Coveo Solutions Inc-sub Vtg Stock

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 are Karine Hamel, the Chief Financial Officer of Coveo; and Jérémie Ste-Marie, the Senior Vice President and General Counsel of Coveo as well as a number of other executives and Board members in listen-only mode.

As you know, the company has decided this year again to conduct 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 person. By holding the meeting virtually, all shareholders, regardless of their geographic location, have an equal opportunity to participate in real time and vote 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 to 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, measurable 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 use cases. 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 ensuring those answers are grounded in trusted, relevant enterprise knowledge. Organizations continue to struggle with fragmented data spread across countless business applications and repositories. Coveo's AI relevance platform was purpose-built to address these challenges by securing connecting, indexing, understanding and retrieving enterprise content with the precision required for modern AI applications.

Today, our platform powers AI search, generative experiences, recommendations and emerging agentic 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 deploy AI at scale and that Coveo is uniquely positioned to provide this foundation. Our continued investments in AI relevance, generative search, agentic AI and connectivity and interoperability capabilities position us to help organizations unlock 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 enterprise AI is entering its next phase, one defined by scaled adoption, intelligent automation and measurable business impact. With our differentiated technology, disciplined execution and exceptional team, we believe Coveo is well positioned to lead in this evolving market. Most of all, thank you to all Coveans 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 or opposition?

Great. I can now confirm that Karine Hamel will act as Chairperson of this meeting. Karine, 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 Jérémie Ste-Marie, our Senior Vice President and General Counsel, act as a Secretary of this AGM, also 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 question or opposition? Great. I can now confirm that Jérémie Ste-Marie will act as the Secretary of this meeting. Before we begin with the formal portion of the meeting, I will hand it over to Jérémie, who will quickly go through the meeting rules.

Thank you, Karine. Good morning, everyone. [Foreign Language] To ensure that the meeting proceeds in an orderly 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 French 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 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 deemed more appropriate at the formal Q&A session of the meeting, which will occur after the management presentation.

Following adjournment of the formal business of the 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 succint and cover only one topic per question. Questions from multiple shareholders on the same topic or that are otherwise related may be grouped, summarized or answered together.

Follow-up questions will only be addressed via e-mail to [email protected]. 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 have the opportunity to ask questions. The Chair of the meeting has broad authority to conduct the meeting in an orderly manner to ensure the meeting is conducted in a manner that is fair to all shareholders. The Chair may exercise broad discretion in the order in 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 irrelevant to the business of the company or the business of the meeting related to material nonpublic information of a personal nature, including any question related to personal grievances, derogatory references to individuals or that are otherwise in bad faith, hostile or otherwise disruptive to the orderly conduct of the meeting, out of order or not otherwise suitable for the conduct of the meeting, each as determined by the Chair of the meeting in a 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 votes on the items of business will be conducted via electronic ballots, and you will be required to vote on each item of business in real time. Voting will open upon commencement of the formal portion of the meeting and remain 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 voting instructions.

Finally, we want to remind shareholders and duly appointed proxy holders that in the event of a technical malfunction 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, Jérémie. The meeting will now come to order as per the powers vested in me by our bylaws. I appoint Francine Beauséjour and Jenny Khongkham of TSX Trust Company here with us today in listening mode to act as scrutineers for the meeting. I wish to note 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 MD&A and all other required meeting materials were made available to all shareholders.

All such material can be found under the company's profile on SEDAR+ at www.sedarplus.ca and on our Investor Relations website. The Secretary has further confirmed that the notice of the meeting, the notice of availability of material and a form of proxy 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 mailing provided to us by the company's transfer agent, TSX Trust Company. The affidavit of mailing is available for inspection by any shareholder.

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 share entitled to vote at this meeting are virtually present or represented by proxy and at least 2 person entitled to vote at this meeting are virtually present or represented by proxy, such that we have quorum for the meeting per the company's bylaws. I ask the secretary of this meeting to file a copy of the scrutineer's report with the minutes of today's meeting.

Therefore, I declare this Annual General Meeting to be regularly called and properly constituted for the transaction of business. The voting polls will now be open for all resolutions. 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 votes cast be voted in favor of the item of business in order for the corresponding resolution to be passed. I wish to inform each and 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 cutoff, each motion presented before you today is currently expected to be carried.

Finally, I note that given today's meeting format, 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 on motions presented before you today, please let us know 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 statements 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 reports thereon 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 statements for fiscal year 2026 was made available to shareholders in accordance, pardon me, with applicable laws and exemption thereon.

Having considered the length of time needed to read 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 auditor's report thereon be waived. And I now place the company's consolidated financial statements 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 auditor's 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 successor are duly elected or appointed as applicable. As required by applicable 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 they be elected. As previously mentioned, all motions have been preapproved and preseconded, 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 hold 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 to Coveo's Board of Directors. Would 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 have been the auditors of the company since incorporation in 2004. As previously mentioned, all motions have been preapproved and preseconded, 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 on 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. Would all shareholders and duly appointed proxy holders, please enter their votes. We will give you 60 seconds to do so and to complete any other missing votes and then officially close the vote for this year's meeting. The carrying of all motions presented before you 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 today have been formally carried and adopted 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 voting results, which will be both filed under our SEDAR+ profile. As there is 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 discuss 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 history, including several of the largest deals in our history. We advanced our innovation, thus deepening important enterprise 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 experience AI era by delivering the best experiences in their industry while generating financial returns at scale.

These experiences save people time, provide customers with what they need, increase revenue and conversion, reduce costs and help employees learn, resolve issues and complete tasks more quickly. Today, we support more than 1,000 use case across verticals such as manufacturing, distribution, retail and brands, technology, financial services and several others. These customers operate across many technology systems, geographies, languages and permission structures, creating advanced and highly complex data corpus. In order for these organizations to leverage the capabilities of AI, Coveo unifies enterprise content, product catalogs, behavioral data and permission from across the enterprise.

Our platform then use that context to orchestrate personalized conversations, ground AI assistant and agents enforce governance and operate reliably at enterprise scale. This is where the depth of our platform is most valuable. Whether a user, sorry, wants to buy a product, find information, fix an issue or complete a task, Coveo is designed to understand that objective and provides the most relevant next step. We apply that capabilities across commerce, website, service and workplace experiences to support higher revenue, stronger engagement, faster resolution, greater self-service and improved productivity.

Importantly, these experience are increasingly converging. A customer journey may 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 evolve. The value of this approach is demonstrated through customers' outcomes across both B2B and B2C commerce, generative and product experiences and AI-powered self-service, customers that report an improvement in revenue, conversion, case avoidance and cost to serve.

The following examples span distinct industries 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 source and more than 10 million documents while respecting the security and permissions attached to that information. SAP 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 governed enterprise knowledge. It also illustrates our expansion model, an initial SAP Concur deployment developed into a broader role supporting SAP's global customer experience. In B2C commerce, pardon me, Nespresso illustrates the effect that relevance 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 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. By understanding and responding with relevant products and recommendation, it can reduce friction and contribute directly to commercial performance. ADI 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, ADI reported a 20% increase in revenue tied to on-site search, a 16% improvement in conversion and a 91% reduction in its rate of search returning no results.

This aligns closely 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 entitlements and highly specialized buying journeys. Those requirements align directly with Coveo's platform strength and are creating a growing pipeline of opportunities as customers seek to unify product discovery, purchasing guidance and post-purchase support through a single intelligence layer.

Coveo brings those input together so buyers can find the right product and information with less effort. Finally, F5 provides another example of generative AI delivering tangible operation benefits. By using Coveo generative -- sorry, by using Coveo's 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% uplift in feedback on knowledge articles above the industry benchmark referenced by the customer.

In an enterprise setting, generating an answer is not enough. It must be relevant, 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 value it delivers that demonstrate Coveo's ability to transform complex enterprise data into relevant trusted experience that produce meaningful quantifiable business results. Another important growth opportunity is our partner channel.

Technology partners and system integrators, including Bell, Ateko, SAP, Perficient, AWS and Deloitte are bringing Coveo into 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 modern 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 a particular user and use case.

We make that intelligence available in 3 ways: through fully managed Coveo's applications, through specialized search discovery and merchandising agents, and through APIs in our hosted MCP server, which allow personal assistants and third-party agentic platforms to access enterprise information through Coveo. This architecture reflects an important principle. Customers should retain choice. As such, our strategy is deliberately interoperable. Customers can use Coveo's application, connect Coveo to leading AI assistants or embed our capabilities with their own agentic platform. Enterprise are adopting multiple models and agentic frameworks that will continue to change.

Coveo remains agnostic to the source system, an experience and large language model, providing consistent retrieval, context, security and governance across the environment. This flexibility protects the customers' investment and expands the experiences our platform can support as commerce service, workplace and website journeys become more conversational and interconnected.

I will now turn to our financial profile. Coveo operates a subscription-based business model with contractually committed volumes for the term of the agreement. Our contracts are predominantly multiyear, generally 3 years or longer with annual billing typically paid upfront. This structure provides a high degree of recurring revenue visibility. We primarily serve enterprise customers with average ARR of more than $220,000 per customer. Under our land and expand 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 core 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 while materially improved 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 the 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 AI conversations are evolving. Generative AI is now part 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. They need secure, relevant govern AI experience. We are particularly excited by the opportunity in commerce, both in complex B2B environment with large distributor and manufacturer and with large B2C 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 Q2 of 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 road map. We intend to pursue these larger and more strategic opportunities with discipline by deepening our customers' relationships, continuing to invest in commerce, generative AI and agentic experiences, preserving strong gross margin and generating positive operating cash flow.

In closing, fiscal 2026 demonstrated progress in customers' outcome, strategic 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 guide our efforts moving forward. With that, I will conclude the meeting, the management presentation and turn the meeting back to Jérémie for the next steps.

All right, folks. This is Jérémie Ste-Marie, Senior Vice President, General Counsel and Secretary of this meeting. Before we conclude this meeting, we will 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 person who asked the 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 formally declaring the meeting closed. Thank you all very much for joining us today. We are looking forward to seeing you next year.

Thank you.

Good afternoon ladies and gentlemen and welcome to the Coveo First Quarter Fiscal 2027 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, July 30, 2026. I would like to turn the conference over to Adia Cadve. Please go ahead.

Good afternoon, everyone, and thank you for joining us. With me to discuss Coveo's first quarter fiscal 2027 results are Laurent Simonot, Coveo's co-founder and chief executive officer, Louis Taitou, Coveo's executive chairman, and Kevin Amell, Coveo's chief financial advisor. A reminder that some remarks made today will be forward-looking statements within the meaning of applicable securities laws, including those regarding our planned objectives, expected performance, and our outlook for the second fiscal quarter and full year fiscal 2027. These are forward-looking statements given as of July 30th, 2026, and while we believe any statements we make are reasonable, they are based on current expectations and assumptions which are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied. Coveo disclaims any intent or obligation to update our forward-looking statements, whether as a result of new information, future events, or otherwise. Further information on factors that could affect the company's financial results is included in the filings we make with Canadian Securities Regulators, including the Risk Factors section of the company's most recently filed Annual Information Form. as key factors affecting our performance section of the company's most recently filed MD&A, both of which are available on our CDARplus profile at cdarplus.ca or on ir.coveo.com.

Additionally, some financial measures and ratios discussed on this call are either non-IFRS measures, ratios, or operating metrics used in our industry. a discussion on why we use these metrics, and where applicable, a reconciliation schedule showing IFRS versus non-IFRS results are available in our press release and our MD&A issue today. Finally, please note that unless otherwise stated, all references and financial figures made today are in U.S. dollars. Our presentation slides accompanying this conference call can be accessed on our IR website under the Financial Information section. I will now turn the call over to Louis to review our platform and strategy, followed by Laurent taking us through our operational and strategic highlights of our first quarter, and we will end off with Karim taking you through the financial details and provide our outlook for the second quarter and full year fiscal 2027. We will then open the line to your questions. With that, over to you, Louis.

Good afternoon everyone and thank you for joining us. We're pleased to report another successful quarter as we begin fiscal 27. Revenue came in within our guidance, adjusted EBITDA slightly above our expectations, and once again we generated strong positive cash flow. Those are encouraged encouraging results and they reflect the discipline with which our team continues to execute. Since quarter end, we've reached another important milestone for Coveo. For the first time, we now have a customer generating more than $10 million in annual subscription revenue. We've spoken before about our strategy of building larger, more strategic customer relationships as the value and importance of our technology continues to increase.

This milestone is a meaningful validation of that strategy. It reflects not only the value customers place in our unique technology, but also their trust in Coveo as a long-term partner. So, this quarter says something even more important. It tells us that the enterprise AI market is maturing and that the characteristics that have always differentiated Coveo are becoming increasingly essential. Over the past three years, we've seen the AI market move through several phases. First came extraordinary advances in foundation models. Then came an intense period of experimentation as enterprises explored what generative AI could do for their businesses.

Today, I believe we're entering a new phase. The conversation has shifted from possibility to deployment, from experimentation to production, to measurable business value. And perhaps most importantly, buyers have become much more educated and sophisticated. Our conversations with CIOs, digital leaders, and business executives are very different from those of 18 months ago. Enterprise leaders now understand what it takes to deliver AIO. at scale and that using an AI or large language model is only one piece of the puzzle. They understand the importance of trusted enterprise context, security, governance, relevance, orchestration, and continuous optimization. They also understand that AI must work in the real enterprise, not in a demonstration, but across thousands of employees, millions of customers, many systems, and enormous volumes of information and interactions.

That growing enterprise AI literacy plays directly to Coveo's strength. We're also seeing a healthy impatience around return on investment. Organizations are no longer satisfied with demonstrations or isolated pilots. They want measurable improvements in customer experience, employee productivity, digital commerce, and operational efficiency, with the P&L and balance sheet keeping the score. They want AI that delivers business outcomes, and that is exactly where Coveo has always focused. At the same time, another important evolution is underway. Over the past two years, much of the market's attention has understandably focused on AI infrastructure, chips, cloud, and foundation models.

Those technologies are incredibly important, but attention is increasingly shifting towards applied AI, the software that actually puts AI to work inside the enterprise. That's exactly where Kaleo belongs. Our vision is to lead the experience AI market. Our technology helps enterprises compete in the experience AI economy. Because if you think about how most people experience artificial intelligence today, the most pervasive of AI for all of us is through digital interactions. We're online to learn something, to buy something, to solve a problem, to find answers, to fix something, to discover new products and solutions, to move from intention to outcome quickly and effortlessly. Every one of those moments is an AI opportunity, and every experience needs to be trusted, contextual, personalized, prescriptive, conversational, and precise. Qualities that are not humanly possible at scale without AI.

Those same expectations now exist inside every one of us. every enterprise. Businesses deliver millions of digital interactions every day to customers, partners, suppliers, and employees. Those interactions increasingly determine customer loyalty, employee productivity, revenue growth, and competitive advantage. That's the large and consequential market we're building for. Covail provides the intelligence layer that connects intricate enterprise context and data with AI models to control and optimize those experiences. Our confidence is growing because enterprises have learned important lessons over the past couple of years. They've learned that AI models do not intrinsically understand your business context.

Context is distributed across the organization in many systems and sources of data. They've learned that moving everything into one system to capture context is neither practical nor economical. They've learned that AI models are also evolving quickly, becoming more specialized and increasing commoditized. With hundreds of models now available, including the rise of open source and sovereign AI, locking into a single model is not a sustainable strategy and the cost of tokens is now a key consideration. And now they're learning that AI agents are proliferating and also emerging as a major interface for enterprise software. Our platform was designed exactly for this environment. We're independent of content and data repositories.

We're independent of AI models, which we A-B test. We deliver intelligence wherever the experience happens, on a website, in a commerce application, an employee workspace, a service experience, or increasingly through an AI agent also grounded in Coveo as the unified data and context pane. We ground those experiences in trusted, permission-aware enterprise context, continuously optimize relevance, and deliver precision at enterprise scale. So as organizations better understand the architecture required to operationalize AI, they increasingly recognize Coveo's critical role. We see that recognition translate directly into our business, customer service, Customer relationships are growing broader and more strategic. Customers continue to expand their investments with us. Seven-figure subscriptions continue to grow. And today, we are proud to have reached our first eight-figure annual subscription customer.

Those are not simply larger contracts. They're evidence that customers increasingly see Coveo as foundational to their long-term AI strategy and to the experiences they deliver across their businesses. Our partner ecosystem is also encouraging. System integrators and technology partners are investing more in Coveo enablement and bringing us into larger enterprise transformation initiatives. As enterprise AI becomes mainstream, we believe those partnerships will become an increasingly important growth engine. So, our confidence in this growth opportunity shapes how we invest. Since becoming a public company, Coveo has roughly doubled in size while building a business with strong recurring revenue, with subscriptions representing 96% of total revenue, healthy product gross margins of more than 80% and disciplined financial management.

We believe that's an important economic combination. As the applied AI market matures, we believe shareholders are best served by continued, thoughtful investment in innovation and in expanding our go-to-market capabilities each time we increase the value we create for customers, we create opportunities for larger, longer, and more strategic relationships, and strengthen our trusted brand. That's exactly the pattern we're seeing today. So looking ahead, we remain very optimistic. We believe experience AI will become one of the most important applications of artificial intelligence for enterprise competitiveness. Organizations will increasingly differentiate themselves through the performance of the digital experiences they deliver. And we believe Coveo is uniquely positioned to make those experiences trusted, intelligent, and economically measurable.

Before I turn the call over to Laurent, I want to thank our employees for their commitment and execution, our customers for their trust, our partners for extending our reach, and our shareholders for their continued confidence as we built this business for the long term. With that, I'll hand things over to Laurent.

Thank you, Louis, and thank you everyone for joining us. We entered fiscal 2027 with three clear priorities. deepen our relationships with the world's largest enterprises, continue leading through innovation as enterprise rapidly evolves, and grow our business efficiently while investing for the long term. I am pleased to say we made meaningful progress against each of those priorities during the quarter. Let me start with our first priority, deepening strategic customers' relationships. Our customer momentum continues to validate both our strategy and the high-performance high economic value and uniqueness of our platform. We see this as a key to increase sales, deal size, and the strategic value of Coveo to our customers. During the quarter, we expanded relationships with customers including Nespresso, ADI Global, Enbridge, Linda Agee, and others, while also signing another seven-figure subscription with a Fortune 500 leader in healthcare distribution.

These wins reinforce that as enterprises move from the experienced AI era, competitive advantage increasingly comes from the quality of the digital experiences they deliver. Our customers are no longer buying isolated AI capabilities. They are standardizing on our platform across their digital experiences. experiences capabilities. We enabled them to compete in the experience AI economy by securely connecting enterprise knowledge and product catalogs, grounding AI in trusted context, and continuously optimizing customer and employee experiences at scale. That is exactly where Coveo was differentiated. Turning now to our second priority, continuing to lead through innovation. Innovation continues to be one of our strongest competitive advantages, and a market adoption we're seeing across our newest AI capabilities reinforces our conviction that we're investing in the right areas, what our customers care about.

Our conversational search solution is now live in production with customers while several dozen additional organizations are actively evaluating it. We're also seeing stronger early demand for conversational product discovery with customers onboarding and many others progressing through evaluations. During the quarter, we introduced merchandising co-pilot, and we're seeing strong early adoption. The majority of merchandisers using the product engage with it at least once each week, demonstrating that it is becoming a regular part of their merchandising workflow. Even more importantly, a growing number of merchandisers are leveraging our AI recommended actions to automate storefront optimizations. In some customer environments, AI-driven actions have now surpassed manual merchandising actions, offering an early glimpse of how AI can evolve from assisting teams to actively operating parts of the business. A broader product strategy remains centered on customer choice and interoperability.

Rather than locking organizations into a single model or AI ecosystem, Covil provides the trusted intelligence layer that enables customers to adopt the AI technology of their choice, while ensuring those systems are grounded and secure, governed, and highly relevant enterprise knowledge. Let me bring that strategy to life with two customer examples. Netcash is one of Australia's leading distribution business across food, liquor and hardware, generating nearly $15 billion in annual revenue and facilitating more than $4 billion in B2B e-commerce sales. By bringing together information from Adobe Magento, SAP, and Salesforce, Clio created an intelligent experience that understands bulk products and customer context across the buying journey. The results at Medcash have been exceptional. Revenue per visit increased by more than 25%. Conversion improved by more than 30%.

