Docebo Inc. Price & Performance (DCBO)

Thank you, Julianne.

Earlier this morning, Dolcebo issued its Q4 twenty twenty four results. The press release, which included a link to management's prepared remarks and our quarterly investor slide deck, were all posted to our Investor Relations website.

Morning's call will allow participants to ask questions about our results and the written commentary that management provided this morning. Before we begin this morning's Q and A, Dopechayba would like to remind listeners that certain information discussed may be forward looking in nature. Forward looking information reflects the company's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected the forward looking statements. For more information on the risks, uncertainties and assumptions relating to forward looking statements, please refer to the Chabot's public filings, which are available on SEDAR and EDGAR. During the call, we will reference certain non financial IFRS measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please see our MD and A for additional information regarding our non IFRS financial measures including reconciliations to the nearest IFRS measures. Please note that unless otherwise stated, all references to any financial figures are in U. S. Dollars. Now, I'd like to turn the call over to Docebo's CEO, Elacio Artupo and our Interim CFO, Brandon Farber.

Operator, we're ready to take questions. Our first question comes from Robert Young from Canaccord Genuity.

Great. Good morning. You said in the release that you had an improvement in your competitive position.

You noted a bunch of new product releases that inspire and in the back half of the year. And so I'm just can you talk about adoption with existing customers and maybe the recent new wins of these new products been influencing that? Good morning, Rob and everyone. We are very satisfied modules that we've recently released, namely our offering of community and analytics component. They have been meaningful contributors to our quarter and we have greater expectations for this year and the years to come. But let me take the opportunity given the question to level set where we are today at Docebo strategically from a product standpoint and where we're going in the future. First, I'd like to underscore where we are today. Today, just as a reminder, we are the single most appreciated enterprise LMS in the market addressing both enterprise and customer experience needs. Okay? And as we do that, currently, we serve over 40,000,000 users worldwide. And this number is only set to grow. We expect this to reach about 100,000,000 users over the next five years and that's a pretty conservative estimate. So [indiscernible] enable for our customers And today, as you all understand very well, we've essentially supported upskilling and reskilling strategy scale, okay?

And as our users grow and continue to grow, what we've been doing with these new products, these new modules, continue to add capabilities and Engine AI and AI are helping us accelerate Now that is the picture of today. But what's changing? The workforce is changing. There is workforce transformation occurring. Over the next five years, okay, about 40% of the workforce and their skills are going to change dramatically. And even more, organizations in most instances don't have the tools and the knowledge to understand their current skill gaps. Okay? So we are effectively anticipating this transformation in the market. We are going to execute aggressively on our roadmap to transform what it is to Cheggo today the LMS for enterprises to an AI first learning platform that addresses a broader set of learning needs. Okay. What does that mean? In short, LMS learning means addressing primarily passive use cases combined with classroom or virtual classroom at best. But the future of learning, the transformation that is undergoing requires a different approach. That is hyper personalized learning automated, highly experiential hands on and effectively measurable. Okay? That is our vision. Our vision is to transform the table from the strongest enterprise LMS into an AI first learning platform and ecosystem, that adapts to individual needs.

And finally, the way we're going to do that is to leverage Gen AI in a really significant way. And we're going to leverage techniques like AgenTek to augment and accelerate things like platform administration business process management. But I can't share it all because the Chamber Inspire is coming in April, I hope to see many of you there. And I will be sharing a lot more insight pertaining to the strategy. In conclusion, I am so happy with the recent updates to our product and in new modules. But I'm equally thrilled and incredibly excited about our strategy and vision for the future.

Okay. Thank you. And my second question, just could you give us a quick update on FedRAMP all the activities where traction is and Whether there's any impact from Doge on the current customer base or on the engagement you've gotten around FedRAMP, how that might be changing your expectations for the near term? And I'll hop back in the queue. Exciting update and I pass it to Brandon Farber.

Hey, Rob, I'll take that question.

So let me take a step back. So first of all, during the quarter, we got listed on the FedRAMP marketplace with a sponsoring agency. Subsequent to year end in January, we started the audit process with FedRAMP TMO office and it's going very well. We're two months into that process. And with the visibility we have today, we expect to achieve ability to operate, which is considered ATO status. By the end of Q3. At that point, we can start bidding and winning on contracts. With regard to DOGE, if you actually look at the White House press release, the Doge's mandate Section four says it is required or is it going to look at modernizing federal That plays directly into Docebo's hand.

If you think about HCF software in the government space, we have maybe roughly 60% remains on prem.

