investors@coveo.com

Kiyomi Harrington
PR Lead
kharrington@coveo.com

Released June 14, 2022