An average order value increased by more than 10%. Just as importantly, shortly after going live, Netcash expanded its relationship with Avail beyond commerce into supplier-facing workflows, extending both our AI search and our generative AI capabilities. That is exactly the expansion motion we strive to create. We deliver measurable business outcomes, and this leads to broader strategic adoption across the enterprise. Lynda is another excellent example. As one of the world's largest industrial companies operating across more than 80 countries with highly technical products and complex global operations, Lynda requires AI that performs reliably at enterprise scale. We initially selected Coveo to power their B2B commerce search experience in a single market. Since then, they have expanded our platform across additional markets and languages while partnering with us across a broader vision of unified, intent-driven experiences that seamlessly connect product technical guidance, and post-purchase support.

We believe that vision represents the future of enterprise commerce, and Lynda is helping shape that future alongside us. Finally, I'd like to touch on the largest transaction in Coveo's history. As we mentioned earlier, shortly after quarter end, we closed the largest transaction in Coveo's history, expanding our relationship with a Fortune Global 500 technology leader to more than $10 million in annual subscription revenue. I could not be more excited about this and what this means. This customer now relies on Coveo across multiple strategic AI experiences spanning both customer facing and internal applications. Our platform also serves as the grounding and intelligence layer behind their authentic AI initiatives. What makes it truly meaningful is what it says about the market.

This is one of the world's most sophisticated technology companies. They understand AI deeply, work directly with frontier model providers, and possess world-class engineering talent. yet they chose Coveo as the strategic platform for enterprise AI. Let me close with one broader observation. When I step back and look across these customer examples, I believe they all reinforce the same conclusion. These organizations have the technical capability to build many things themselves and the authority to engage any technology vendor relationship. Building enterprise AI at high scale and precision that consistently delivers measurable business outcomes requires much more than integrating a large language model. It requires trusted enterprise context, secure and permission aware retrieval, governance, continuous relevance optimization, interoperability across rapidly evolving AI ecosystem, and the ability to deliver those capabilities consistently at enterprise scale.

Those capabilities are not commodities. They represent years of investment at Coveo, deep domain expertise, and proven execution working with hundreds of the world's largest brands. That's why sophisticated organizations continue to choose us. As enterprise AI moves from experimentation to production and real results, our customers increasingly question their ability to build these capabilities themselves. We give it to them out of the box, flexible, precise, secure, and cost-effective, and we keep them in tune with future AI innovation. The customer momentum we're seeing gives us real confidence that our strategy is aligned with where the market is heading, that our timing is right, and that we're a market taker. We solve some of the most important challenges in enterprise experience AI today, and that we're well positioned for the opportunities ahead. As a result, our third priority is growing our business efficiently.

Everything I've discussed today reflects a deliberate strategy, invest behind innovation that creates measurable customer value, expand those relationships over time, and do so with discipline. We do this through a repeatable go-to-market motions and high value industries that generate viable economics. As you'll hear from Kerien, that approach continues to translate into healthy financial performance, strong cash generation, and disciplined investment as we execute against the significant opportunity ahead. With that, I'll turn it over to Karine to review our financial results.

Thank you, Laurent. Q1 reflected the themes and dynamics we outlined during the fourth quarter results. Q1 bookings were driven by our key growth drivers of commerce, including B2B, GenAI solutions, and multi-use case customers. We also closed another seven-figure transaction during the quarter, this time with an existing customer, reinforcing our ability to grow larger, more strategic customer relationships over time. Looking at profitability, we remain disciplined in our spend, allocating capital to the highest and most efficient areas. This resulted in a slight beat on our adjusted EBITDA guidance, and we generated strong cash flow from operations. Let me begin with a brief summary of our first quarter results. With the full deprecation of the legacy Qubit platform, all SAS subscription revenue came from the CoveoCore platform, which saw an increase of 13% compared to the prior period.

Including QBITS, just subscription revenue was $37.4 million, an increase of 9% compared to the prior period. Total revenue was $38.5 million, an increase of 8%. of gross margin was 81% and gross margin was 78% comparable to the prior period. Adjusted EBITDA was 0.1 million compared to negative 1.9 million in the prior period. Cash flow from operating activities was $9.2 million and consistent with our seasonal trends aided by positive working capital fluctuations. Cash and cash equivalents were 107.1 billion as of June 30, 2026, and we remain debt-free. NER platform, which excludes the impact of Qubit, was 102%. Including Qubit, NER was 99%. Subsequent to quarter end, we renewed our NCIB, giving us optionality to repurchase approximately 5.1 million shares over a 12-month period.

And finally, as you've heard from Louis and Laurent, in the first few weeks of July, we closed the largest transaction in the company's history, bringing the total annualized SaaS subscription of this customer to eight digits, an important milestone for us. Looking beyond the financial results, let me spend a few minutes on key booking trends we saw during the quarter. In Q1, we secured another seven figure transaction with an existing customer, a Fortune 500 leader in healthcare distribution. After successfully deploying Coveo to enhance its contact center and self-service experiences, the customer selected us to power its B2B commerce experience as well. This is exactly the type of expansion we aimed to drive, growing across additional use cases within our core ICP of large complex enterprises. The relationship with this customer began with a low six figure subscription and has now grown to more than 1 million in annual recurring revenue, illustrating both both the breadth of our platform and the strength of our land and expand model. Generative AI continues to be a meaningful driver of our bookings this quarter, representing approximately 30% of total bookings in Q1.

More importantly, we're seeing a clear shift in customers' buying behavior. As organizations move beyond AI experimentation towards production deployment, they are increasingly designing AI into their digital experiences from the outset. Our generative AI capabilities are increasingly at the center of initial customers' conversations. As I noted last quarter, this creates a compelling land and expand motion, enabling us to establish strategic relationships earlier and expand adoption across the enterprise over time. On the innovation front, as Laurent discussed, we're encouraged by the early adoption of agentic AI capabilities, including search agents, conversational product discovery, and merchandising co-pilot. From a financial perspective, these innovations create new ways for customers to engage with the Coveo platform, expanding the number of use cases and user interactions we support. As a reminder, our customers subscribe to the Coveo platform by committing to a defined level of annual platform consumption which provides us with a predictable base of recurring revenue.

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. Moving now on to customer expansion and retention. Our reported net expansion rate, excluding legacy Qubit customers, was 102%, and 99% including legacy Qubit customers. As we've discussed previously, we continue to view this metric in the context of the broader evolution of our customer base. Our strategy cohorts, including customer using B2B and B2C commerce solutions, customers with multiple use cases and those adopting our GenAI solutions continue to expand at a higher rate than our reported NERs, while legacy cohorts continue to wait on the consolidated metric. Again, shortly after border ends, we closed the largest extension in our history.

While the timing of large expansions can create quarter-to-quarter variability in our NER, we believe this transaction reinforces the strength of our expansion motion and our ability to grow alongside our customer over time. Turning to guidance, our outlook remains aligned with the plan we outlined at the beginning of the year. We continue to see ongoing customer adoption, expansion across our strategic customer base, and an active pipeline of strategic opportunities. At the same time, as we've noted previously, the precise timing of large transactions remains difficult to forecast. As a result, we are reaffirming our full-year fiscal 2027 guidance, which we believe appropriately reflects both the underlying fundamentals of the business and the normal timing variances. associated with large and complex opportunities. As such, we expect Q2 self-subscription revenue to be between $38.5 and $39 million, representing approximately 10% to 12% growth on the CoveoCorp platform. due to total revenue to be between 39.7 and 40.2 million. For the full year, we expect SaaS subscription revenue to be between $154 and $158 million, representing approximately 10 to 13% growth for the CorreoCore platform.

And we expect total revenue to come in between $160 and $164 million. On profitability, we remain focused on making the investment that we believe will drive medium to long-term growth. At the same time, we continue to allocate capital with a disciplined focus on the highest return opportunities and operating efficiency. As such, we expect Q2 adjusted EBITDA to be between 0.5 and 1.5 million. For the fiscal year, we expect adjusted EBITDA between two and seven million. And finally, we expect to generate operating cash flows of more than 10 million for the full fiscal year. Note that we will have some quarter variability here due to timing of working capital.

In summary, the underlying trends in our business remain healthy. We're seeing continued demand for large enterprises, customer expansion, and early adoption of our AI innovation. Her strategy remains unchanged, and this gives us conviction in the long-term opportunity ahead. With that, Operator, please open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have question, please press the star followed by the number 1 on your touchtone phone and you will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press the star followed by the number two. moment for your first question. And your first question comes from the line of Athanasios Mouskopoulos of BMO Capital Markets. Please go ahead.

Hi, good afternoon. Maybe just starting off with the eight-figure customer, can you provide some color in terms of what drove that? upsell. So was that a function of the customer adding a use case? Was it just adding regions or product lines or.

you know, their increased usage of the platform? What was the catalyst there? Python, it's slow here. So, So it was an existing customer that where with Coveo created a lot of value over the past 18 months and Coveo became an integral part of their AI infrastructure strategy. So they expanded in both new use cases, more experiences, And more consumptions, more languages, for instance. So it's all of the above, Donis.

David Chambers- Good to hear. And you recently appointed a new head of sales. its early days, but just any initial thoughts in terms of, you know, changes or tweaks to the go-to-market strategy, or is it more just about maintaining the strategy but improving execution?.

Yes, absolutely. And Thanos, as you know, we're investing in both our new and existing customer motion. We continue to strengthen our leadership bench. Last quarter, we announced the arrival of our new CSO that is focused on new customer motion. So it's been... It's been arrived in 30 something days ago. So far, so good with progress, but the general picture here is we're strengthening our bench. We're investing in this team that is greatly positioned to go after the opportunities in front of us.

Okay. And just on that note, I guess the problem question is, you alluded to how the conversations are becoming more strategic. larger in nature. And so as you think about the motion needed there, Is there some upskilling of the Salesforce required? Do you have the right team in place for that? How has that changed your thinking in terms of as you execute on those larger deal sizes?.

Yes, Thanos, Louis, I'll answer the first part of that question. We're seeing a meaningful difference, as in the prepared remarks, in terms of the strategic nature scope, value of the conversations with the customers who, as we said, realize the importance of the Coveo infrastructure to essentially make AI work in a trusted way. That leads to some pretty interesting... dynamics in terms of how we deploy our sales motion. In particular, Laurent commented last quarter and this quarter on the forward deployment engineering function, which is essentially designed to help customers understand the art of the possible, discover value, opportunities, and essentially, in our case, we have a very agile model to prototype abilities within a matter of days and weeks you know which leads to in Increasing account executives and we have account managers for the install base, complemented with the technical and business expertise, as well as the financial analysis and ROI analysis and et cetera. So it's continuously evolving and we're Perfecting that model and, you know, as we nail the model, we certainly are ready to invest and scale it.

If I may, just as a compliment, basically what we're seeing is the more we're doing up front to reduce the risk and eliminate the risk and the crystallized value up front, of course, we increase the probability of a larger deal and faster. We adjust with the timelines of customers. and prospects, but we see great value in investing in front with those motions of FDEs and the business value experts.

Alright, thanks for the call. I'll pass the line. And your next question comes from the line of . Please go ahead.

Good afternoon, guys. My first question, I wanted to touch on net new deals. Can you speak a little bit about how average deal sizes here have been trending and and um and what's been changing and how net new customers are procuring your your offering and just wondering if there's you know there's more um assessment pre-sales activity that you're seeing? Is there multiple use cases out of the gate now and our partners being more involved? I'm just curious kind of what's changed in the overall end-to-end sales process,.

in the past year. Thank you, Sutan, for your question. I would say that we didn't see a major shift into what we had seen and we've talked about and what you've heard from us in the last couple of quarters. Our unit economics are trending in a better direction. We're happy with the opportunities and the logo we're engaging with. Over time, yes, we're seeing the average deal-by-value growing. So I would say that this quarter aligns with what we've seen in the last couple of quarters. Okay, great.

know shifting the lens to your existing customer base and more specifically the legacy cohort what's the strategy in navigating that base you know it feels like it's more of a it's more a question of when not if GenAI becomes a more important strategy for this cohort. guys um you know positioning for that opportunity and and what's the strategy there.

Yes, hi, Cévennes, Louis. Maybe I'll start by saying that what we call the sort of legacy cohort is, again, the minority of our AIR, which has not yet transitioned to GenAI, to your point, and agent tech. We can't predict exactly how every one of them will, but to your point, I think I'm repeating what you said. I agree with your statement that the future is generative and agentic, and we're obviously designed for that. There are two things that happen here. We're obviously working to, you know, for those of them who don't feel the burning desire to move quickly on that, we're working hard to keep them. and renew their subscription. As we said before, you know, smaller customers that have bought a search engine on limited content and et cetera for let's say 50K a year or whatever, you will understand that this is not where we put our major investment in. And then the second thing is, We're working to obviously transition particularly all the enterprise, the larger enterprise of this cohort, we're looking to, we're working to grow them.

Again, in line with our prepared remarks, We're seeing more opportunity as the understanding and the literacy of these customers increases on And they appreciate you know you know, the part of the stack that Coveo brings. So that's sort of the color of that cohort. On the flip side, the vast majority of our, well, the majority of our area is the strategic cohorts. That's commerce, B2B, industrials, distribution, large enterprise, knowledge verticals, multi-use case customers, etc. So those in this case are expanding. We said on the last call we qualified it as high double digits. you know it's it's a very very healthy segment so so that's that's sort of the dynamic we're in right now Obviously the legacy brings down our overall metric, But from an NER perspective and a growth perspective, the company is clearly designed to serve the majority of our ARR and where we're focused. Maybe Kevin wants some numbers and colors.

Well, I think there is not much. I think your answer was pretty consistent. And I would say, you know, The Q1 went pretty much in line with what we were expecting. So, yes. Yes.

Okay, great. And just the last one for me, you guys have been seeing sustained strength here in commerce. Genting Commerce as a theme, it sounds like it's gaining a lot of momentum here. How are you guys positioned to play into that theme? Yes.

Thank you for that question. So, first of all, you have to remember that Coveo is built expertise in both dealing with complex catalogs and commerce and also a design. advance knowledge over the years. So what we're now doing is support classic e-commerce with someone that will navigate through category pages and do search and semantic search, but then also deal with more advanced conversations where you provide a more generic, general query that may have an outcome of buying something or getting more information on something or getting support on a product and this applies in retail and b2c but even more into industrials and distribution So, we're quite excited about this one. As we said in the prepared remarks, we have customers that are running production right now and a lot in pilots. So that's an area that is highly strategic for us in the future. And maybe I should add, so then an area where we're highly differentiated because to Laurent's point, we understand semantic, we understand content. You know, Coveo grew in that world of very advanced long tail intricate customer support in particular, where, you know, deep engineering and knowledge conversations. and so on is the norm. And so new shopping experiences require not only the SKU itself, but everything around the SKU, not only the metadata, but all that.

If you think about a chainsaw at a DIY supplier, you will index all that. all the engineering manuals, the user manuals, maybe the customer comments and all the service records of that particular system. And so you end up in the industrial world where they may have 2 million parts. for after market and complex diagnostic and engineering documents and etc. And you combine all of that to create a unified experience And that's pretty unique to Coveo because of our ability to merge and blend both the commerce and the knowledge experiences, which is now becoming the norm in enterprise commerce, both in B2C complex commerce and particularly in B2C.

be. Great. Thank you for taking my question. I'll pass the line.

And your next question comes from the line of Paul Traber of RBC Capital Markets. Please go ahead, Paul.

Thanks for taking the question. Good afternoon. You mentioned in the prepared remarks that you're seeing increased engagement with systems integrators. Can you speak to the magnitude of that impact and the change? And also just generally speaking, with larger deals in your pipeline, how has the.

smaller value of your pipeline changed over the last several quarters? Yes, Paul, hi. Thanks for the question. As you know, we don't report on pipeline, but we would qualify the pipeline as healthy. And certainly growing in volume. strategic value, which links it to the first part of your question. Systems integrators are also feeling the maturing of literacy of customers, I would say combined, and we talked about it briefly, but combined with a very healthy impatience on the part of customers. It is a fair qualification. We see it enough where customers can no longer wait. They need to see the P&L impact. of AI, enough AI talk essentially, and show me AI results. And so that pressure is there. is certainly felt upon the system integrators that in turn, you know, want to be at the center of AI transformation and then turn to us and probably other companies that can deliver.

But, you know, I would argue that it's not the majority that can deliver at that scale. And we're certainly one of them. And so, and we can prototype that, as I said, within days and weeks and show. And so they increasingly come to us, you know, because they propose to their clients, you know, an AI transformation. They have the pressure to show results quickly to continue to expand that transformation. transformation and they need our technology to ground these models. In particular that CIOs no longer want to lock themselves into any particular model and they're seeing the increasing cost of tokens and etc. So all things that Coveo helps them manage and deliver.

So that's really how I would qualify it. And of course, it's a very positive tailwind for our business.

And just on partnerships, specifically speaking to the LLMs, you mentioned wanting to be agnostic. Is there an opportunity to go deeper with the LLMs in terms of creating partnerships with specific ones? I just mentioned this in light of one of your search competitors did announce a deeper partnership earlier today and so just what's your thoughts on going deeper with the LLMs?.

Hi Paul, this is Laurent. Thank you for your question. So, our strategy is really to focus on agnosticity and interoperability, which in plain English means that we're going to adapt what our customers want to use. Large language models have different characteristics in terms of cost, in terms of speed in terms of reasoning capability. And it depends on the use case where you want to use, that customers want to use. So while we may have different partnerships with different LLMs in the future, we really build our.

architecture to support what the customers want and optimize for scale for cost depending on the use case? Paul, as we speak, there are 62 vendors or 63 vendors of large language models and about 460 plus models. And that number keeps increasing. So Models are both commoditizing, specializing with open source and sovereign AI on the backdrop across the world. And so that creates a dynamic where, you know, if you go back just three years ago when LLMs came out, many, many companies said, oh, we're going to train our model and et cetera. That all went away. Then some of them said, no problem, we're just going to get tokens from OpenAI through Azure credits or whatever, and we're going to dump it in our data. You know what? It didn't work. So, you know, that's we I hate to say it, but we predicted that we've mentioned that all along. I don't think the market was either ready or educated enough to understand it today.

Today, CIOs do. And, you know, all companies, in our view, will run multi multi models. So the idea of locking ourselves with one particular provider, we did see the elastic deal and we understand why. Of course, customers want to have an intelligence layer to organize their information so they can ground it into AI applications, and Elastic didn't have that. And OpenAI needs something like that underneath. But our customers, again, as Laurent said, are looking for agnosticity and interoperability. And we continue that is our that is 100% our strategy and we're absolutely convinced of that and the reason we're convinced of that Is we talk to CIOs every day?.

Okay, thanks for that. I'll pass on. And your next question comes from the line of David Kwan of TD Collin. Please go ahead.

Good afternoon. Just getting back to that 10 million plus ARR customer, can you comment on how much they were spending with you beforehand and how much the incremental is?.

No, David. As you know, we don't provide details with any particular transaction. We did mention this eight-figure deal because we think it's a very important milestone for us and we're really proud of that, but the intent was not to speak to one specific customer here.

Okay, can you say, Crin, maybe this 10 million error is Is you're realizing that right now or is it going to take a while to scale up to that?.

No, no, we're realizing, as you know, like a rateable model, when we report something in our bookings is because, you know, we're ready to recognize the revenue on that transaction.

Okay, that's helpful. Thanks. And then in terms of the guidance, they didn't change for fiscal 27. Is that because you guys were already baking this into the guidance already or maybe just being a bit conservative given the macro? Yes, thanks, David, for your question. I mean, look, this is the first quarter.

So we met a couple weeks ago and the Q1 went broadly as we expected. We're happy, we're pleased with the execution. As I said in the prepared remark and on the call, the largest variable for the balance of the year remains the timing of some of the larger enterprise transactions. And, you know, given that dynamic, reaffirming the guidance, we believe was the appropriate approach at this stage of the year.

I appreciate the color, Corinne. And maybe just one last question, just on cap allocation. I didn't buy any shares back this quarter despite kind of the shares trading at or near all-time lows. Can you comment on the rationale for that and how you're looking at capital allocation going forward? Sure.

Yes, thanks for your question, David. As you alluded to, indeed, we didn't buy back in Q1. By nature and seasonality of reporting, as you know, we really have a small window where we can buy back in Q1, given the blackout periods, the statutory blackout periods. Look, David, I mean, we've been active in buying in the last years through CIB and NCIB. We just announced that we renewed our NCIB in July for the next 12 months. We maximized it to like 5.1 million shares that we can buy that. And as usual, we'll remain disciplined and thoughtful, thorough our capital allocation and what drives the highest value for shareholders on the long term.