This is clunky old software that was likely built ten to fifteen years ago And if you think about how much money they have to spend on maintaining this, This is managed service provider I. E. Consulting spend or large bloated internal IT that are maintaining the system that is just not best in breed. There's no doubt in my mind that it'd be more efficient They spend less money moving from on prem to the with a much better experience. Secondly, we've been tracking our fees in the market we've noticed a trend where certain of our competitors have won contracts and the RFP states, we award this contract because they are the only vendor that was Rob, if you think about price discovery, if you think about the ability to figure out what is the actual market price of a cost per user, you can't do that by having one vendor. Personally, as I've on the go, I've won as many software providers SEN REM compliant as possible to three vendors respond to RFP so that you can actually figure out what is the fair market value for this learning software.

Needless to say, we are just excited about the FedRAMP opportunity today as we were twelve months ago.

Okay.

Thanks for the color. I'll hop back in the queue.

Next question comes from George Sutton from Craig Hallum.

Thank you. Alessio, I wondered if you could give us a little bit more of a sense on the AgenTek AI offering Within the learning is this really within the learning ecosystem enhanced engagement with this give me as a user versus how I might have engaged before?

Great question and super exciting. I would say, Agentic AI is relatively So a new trend that certainly has gotten media attention over the past several months. But at the Cebo, we've been thinking about the underlying problem argentic addresses for a really long time. The underlying problem, one of the main key issues that in Argentina strategy addresses is the need for the software to be easier to use for automation to be increased and for time to value to be Argentic is a response to those needs. We've seen over the past several months across the board several startups operate agenetic marketplaces and grow very fast. Effectively capitalizing on the need to integrate multiple whether they are LMSs or EOPs or CRMs, in basic task management that are time consuming consuming tedious and repetitive. There are short term, mid term and long term wins that we're thinking about in this regard. We're very pragmatic in understanding that our customers in this era today and in the future want an LMS that is easier to manage so that their energies and their skills be put to use in more qualitative parts of the work.

And so what we want to accomplish is a strategy that plays two folds. Number one, we want to introduce agents that will enable our customers to execute simple to very complex tasks within the Deutsche Bank platform. That can be something as simple of running a report or something more complex, a workflow within the system that requires decision making ability. Because agentic doesn't just mean going from feature A to feature B, but also introduces the level of decision making that agents intelligently are granted to do. To do this, we've built our own proprietary AI platform as a service. This has been our work for the past couple of years since we have acquired EduGo, and we've only started under my predecessor, Claudio, and is now bearing fruits and it's substantially our backbone for anything AI acceleration. Finally, we're going to use AgenTek to dominate the market How are we going to do that? We're going to extend the agents not only to automating what will be features within the Chevo. But it will become a place where L and D profession can improve not only Docebo's life, but tasks across Docebo and other platforms, whether they are the other LMSs other skilled management platforms, Our goal is to create a new UI for L and D execution and L and D professionals.

And agents allow this.

Agents are the new integration framework. Agents in the future will be the new UX. And we are all over it. I hope that answers. Super. I look forward to seeing that at Inspire.

So one other question, you've had multiple key leadership changes over the past several months.

I'm just I think it'd be helpful if we can get an update on how the group is functioning together any sort of changes to the go to market plans Just a general update there, I think would be helpful.

Absolutely. So since becoming CEO, even starting from the interim phase, and then permanent as of a few months ago.

I've always thought it's imperative that we keep equipped ourselves with the skills needed to win the market over the next five years. So the changes that have occurred have that priority and that objective. We have brought on board recently very talented individuals, leaders in their respective categories. I name Brandon Carson, for example, undisputed leader in learning strategies that has operated with some of the best companies in the world. [indiscernible] that has operated at high growth NIC scale companies in setting up very modern people centric These people are going to be at the center of our transformation as a company that as I described before, will require new skills in this new AI first era. Now with that said, I also want to acknowledge that talented individuals like Sukarn Meta, our soon to be former CFO, are leaving the company. And listen, Sukaren is not only a friend but one of the most talented people I've met. [indiscernible] that was very exciting for his life. But the part that I am more excited about is that we took the time to develop internally our successor [indiscernible] is a phenomenal leader. And the Chebo has this strategy in mind this capability, building leaders from within us.

That I'm super proud of. It shapes our culture. So I believe combining new strong leaders with the existing growth of leaders from within, that preserve the existing culture of the company is the right formula to win in the long run.

Great stuff. Thank you.

Our next question comes from Joshua Baier from Morgan Stanley. Please go ahead. Your line is open.

Thank you for the question. I was hoping you could give an update on where you are as far as the larger ACV lands are you landing wall to wall as companies are choosing you for your core LMS and you're ripping and replace [indiscernible] on landing in a single department or for a specific use case and then expanding from there?

We are not necessarily lean focused, Josh, on a all in win wall to wall from day one.