I appreciate it. Thank you. Your next question comes from the line of Koji Ikeda of Bank of America. Please go ahead.

Yes. Hey, guys, thanks so much for taking the questions. I wanted to ask maybe another question on that $10 million deal and not on that deal, but how that deal relates to the pipeline. Meaning, how many other prospects do you have in your pipeline are kind of deep in discussions at that type of level, maybe $5 million? plus in ARR. And is that something you could speak to and maybe help remind us, like, what is the historical conversion rates of deals of this size and like sales cycles? Thank you.

Hey, Koji. I'll start by saying that first of all, this deal was an expansion. I think for now at this stage of the company, the company growth and history, The motion is probably not to land an initial $10 million plus customer, but likely to land a seven-figure customer and grow it over a reasonably short period to multiple seven-figure and and then more. Obviously, that's not average. What's important to us here is the value, is the threshold in terms of the capability of the technology and the firm to generate that kind of value across multiple use case. It's also a demonstration of the Coveo vision, of the need for a single spinal intelligence layer across data and context to ground AI as opposed to siloed AI. something that probably was not well understood or we didn't articulate it well. I think many of our customers understood it. But it's starting to materialize very, very well. Again, as Laurent said, you know, a layer of software that's agnostic to data, that's agnostic to models, that is full MCP agnostic to agents, and can be headless into NAPIs into any app.

And we continually... I believe that in the end, that's where it lands. That's what CIOs want. And so again, back to your question, Koji, don't expect us, at least we don't, We're certainly going to take the deal if we see more, but don't expect us over the next couple of quarters to land a deal of that magnitude, but we certainly have customers that have potential to grow in the future.

in that kind of zip code over time. And if I may add, Koji, I mean, look, the five last quarters, four out of those five, we reported a seven-digit transaction, either expand or lend. These are the type of transactions we're looking to see, looking forward, and you asked a couple of questions around pipeline and pipeline. so on. I mean, you know, I think the evidence I just talked about, meaning us delivering on those transactions, speaks to it. On top of it, Koji, what I would add is, you know, either the customer growing to seven digits or lending to seven digits. The way I look about pipeline is the texture or the brand, the potential they have with us, Like, are they looking for, you know, are these distributors that we know we can help a lot and so on? And when I look into this, I'm happy where we are. Yes, Koji, if I may add, I want to comment on that.

I think if you think about Coveo, you know,.

We were obviously historically, I think the company grew as you know in search, you've been following the company for some time. Generative AI hits, initially people say search is dead, full reversal of events. People now see search and relevance technology as the grounding layer to control and govern AI, which is growing in diversity. Initially, if you go back a few years ago, obviously our average deal size was smaller and we were probably a little more transactional. I think today, to Kerrigan's point, we look at long-term customer margin value and margins at 80%, so it's pretty easy calculation. That's what really matters is when you look at your CAC, your customer acquisition costs relative to the type of customer you go after, you create an educated view of the long-term customer margin value. Take 15 percent IRR, for instance, on top of your of your CAC.

And so we're much smarter about that. I would say we're much more intentional. We're much more focused about going after these types of verticals that have this potential to grow. And so, you know, and that starts before the land, you know, and obviously through the expand. So I guess that gives you a little sense, perhaps a little color on how we've evolved the business and how we manage and focus the business.

Got you. Thank you so much. And maybe just a follow-up here. You know, one metric that I stare at a lot for you guys is net expansion rate. And so it sounds like with all the expansion and deals and pipeline, I mean, is it safe to say or, you know, assume that net expansion rate.

your NER is kind of stabilizing here at 102 and should expand from here, and is that is what's embedded in your assumptions and your guidance? Thank you. Thanks, Koji. As we've discussed, the timing of large enterprise expansion can create quarter over quarter variability in NER. And you've heard me say from us, the largest expense transaction in the historical shortly after a quarter end. So, as you can imagine, you know, if we were were to take a picture today of the NER, it would look different than the picture we've taken on June 30th. The more important thing here is that we focus on strategic customer cohorts. We continue to exhibit stronger expansion characteristics. We've talked about this large transaction and we also talked about about the customer expanding to B2B commerce on the prepared remark.

We believe those transactions talked about the strength of our expansion motion.

Hey, Koji, the top 20, we reported last quarter, the top 25 customers of the company you know, north is that all seven figure that cohort grew north of north of 150% over the past three years. And so, you know, and again, in the strategic verticals where we operate work, we're growing the NER obviously is above double digits, so is double digit plus. And so overall, obviously it's a blend, but the straight answer to your point about 102 is absolutely not. absolutely you know we're absolutely not aligned on that not even close.

Thank you. And there are no further questions at this time. I will now turn the call over to Lauren.

raw simony you may continue okay great so thanks everyone for joining us today and i want to thank all of our shareholders for their continued support. Looking forward to updating you on our progress during our Q2 FY27 results. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good afternoon, ladies and gentlemen, and welcome to Coveo Fourth Quarter Fiscal 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, May 27, 2026.

I would now like to turn the conference over to Adhir Kadve, Head of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us. With me to discuss Coveo's Fiscal Fourth Quarter and Full year 2026 results are Laurent Simoneau, Coveo's Co-Founder and Chief Executive Officer; Louis Têtu, Coveo's Executive Chairman; and Karine Hamel, Coveo's Chief Financial Officer.

A reminder that some remarks made today will be forward-looking statements within the meaning of applicable securities laws, including those regarding our plans, objectives, expected performance and our outlook for the first fiscal quarter and full year fiscal 2027. These are forward-looking statements given as of May 27, 2026. And while we believe any statements we make are reasonable, they are based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied. Coveo disclaims any intent or obligation to update our forward-looking statements, whether as a result of new information, future events or otherwise.

Further information on factors that could affect the company's financial results is included in the filings we make with Canadian securities regulators, including in the Risk Factors section of the company's most recently filed annual information form as well as the key factors affecting our performance section of the company's most recently filed MD&A, both of which are available on our SEDAR+ profile at sedarplus.ca or on ir.coveo.com.

Additionally, some of the financial measures and ratios discussed on this call are either non-IFRS measures, ratios or operating metrics used in our industry. A discussion on why we use these metrics and where applicable, reconciliation schedules showing IFRS versus non-IFRS results are available in our press release and our MD&A released today.

Finally, please note that unless otherwise stated, all references in financial figures made today are in U.S. dollars. Our presentation slides accompanying this conference call can be accessed on our IR website under the Financial Information section.

I will now turn the call over to Louis to review our platform and strategy, followed by Laurent, taking us through the operational and strategic highlights of our fourth quarter, and we will end off with Karine taking you through the financial details and providing our outlook for the first quarter and fiscal 2027. We will then open the line to your questions.

With that, over to you, Louis.

Thanks, everyone, for joining us. Fiscal Q4 was a record fourth quarter in new business bookings performance and another quarter of new customer strength. So we're ending fiscal '26 with the best new business bookings year ever. We also posted $13.7 million of operating cash flow in the fourth quarter and maintained the breakeven levels we had guided for the year, all this while continuing to scale revenue. Laurent and Karine will discuss the details.

We attribute this performance to our focus on both our generative AI solutions and our go-to-market and strategic growth areas where our technology is highly differentiated and where the economics are very strong for both Coveo and our customers. I want to help investors understand our market dynamics, what we're hearing from customers and why we see growth in core markets in this new generative AI and agent era. AI is at the center of every enterprise technology conversation, but the market is still noisy. Customers are still figuring out the stack required, how they can deploy AI to create real durable business value. We don't believe AI will simply replace enterprise applications as perhaps the so-called [ SaaSpocalypch ] suggests.

Instead, we think AI will become a new operating layer across the enterprise data and that the strongest software platforms are integrating AI to make their applications more intelligent, more automated and more valuable. And this is where we believe Coveo is extremely well positioned and that this trend increases our value. We provide foundational technology that makes enterprise AI work accurately, securely and at scale across all enterprise data. The leading brands we deal with have realized the need for this, and there are 3 reasons.

First, none of the AI works unless it understands your context. In the enterprise, that context lives in the company's broad data. Much of it is unstructured, distributed across systems and governed by complex permissions. Large language models do not intrinsically understand a company's products, inventories, customers, documents, conversations, contracts, processes or business rules.

The second reason is that generative AI is powerful because it can stitch together information fragments from many sources and bring those in context, generate novel, useful answers or actions in real time at large scale. AI models alone are probabilistic, but enterprises need to avoid hallucinations and force permissions and control trusted outcomes and accuracy. High-precision AI outputs is the norm.

The third reason is that many companies first tried to build these capabilities themselves, and they're reaching the same conclusion that enterprise AI success is not just about picking AI models. It's about data, relevance, security, governance and measurable business value. In fact, models are multiplying and agent pick evolves quickly. So preserving flexibility and interoperability is key. The ability of different artificial intelligence models, agents and systems to seamlessly work together across broad data.

So net-net, 2 things are necessary, and Coveo does both. First, reaching data everywhere it sits is key. If you can use search to bring it together for AI context, that's a good start. Then grounding AI models with high contextual relevance is also key. So tech that can figure out relevance is a second critical piece. For more than 15 years, we've built our platform deploying successfully within thousands of use cases with customers globally, combining indexing, search, semantic, vectorization, machine learning, deep learning, relevance control, personalization and now generative experiences, AI applied in production and producing real business outcomes.

Coveo has now evolved as the trusted relevance and context layer for enterprise AI. And that context window is a very precious piece of the enterprise applied AI stack in digital. Without it, it doesn't work. And AI models alone do not provide that infrastructure. And so it gives us confidence in Coveo's long-term position and value as enterprises move to AI deployment at scale. Here are some practical examples.

In the quarter, we signed significant deals with several new Fortune 1000 customers in the B2B industrial, manufacturing and distribution sectors. Last earnings, we discussed the massive economics and competitive gains derived from our AI solutions across this B2B industrial sector. These large-scale companies know a thing or 2 about AI. Many have strategic partnerships with the leading AI companies in the Magnificent 7 and access to all the models and commercial agents, OpenAI, Anthropic, AgentForce, et cetera, yet they use Coveo for their AI stack. Laurent will discuss the reasons, customer examples and the high ROI in more detail.

Over the recent years, Coveo navigated successfully through what we believe is the most profound transition ever in the tech industry from AI search in the pre-generative AI era to now the GenAI and agentic era. GenAI has redefined our market and almost every industry. Our company evolved as a result. First, our consolidated growth and net expansion metrics continue to reflect the broader evolution of our customer base. This includes certain more mature cohorts traditionally in service and workplace, for example, with simpler search use cases. These cohorts tend to have a more moderate renewal and expansion profile. We continue to thoughtfully manage and support them while directing incremental investments towards larger, more strategic customers operating in complex digital environments. This is where Coveo's relevance and AI capabilities are more differentiated. We seek to bridge those into our more advanced GenAI and agentic solutions.

That being said, our strategic growth areas tell a very positive story. Those are B2B, commerce, GenAI and large complex enterprises deploying Coveo across multiple use cases. This cohort forms the vast majority of Coveo's overall ARR, almost all of our new logo acquisition focus in sales and all of our new customer bookings in fiscal '26. and those segments are growing fast with robust net expansion rates. I think this is an important message for investors. Coveo is not only participating in the GenAI transition, we're performing strongly and taking share in the solutions and segments that matter most for our future growth, winning in the new generative AI and agentic era and in the large enterprise B2B market segments.

As the market continues to gain greater clarity and education, the team is focused on execution, conversion visibility, solid customer economics and more and more proof points. The success in our strategic growth areas reinforces our conviction in our long-term strategy and durable growth. This is where we invest. As we've discussed before, we also continue to see opportunities on home soil as both Canadian public sector and regulated industries seek to accelerate sovereign AI deployments. To that effect, we've announced an MOU with the Canadian government in the third quarter and now a strategic agreement with [ Bell AI Fabric ] in the fourth quarter. At this time, given the scope, geopolitics and unpredictable timing, we are not forecasting any revenue from this opportunity in our guidance. We, however, remain encouraged by the potential scale and long-term opportunity this partnership could represent.

I'll now turn it over to Laurent.

Thank you, Louis. First, I'm very proud of our team delivering this record fourth quarter of bookings as well as a year of record bookings performance in fiscal '26. These results were driven by continued strength in our core growth areas, particularly B2B commerce and generative AI. They also reflect growing conviction for new and existing customers that Coveo is uniquely positioned to solve complex enterprise AI, search, discovery and personalization challenges at scale.

This quarter, organizations, including Palo Alto Networks, [ Unomax Tires ], Elution, Intuit, Deloitte, Perficient and the Australian Taxation Office chose Coveo to power mission-critical commerce, service and enterprise experiences. We see strength with B2B manufacturers and distributors where large parts catalogs, complex buyer journeys, pragmatic content and technical service environments create exactly the challenges Coveo is built to address.

For example, what happens when a mining machine, an aircraft engine or an MRI machine goes down. Our technology can consolidate product catalogs, documents, data and context from dozens of systems into AI so that the AI can orchestrate faster diagnostics, parts, engineering, manufacturing and contractual content. This intelligence translates into better uptime and in turn into tens of millions of dollars of revenue gains for these machines. This is not something you can do easily just firing up a set of AI models, and it also requires vertical expertise. It is a difficult problem. Content is fragmented, access rights are complex, catalogs are large and dynamic and intent varies by user role, journey, entitlement and context. Coveo's differentiation is making this complexity usable by AI across both digital and agentic experiences.

Our differentiated technology enables B2B companies to industrialize generative AI and agentic capabilities at scale. We can demonstrate high ROI through fast pilots, phased rents and deliver a flexible model that works both as a complete solution and a composable platform, all with amazing simplicity and cost efficiency.

For the second consecutive quarter, we landed the largest deal in Coveo's history, another 7-figure annual subscription with a Global 1000 industrial manufacturer. This customer operates a complex $1 billion B2B aftermarket parts and service business, representing about 1/3 of their revenue and their highest margin opportunities. Their customer experience was constrained by weak search relevance and an inability to interpret complex product models, technical configurations and parts shipment requirements. Coveo will power their B2B OEM AI parts discovery and recommendations experience, unifying complex catalog structures with broad technical content across systems into a single intelligent search, recommendations and conversational experience. It applies to our enterprise-grade scalability and security with support from multiple AI models and even the customers' own LLM across millions of parts in more than [ 3 ] languages.

The conservative business case estimates hundreds of million dollars in incremental revenue over 3 years, driven by improved conversion and average order value, reduced manual maintenance and step change in SLA performance. Another new customer is a major HVAC manufacturer. They expect Coveo AI to deliver substantial ROI over the next 3 years, driven primarily by a projected lift in search session conversion with additional gains from listing page performance and recommendations led increases in average order value. The pattern for both these customers is the same. relevance and personalization precisely tuned to each customer's profile and behavior, guiding customers through the buying and product ownership journey while reducing customer effort and configuration overhead.

Our R&D investments and innovation priorities are guided by customers and by a clear view of where enterprise software is going. Workflows are becoming more AI-assisted, conversational and agentic, creating a need for AI that is trusted, secure, permission aware and routed in the right enterprise data. Last quarter, we launched our hosted MCP server to support interoperability between Coveo and the growing ecosystem of AI assistance and agentic frameworks. As enterprises adopt different AI experiences, Coveo's role is to provide a universal grounding layer, so each experience can access the right enterprise content with the right context, permissions and relevance. We are also investing heavily in the convergence of enterprise use cases to create a unified intent-driven experience.

Commerce, service and other points of experience are becoming one connected journey. We rolled out Coveo search agents to select customers, adding conversational and reasoning capabilities across these points of experience. These agents help understand what a user is trying to accomplish, retrieve the most relevant information, recommend the best next action and present it in the appropriate format, contextual experiences, intent-driven, unified and automated with AI.

For example, a commerce conversation may begin with product recommendations and rich discovery, then evolve into education, side-by-side comparison or buying guidance. With ownership, the conversation shifts towards service. The same experience can surface the right knowledge article or troubleshooting advice alongside relevant parts suggestions while maintaining context. To further support interoperability, we are also making these contextual and intent-driven experiences easily available to agentic and personal assistants. This allows Coveo to extend beyond our own experiences and into the broader ecosystem of AI assistant and agentic interfaces customers choose to use.

Looking ahead to fiscal '27, we will remain intensely customer-focused. To support that, we're transforming our customer organization around a new operating model designed to bring our teams even closer to customers and accelerate the path from customer need to product impact. This model creates a more coordinated life cycle engine built around technology architecture, outcomes and adoption. It brings together account management, forward deployed engineering, technical programs, professional services and support into unified customer motion. The goal is to provide customers with the trusted AI expertise, technical leadership and clarity they need across the full journey. We serve some of the largest and most innovative enterprises in the world. Our goal is to partner with them deeply, combine their domain expertise with our technology expertise and uncover and deliver new solutions that solve real business problems at enterprise scale, always with high ROI economics in sight.

From a financial perspective, we will continue to scale the business in a disciplined and efficient way. Karine will provide more detail, but our focus remains on building a high-margin recurring revenue business that generates positive cash flow and allocate capital towards the highest growth and highest return opportunities. We believe our business model is sound. We have a differentiated platform, a customer-centric innovation machine and a large opportunity in front of us in our strategic growth area as enterprises invest in AI-driven search discovery, knowledge and agentic experiences. The market, as Louis said earlier, is gaining clarity, and we are right there as it inflects.

Finally, I'm pleased to announce that we have hired a new Chief Sales Officer to lead our North American new customer team. This individual is a seasoned executive with more than 20 years of enterprise sales leadership experience. including executive roles at some of the largest software companies in the world. He is expected to join Coveo in June.

To wrap up, I'm very excited about Coveo's future. We're differentiated. We bring high value to customers. We have momentum in our strategic growth areas, a clear path forward and a significant opportunity ahead in fiscal '27 and beyond. And I want to thank our incredible team for their hard work throughout the year.

I will now pass the line to Karine to review our financial details.

Thank you, Laurent. From a financial perspective, fiscal '26 reflected continued progress in several of our strategic growth areas, alongside disciplined execution. We said we would focus on accelerating Coveo's core platform growth, improving bookings performance, scaling commerce and GenAI and maintaining financial discipline. We made meaningful progress against those objectives with 15% Coveo Core platform SaaS revenue growth, our strongest full year new business bookings performance to date, continued momentum in commerce and GenAI and positive cash flow.

Now let me walk you through our fourth quarter and full fiscal year results. SaaS subscription revenue of $35.9 million, an increase of 10%. With the full depreciation of the Qubit platform, all SaaS subscription revenue during the quarter came from the Coveo Core platform, which increased 14%. Full year SaaS subscription revenue was $142.5 million, growing 13% with the Coveo Core platform growing 15%. Total revenue was [ $37.4 million ] in the quarter, an increase of 9%. Full year total revenue was $148.3 million, an increase of 11%. Gross margin for the quarter and full year was 78% and product gross margin was 80% in the quarter and 81% for the full year. Adjusted EBITDA was $0.8 million in the quarter and negative $0.8 million for the full year, in line with guidance. Cash flow from operating activities was $13.7 million in the quarter, aided by positive collections. For the full year, we generated $10.5 million in operating cash flows compared to $11.1 million in the prior year.

NER on the Coveo Core platform, which excludes the impact of our deprecation of Qubit was 103%. We continue to be active on our buyback program, purchasing for cancellation approximately 1.9 million shares at a weighted average price of CAD 6.08 per share for a total consideration of USD 8.4 million during the quarter. For the full year, we repurchased approximately 4.4 million shares at a weighted average price of CAD 6.83 per share for a total consideration of USD 22 million. We maintain a strong financial position with approximately $102 million in cash and no debt.

Let me now touch on a few of the strategic areas that continue to drive performance throughout the quarter and fiscal '26. Commerce is the primary driver of our growth this quarter, representing approximately 60% of total new business bookings, remaining our fastest-growing segment. We were pleased by the momentum in B2B commerce, where we're seeing increasing demand for large manufacturers and distributors. B2B commerce was a standout this quarter with recurring new logo additions and strong new business bookings performance.

Turning to generative AI. Adoption continued to expand across both customer expansion and new logo acquisition, where our GenAI capabilities remain an important differentiator and growth driver. As we noted previously, these solutions are proving to be both highly sticky and an effective entry point for broader adoption. We see strong expansion trends for these solutions within the installed base with net expansion rate for generative AI SKUs remaining above 150%. We also made meaningful progress with new customers adoption this year, nearly doubling our GenAI customer count year-over-year. As a result, GenAI solutions now represent 13% of our total annual recurring revenue.

You've heard us speak before about customers using Coveo across multiple use cases. When that happens, we typically see stronger expansion dynamics and greater customer stickiness as Coveo becomes increasingly embedded as a strategic platform within the enterprise. During the fourth quarter, we saw continued momentum in customers expanding their use of Coveo into additional use cases. We believe there is a growing need for enterprise-grade platforms, acting as foundational layers across increasingly interconnected commerce, service, website and knowledge experiences. As these environments continue to converge, Coveo is well positioned to help enterprises deliver more unified and intelligent digital journeys.

Beyond new logo acquisition, we see expansion trends across several of our strategic customer cohorts. Last quarter, we highlighted that our top 20 customers generated a 3-year net expansion rate of approximately 150%, demonstrating the long-term expansion potential of strategic Coveo deployment and the stickiness of our platform in multi-use cases scenarios. Since then, we continue to grow the number of customers over $1 million of ARR, further reinforcing the strategic role Coveo is playing within large enterprises. More broadly, across our strategic customers cohorts, namely commerce, GenAI and multi-use case customers, we see robust net expansion rates. At the same time, some of our more mature customers cohorts expand and renew at a more modest pace than what we're seeing across our strategic growth areas. This reinforces our focus on larger, more strategic enterprise deployments with multi-use case potential, where customer outcomes and long-term expansion dynamics remain the strongest.

Moving on to guidance. We continue to see healthy customer adoption and expansion across the strategic growth areas we've highlighted. Our fiscal '27 outlook also reflects a balanced view of the broader operating environment, measured expansion dynamics within portions of the more mature installed base and the timing uncertainty associated with large strategic opportunities in our pipeline. While these large enterprise deployment opportunities remain difficult to precisely forecast given their size and complexity, we continue to progress and depending on timing, could contribute incrementally to revenue growth in the fiscal year.

As such, for the first quarter, we expect Q1 SaaS subscription revenue to be between $37.1 million and $37.6 million, representing approximately 12% to 13% growth for the Coveo Core platform and Q1 total revenue to be between $38.2 million and $38.7 million. And for the full year, we expect SaaS subscription revenue to be between $154 million and $158 million, representing approximately 10% to 13% growth for the Coveo Core platform and total revenue to be between $160 million and $164 million.

Regarding profitability, we remain disciplined in how we manage our spend and are focused on operating efficiently, balancing improved profitability with continued investment in the business to support future growth. As such, we expect adjusted EBITDA in Q1 to be between negative $1.5 million and negative $0.5 million, reflecting the seasonally higher costs we typically incur in the first quarter. For the fiscal year, we expect adjusted EBITDA between $2 million and $7 million, and we expect to generate operating cash flow of more than $10 million for the full fiscal year.

In conclusion, we're pleased with our fiscal '26 execution, including record new business bookings performance, continued progress in commerce and GenAI and disciplined financial execution. While our fiscal '27 outlook reflects appropriate caution in the current environment, we believe Coveo is well positioned as enterprises increasingly look for AI platforms capable of supporting complex and converging digital experiences.

With that, operator, you can now open the line for questions.

[Operator Instructions] And your first question comes from the line of Thanos Moschopoulos with BMO Capital Markets.

Can you expand on the go-to-market changes that you -- Laurent alluded to in your prepared remarks? Is that really about kind of leveraging FTEs upfront earlier in the process, recognizing that it's a complex technical sale? Or just what's the dynamic there that you're envisaging?

Thank you for the question. So I think we mentioned that in our prepared remarks. We are seeing more and more large enterprise-wide multi-use cases transactions. and customers. And with more AI, with more generative AI part of those deals, we feel that we need to have a greater strategic collaboration with our customers and our partners, bringing account management FDE support deployed engineers and also technical programs under one single umbrella.

So coordinating all of that to, first of all, accelerate the deployment and the success of the project, help fix some challenges in the future, if any, and grow into new opportunities is really the objective here. And this is not a new model. The -- the most -- the multiAI-first companies, I should say, are using that model, that FDE model with a lot of success. So we are accelerating that.

Great. And I didn't hear you specifically call out service. You talked about multi-use cases and B2B commerce. Should our takeaway be that you're deemphasizing your service opportunities in favor of opportunities where service is a component of a broader use case like the B2B commerce?

Thanos, it's Louis speaking. What we're seeing, as Laurent mentioned, and if you look in the numbers, we reported over the past few quarters, basically almost every quarter, 7-figure transactions. So what's really happening, and I'll start with that and dig into service. What's really happening is that the Coveo conversation is becoming much more strategic, a much larger one. And we gave examples with the B2B examples that Laurent mentioned in the industrial sector. So what's going on really is that these customers no longer look at service in an isolated way or at commerce in an isolated way. These large manufacturers, equipment companies, distributors, energy companies through -- because of the power of Coveo AI and when we show it to them, the ability to consolidate the experience and unify it and drive the experience automatically with AI through the intent.

So as you go online, for instance, and interact with a company, depending on your context, depending on what you're asking, we will branch -- you're looking for parts, you're looking to compare, you're looking for education, you're looking for part fitment, you're looking for troubleshooting or logging a case or symptoms and diagnostic. So we're really seeing that convergence right now.

The historic cohorts pre-GenAI, as you know, quite a number of them were -- Coveo was before that. 4 or 8 years ago, we have a lot of those customers that were using Coveo only for service knowledge. The bigger one of those, we talked about SAP earlier this year, indexing 43 sources and Coveo helping to dodge 1.6 million calls. Those remain -- Coveo remains a critical infrastructure for those types of environments. In the lower-end market, smaller customers, simpler use cases, no complexity, et cetera. These companies are still trying to figure out whether a model, a simple model can just answer their questions and all of that. It's no longer our market. We've evolved from that.

In go-to-market, we're really into large complex enterprises, industrial distribution, B2B commerce, tackling those bigger problems. So the net-net -- pardon me for the long question, but for everyone on the call is we're no longer seeing the world as service versus commerce versus websites and et cetera. Coveo is involved in much larger enterprise situations right now, which is to us is great.

The next question comes from the line of [ Doug Taylor ] with National Bank Capital Markets.

Perhaps a related question to Thanos is you stated in your prepared remarks that you've got these more mature cohorts in service and workplace that have lower expansion potential or profile. And then you've got these growth areas, and that's not the majority of the ARR. And perhaps I could ask you maybe to wrap some numbers or ranges around the relative mix of your current ARR base from those 2 cohorts, I think would really help us understand better and more quantifiably the trends underpinning the overall growth picture and when we can expect Coveo as a whole is going to see its growth better approximate the excitement that you're describing for your strategic growth areas.

Yes. No, very good question, Doug. And obviously, that's the right question to ask when you look at the overall numbers and trying to understand the mix. As you know, currently, we don't report by segment. So we'll see about that. But today, we report overall. What we did say and is qualified accurately is the ARR in our strategic growth areas is the majority of our ARR today. And that cohort is 2 things.

Number one is growing significantly faster than the company average is obviously, those are obviously the segments where Coveo is, I would say, is designed for, I would say, the GenAI and the agentic era as opposed to the pre-GenAI world. So we -- the net -- the headline here is we'd rather be a company that's designed for the future era than the past pre-GenAI era. And I think that's an important message, as we said. And also very positive NER metrics there.

The other portion, which is the minority of our ARR, as we said very clearly, we're retaining them at a much more modest pace. It's lower net expansion rate. And there's still -- the larger of those customers, we're very engaged in converting them to more significant AI capabilities, et cetera, because by nature, they're more complex. They need to reach more content and et cetera. The other ones, the smaller ones are the ones that are still -- frankly, the jury is still out. They're still figuring out what to do and et cetera. But we expect, given we're putting 100% of our go-to-market efforts on what we call our strategic growth areas, when we do the math, and we can't report any segment yet and any timing of that, but we're obviously going to outgrow the modest pace of the minority of the ARR, pardon me for -- I think you understand the mix here.

And so overall, while the average growth, and we're prudent with the average guidance, as you can tell, because we're dealing with large transactions and the timing of this transition. But the net-net is we're quite exciting with the growth metrics, which I would frankly qualify as significantly greater than the company averages in those strategic growth areas.

Okay. And then as we map that to the NER as a company that you've reported and some slight compression there. And I guess I got to ask, is there perhaps some gross churn in some of those, say, noncore areas that's beyond what we would have expected with Salesforce. Is there -- is that at work here? Can you speak to the renewal activity in some of those areas?

Yes. Thanks, Doug, for your question. The underlying drivers, are pretty consistent to what you've heard from us earlier this year and tonight with Louis. We got a few isolated churn events this year and more importantly, a significant one with Salesforce in Q2. Additionally, we have strong expansion across our strategic accounts like in our growth areas, we're very excited about that. And yes, what we just talked about around some more mature cohorts, of course, influences that.

But more importantly, Doug, I think when we look at fiscal '26, something we're really happy is that the new logo acquisition, so what we call internally land bookings, as we get those new customers on board, maybe you're not as familiar with our detailed math on NER. But as a reminder, we don't include those whatsoever in that metric. So as we have a greater penetration of bookings coming from new logo acquisition, of course, then that may have an impact on NER in the end. That would be how I would address your question, Doug. I hope this answers it.

Yes. I mean that helps. One last one for me while I've got you, Karine. The guidance implies a pretty steep rebound in the EBITDA in the second half of the year after Q1, which understandably is seasonally low. And I just want to unpack a bit. You've been signaling through most of last year an intent to reinvest and to some degree, that is happening still. But is there something about the market you're seeing, which is causing you to perhaps take your foot off the gas? Do you feel you've got the spend profile you need now to deliver against the growth opportunities, and we should expect more of the economics of your growth to trickle down from here?

Listen, Doug, this is a really good question. Thanks for asking. Thanks for pointing out, I mean, Q1 is highly seasonal in terms of spend, go-to-market mainly and so on. So of course, that will pick up over the next 3 quarters.

Having said that, we've been, I think, always saying and talking about prioritizing growth over profitability. We still believe this is an important assumption. What we care about, Doug, is we look at strong customer economics when we think about the money we put at play to get a customer that will drive higher margin, the recurring revenue, long-term stickiness and so on. When we look at that, this what drives investment thesis here. So having said that, we want to be operating efficiently, and we constantly revisit that as we go on.

And the next question comes from the line of Paul Treiber with RBC Capital Markets.

A question in regards to the change in the go-to-market strategy really to focus on larger, more strategic customers. When you look back over the last year, did you see higher sales efficiency on larger customers versus the smaller ones? And then looking forward over the coming year, if you're putting more dollars -- sales dollars to focus on larger customers, do you expect that will drive stronger bookings growth?

Well, I think, yes, that's certainly the objective. But yes, when what we're seeing the -- as you know, the economics of a company like ours is we run a certain -- we incur a certain expense to acquire a customer. And then that customer brings obviously, an annual contract subscription plus some degree of services, but not that much and mostly subscription and then grows over time. And it's really kind of a land and expand model and at a very high margin. We're obviously very enthused by the fact that our deal size is going up.

We have a growing number of large enterprise wins, which obviously plays very positively, Paul, on the economics. we've always been and historically up until today, disciplined, as you know, with our P&L, and we continue to be. But as we see the market opening and really inflecting and we see the metrics of acquisition with these large accounts, we would expect that these economics will get better and better.

Mind you, at the same time, as we see those wins, I think you can expect us to the last question about the EBITDA to continue to reinvest in that. We're seeing this market maturing right now. We're seeing companies making real decisions. We're seeing them compelled to deliver results and come back, as we said in the prepared remarks, to companies like Coveo and Coveo in particular, to execute on that. And so the answer to your question is all of these signals are trending in the right direction for better and better and better unit economics.

That's helpful. And then just trying to tie together, connect some of the dots with the last couple of questions just on churn. And you mentioned bookings, you anticipate bookings to continue to be strong. How do we think about the '27 SaaS guidance? You look at the numbers, the growth rate seems a little bit slower versus '26. How do you sort of bridge between that? Like what's sort of the disconnect between bookings growth and SaaS growth?

Yes. A very good question. And look, I understand everybody on the call is certainly asking the right question because it's the right question today. We're -- the high-level answer is we're taking a prudent approach in our guidance. until the timing becomes visible, particularly of larger transactions. And of course, we have, as you know, exceptional -- potentially exceptional transactions that we're not including in the guidance just because we don't understand the timing of those, and we talked about some of those in the prepared remarks.

But you're right that we -- when you look at -- you have to look -- you have to do the math, and I understand we're not breaking it down by segment again for you guys just because we haven't yet. You have to do the math on a blended basis. And that would probably be the best explanation we can give you. Karine, perhaps you can give a little more color on that one versus the other.

Yes. And as I said, Paul, on the call, I mean, there's 3 main drivers on the guidance here. We talked about those large opportunities. Look, we're super excited about those opportunities active in our pipeline. Timing could make a difference there, but just felt it was responsible from my perspective to take a prudent stance here.

Then on the second, we've talked about the more mature cohorts, right? Those dynamics are also at play in our guidance. And finally, I think in the current environment as well, world is active and so on. So it's all of that together that drove what you're seeing for fiscal '27.

Just lastly, just on gross margins is the AI costs having an impact on gross margins? Or do you see gross margins -- product gross margins remaining stable here?

Yes. Thanks. Good question. This is clearly something we monitor very closely, Paul. Of course, there were a lot of incertitude when GenAI started around that, and we have a cloud ops team that is really highly efficient and driven by optimization all the time. So while we see some pockets where costs could be a little more heavier on the other side, we continue to be highly optimized and efficient, as you can see on our reported adjusted gross margin. So it's very healthy there.

And I might add that the structure of our platform is such that we're agnostic to models. So we create actually, which is an advantage right now that customers are realizing, we create optionality. So as a reminder, Coveo has -- think about Coveo as a platform that's obviously agnostic to data, agnostic to models, agnostic to apps and agnostic to agents. And so we create optionality. So customers don't have to lock themselves up in one model versus another. And increasingly, there are now hundreds of models on the market, and you can A/B test them and so on. So that's another consideration, which is important because you're enabling that cost optimization through the use of various alternatives here. just to qualify that part.

So we're not -- right now, we're not seeing at all that our margins will go down as a result of higher expenses, although the consumption of Coveo is increasing actually at a pace that probably outpaces the company right now, which is also good because we can absorb that.

And the next question comes from the line of David Kwan with TD Cowen.

A question about the guidance. It seems to imply that there's a solid quarter-over-quarter pickup in new SaaS revenue for Q1 but also seems to imply a slower pace in terms of new SaaS revenue for the balance of the year. What's driving that? Is that just given the strong bookings we've seen in recent quarters boosting the Q1, but the impact that Karine kind of outlined as it relates to the macro, the increased deal complexity, that's kind of driving the slower growth over the balance of the year?

Yes. Thanks for your question, David. As you said, the timing of opportunities matter here. So that's definitely to take into consideration. Our approach in the outlook is simply to remain as appropriately balanced as possible given the size, complexity and timing, as we've said. And then the seasonality around bookings and around renewal dynamics also is taken into consideration.

As you know, seasonally, H1 is usually not as strong as H2. It's been like that for the last, I don't know, even probably before my time 10 years ago. So this is also into consideration in the growth rate that you're seeing. David, sorry, I just want to add one thing. I forgot something. Remember, ARR growth and GAAP will follow sometimes not necessarily the same trend. So what you're seeing from a GAAP would be slightly different from an ARR perspective.

No, great. That's helpful. And tying into Paul's question on the margins, like are you adjusting your pricing right now just given the increased token prices that we're seeing? And have you seen a material impact to the gross margins over the last couple of quarters?

David, so the short answer is we're keeping our gross margin at a very healthy level, and it's a mix of discipline on our part, but also optimization from a customer part where we offer them the opportunity to use the model that is the most efficient for what they want to accomplish first. And sometimes, we make this own selection on our own, depending on the use cases and depending on various circumstances. And of course, yes, we adjust pricing when it's appropriate and when we feel that the value we create is linked to certain models that may be more expensive.

Is that built in...

If I may qualify here, we're -- to Laurent's point, we control that essentially is how I would summarize that. We have the levers to control the margins here. So we're very confident with the margins going forward on this one because customers understand that there's a price depending on the models and what they want to achieve. So they -- we can absolutely transfer that cost and maintain our margins.

Okay. Okay. So that there's something baked into your contracts that allows you to adjust prices as it relates to what the prevailing token prices are?

No. Our contracts are -- well, to be accurate, no, it's not -- well, we have provisions for price increase in the contract and so on. But if you want to activate a certain model in the future that will perform certain types, we saw it with CRGA when we launched initially the initial versions of Relevance Generative Answering because before we got into a and tick and all of that. And we were able to charge incrementally for that. And so if our platform is built in such a way that if we want to activate in the future, something that would provide some much higher level reasoning abilities or whatever, we would absolutely be in a position to charge customers for it.

And technically, what it means, David, is we charge typically an entitlement of queries and also an entitlement of generative queries. So complex use cases may require more generative queries. And if they get about their entitlement, then we have the conversation to provide more.

That's helpful. And on a related note, what -- can you say what gross margins you're assuming for the '27 guidance? Is that similar to what we saw in '26 or?

Yes, you can assume similar gross margin, David.

And the next question comes from the line of Koji Ikeda with BofA Securities.

This is George McGreehan on for Koji Ikeda. I appreciate you guys taking the time today. As we think about NER kind of how it's contemplated in the guide directionally, is it kind of down from conservatism around mature cohorts? Or is it kind of like up/stable from maybe faster growth, more strategic newer cohorts kicking in and their renewals through the year?

So of course, you got it, George. Those 2 dynamics will be impacting our NER, as you said. I do not provide guide on NER to be clear, though. However, directionally, what I want to tell you is that the NER we're seeing on the strategic cohorts we've mentioned, like multi-use case customers, commerce customers, GenAI customers, really healthy. And as you probably heard from Louis, is significantly higher than what we're seeing in the reported NER. Now having said that, the dynamic around our monitor cohort also have to be taken into consideration here.

That makes sense. And maybe just one on kind of these large strategic deals and the go-to-market focus there. As the go-to-market motion around these large strategic deals continues to learn and improve, like how are these conversations trending? And maybe if you guys could touch on, too, as it pertains to shifting resources maybe from more mature to the faster-growing strategic opportunities, what signals would it take for you guys to maybe shift even more aggressively resources, go-to-market resources towards these more strategic opportunities that you have in the market?

I'll start with that, George. The way to think about the company right now is there is obviously the pre-GenAI cohort, the search cohort that we have an account management team that actually works hard actually to look at those accounts and make sure that we get them into the agent and the generative AI world and so on. And that dynamic is still unfolding as these companies are sort of discovering what to do and et cetera. This market everybody was talking about AI, but everybody on the line needs to realize that customers were a bit on a holding pattern and experiments and all that, and we've talked about that in previous quarters.

The reality is if you look outside of that account management team, all of our effort, if you think about go-to-market in terms of marketing, in terms of lead generation, where we -- where the company is selling and et cetera, 100% is within the strategic growth areas for the reasons we mentioned above. The metrics are outstanding. The deals are big. The growth is high. The NER is high, and it ticks all the marks. And so it's -- I don't know if we talk about an evolution of the go-to-market, or really what is today, but it's really where in 2026. And as we reported in 2026, all of our new logos came from those -- from there. And again, we announced record deals quarter after quarter, 7-figure deals, which had never happened for new logos in the history of the company before. So obviously, we're all in on that and growing that.

To -- on the last part of your question, we're managing that gradually. We're reinvesting. The more we win, the more we will reinvest and the more the market is opening up. There are many catalysts right now. Companies, and it's no different than our narrative in the past quarters. We're just more and more certain of that is companies now can no longer wait. they have to deploy AI period. Otherwise, they'll compete against it. And they can no longer experiment. They've tried, many failed. So that -- those are huge tailwinds for those markets. And again, the economics, when Laurent spoke on the phone about one example that we signed in the quarter with this large industrial Fortune 100 company, you're talking about hundreds of millions of ROI that is demonstrated. And so this is the game that we've always wanted to play. This is the game that we started playing more and more, and we're going to continue to invest in 100%. So basically, we're all in on these strategic growth areas. which are B2B, B2B commerce, industrial, distribution and large-scale complex enterprises is really where we're all in.