Our goal is to enter organizations and leverage the fact that when we enter a company, we have a services and success organization that enables us to gain trust, credibility and value very quickly. The example that we have published this release of Lululemon where the signed with the shareholders 2021 and recently expanded a customer experience related use case is would say, a premier example of our strategy. With regards to what we call internally as whale deals, organizations that are lever reach out to the shareholders as part of their RFP process for a more work to wall or end to end use case those deals are complex in nature. They are not very easy to pin down to the existing months of signing. And as a result, they are not easy to forecast exactly in the right quarter. Procurement strategies remain very conservative. As such, we not always are able to forecast with exact precision in any given quarter. But the good news is those deals continue to augment both in our pipeline and it's reflected in our average ACV that has been growing significantly in quarter four as you can see from $70,000 to $83,000 per new customer.

I'm very excited about our progress in enterprise I believe there is a lot of more work to do. At the end of the day, we're a company that $220,000,000 or so of ARR has a lot of steps to take to improving our execution and efficiency. We're on the right trajectory and with the product strategy that we have in mind, combined with the customer obsessed mentality that we have in our DNA, I believe that these deals will become not only more and more, but we will be able to even forecast them better in the future to come.

Thank you. And one for Brandon on on margins. The sales and marketing and R and D as a percentage of revenue, was up slightly. I guess I was just wondering, is there more room for operating leverage in these areas? Like is that where this headcount reduction comes in? If you could talk a little bit about the different expense categories in 2025 and what we should expect? [indiscernible] Yes, Josh.

Regarding headcount reductions, I would say it wasn't really It was broad versus, so we didn't look at specific department and we didn't look at specific region. It was broadbrushed across the company. Regarding sales and marketing, is there ability for efficiencies?

The answer is yes.

We truly believe that is the response for every single department. Roughly twelve months ago, we started on this journey of implementing not only AI in our product, but utilizing AI internally. We've achieved significant efficiencies from pipeline generation, sales operations customer support, R and D, and we're really just in phase one of that.

So part of this headcount reduction, part of this efficiencies you're going to see going forward is just a result of us being able to do more with less.

That's helpful. Thanks. Our next question comes from Ryan MacDonald from Needham. Please go ahead. Your line is open. Thanks for taking my questions. Nick, first to start, it was noticeable the sort of in through SI Partners in the quarter.

Just curious as to sort of the magnitude of ramp up that you're continuing to see with your SI partners. And as we think about how this translate into '25, can you talk about the sort of percent of say pipeline that is partner driven at this point versus direct? And how is that informing your incremental investments in sales headcount for '25? Thanks. Relative to Size, the first thing I would like to say is we have built several months ago, we have revamped and rebuilt and grown our strategic partnerships group under the leadership of a phenomenal leader named Travis Burk.

He has built a team that together with our revenue if you will, relationships in a very significant way. So much of the work that we much of the outcomes we're seeing are the prompt of a strategy that began with these investments and under this leadership. With that in mind, we have primarily today two SIs that contribute to more than 50%, really more than 70% of the SI related deals. Meaning deals that are influenced or originated by a size. As far as the growth of these deals, and as far as how this will continue to progress, we expect, of course, that it will be natural that our success in the federal space once ATO is achieved will be tied and supported by the strategic alliance that we formed several months ago and announced with Deloitte. We have a very significant practice in that in the government business as a whole, also public sector, but certainly will be helpful to accelerate penetration in the federal space. That is no doubt about that. But with regards to the non government book of business, what we're seeing is the following trend. We're seeing a situation in which RFPs happen where selected SSI are already inside the account and facilitate our short listing because they have trust and knowledge of Locebo's capabilities.

Okay, or a situation in which NSI may not be yet in the account. However, we have co selling strategies and entering any Fortune 1,000 company or any large company [indiscernible] as opposed to combined efforts with companies like Accenture or Deloitte Of course, as it's a meaningful go to market emotion and has a strong impact on win rates. So we have a lot of work to do more on SIs. But we're very satisfied. And as far as the percentage of deals where NICE is attached to pipeline, we don't disclose that number directly, I can say it's very meaningful and trending up. [indiscernible] part of that plays into our revenue guide as well because professional service revenue we do expect to be relatively flat year over year. And that is a direct contribution to the success we're having with our large strategic SIs where they're taking 100% of the professional service revenues We're taking 100% of the high margin accretive subscription revenues and from a headcount perspective, which you mentioned as well, where it really becomes more efficient is that we require less people professional services because they are the ones doing the implementation. Helpful color there.

I appreciate it. Maybe just follow-up. Just generally, curious about the generative AI dynamics that you're seeing in the market particularly as we look at a number of companies, Docebo included as you've talked about, they're sort of undergoing this evolution and really shift and focus to integrate generative AI more within their within your infrastructure and you're taking a strategic initiative to sort of reduce staff as a part of that.