And this concludes our question-and-answer session. I would like to turn it back to Laurent Simoneau for closing remarks.

Thank you. So I want to thank all of our shareholders for their continued support and look forward to updating you on our progress in fiscal '27 Q1. Thank you.

Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Coveo Solutions Third Quarter Fiscal 2026 Financial Results Conference Call. [Operator Instructions]

This call is being recorded on Thursday, January 29, 2026. And I would now like to turn the conference over to Mr. Adhir Kadve, Head of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us. With me to discuss Coveo's fiscal third quarter 2026 results are Laurent Simoneau, Coveo's Co-Founder and Chief Executive Officer; Louis Têtu, Coveo's Executive Chairman; and Brandon Nussey, Coveo's Chief Financial Officer, and Karine Hamel, Coveo's incoming Interim Chief Financial Officer.

A reminder that some remarks made today will be forward-looking statements within the meaning of applicable securities laws including those regarding our plans, objectives, expected performance and our outlook for the fourth fiscal quarter and full year fiscal 2026. These are forward-looking statements given out of January 29, 2026, and while we believe any statements we make are reasonable, they are based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied. Coveo disclaims any intent or obligation to update our forward-looking statements, whether as a result of new information, future events or otherwise.

Further information on factors that could affect the company's financial results is included in filings we make with Canadian securities regulators, including in the Risk Factors section of the company's most recently filed annual information form as well as the key factors affecting our performance section of the company's most recently filed MD&A, both of which are available on our SEDAR+ profile at sedarplus.ca and on ir.coveo.com.

Additionally, some of the financial measures and ratios discussed on this call are either non-IFRS measures, ratios or operating metrics used in our industry. A discussion on why we use these metrics and where applicable reconciliation schedules showing IFRS versus non-IFRS results are available in our press release and our MD&A issued today.

Finally, please note that unless otherwise stated, all references and financial figures made today are in U.S. dollars. Our presentation slides accompanying this conference call can be accessed on our IR website under the News and Events section. I will now turn the call over to Louis for an overview of our third quarter, followed by Laurent, taking us through a strategic update and we will end off with Kevin, taking us through the financial details and providing our outlook for the fourth quarter and fiscal 2026. We will then open the line to your questions.

With that, over to you, Louis.

Thank you, Adhir, and thanks, everyone, for joining us today. We have excellent news to discuss. In the third quarter, we broke new records in both subscription bookings and net bookings. This is the strongest new bookings performance in the company's history. Total revenue and SaaS revenue both came in above guidance. And as a result, we are reaffirming guidance for fiscal '26 and are now expecting SaaS subscription revenue and total revenue at the top end of the previously guided range.

Customer momentum remained very strong during the quarter with a healthy balance between new customer wins and expansion within our existing base. We signed major new contracts with leading brands such as GE, Liberty Mutual, Total Tools and Insight to name a few. Notably, we secured the largest new customer win in Coveo's history, a 7-figure deal with a Fortune 500 global leader in the industrial sector.

We also expanded more than 80 subscriptions and deployments with existing customers, including Deloitte, United Airlines, Ticketmaster, Cardinal Health, Anderson Windows, Thomson Reuters, USAA, Vanguard and Workday, all of whom increased adoption of our AI platform. Our commerce offering continued to deliver exceptional growth. Retailers, distributors and manufacturers increasingly recognize the imperative for AI-powered relevance and are seeing measurable results from Coveo-AI. During the quarter, we closed the second largest AI commerce expansion transaction in our history with Cardinal Health, a customer we discussed last quarter. Cardinal supports more than $220 billion in health care commerce distribution and have validated our ability to deliver enterprise-grade AI at massive scale. How we operate in highly complex environments and generate tangible financial results.

Our generative AI solutions also sustained strong growth. Laurent will expand on this opportunity and the growth levers enabled by our continued platform innovation. Overall, it was an outstanding quarter, and Karine will provide the financial details. During the quarter, we announced a strategic partnership with Deloitte, a global leader in digital transformation. Deloitte shares our belief that the future of enterprise digital experiences is AI and relevance first, and this partnership expands our reach across joint customers. We also signed an important memorandum of understanding with the government of Canada to support the modernization of digital services using Coveo AI.

We already serve the governments of Australia and New Zealand with modern search and generative solutions for citizens and civil servants. And with Canada, discussions are underway to evaluate large-scale deployments across agencies coast-to-coast to improve efficiency, service quality and digital sovereignty. I am pleased with the pace and value of our innovation. Our strong bookings and increasing number of larger transactions confirm that these breakthroughs are resonating and that our customers anchor Coveo in their core AI plans. We're particularly excited about our RAG as a service and Coveo hosted MCP server offerings.

These solutions allow customers to securely ground generative AI and digital agents in permission-aware, context-aware enterprise data, one of the most difficult challenges in enterprise AI. Coveo removes the complexity around retrievals, security and relevance. Building on this, we announced the availability of RAG-as-a-Service for AWS Agentic services, helping AWS accelerate customer adoption in Agentic. We also recently launched the Coveo app for Open AI ChatGPT Enterprise. This brings secure, enterprise-grade relevance directly into natural language workflows. The key takeaway here is that our flexible, agnostic RAG and MCP architecture significantly expands our integration and partnership opportunities across the rapidly growing Agentic ecosystem.

Investors often ask us why Coveo is so valuable and sustainably differentiated in an increasingly crowded AI landscape. Why do enterprises choose Coveo often investing millions in subscriptions instead of building these capabilities themselves? The answer is twofold. First, Enterprise AI does not inherently know your data. One of the major most profound breakthroughs of generative AI is its ability to synthesize and stitch fragmented siloed information into coherent answers in real time. However, securely connecting models to complex fragmented enterprise data at scale remains extremely difficult.

Second reason, AI does not understand context by default. Enterprises cannot tolerate hallucinations. Customers, employees and stakeholders require accurate answers based on current context and governed data. Achieving this level of precision requires surgical governance of relevance. It's a science. Coveo has spent years building and refining AI models that govern relevance and intelligently connect enterprise data to digital experiences. That technology is critical. Customers consistently measure superior outcomes with our platform, validated through A/B testing and reflected in cost reductions, revenue growth, margin improvement, productivity gains and better decision-making, just to name a few.

In the past, search was just retrieval embedded in apps. Today, relevance is what matters. In fact, during the quarter, Salesforce reconnected Coveo Search within its global support portal after customer dissatisfaction during a brief disconnection. While Agentforce is designed to answer questions from within Salesforce Data Cloud, Coveo search relevance is still necessary to surface the exact issue resolving content for these millions of Salesforce users. In our view, Coveo is complementary to agents such as Agentforce.

As Laurent will discuss in a moment, AI search and relevance is needed to enrich and augment Agentic, and we have multiple examples of this with Agentforce customers in particular. Today, relevance is a necessary enterprise-wide capability that powers interaction channels and Agentic workflows with consistent precision, security and governance across all data silos. That relevance and connectivity layer is what Coveo-AI delivers, and replicating it requires years of deep enterprise engineering and real-world experience. We are more convinced than ever that Coveo's addressable market is large and expanding. We've built defensible moats and relevance for knowledge-intensive industries and an AI-powered search and discovery for complex consumer and B2B commerce. We have rapidly evolved Coveo into a highly flexible AI platform that allows enterprises to access data anywhere, adapt to multiple AI and large language models and inject context-aware intelligence into any application or conversational agent.

This flexibility significantly expands our use cases and market verticals potential. We're particularly excited about the large and fast-growing market for Coveo AI in the industrial sector. Think about manufacturing, distribution, aerospace, energy, medical devices or hardware, for example. Here, we're addressing the economics of uptime and dependability with AI. In the U.S. alone, nearly 10,000 companies generate revenues above $250 million across these industrial segments. Think about assets such as MRI machines, aircrafts, HVAC systems or heavy equipment, downtime costs for these are significant, often in the millions of dollars annually. This creates very compelling economics for our software. As we help increase efficiency and uptime with 360-degree customer care intelligence.

Industrial data and content are highly complex and siloed. Our AI can unify it and turn it into context aware intelligence for issue diagnosis, prescribed solutions, service intelligence and complex parts recommendations. So our manufacturing customers can deploy a single Coveo platform as the real-time orchestrated intelligence for self-service, contact center agents, search portals, field service, and of course, linked to complex aftermarkets parts commerce, advice and recommendations, something that is very time consuming and more costly to do without AI. Our AI insights can even be embedded within connected products that then continuously feed back data into our AI models for even greater speed and precision. We are not aware of any other platform that delivers this breadth of experiences from a unified AI intelligence layer.

Our mission and conviction remain unchanged since we began combining enterprise search and machine learning in 2012. The world runs on digital experiences. It is now widely understood that all of them will be transformed by AI. Coveo is uniquely positioned as a mature platform that governs and optimizes AI-powered experiences on enterprise data. Before passing it to Laurent and Karine, I want to thank Brandon Nussey, who is stepping down in a few days for his years as our CFO. After a 20-year career as a public company CFO, Brandon is moving to the private company side. Brandon, we're deeply grateful for your contributions and for helping build our solid growth foundation.

With that, Laurent?

Thank you, Louis. First, I'm extremely proud of our team during this record third quarter and how we are positioned for continued growth acceleration. The applied AI market is moving from confusion to clarity. Organizations are now more educated buyers, shaped by early experiments and in many cases, inflated AI claims that failed to deliver. Customers some to Coveo with a strong appreciation for platform maturity and more importantly for provable results. while investment in foundational AI remains strong, the market is shifting towards operationalizing AI with company-specific data and use cases with a focus on tangible outcomes rather than AI as technology and search of problems.

One of the largest and most immediate areas of impact is digital experiences, serving buyers, customers, citizens and employees. Persons online with high relevance expectations. Digital and Agentic experiences must be grounded in secure proprietary enterprise data with relevance that remains coherent across the entire journey. Governing AI models to deliver precise relevance is therefore critical. Given the rapid commodization of AI models, flexibility and agnosticism are no longer optional. This is where Coveo plays, providing the trusted foundational plumbing that allows enterprises to realize value from AI at scale and adapt over time.

As CEO, for close than a year now, I'm focused on 5 priorities: innovation, value to customers and differentiation, growth and market expansion, disciplined execution and, of course our healthy business economic model.

First, innovation. I could not be more excited about the pace and impact of the innovation we're delivering with our customers. The progress is driven 100% by the intentional flexibility of our platform. We covered our MCP server and RAG-as-a-Service launches. The takeaway is straightforward. Coveo delivers out-of-the-box connectivity and governed relevance across digital experiences with security and precision.

Our platform is easily accessible to developers, applications and Agentic systems, enabling consistent unified intelligence layer across multiple channels. This capability is central to our expansion into new markets and higher-value use cases. Coveo is now available in ChatGPT Enterprise, AWS Quick Suite and Salesforce Agentforce, for example. In addition, we see many customers independently leverage Coveo through MCP with AI systems such as Anthropic [ Claude ] and others. Organizations will adopt multiple Agentic platforms over time. It is imperative those platforms rely on a common relevance and connectivity layer and Coveo is designed to be that stack. As CEO, I'm fully committed to a strategy centered on interoperability, flexibility and unique value. This capability has allowed Coveo to evolve from addressing a limited set of use cases to broaden its scope across more strategic vertical specific challenges.

From a growth perspective, this is also driving broader expansion and more 7-figure subscriptions for Coveo. Once we land in an account with initial more urgent use case, our ability to expand meaningfully with the same platform increases. Second, value to customers and differentiation. Let me share concrete examples. First in commerce, we built on our platform Agentic Discovery solution that moves Coveo from ranking results to orchestrating the storefront experience. Now an intelligent agent can dynamically select and present the optimal mix of products and content to serve both user and business objectives. Over time, Agentic Discovery will evolve into a true end-to-end agent that guides customers seamlessly from free purchase discovery to post sales support proactively recommending products, providing guidance and resolving needs across the entire customer journey.

Louis highlighted our growing presence in the industrial sector, including a new 7-figure customer in industrial automation. Their decision reflects our ability to unify content across their complex technology stacks and improve knowledge access and service efficiency. As you know, Coveo AI was built over more than a decade working with leading tech companies. They were the early adopters of relevance driven across their engineering and customer service operations. Today, Coveo is trusted by many of the world's leading technology companies from AMD, Intel, Dell and NVIDIA to SAP, Snowflake and DocuSign.

The same dynamic lies across aerospace, energy, transportation, heavy industry, companies such as Halliburton, Schlumberger, Cummins, Honeywell already relying on Coveo. We recently successfully built an AI-powered diagnostic solution for global medical devices company, synchronized with intelligent aftermarket parts commerce. In environments where equipment failure carries high financial and human states, such as an MRI machine, for example, rapid resolution depends on securely interpreting siloed engineering data maintenance, history and parts compatibility and availability through context-aware routes.

Without the ability to securely connect and interpret the siloed information at scale, resolution times lengthen, cost rises, revenue declines and outcomes suffer. Related to this, our partnership with SAP remained a key driver of bookings during the quarter and also an anchor in industrial segments where SAP has a deep market penetration.

What began with SAP commerce and global retailers is now expanding into multiple knowledge use cases, reinforcing the strategic importance of this partnership. In 2025, Coveo was one of the SAP's fastest-growing endorse partner in the SAP CX ecosystem. I'm also pleased with our momentum in Financial Services, the core knowledge industry vertical for Coveo. During the quarter, a leading global asset manager overseeing nearly $10 trillion in asset under management significantly expanded its Coveo subscription.

This customer initially deployed our Generative Answering to support financial advisers handling complex investor questions in real time. The results were compelling, driving meaningful improvements in productivity, consistency and overall customer experience. Based on this success and strong internal confidence in our accuracy and security, they have now extended these capabilities to investor-facing self-service experiences. Today, they are using Coveo AI across more than 40 internal and external digital properties. This, for us, is a big deal. First, this represents a growing 7-figure subscription and constant expansion, but more importantly, this validates Coveo as a core technology platform, delivering relevant accuracy and reliability in highly regulated, high-stakes environment.

It also reflects the confidence to move from adviser-assisted to a probably more unforgiving direct customer-facing self-service. These marketing wins with industrial leaders who have the scale to build in-house or choose from many vendors highlight why they partner with Coveo, our agnostic tech stack, platform maturity, and proven ability to manage complexity and govern relevance at scale are the reasons. As Karine will explain, many of our largest customers continue to increase their spend with Coveo. To us, this validates our platform and reinforces Coveo's position as a vendor of choice for generative and Agentic AI road maps.

These are powerful illustrations of our long-standing vision of unified relevance in action, a single AI platform connecting internal advisers and customer self-service for a bank, a single AI platform, unifying diagnostics, aftermarket parts and service in one coherent intelligent layer for an industrial company. By delivering high-impact use cases on a shared foundation, we increasingly address strategic challenges for customers and open the door to new vertical markets and expanded technology alliances. Our third area of focus is our growth and market expansion. We are building a powerful growth engine on a single, flexible agnostic AI platform. On the one hand, the strategy drives consumption and subscription expansion with our existing customers by broadening use cases and solving more strategic, higher-value problems in a more integrated way.

On the other hand, it fuels market expansion by enabling applications and Agentic to leverage the Coveo platform across multiple new vertical industries. Today, Coveo is focused on commerce for retailers, brands, large distributors, and B2B industrial customers, while remaining a leader in search and generative experiences for knowledge industries, such as financial and professional services. These segments represent a large and growing TAM.

We see significant upside from further verticalizing our applications into new markets. So net-net, our customers are expanding with us and we're increasing our ability to serve a broader and more diverse set of customers. Finally, my overarching priority is disciplined execution and a strong sustainable economic model. Focus matters for any successful business. At Coveo, our focus is on playing where we win and where our customers win. Vertical markets where we deliver the highest financial and operational value operates with repeatability and consistency and where we're the most trusted partner for our customers, of course, in markets we carefully select I've shared multiple proof points, and we continue to build a roster of leading innovative global enterprise customers with close to 1,000 brands and organizations with thousands of use cases deployed. And we're widening our competitive advantage and expanding into markets, industries, use cases and channels that were previously unimaginable.

At the same time, we remain disciplined about economics. We operate with high product gross margins above 80%, very sticky recurring revenue that grows organically and a favorable customer acquisition costs relative to the lifetime value of our customers. We manage the business with a long-term mindset. We have built a real company with clear strategy to scare, and we believe this is only the beginning. To wrap up, I'm in freely proud of our team's execution in this record quarter. Our focus on innovation and obsession with customer outcomes continues to differentiate Coveo and the flexibility of our platform positions us well to capture the significant market opportunity ahead. Finally, I also want to thank Brandon for his contribution and for being such an outstanding colleague and leader over the years.

With that, I'll turn it over to Karine to walk through the financial details. Karine?

Thanks, Laurent. As you've heard from Louis and Laurent, we're pleased to report that Q3 was a record quarter for Coveo delivering the strongest bookings performance in the company's history. This was driven by meaningful lend and extend transactions across our core growth drivers, especially our Gen AI and commerce solutions.

First, I will quickly summarize our Q3 fiscal 2026 results. SaaS subscription revenue was USD 36.6 million coming in ahead of guidance and representing a 13% year-over-year growth. Within this, Coveo Core platform subscription revenue was $35.8 million, growing 15% year-over-year with ARR growth roughly. As previously announced, we have now fully deprecated the Qubit platform and no longer expect any further Qubit revenue beyond this quarter.

Total revenue was $38 million, up 12% from last year. NER on the Coveo Core platform was 105%. Gross margin and product gross margin remained strong and broadly in line with last year at 78% and 81%, respectively. Adjusted EBITDA was in line with our expectations at negative $0.2 million, down from positive $0.6 million in the prior year. Cash flow from operating activities was $0.5 million compared to negative $0.2 million a year ago. Our cash position remained strong at USD 100.8 million as of December 31 with no debt.

Getting into further details. As you've heard from Louis and Laurent, Q3 was a strong quarter across the business, marked by high-quality wins, meaningful validation from new and existing customers' transactions and solid and efficient execution by the team. This performance reinforces Coveo's position as a strategic platform supporting our customer search, Gen AI and Agentic AI use cases. NER for the Coveo Core platform was 105% in Q3. As a reminder, from last quarter earnings, this continues to reflect the impact from a single onetime contract renegotiation that took effect last quarter. Without this event, NER would have been 108% in Q3.

We emphasized last quarter that this was a unique customer-specific event. What we see from our largest customer is Coveo becoming a core AI tech partner with impressive expansion. To give you some context, our current top 20 customers, none of which individually represent more than 5% of total revenue and averaging more than $1 million in ARR have achieved a 3-year net expansion rate of nearly 150%. Over the past 3 years, this group has materially increased its spend with Coveo.

Notably, this period aligns with the broader emergence of generative AI, underscoring how large enterprises are increasingly turning to Coveo's platform to power their AI and Gen AI experiences.

Turning into the economics of the business. Gross margin and product gross margin remained strong at 78% and 81%, respectively. As we continue to see strong uptick and proliferation of Gen AI and adoption of some of our newer solutions, we've maintained enterprise best-in-class product gross margin which speaks to our ability to efficiently grow the business.

Adjusted EBITDA for the quarter was negative $0.2 million compared to $0.6 million a year ago. Cash flows from operating activities were $0.5 million compared to negative $0.2 million last year. Please note that adjusted EBITDA and operating cash flow both include $1.4 million onetime severance expense associated with targeted workforce optimization actions as part of our continued focus on directing investment towards the highest return opportunities. Coveo ended the quarter in a strong financial position with approximately USD 100 million in cash and no debt.

During the quarter, we deployed $4.7 million to retire approximately 1.1 million shares under our NCIB, reflecting our continued focus on disciplined capital allocation. All in all, and consistent with what you've heard from us in the past, our primary focus remains on growing our top line, while operating efficiency and with discipline, supported by a strong balance sheet and improving cash flow profile.

I will now wrap up and discuss our guidance. Our revenue guidance reflects the now completed end of life of the Qubit platform. As a result, Q4 SaaS subscription revenue will now consist solely of Coveo's Core platform revenue. I would also like to remind everyone that we recognize revenue on a daily basis. Q4 includes 2 fewer calendar days than Q3, which impacts sequential revenue comparison by approximately $0.8 million.

With that context, for Q4 fiscal 2026, we expect SaaS subscription revenue to be in the range of $35.6 million to $36.1 million. Total revenue to be in the range of $37.1 million to $37.6 million. For full fiscal year 2026 revenue, we now expect to exit the year at the high end of the previously announced range. SaaS subscription revenue to be in the range of $142.2 million to $142.7 million. Total revenue to be in the range of $148 million to $148.5 million. Consistent with our prior commitments for Q4 and the full fiscal year 2026, we continue to expect adjusted EBITDA to be approximately breakeven and to deliver positive operating cash flows for the fiscal year.

In closing, I will end where I started. Q3 was a strong quarter with solid and efficient execution, record bookings and results that validate our growth strategy. While we remain focused on disciplined execution, we are encouraged by the momentum we are seeing across the business.

With that, operator, you may now open the line for questions.

[Operator Instructions]

And your first question comes from the line of David Kwan from TD Cowen.

Congratulations on a great quarter and Good Luck Brandon. I wanted to dig into kind of maybe look at the bigger picture, you mentioned seeing strength across your primary solution areas, which I assume kind of is commerce, service and CRGA. I was wondering though, are you also seeing strength across the customer base? Or is there maybe some pockets in terms of end markets where demand might be a bit softer?

Yes, sure. David, this is Laurent here. So look, we're seeing a lot of strength with our large customers. And Karine mentioned during the prepared remarks, our NER on the top 20 customers of 150%. These customers are seeing us as a strategic platform, and they are expanding substantially with Coveo, but it doesn't stop at those 20 customers, obviously, and we are seeing market dynamics here where with the interoperability that we're building and the requirements and the interest of customers at connecting Coveo with their Agentic AI frameworks that they are deploying. Coveo is uniquely positioned to cover the ground these Agentic AI frameworks with the enterprise, the enterprise secured platform in a very relevant way. So we are -- Yes, we're becoming critical for these large customers, David.

That's helpful. And when you look at the new customer wins that you've had, obviously, you highlighted that the large industrial customer, Fortune 500. In terms of the solutions that are driving those wins, is it really still primarily on the commerce side and CRGA or are you seeing also on the services side and the knowledge side?

It's across the board. So B2B commerce, B2C commerce and Knowledge Solutions all fueled with CRGA and with GenAI Agentic capabilities. So -- what is super interesting this quarter, what we're seeing is we are not only fueling user experiences and making user experiences better. We're also making Agentic frameworks better, which is something that we were expecting in the past and now that we are seeing picking up this quarter.

And your next question comes from the line of Thanos Moschopoulos from BMO Capital Markets.

Can you comment on ARR growth in the quarter broadly, if that was similar to the prior quarter or any uptick in that regard? And then as you look at your pipeline, whether you would expect that to accelerate in the coming quarters, whether it kind of remains at a consistent level. And any color on that front would be helpful.

Your question -- Thanos, good to talk to you. Your question specifically is with -- as it relates to the pipeline or the growth?

Yes, specifically just ARR growth in the quarter and kind of the trajectory that you're seeing in that regard based on your commentary.

Thanos, it's Karine here. As you've heard on the prepared remarks, I believe I mentioned that ARR growth for Q3 was roughly in line with SaaS subscription revenue growth of 18%. And remember, we have a 3% headwind from the last quarter, renegotiated contracts that you've heard from us. Now when you look at the guidance for Q4, I think you can drive similar patterns in terms of growth there. Does that answer your question?

It does. I apologize. I missed that in your prepared remarks.

We're not guiding '27 yet, as you know, right?

No, I understand. And then regarding SAP, we've obviously I heard you talk about your relationship there on the commerce side. Your SAP Service Cloud relationship has been kind of more recent. How is the pipeline building on the Service Cloud side of SAP.

Yes. What's really interesting, Thanos with the SAP endorsed relationship is that increasingly as the Coveo platform broadens we become more and more relevant to the broad sector that we described, which we call industrials, where SAP truly dominates. Increasingly, companies don't look at commerce and service in silos. They look at the holistic picture.

Let's say you're an aircraft manufacturer. Your goal is to be extremely effective when there is an aircraft on ground to put that aircraft back in the year, for example. And so we're seeing really the convergence of commerce and knowledge, the ability to understand with AI parts availability substitutes, but also diagnosis, recommended solutions et cetera, to serve everything from engineers to self-service to end product, to field service and commerce and so this is increasingly what we're seeing and frankly, what we're quite excited about. And that drives higher value, bigger deals ultimately. We announced in the quarter that we had landed the biggest land ever, and that's one of those examples in industrial. And so this is where the synergy with SAP really lives.

So a lot of words here, maybe, but the direct answer to your question is we continue to do extremely well in B2B commerce because -- and B2C commerce with large enterprises because this is where SAP dominates. SAP dominates really the enterprise commerce market, but really, really expanding with customer service and more broadly, knowledge solutions, AI-powered diagnostic and things of that nature. And as I said, this drives high value because we're in the economics of uptime here on those equipments. And that's -- those are significant dollars in ROI. So I hope that puts some perspective on your question.

[Operator Instructions] And your next question comes from the line of Taylor McGinnis from UBS Company.

Just to build on the last ARR question, could you give us a little bit more color on maybe what the normalized new -- net new bookings growth or net new ARR growth was this past quarter. So if we're going to adjust for Qubit and the renegotiated contract, and maybe how that compares to prior trends?

And then it's just a second part to that question. When you strip out the 7-figure deal within that, I'm curious how bookings momentum was broadly across the base.

Yes. Thanks, Taylor, for your questions. So maybe what I would like to add here to give you some color on Q3. We're really pleased with the breadth of the transactions we've seen. Yes, we have highlighted this large 7-digit deal for us, which was a good one, but it's not the only one that made a good quarter. So when we look at both from a land from an expand perspective, size of transactions, names that we have added to our expanding list of customers, we're really proud to all of that going into the right direction. So I don't think there is any normalization necessary with regards to Q3's results. It was a good quarter.

Remember that compares to a strong quarter last year, same timing as well. What I want to add as well is when we think about Q4, a couple of things, as you said, Qubit, no more further revenue expecting from that. And when you think of the Core platform, we've got to remember that we're recognizing revenue on a daily basis. And that, of course, will impact sequential revenue for Q4. And then I want to mention as well that we have great opportunities ahead of us. We are very pleased to what we've seen in Q3. And when we look in terms of pipeline and et cetera, we're excited for what is in front of us. However, we can get ahead of ourselves and execution is key here. So I hope it addresses your question, Taylor.

Yes. And then just last one for me. If I look at the implied guide for 4Q for subscription revenue, it looked like it came down a little bit. So it sounds like you're seeing a lot of really good momentum in the business. So could you just help us square that maybe with a slightly lower guide and what you guys are seeing at the start of 4Q, particularly on the back of some of these AI announcements?

Yes, of course. I mean as I said, we're pleased with what we're seeing. We just don't want to get too much ahead of ourselves here, dynamic market. We're getting good signals. We're grounded on execution, and we have a lot of opportunities ahead of us.

And your next question comes from the line of Paul Treiber from RBC Capital Markets.

Just a question on the business momentum. I mean, if you put aside the large customer turning off. The new business bookings have been strong for a couple of quarters now. When you look at it fundamentally, like what's changed over the last couple of quarters? Is it more external factors like customer readiness? Or is it internal factors like sales execution that's allowing you to better capture or convert the deals in the pipeline?

It's both, and I'll add a third one. It's also the evolution of our platform and positioning. So first of all, Paul, thanks for the question. So as we said in the prepared remarks, clearly, we're selling to a much more educated market. There's no question there's a huge difference from a year ago where people were still experimenting, lots of hype, frankly, some successes with lots of failures. So customers come to us with a much clearer understanding of the stack and hence, a much greater appreciation for what we do. So that makes much better sales conversations.

Number 2 is really the expansion of the platform. The platform is becoming really, Laurent talked about RAG-as-a-Service, MCP servers, supporting Agentic and so on, the flexibility of the Coveo platform to adapt to any data, any LLM, any app and any agent is starting to be recognized and highly valuable to these customers. So that's really what's driving here, the difference. And yes, there is a difference in market dynamic overall, and we're seeing a positive trend here.

And as a follow-up, just on -- can you speak to the pipeline for RAG-as-a-Service and then MCP? Like is that a separate pipeline? Is it part of the current pipeline? And do you see the nature of customers that you're -- that's in that pipeline different than maybe your core product?

Well, the pipeline is made up of 2 main areas, right? I mean the -- what we call land and expand. So landing new customers and then expanding the existing one. That pipeline is -- would qualify as very healthy for the reasons I've explained before. The recognition of the -- I'll use the term necessity of the stack that we provide to inherently, as we said, AI models do not understand your data, do not understand corporate data and are not really good at relevance and governing that, and that's what we do.

So that pipeline is expanding for that reason. And the conversion rates are also in healthy territory. And again, it goes back to the reasons before. The market is more mature, people understand what we do, the flexibility of the platform. So it's really across the board, back to the fundamentals of what we do. And that obviously creates some growth in -- across the board in both Knowledge Solutions and commerce as well.

And if I may add, Paul, what it does also ultimately drive additional consumption of Coveo, these new capabilities around interoperability, what we do around MCP, servers and so on. It exposes Coveo to additional experiences and also additional Agentic experiences and it will drive consumption of Coveo. So we want this to be as present as possible in our future deals.

And your next question comes from the line of Koji Ikeda from Bank of America Securities.

This is George McGreehan on for Koji Ikeda. So I wanted to ask just in light of everything good happening in terms of how Coveo is viewed more strategically by customers and the momentum you're seeing both in expand and land. How do you guys feel about S&M capacity? And maybe if you could share some color on how productivity in the sales force has kind of trended. I appreciate it.

So productivity in terms of -- well, I think I'll qualify, George -- this is Louis, I'll just qualify by saying that very healthy performance from our sales team, evidenced by the bookings and the guidance and the performance. But we measure productivity in terms of quota achievement in terms of conversion rate and also in terms of long-term customer value. The types of customers that we land and how we expand them and what's the expand potential of these customers. And I would put all these metrics at green right now.

So we're growing when we see -- or I should say, George, as we see a more mature market, as we see very healthy deal economics, convert both conversion and deal size moving in the right direction. Obviously, you'll see us continue to invest and expand our field force. You just don't throw -- you just don't throw a sales team when you don't have a defensible moat or healthy economics. We're very, very pleased with our CAC to ACV, our CAC to long-term customer value. We operate the company at 80-plus gross margin. And so from a product side. And so those are all -- and as you know, net expansion rate is also very healthy. So from a from a sales standpoint, this is where you'll see us invest.

And your next question comes from the line of Suthan Sukumar from Stifel.

First question for me is on the demand environment. In terms of recent wins, what would you say has changed? Or what is different about the companies buying Coveo.

I was wondering are these companies later adopters? Or did they attempt to do AI without enterprise search and coming back? Or are they moving from competing solutions? And how do you describe the sense of urgency compared to, say, last quarter or 6 months ago?

So that's a great question. This is Laurent here. So here's what we're experiencing is companies that see the value of AI, that want to invest in AI, but that understand that they need to ground AI in their own content. That's what Coveo does, right? It does really well. They -- sometimes these companies have also started some internal projects trying to build that on their own. And they discovered that it's hard. They discovered that it's expensive, and it's even harder to maintain and evolve. So Coveo is becoming really an important piece of the infrastructure for these large companies. I would say a year ago, we were convinced in companies that it was the case. Now they are adopting this. And not only they're adopting this, they are expanding with us, which is an amazing proof point.

Great. And for my second question, I just wanted to touch on the Canadian government opportunity. From where you sit today, what are some of the core use cases that you guys are well positioned for to solve for the government. I was wondering if there's anything kind of from a low-hanging fruit perspective that you guys are going to be tackling in the near term?

Right. As I said in the prepared remarks, we already do business with agencies such as, for instance, the Australian Taxation Office or the New Zealand Taxation Office, the state of Tennessee or the City of New York or so on. And mostly, it's about using generative AI for acute citizen services and really civil servants insights and so there's a lot of opportunity in Canada to deploy AI. And I guess not unrelated to the overall macroeconomic environment right now, Canada is really taking AI very seriously both from an industrialization standpoint, which we can participate in across the country, but also from a government efficiency perspective, which is top of the agenda for our Prime Minister, Mark Carney.

And so as a result, Coveo being one of the Canadian -- sort of Canadian leaders in applied AI has been called by the government and we signed a memorandum of understanding, which is sort of a normal way that the government proceeds to essentially explore deployments across agencies essentially coast to coast. So we'll see how that unfolds. We're not announcing anything. There's nothing formal, an MOU is essentially the equivalent of a letter of intent and government jargon.

But certainly, there's a significant opportunity for us to save and we've already said publicly that we can save billions to the government and create that equivalent amount, billions also in economic value with our technology. And we can do that. We have thousands of use cases of Coveo and we can do that in a highly industrialized way. which most people cannot do. And so we think that could be a significant opportunity. Now the MOU was signed by 2 ministers, the Minister of AI, Evan Solomon and Joel Lightbound, the Minister of Government Transformation and Service Canada, so we'll see.

I can't speak on their behalf as far as what decisions they'll make regarding their transformation and how they'll deploy AI in the sovereign way in Canada, but it's certainly -- those are certainly discussions underway, as you might expect.

[Operator Instructions]

Your next question comes from the line of Richard Tse from National Bank Capital Markets.

Yes. It seems like you've sort of had some really accelerated momentum in sort of new verticals or I don't want to say new, but sort of verticals like industrial and financial services. I think you sort of called out industrials in particular. What would you attribute that to? Is that kind of because you made a sales push there? Or is it goes back to your comments that there's more sort of understanding in the market? Like it seems like that is becoming a much bigger opportunity than you have sort of talked about in the past?

Absolutely. So our customers are bringing us there. We -- the fact that we cover both the commerce part, think about large catalogs and pricing entitlements, inventory and so on and the knowledge side that involves service that involves field service and so on, it becomes a logical next step to handle that altogether. Now what is also accelerating this is search and conversational experiences are allowing to stitch all of this information altogether.

So customers are evolving in a way where these new experiences will serve customers, all silos of the customer lifetime into customer lifetime with them, which is highly strategic. So Coveo serves as an infrastructure layer supporting all of that. And because, again, we connect to commerce, we connect to service and knowledge, and we have the AI on top of it to deal with relevance. We become a strategic component for them in the future.

Richard, I'll add the following to perhaps illustrate this and for everyone on the call, which is -- which really speaks volume to our thesis and what we're experiencing. One of the most -- and this -- I think for everyone, this is really, really important to understand Coveo.

One of the most fundamental breakthroughs or paradigms that new paradigm that generative AI, in particular, enables is the ability to stitch content in real time and bring it in context. So think about how you can go on ChatGPT and essentially ask a very complex question, provide the context and how ChatGPT will literally stitch it for you and tailor it for you.

And so if you think about that in the context of an enterprise, data doesn't need to be moved anymore. You do not -- if you think about something like Agentforce, for instance, at Salesforce, it was designed to work on Data Cloud. You need to move all your data into Data Cloud. Well, guess what? And for a lot of use cases, especially the ones we cover, you don't need to do that anymore. Why does that matter is that search and the ability, which we've mastered for now 15 years, the ability to reach content across multiple silos, highly securely govern that process, understand the semantic behind it, vectorize it and then the relevance to understand the context and stitch it together in real time is what we enable.

And so fundamentally, as companies discover that, and they understand better than ever how to take advantage of that. And that is really, really, really critical to what the market is realizing to what AI is truly enabling and to what Coveo at the core is doing. We're in the stitch and tailor business. We stitch data and we tailor it. Think about it that way in those terms. And this is why we're becoming very relevant to these customers because of that ability, does that make sense?

Yes. Yes, that's very helpful. My next question -- your second question here is as workflows shift more away from search and directly in the agents, does that kind of change the revenue model going forward in any way? Or is it essentially the same?

Well, for us, we have primarily a consumption model, right? So we don't really sell seats. So if the if the usage of Coveo goes through Agentic workflows, it's fully fine. We're going to serve these Agentic workflows just like we serve, user experiences, classic user experiences, and it brings more consumption for Coveo. So we are -- we are quite comfortable with serving this diversity of experiences basically. We're in the good side of Agentic as a summary.

And there are no further questions at this time. I will now hand the call back to Laurent Simoneau for any closing remarks.

All right. So thank you again, everyone, for joining us today and to our shareholders for your continued support. We look forward to updating you on our next earnings call after our Q4 and full year results. Thank you.

This concludes today's call. Thank you for participating. You may all disconnect.

"

"

"

"

"

" National Bank Financial, Inc., Research Division

" BMO Capital Markets Equity Research

" RBC Capital Markets, Research Division

" TD Cowen, Research Division

" Stifel Nicolaus Canada Inc., Research Division

Good afternoon, ladies and gentlemen, and welcome to the Coveo Second Quarter Fiscal 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded on October 30, 2025.

I would now like to turn the conference over to Adhir Kadve, Head of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us. With me to discuss Coveo's Fiscal second quarter 2026 results are Laurent Simoneau, Coveo's Co-Founder and Chief Executive Officer; Louis Têtu, Coveo's Executive Chairman; and Brandon Nussey, Coveo's Chief Financial Officer.

A reminder that some remarks made today will be forward-looking statements within the meaning of applicable securities laws, including those regarding our plans, objectives, expected performance and our outlook for the third fiscal quarter and full year fiscal 2026. These are forward-looking statements given as of October 30, 2025.

And while we believe any statements we make are reasonable, they are based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied. Coveo disclaims any intent or obligation to update our forward-looking statements, whether as a result of new information, future events or otherwise.

Further information on factors that could affect the company's financial results is included in filings we make with Canadian securities regulators, including in the Risk Factors section of the company's most recently filed annual information form as well as the key factors affecting our performance section of the company's most recently filed MD&A, both of which are available on our SEDAR+ profile at sedarplus.ca and on ir.coveo.com.

Additionally, some of the financial measures and ratios discussed on this call are either non-IFRS measures, ratios or operating metrics used in our industry. A discussion on why we use these metrics and where applicable, reconciliation schedules showing IFRS versus non-IFRS results are available in our press release and our MD&A issued today.

Finally, please note that unless otherwise stated, all references and financial figures made today are in U.S. dollars. Our presentation slides accompanying this conference call can be accessed on our IR website under the News and Events section.

I will now turn the call over to Louis to review our platform and strategy, followed by Laurent, taking us through our operational and strategic highlights of our second quarter, and we'll end off with Brandon, taking you through the financial details and provide our outlook for Q3 and fiscal 2026. We will then open the line to your questions.

With that, over to you, Louis.

Thanks, Adhir, and thanks to everyone joining us this evening. I'm pleased with our results this quarter. Our SaaS revenue, total revenue and adjusted EBITDA all came ahead of our guidance, and we delivered another quarter of revenue growth acceleration.

Generative AI, agent AI and AI-powered experiences represent the most significant opportunities of our time. And while most enterprises are still chasing tangible results, Coveo's customers and partners are already realizing meaningful ROI from our platform, and our results this quarter really show that. Laurent and Brandon will comment on these results.

I want to focus on helping investors understand our views on the fast-evolving dynamics of the AI, Gen AI and agent tech market backdrop, in particular, why we believe that this continues to build an important opportunity ahead of us and why we believe Coveo will continue to stand out, thanks to unique technology and real results.

First, a reminder of the fundamental thesis around which Coveo is built. powering every point of experience with AI grounded in enterprise data. The importance of AI and digital cannot be understated. It changes everything because it enables digital experiences to become hyper-personalized, prescriptive and now thanks to generative AI, conversational, insightful and advisory.

Think of it this way. When buyers, customers, employees or citizens can go online, express their detailed context and then obtain powerful recommendations and advice that is relevant to them. They buy more, they learn faster, they solve issues on their own and become more proficient and productive. In addition, on the business side, when AI models can deliver these experiences while at the same time optimizing business metrics such as revenue, cost or margins, you get quantum leap in business performance.

If online, my brand can sell you something that delights you while simultaneously getting rid of my excess inventory, pushing my campaign or maximizing my margin. And then if I can do this for 1 million other consumers on that same day, I'm redefining my business. If I can answer your very intricate customer question, even the most complex one and do this for 1 million other customers on that same day, I'm redefining my business. This is what the Coveo AI platform can do grounded in your secure enterprise data.

For our customers, most of which are leading brands and enterprises across the world, the debate is not whether they want to adopt AI in their digital experiences. Their debate is that they're convinced they never want to compete against any business who does. And so it really becomes a question of what it takes and who can deliver now. We've seen many such stories recently where our customers have been able to quantify significant improvements in revenue, self-service or cost reductions and fast.

In particular, I want to highlight a story published in Forbes just 3 weeks ago on October 5 about the deployment of Coveo at SAP Worldwide. SAP reports measuring a reduction of 1.6 million cases annually in their global support organization, thanks to Coveo's ability to make generative AI work at high precision on their secure data. The data Coveo stitches in context for millions of users comes from dozens of secure internal sources at SAP and more than 10 million documents across the world.

Coveo grounded generative AI provides direct responses to questions while showing exactly which SAP document sources the information came from, similar to how GPT works, but trained on SAP's specific knowledge. According to their calculations, this accounts to more than EUR 100 million in annual savings.

And SAP isn't stopping a cost reduction. The company is now using behavioral analytics to intervene before customers encounter problems. Such results are not only impressive, but more importantly, few companies such as Coveo can deploy and measure. And this kind of capability is what will fuel our growth.

What we're seeing in the market is extremely encouraging. First, enterprises are awash in AI talk. They are drowning experiments. They're parsed for results. Boards are now asking harder questions about AI, looking for measured outcomes on the P&L. And at the same time, every company fears not being at the forefront of AI innovation.

In such an environment, showing results in a practical easy platform to deploy has become immensely valuable. We've said it before. The launch of ChatGPT almost 3 years ago was more than the launch of generative AI. It was the true catalyst that woke up the world on the power of AI, but both the nature of it and the hype confused the business world.

What our customers have realized after trusting their own IT to figure out how and where to deploy AI is that the intuitiveness of ChatGPT in particular, masks the complexity of deploying it successfully on their own secure enterprise data. That's precisely the plumbing and intelligence that Coveo provides. For most companies, it's been a journey of experimentation with innovation and also a journey of education.

Today, we're talking to market more proficient about the necessary capabilities much more appreciative of the importance of a platform such as Coveo that can connect to any data, not confined to a specific data platform, an AI stack that can deliver the highest levels of relevance precision enterprises need into any application, whether it's website, commerce, contact center, Internet, portals and now into any agency framework, but also an ability to deliver using your own trained LLM.

While this may sound perhaps quite technical, making AI models work at high relevance precision on enterprise data is the primary differentiation that Coveo brings, a decade-long cumulative innovation that is tough to replicate at maturity and the difference between delivering results versus claiming you will or failing to deploy in production. This is the reason why today, several of the leading global technology companies use Coveo and why some of the largest commerce brands use our platform. And Laurent will discuss transactions with some of these leading brands.

The other good news is that this same need around data grounding precision and relevance is unfolding in agent tech. I want to refer you to our recent announcement of how Coveo unlocks custom actions for AI agents and how, for example, Coveo for Salesforce Agentforce sends queries to the Coveo AI platform to return higher precision results but from all connected content sources.

We basically enable any AI agent to operate within the guardrails of all secure and governed enterprise content shaped by the user's reality. This announcement is important and was personally endorsed by the President and GM of Applications and Industries at Salesforce. We believe that the market will continue to move towards us as we chase real-world results, that it's only a matter of time and that maturing buyer knowledge plays in our favor. We've said many times on previous earnings calls that we believe Coveo will be a market taker in this industry.

We started applying AI to large-scale search relevance and personalization problems in 2012, building on our history of leadership in enterprise search. And we have built arguably the industry's deepest technology platform to ground AI models and broad enterprise data. And that's why we can deliver on the extreme relevance, precision and scale that enterprises require, something others have underestimated and can't deliver on.

With that, Laurent, take it away.

Thanks, Louis, and hello, everyone. To quickly summarize our key results. Subscription revenue for the Coveo Core Platform was ahead of guidance, accelerated to 17% and represented the highest growth rate we have seen in nearly 5 quarters. Adjusted EBITDA was also above our guidance range at $0.6 million.

The results we delivered this quarter, along with the accelerated growth we have achieved, underscore Coveo's pivotal role in the era of agentic and generative AI. They reaffirm that our platform and solutions are not only highly relevant, but foundational for this new wave of innovation.

Throughout the quarter, my discussions with customers, partners and the demand signals we're seeing from some of the world's most forward-thinking organizations have reconfirmed that search remains a fundamental enabler of any reliable ROI-generating agentic or generative experience. As a platform that powers search with the most relevant content, Coveo continues to be mission-critical to our customers' ability to deploy agentic and generative AI solutions that deliver tangible business outcomes and solve real-world problems like we highlighted earlier on with SAP and the impact we're driving with many others.

That said, I'd like to address upfront why our Coveo Core net expansion rate was 105% this quarter compared to 108% last quarter. The difference is primarily due to a renegotiated customer contract with Salesforce, representing approximately 3% of our ARR. This onetime renewal adjustment by Salesforce simply reflected their internal mandate to run Salesforce on Salesforce and Data Cloud.

We view this as a unique situation, and I want to emphasize that this does not reflect the solid underlying momentum we're seeing with our customers. Our customers are large global enterprises that operate with content across a diverse technology stack. And while it may be feasible for Salesforce to run at Salesforce, this is not the case for the vast majority of our customers. So net-net, we view this as an isolated event.

Salesforce does remain a customer and a strategic partner for Coveo. This was highlighted in our October 14 press release featuring Illumio, an early adopter of Coveo for Agentforce. By leveraging the strengths of Coveo, Illumio has improved content retrieval accuracy, enabling more relevant answers, better agent actions and ultimately a stronger self-service outcome. Illumio measured 95% success rate with Coveo in their formal evaluation, resulting in an accelerated go-live.

Illumio is just one example. Others, including Xero Software, Palo Alto Networks, CrowdStrike, Workday and Intel have not only extended their engagement with us, but are also leveraging Coveo to drive generative search and support their agentic road maps. These customer stories give me confidence that we're on the right path and have a great future ahead.

Commerce remains our fastest-growing segment and drove nearly 50% of new business bookings this quarter. Within commerce, our SAP partnership continues to show momentum, influencing 50% of commerce bookings. Customer wins in commerce included the European DIY retailer, HORNBACH, Solar, Carlton One and several others.

We're quite excited about commerce moving forward, and we continue to anticipate this will be our fastest-growing use case, where we see significant opportunity ahead. This segment is benefiting from multiple tailwinds, including our leadership position in B2B commerce and the accelerating convergence of commerce and knowledge into a single integrated capability. Let me expand with a customer example.

Today's commerce platforms simply are not optimized to handle the inherent complexities of B2B commerce. They struggle to index the countless combinations and permutations that arise from a B2B merchants unique pricing models, customer entitlements and real-time inventory data query time. What starts as a modest SKU catalog can quickly multiply in size and complexity. The Coveo platform is designed to operate at this scale. Good example is Cardinal Health, a global leader in health care services and products.

Cardinal Health manages a vast portfolio with several hundred thousand SKUs and more than 100,000 different pricing structures. This dynamic environment results in an effective record count in the tens of billions and a level of complexity that few, if any, platforms can manage efficiently. Cardinal Health chose Coveo platform for its ability to deliver fast, personalized and relevant results at scale.

Another tailwind is one where Coveo's deep knowledge expertise is now unlocking powerful new value in commerce as the line between commerce and service queries blurs. A good example of this would be Bunnings Warehouse, a leading Australia-based home improvement retailer where Coveo powers both product discovery and support experiences through one unified AI platform. This convergence creates a major opportunity for enterprises, and Coveo is uniquely equipped to lead the way.

Our generative AI solutions, which represented more than 35% of new business bookings this quarter reflected continued strong momentum. I am encouraged by the progress we are making. This was one of our best quarters for customer adoption and revenue growth since launching the product. We welcomed several new customers, including Halliburton, one of the world's largest oil and gas equipment manufacturers as well as Deckers Outdoors, Intermountain Healthcare and the BMR Group.

We also saw meaningful expansions from existing customers such as NVIDIA, Intel, GE, UKG, HP Enterprise, and Freedom Furniture who continue to increase their investments in our generative AI solutions. We're especially proud of these expansions. They come from customers who have experienced the value of Coveo's generative AI firsthand and continue to deepen their adoption, clearly validating the ROI our solution deliver.

On the innovation front, we've been testing, validating our agentic RAG and conversational capability with some of our closest customers and continue to make excellent progress. Within our commerce use case, we're moving forward with key capabilities such as conversational commerce, content intelligence and more. These areas will help drive next wave of differentiation for Coveo.

Finally, at an operational level, as we regularly do, we're making sure our investments are directed at the best areas of return. We're moving quickly to optimize our go-to-market investments in light of some of the recent dynamics to ensure we continue to build momentum. In this respect, we're pleased to welcome Pranshu Tewari, who will be joining Coveo as Chief Marketing Officer, effective November 10.

Pranshu brings extensive experience in enterprise SaaS, having held senior executive positions at Mendix and Dell Software Group. Improving Coveo's market awareness and presence is an important objective of the company, and I welcome Pranshu’s expertise in helping in this area, among others. Lastly, John Grosshans will be departing from Coveo effective November 1. We thank John for his contributions, and we wish him continued success in his future endeavors.

To wrap up, our market is dynamic, and I continue to be confident in our path ahead. Based on our innovation, the strong results we are delivering to our customers and partners and a healthy pipeline of future business.

With that, I will pass it to Brandon, who will discuss our financial performance. Brandon?

Thanks, Laurent. I'm pleased to report that our Core Coveo Platform grew 17% year-over-year, driven by continued momentum of our generative AI solutions, commerce use cases and expansion within our base.

Before we get into details, I will quickly summarize our Q2 fiscal '26 results. SaaS subscription revenue was $35.9 million and grew 15%. Within this, revenue for our Coveo Core Platform was $35.0 million and was up 17%. Revenue from the Qubit Platform was $0.9 million in the quarter and was down 24% year-over-year. We continue to expect that this revenue will fully churn by the end of our fiscal year.

Total revenue was $37.3 million, up 14% over last year. And our NER for the quarter on the Coveo Core was 105% -- up from 104% a year ago, but down sequentially for reasons discussed shortly. Gross margin and product gross margin were 79% and 82%, respectively, similar to the prior period. Adjusted EBITDA was slightly ahead of our guidance range at $0.6 million versus $1.5 million a year ago. Cash flow from operating activities were negative $10.8 million versus a positive $1.4 million last year due mainly to the timing of working capital. We ended the quarter with $108 million in cash and no debt.

Digging into the quarter in further detail, we saw success in our long-term growth drivers again this quarter. Generative AI solutions saw another record quarter with both customer and revenue growth of approximately 150% compared to the prior year. Importantly, we continue to maintain near perfect retention rates with NER from these solutions at more than 150%. This means customers are adopting, getting value and expanding their usage, which is a great long-term signal for us.

In commerce, which once again was our fastest-growing use case, we delivered one of our best quarters ever for new business bookings. Commerce momentum continues to accelerate, driven in part from our ongoing successful partnership with SAP, and we remain confident it will be a key driver of our growth going forward.

We continue to see encouraging signs from our existing customers and capturing the white space in our customer base remains an important growth driver for us. Our investments in our account management function continue to show a positive impact, and the results are generally tracking to our plans. This is also having a positive impact to our revenue retention rates, broadly speaking.

While the quarter contained many positives, we navigated a couple of near-term dynamics as well. The renegotiated contract with Salesforce that Laurent spoke to will serve to reduce our NER and ARR growth rates by approximately 3% with the effect on recognized revenue spread over the next 4 quarters. This is an isolated customer-specific item and importantly, excluding this customer, churn was the lowest we've seen in the past 7 quarters.

Additionally, after several quarters of record new business, in Q2, we saw some deals that were forecasted to close move to our Q3 and beyond. The good news is that some of these deals have already closed in October, getting Q3 off to a good start. With others, however, we observed that additional stakeholder approvals were required as our solutions become more strategic for these customers. I'd like to emphasize, we haven't seen these go to competitors. They simply require more time. In light of this, we're taking a prudent approach to our second half bookings assumptions.

So bringing this together, we now expect to land at the low end of our previously issued guidance range for revenue for the fiscal year and are bringing down the top end of the guidance range accordingly. In Q3, we expect SaaS subscription revenue of between $35.7 million to $36.2 million and total revenue of between $37.1 million and $37.6 million.

For the full year of fiscal '26, we expect SaaS subscription revenue of $141.5 million to $142.5 million, adjusted from $141.5 million to $144.5 million. And total revenue of $147.5 million to $148.5 million, adjusted from $147.5 million to $150.5 million.

With roughly 3% impact from the renegotiated customer contract, along with measured second half bookings expectations in mind, we now expect to exit the year with roughly mid-teens ARR growth. Improving our rule of metrics remains a top priority, and we're committed to doing so. As you've seen from us historically, we will remain disciplined operators, and we'll continue to be diligent about deploying our capital.

To that end, we're making proactive targeted investment adjustments within our go-to-market organization to ensure resources are aligned with our highest return opportunities and to quickly adapt to the dynamics we saw in the quarter. We continue to see strong performance in several of our key growth drivers, and we're focused on giving those the investment they need to scale efficiently.

Consequently, despite lower revenue expectations, we're maintaining our adjusted EBITDA guidance of approximately breakeven for both the third quarter and the full fiscal year. We still expect to deliver positive operating cash flow for the full year, adjusted from approximately $10 million as we incorporate the impact of the renegotiated customer contract, assumptions around second half bookings and some onetime costs associated with the go-to-market adjustments we discussed above.

In summary, our reported revenue growth rate of 17%, which was improved from 11% a year ago, was driven by the building momentum we're seeing in our long-term growth drivers. We continue to see many positive signs surrounding those growth drivers, and we have many things to be proud of this quarter. Despite the short-term challenges encountered in the quarter, we continue to see many opportunities ahead.

And with that, operator, you may open the line to questions.

[Operator Instructions] We'll take our first question at this time from Richard Tse with National Bank Capital Markets.

I was wondering if you could update us on any plans to shift to a sort of consumption-based pricing model that would potentially create a revenue lift. And I ask that because Louis, when you talked about SAP, it sounds like it's a substantial kind of savings that they're getting from your sort of Coveo. And are you kind of harvesting sort of full value from these relationships?

Richard, so here's what's happening. In our business, those are obviously massive customers. And so we're very proud that we're now -- we have multiple examples where we're completing the cycle of essentially selling to the customer, deploying on a global basis. I mean, SAP is a massive deployment on a worldwide basis. And then completing the cycle of measuring. As we said about the SAP announcement, SAP measured, and it's -- you can find it in the Forbes article, measured a reduction of 1.6 million cases annually. And the number they measured was more than $100 million of savings.

So I understand the gist of your question that when you think about this, the value that we provide is, in a way, for now, still somewhat in commensurate with the price we charge. We view that as a positive tailwind moving in the future. The more we bring and measure those proof points, Richard, the more we gain price power for our solutions. Our solutions today are consumption-based pricing. You can see that, obviously, as we said, they generate much more value. And as we accumulate these proof points, and we have many more that you can -- some of which you can see on our website, I think that bodes well for, again, price power progression.

I just have one other question. So in your MD&A on Page 8, you sort of talked about incorporating AI into some of your products. So can you maybe help me understand the divide in terms of where your IP is versus the use of external IP when it comes to AI with respect to that comment in the MD&A?

Yes, Richard, this is Laurent here. So, we are an AI platform company here. We have multiple models that we build ourselves, that we manage, that we maintain, that are targeted towards relevance. We also include large language models when required in multiple use cases. And -- because we're built with interoperability in mind, we have the ability to either use our own models or leverage something that is best-of-breed or that in certain use cases that is that run at lower cost, and that may be what's used here. So we have a wide variety of AI usage. A lot of this is based on our IP. But as always said, we're pragmatic and we're leveraging what's the best for our customers.

Our next question comes from Thanos Moschopoulos with BMO Capital Markets.

Regarding the commentary on some deals that have been delayed, are there any common themes there, be it with respect to the verticals where you're seeing that, the geographies, the type of use case? Is it driven by budgetary scrutiny initiatives? Or is it more about the client deciding strategic approach of whether to custom build internally versus a platform like yours? And any common themes you'd call out in that regard?

Yes. Great question, Thanos. I don't think there's any vertical themes or anything like that that was common. What we are finding, and maybe it relates a bit to Louis's comments earlier that as we deploy and -- initially deploy and start to measure what ends up happening is customers will come back and look to buy more from us. And that will tend to be then a transaction size that's above what we historically have been doing on average. And as it gets further and further deployed, it's -- we found in some cases that we're bumping into additional stakeholder groups inside of these customers that increasingly where we need those approvals.

So, it's really a function of us becoming a little more strategic at our customers is what we're seeing in many of these instances. And with that comes a few more steps in the sales process. So, as I said on the prepared comments, these are deals we continue to work. They're still in our pipeline. They're just taking us a little bit more time to get them done.

Just to clarify, so is this primarily impacting then expansion deals? Or in some cases, you brought in to do proof of concept, but then when people see the savings and how that expands, it goes to a bigger deal than initially contemplated for new logo?

Yes. I mean, not to say we don't see it on some of the new opportunities as well. I do think we've always taken a proof-of-concept type approach to winning new logos. And so, we do see just the stuff we do is strategic to these folks. So, we might see a little bit of it there, but yes, definitely on the expansion side as well.

Last one for me. Do you have plans to backfill the COO role? Or will the responsibilities be reallocated amongst existing executives?

Yes. So, first of all, we have a great team of leaders today that are running the operations with a lot of maturity and stability. And yes, we expect to fill a CRO role in the coming months.

[Operator Instructions] Our next question comes from Paul Treiber with RBC.

I was just hoping you could elaborate a bit further on the change in the relationship with the contract with Salesforce. What drove the change in terms of -- like is it specific use cases that they felt they could use internally developed software versus using Coveo? Or is it something else that drove the change?

Thank you, Paul, for the question. So look, it's really a commercial imperative from their side to run as much as they can Salesforce on Salesforce. We are disappointed, but we believe it's isolated. We have not heard that from other prospects or customers because, quite frankly, it's hard to consolidate everything on one single platform, right? It's very hard. So Salesforce remains a customer of Coveo. Our partnership remains unaffected by this. You've seen PR and endorsement from the President of Applications at Salesforce. So we expect this to be an isolated event.

Just another question, the AWS outage, did that have an impact on your business in October when that happened? Do you expect any impact? Or were you resilient to it?

So thank you for this question. So, the short answer is we have 0 downtime on what matters, which is search and queries because we built a resilient platform understanding that while rare, these events may happen once in a while. Our customers select us for a long period of time. They love the fact that we are resilient to a lot of these events that may happen and that may have a big impact, especially our commerce customers. So yes, thank you for your question. We were proud of the team and the architecture to support this situation.

Our next question comes from David Kwan with TD Cowen.

I was wondering just more on the Salesforce, I guess, renegotiation. Can you comment when, I guess, the renewal hit? I assume it was -- it sounds like -- I'm guessing the second half of the quarter. And then of the $2 million reduction in the high end of the guidance range, how much of that was related to Salesforce versus the adjustment in terms of your booking’s assumptions?

David, yes, look, it was a September 30 renewal. And as you can probably appreciate, there's lots of discussions in the back half of the month that got us to that point. So, it was a late in the quarter renewal. And as it pertains to the guidance, look, it's -- you can do the math, 3% of the ARR. The good news is we're still within our guided range. I think that speaks to some of the underlying momentum we have had that we can absorb this. But at the same time, second half revenues are impacted primarily by this event.

That's helpful. And as it related to the, I guess, the EBITDA guidance, you guys have talked about, I guess, trying to make up for some of that lost revenue just on better cost optimization. I just wanted to clarify, I guess, it sounds like -- it doesn't sound like there's much of an impact as some of the growth investments that you're planning to make this year to help drive an acceleration in growth. Is that correct?

Yes. Look, that's a constant exercise to optimize your spend, especially as we've been building our go-to-market function up to increase presence and coverage and so on. So that's a constant exercise of making sure we've got the chips on the right spot on the table. And so, there's a little bit of that happening. But to your point, it's not going to impact the big picture. We have been building on that line. We're in a good spot now. It's just making some tweaks here and there to make sure that we are optimizing that investment and getting the unit economics we expect out of it.

Just one last question. Just wanted to get a sense for the commerce business, just trying to compare the opportunity in the B2B market versus the B2C.

Yes, David, Laurent here. So, what's very interesting in the B2B market first of all, is the scale of a lot of our customers from a combination of catalog size and entitlements, think about pricing and think about availability of products and so on. So, you start with that foundational -- so that's a foundational challenge that we address at a scale that is quite unique in the market.

And then what is -- was quite exciting for us is that now these customers are starting to experiment with convergence between classic commerce and also some knowledge functions. So we're seeing their own customers, their own shoppers starting to ask queries that maybe commerce, maybe support and having the convergence of those 2 together opens up a lot of possibility from an experience standpoint. And we believe that we're uniquely positioned to address both sides at the same time.

[Operator Instructions] Our next question comes from Suthan Sukumar with Stifel.

For first question, I want to touch on the sales front. What would you call out as having changed the most sequentially with respect to your customer conversations for new deals with respect to initial scope, use case adoption? And can you provide an update on the ongoing ramp-up and efficiency of your recent sales hires?

So thank you for your question, Suthan. I think that we're seeing -- one of the things that we're seeing is that deals are becoming larger and therefore, sometimes more complex. And as Brandon said, now happens that they take a little bit more time in some cases. So that's something that overall, I think it's positive, but has changed a little bit the texture of the deals that we're seeing. And of course, commerce is quite robust, and we are seeing these -- again, this convergence of commerce and knowledge as a next step of initial commerce deal potentially that is something that we are seeing as something that is evolving.

Yes. Susanne, on the efficiency question, look, as you can probably guess, pleased with some areas, work to do in others. I think that's natural as on the journey we are on. And so we're reacting to the data as we see it and making the adjustments you'd expect us to. But overall, headed in the right direction and pleased with the progress.

Great. For second question, I wanted to touch on the SAP relationship. This -- to me, it sounds like this is humming quite well. Can you provide an update on sort of their broader agentic AI strategy with Joule? And what's your level of exposure there and how you expect to be working with them on that? I'm just kind of curious if the model here will be similar to what you guys have in place with Agentforce? Or could this be a different model altogether?

Yes. So, we have a relationship -- multiple relationships with SAP. SAP is a very important customer of Coveo. As you saw with the with the Forbes article and the amazing case study on their SAP for Me portal. So, there's SAP the customer. There's SAP to partner with I would say, a focus on e-commerce, but it's now expanding into the other dimensions of CX starting with customer service. So, we have a partnership also with them on that.

So, SAP's strategy is to bring Joule as the front end from a copilot/agentic perspective on top of those different properties that they have from a product portfolio perspective, but they also want their own customers to use Joule on top of their own customer-facing assets such as SAP for Me. It is planned that Coveo will play a pivotal role into this Joule version on top of SAP for Me of the agentic version.

Coveo will bring the consistent relevant content that we're bringing on the SAP for Me classic portal available also into this Joule interaction point, so customers will be able to ask a question on Joule that is consistent with what they saw on the SAP for Me portal. So that's something that is happening right now that is being built and optimized. And we expect that once we have that, it will be hopefully an amazing example for SAP customers to adopt in the future.

That appears to be our last question. I'll turn the conference back to Laurent Simoneau, Co-Founder and Chief Executive Officer, for any additional remarks.

All right. So, thank you again, everyone, for joining and to our shareholders for your continued support. We look forward to updating you at our next earnings call after our Q3 results. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to Coveo's 2025 Annual General Meeting of Shareholders. [Foreign Language] My name is Laurent Simoneau, and I am the CEO of the company. With me here on this virtual AGM are Brandon Nussey, Chief Financial Officer of Coveo; and Jeremie Ste-Marie, the Vice President of Legal Affairs and Corporate Secretary of Coveo, as well as a number of other executives and Board members in listen-in mode.

As you know, the company has decided this year again to conduct the meeting virtually by way of a live webcast to maximize shareholder attendance for those who would be unable to attend the meeting. All shareholders, regardless of their geographic location, have an equal opportunity to participate in real time and vote at the meeting.

Dear shareholders, this is an exciting time for Coveo. We're seeing clear momentum in the market because our innovation is relevant. Customers are now better educated on the benefits and challenges of applied AI, are moving past experimentation toward adoption, and are recognizing the uniqueness and necessity of our AI relevance platform to support their AI and generative experience transformation efforts. That shift makes our path clear. We will aggressively pursue our opportunity while delivering exceptional customer experience.

This year, I believe we have cemented our place in the AI ecosystem and believe that the groundwork we have laid over more than a decade ago is paying off. Our Relevance Augmented Generative Answering product is recognized as market-leading, and we're contributing to agentic AI ecosystems to ensure consistent, trusted outcomes where it matters most, search, retrieval and reasoning over data. We deliver AI relevance across both knowledge and commerce use cases for both customers and employees. Our Coveo AI-Relevance platform brings it all together with business optimization AI models that work in unison across all data to achieve specific business outcomes, delivering unmatched relevance for each individual user. Needless to say, we believe we are positioned to lead.

This year, we've continued to invest in fast and leading innovation while maintaining operational discipline, improving profitability and generating a solid positive cash flow business model, setting the foundation for long-term efficient growth and we're now accelerating our investment to scale. In terms of financial results, this has translated in fiscal 2025 being another great year for Coveo. During fiscal 2025, we grew our SaaS subscription revenue for our core platform 11%, delivering USD 11.1 million of cash flows from operating activities, a 164% increase compared to the prior year, delivered growth of 50% in new business bookings for the second half of fiscal 2025 versus the comparable prior period, continued to drive meaningful land and expand transactions with our generative AI solutions, and continued to sign and expand flagship customers on our platforms such as Docusign, ABB, SAP, Vanguard, Edward Jones and a number of others. All of the four going despite a challenging economic and trade environment.

But we are even more excited for the future of Coveo. We believe our product is built to lead and that we have the team and leadership to scale it. We are entering the next phase of the Coveo story with clarity, conviction and confidence. We're grateful to have you as shareholders to stand by our side as we continue to scale it.

Now for the formal part of the meeting, I would like to make a motion to have Brandon Nussey, our CFO, act as Chairperson of this AGM in accordance with Section 11.8 of our general bylaws. This motion is already been seconded by John Grosshans, our Chief Operating Officer, who is also a shareholder of the company. Any questions or opposition?

Great. I can now confirm that Brandon Nussey will act as Chairperson of this meeting. Brandon, over to you.

Thank you, Laurent. Good morning, everyone. This is Brandon Nussey, Chief Financial Officer of the company. [Foreign Language] Before we start the formal portion of the meeting, I would like to make a motion to have Jeremie Ste-Marie, our Vice President of Legal and Corporate Secretary act as Secretary of this AGM also in accordance with Section 11.8 of our general bylaws. This motion has already been seconded by John Grosshans, our Chief Operating Officer, who is also a shareholder of the company. Any questions or opposition?

Great. I can now confirm that Jeremie Ste-Marie will act as 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's rules.

Thanks, Brandon. Good morning, everyone. [Foreign Language] To ensure that the meeting proceeds in an orderly 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 who are attending the meeting from all around the world. As you can see for convenience, a live French translation is being provided. Copies of all 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 the 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 the business or more appropriate at the formal Q&A session of the meeting, which will occur after the management presentation.

Following adjournment of the formal business of the 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 per question. Questions from multiple shareholders on the same topic or that are otherwise related may be grouped, summarized or answered together for efficiency. Follow-up questions will only be addressed via e-mail to [email protected].

The Chair of the meeting, Brandon Nussey, reserves the right to edit or reject questions he 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 have the opportunity to ask questions. The Chair of the meeting, Mr. Nussey has brought authority to conduct the meeting in an orderly manner. To ensure the meeting is conducted in a manner that is fair to all shareholders, the Chair may exercise broad discretion in the order in which questions are asked and the amount of time devoted to any one question.

The company does not intend to address during this meeting questions that are either irrelevant to the business of the company or the business of the meeting related to material nonpublic information of Coveo of a personal nature, including any question related to personal grievances, derogatory references to individuals that are otherwise in bad taste, hostile or otherwise disruptive to the orderly conduct of the meeting out of order or not otherwise suitable for the conduct of the meeting, the whole as determined by the Chair and its reasonable judgment. Coveo rep will contact you after the meeting if your question is of a personal nature and best addressed privately.

Today's vote on the items of business will be conducted via electronic ballots, and you will be required to vote on each item of business in real time. Voting will open upon commencement of the formal portion of the meeting and remain open for your vote at any time until the poll is 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've already submitted your voting instructions or have already voted prior to today's meeting, not required to vote again today. If you decide to do so, you will be revoking your previous voting instructions.

Finally, we want to remind shareholders and duly appointed proxy holders that in the event of a technical malfunction or other significant problem that disrupts the orderly conduct of the meeting, the Chair may adjourn the meeting, recess the meeting or expedite the meeting and/or take such other action as he determines appropriate considering the circumstances.

Okay. Thank you all for listening to these rules. With that, let's call the meeting to order. Brandon, over to you.

Thank you very much, Jeremie. The meeting will now come to order and per the powers vested in me by our bylaws, I appoint Francine Beauséjour and [ Jenny Koncam ] of TSX Trust Company here with us today in listen-in mode to act as scrutineers for the meeting. I wish to note that in addition to folks at TSX Trust Company, we have a few other people here with us in listen-in-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 MD&A and all other required meeting materials were made available to all shareholders. All such materials can be found under the company's profile on SEDAR+ at www.sedarplus.ca and on our Investor Relations website. The Secretary has further confirmed that the notice of meeting, the notice of availability of materials in a form of proxy and/or of VIF as applicable were mailed on August 11, 2025 to all shareholders of record as of July 28, 2025, as evidenced by an affidavit of mailing provided to us by the company's transfer agent, TSX Trust Company. The affidavit of mailing is available for inspection by any shareholder. I ask that the Secretary of the meeting file a copy of such affidavit with the minutes of today's meeting.

We've also been advised by the transfer agent and the meeting scrutineers that the holders of at least 25% of the aggregate 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 two persons entitled to vote at this meeting are virtually present or represented by proxy, such that we now have quorum for the meeting per the company's bylaws. I ask the Secretary of this meeting to file a copy of the scrutineer's report with the minutes of today's meeting. Therefore, I declare this Annual General Meeting to be regularly called and properly constituted for the transaction of business.

The voting polls will now be opened for all resolutions. 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 votes cast be voted in favor of the item of business in order for the corresponding resolution to be passed. I wish to inform each and every one of you that we have been informed by the transfer agent and scrutineers that given the number of votes received prior to the proxy cutoff, each motion presented before you today is currently expected to be carried.

Finally, I note that today's meeting format -- I note that given today's meeting format, our Chief Operating Officer, John Grosshans; and our Chief Technology Officer, Marc Sanfaçon, both of whom are shareholders of the company, have agreed as shareholders and 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 on motions presented before you today, please let us know by writing in the 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 statements for the fiscal year ended March 31, 2025, and the auditor's report thereon. First, I submit the company's consolidated financial statements for the fiscal year ended March 31, 2025, and the auditor's report thereon 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 the company's financial statements for the fiscal year 2025, the applicable laws and exemptions therefrom.

Having considered the length of time needed to read 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, 2025, and the auditor's report thereon be waived. And I now place the company's consolidated financial statements for fiscal '25 and the auditor's report thereon before 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 fiscal 2025 and the auditor's 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 applicable 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 seven. All directors currently sitting on the Board of Directors of the company are standing for reelection at the meeting except for Shanti Ariker and Isaac Kim. I would like to thank Ms. Ariker and Mr. Kim personally and on behalf of Coveo for their work on the Board over the past few years. Further information on the seven 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 on our SEDAR+ profile.

I confirm that all nominees are eligible for election and have accepted to serve as directors of the company, should they be elected. As previously mentioned, all motions have been pre-moved and pre-seconded. So I hereby confirm that each of the seven persons nominated to be elected as directors as set forth in our management proxy circular are up for election to hold office until the 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 for a vote on the election of each individual standing for election on Coveo's Board of Directors. Would all shareholders and duly appointed proxy holders please enter their votes? We will give you 1 minute to do so and then continue to 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 have been auditors of the company since its incorporation in 2004. As previously mentioned, all motions have been pre-moved and pre-seconded. So I hereby confirm that a vote can be taken on the appointment of our current auditors, PricewaterhouseCoopers LLP as auditors of the company for the ensuing year and the authorization of the Board of Directors to fix the remuneration. Are there any questions?

As there are no relevant questions on this item of business, I now call for a vote as regards the appointment of our auditors and the authorization of the Board of Directors to fix the remuneration. Would all shareholders and duly appointed proxy holders please enter their votes? We will give you 60 seconds to do so and to complete any other missing votes and then officially close the votes for this year's meeting. The carrying of all motions presented before you 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 the preliminary results and announcements regarding the carrying of the motions presented before you today.

Thank you all for your patience. It's my pleasure to confirm that all resolutions presented before you today have been formally carried and adopted with a substantial majority of the votes cast in favor of each resolution. As such, the Secretary and I confirm that the seven directors standing for election as set forth in our management proxy circular have been duly elected, and that PricewaterhouseCoopers have been appointed as auditors of 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 voting results, which will both be filed under our SEDAR+ profile. As there is 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 is over, I will present on the business and activities of the company and talk about the year ahead. I wish to remind shareholders that questions submitted during the meeting that did not specifically pertain to an item of business will be addressed at the end of the presentation.

First of all, we, of course, want to thank all of our customers, our employees, our investors, all for your continued support in Coveo. It's interesting times for the business, of course, with lots going on in our market and lots going on with the company. As Laurent introduced, at Coveo here, we help our customers leverage the benefits of AI search and generative experiences to deliver on key business challenges around two primary areas: how do they access their enterprise knowledge to drive better business outcomes around things like customer service, how your website performs, how your employees access knowledge and how your commerce site performs, how your customers find products, get recommendations and better convert commerce site.

We do this for some of the world's biggest companies across several verticals, customers like you see on this slide here. That's where we're focused, and that's where our value prop really shines. These customers have millions of end customers, lots of complexity in their business and are eager to see the benefits of AI to transform some of their own business outcomes. We work with customers like SAP. SAP Concur was an early adopter of our Generative Answering product and saw significant results from it, 31% reduction in support case volumes, leveraging Coveo's Generative Answering for their customer service portal, resulting in EUR 8 million -- over EUR 8 million in savings to the business. We're now extending that relationship into SAP's global customer portal, SAP for Me, and SAP continues to be a wonderful customer and partner of the business.

Companies like LCBO, we power the commerce site behind it. And we've been able to significantly improve conversion of that site, working with LCBO, greatly improving conversion rates and helping the performance of the site overall from a commerce standpoint. Companies like Zoom leverage our generative answering for their own customer support portal, and companies like Zoom have seen 20% case deflection by turning on this functionality, resulting in significant benefits to them. And of course, Xero, one of our first adopters of generative answering solution leverages Coveo, has seen 21% case deflection and is a huge customer advocate for Coveo. So these are some of the companies we work with in terms of customers.

We also are recognized as a leader by all the leading industry analysts. And we work with some of the biggest platforms on the planet, helping them with their most complex customer use cases as well. SAP is a wonderful partner who help us bring the benefits of AI search and recommendations as an endorsed partner to their customer base. We're an early partner of Shopify as they go into the enterprise space and commerce. We are an AWS partner, increasingly leveraging Bedrock in our own solutions. And of course, Salesforce is a long-standing partner of the business, primarily around the customer service use case for us.

Our platform is valued by our customers because at the end of the day, these large enterprises are all trying to achieve similar things. They've got millions of customers that they want to drive personalized outcomes for, whether that's customers who come to the commerce site, their basic website. There's customer service portals or their internal workplace employees as well. The challenge, of course, is their data is everywhere. And they have structured and unstructured data that might be most responsive to those queries and those customer experiences. And they're trying to leverage the power of AI to bridge the gap, and that's where Coveo comes in.

We've got proprietary purpose-built connectors to all the major source systems inside a large enterprise. We bring that together. We protect the security and permissioning inherent in those source systems. We do things like semantic and vectorization of that data. We then run it through our own purpose-built AI models to power the end use cases that our customers are after. We, of course, also leverage the benefit of LLMs to power things like generative answering to allow that to be more conversational in nature and increasingly now are active in the agentic space as companies look to leverage the benefit of virtual agents, Coveo underpins a lot of potential use cases there.

What companies are recognizing is that solutions like what Coveo offers around RAG, retrieval augmented generation, in our case, relevance augmented generation are critical to how they power generative and agentic AI use cases. Because data is everywhere and because various data sources can be responsive to a given customer query, our ability to bring that together is valued tremendously by our customers. And that allows us also because we're good at relevance and retrieval to improve accuracy and precision and reduce hallucinations for our customers. Of course, our customers greatly value our agnosticity in this market. We're agnostic to content source. We're agnostic to end experience, and we're agnostic to the LLM you choose to use. And that agnosticity goes a long way in this market here today. We're able to do this with speed, high security and in a cost-effective manner as well, of course, all very relevant to large enterprises.

The agentic space is currently very -- it's a key trend happening in our market right now. And we see the demand for Coveo to underpin some of these agentic experiences continuing to be strong. We think the same approach that we brought to generative AI will be relevant in the agentic experiences, and we're working with some of the largest agentic players in the space right now to help their customers leverage the benefit. That's showing up in momentum. This is a subset of customers who have undergone a selection process, who have generative AI plans, who have selected Coveo as part of the technology stack to pull those off. What you'll recognize here is these are some of the biggest companies in the world. These are brand name companies who have every vendor in the planet calling on them to help them with AI needs, and they've all selected Coveo to help drive a portion of their generative AI projects.

Not only have they selected us, they're going live, full global production rollouts, and standing up and talking about the benefits they're achieving. And in a world that's filled with hype right now around AI, where you'll read published studies recently from likes of MIT saying that 95% of enterprise generative AI projects have failed, our customers are seeing great success leveraging Coveo for their specific needs. We're proud of the results we're achieving here, we're proud of the customers that we have, and proud to see some of the use cases and proof points we have here today.

But much more to do. As we transition into the financial aspects of the business, just a quick refresher on our business model. We are a subscription-based business. We are not consumption-based. We do not have variable revenue streams. Our customers sign up to typically multiyear agreements with fixed subscriptions, which gives us a lot of forward visibility into our revenue. As I mentioned, we do serve the enterprise segment. On average, we get about $200,000 in average ARR per customer, and that has been growing nicely over the past couple of years. We have a land-and-expand model where we try to land a customer with a specific use case and see great opportunity to expand that over time. Our net expansion rate was 107% for our most recent fiscal year. It was 108% in our most recent fiscal quarter, Q1 of fiscal '26. And we see a lot of opportunity to see that continue to grow.

Fiscal '25 was an important year for the business. We saw, after a period of disruption, momentum return into the business as customers moved from experiments and pilots into full production rollouts, some -- a little like what I showed you on a couple of slides ago. We saw our bookings momentum return in the back half of the year as we forecasted it might. And that has led to reaccelerating revenue growth rates and improved net expansion rate. And importantly, we're now a profitable business. We generated $1 million of adjusted EBITDA last year and over $11 million of free cash flow or of operating cash flow for the period.

We've been driving a very efficient model over the past 4 years. You can see in the top chart. We've basically been operating with the same expense envelope for the past 4 years, making difficult trade-off choices within, making different prioritization decisions within, but really showing the leverage of the business model. We went from 4 years ago, losing more than $30 million in cash to generating over $11 million in our most recent year. That puts us in a great position today. We're seeing momentum return. We've had a number of consecutive quarters of bookings momentum. That's leading to reaccelerating revenue growth rates. And our profitability position here has now afforded us the ability to reinvest into the business for further future growth.

We've been making select investments as we enter our fiscal '26 around expanding go-to-market, doubling down on some innovation projects and really looking to capitalize on some of the recent momentum we've been seeing in our pipeline with our customer base and are optimistic about our ability to see our revenue continue to reaccelerate.

So with that, that will formally conclude the management presentation. And we will now open the session up for questions -- sorry, I will now turn it back to Jeremie Ste-Marie for next steps for the meeting.

All right, folks. This is Jeremie, VP of Legal 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 presentations that were not yet addressed. For each question we answer, I will read out the question as well as the name of the person who asked the question, and one of the people here with us today will answer it. 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 formally declaring the meeting closed. Thank you all very much for joining us today. We are looking forward to seeing you next year.