Are you seeing I think as you sort of think about that and sort of other companies doing sort of similar approaches, one thing we picked up in the HCM space is that this creates a potential risk of let's call it, fewer seats or sort of down sells because of just reduced staff as more companies invest in GenAI.

Is that a risk for Docebo, as you think about $25,000,000 and beyond of just sort of this reduction in headcount sort of potentially having a potential impact to hurt the top line? Or are there ways that you're contracting to be able to insulate yourselves from that?

We actually are taking let's say a view that the JEMAI events and capabilities that we have on our roadmap will be accretive not only to our revenue by generating more opportunities for new streams of revenue relative to new products we're going to be launched But also offer an opportunity to increase the stickiness of our days. That is done by not only introducing new Gen AI features, but infusing Gen AI in our existing product. In a way that customers will be using our plus to doing more things. For example, creating content pervasively in the system in multiple ways. We have not seen a trend where we expected this to necessarily have an impact on the seats aspect, but we will monitor any future trends.

I'll just add that. Just keep in mind, Docebo is 65% of our ARR is hybrid and external. Customer experience. So So when we think about Gen I, when we think about headcount reductions, that ARR is relatively protected. Secondly, you'll note in the prepared remarks, we actually did an incredible job this year signing long term contracts We had about a 200% increase in contracts of five years or greater.

That just shows the stickiness and the willingness of the enterprise buyer to sign long term deals. So These are deals where the headcount, the user base is locked in for a long period of time.

Thank you.

Our next question comes from Suthan Sukumar from Stifel. Please go ahead. Your line is open.

Good morning, gents. First, I wanted to touch on the attach rates of 15% plus for the new products that you launched late last year.

This is ramping up pretty significantly, I think, better than expected in my view. Which is pretty impressive. Can you speak a little bit about what offer offerings are seeing the most demand? And how much of an impact is the new pricing strategy playing here.

I'll start off on the new pricing angle. Obviously, we recorded very press new logo ACV of $83,000 which was up 17% year over year.

There's a number of puts and takes in that number. It's really hard to wrap apart how much does it relate to increased attachment rates and how much relates to the new pricing model. From a new pricing model perspective, it's gaining significant traction and it's really resonating with our customer base. We really do expect the benefit of higher ACV on new logos, and improved retention rates over time. When it comes to attach rate, it was really broad based across the new products. I would say one product was performing better than the other. [indiscernible] solving important use cases, important problems. And achieving significant ROI for our customers.

Okay, great.

Thank you. Next, I wanted to touch on on FedRAMP. It sounds like you have a little bit more visibility here on the timelines and the process, you're going to be calling for Q3. Is this final certification milestone some that you can press release when it happens? And will this still come with a with a deal contract in hand? If so, is that is that baked into guidance today? [indiscernible] we expect to achieve ATO status at the end of Q3, which is moving start bidding out mini contracts. We do not have a material amount of U. S. Federal government contracts that are guiding do have a sponsor, which means we have a contract. That contract has the ability to expand over time, but that's not in our guide at the moment. Got you.

Okay, great. Thank you.

Our next question comes from Richard Sy from National Bank Financial. Please go ahead. Your line is open.

Yes. Thank you.

With respect to the restructuring, what are you maybe elaborate a little bit more I just want to be clear here that it's driven primarily by sort of the increased automation and not because of the macro environment. And then sort of related to the automation piece, I was sort of curious what functions you're seeing replaced by AI?

Sure. As shared with [indiscernible] [indiscernible] activity was made from a position of strength as opposed from a position of need. Becoming an AI first company does not only mean building AI products for our customers.

It also means [indiscernible] leveraging AI internally, and it's really part of maturity model.

As a result of that, the skills and the talent that we need for the Dosepho and the next And our job more than ever is to have a culture that is very skills focused on the modern needs and with a strong performance management culture. This is not about cost savings, okay? And yes, absolutely, we will always run a well managed profitable business. That is a priority. But the goal is to invest back into the business a portion of the savings, okay, so that we can hire for those new skills and those new roles that are needed in the business. To deliver the mission. And then okay, invest a portion of the savings in what we preach externally I. E. Drinking our own champagne, we see upskilling.

Our employees and funding initiatives internally that accelerate our depth and knowledge of the music We're going to be launching, for example, an AI academy. Where everyone in the company for their respective roles are Valleverde AI certification tied to their role and to the extent they need to learn to reach that. That's an example of how we plan to manage our people. So this initiative is not just some cost cutting in lieu of need, it's actually proactive to prepare the company for the next five years of success. Okay.

Thank you. And my second question, has to do with capital allocation. So you have $92,000,000 or so cash in the bank. You clearly been executing well, but it hasn't really sort of been reflected in the stock price. What do you think about sort of from a capital allocation standpoint the idea of maybe sort of buying back stock or any other measures at your disposal?

Sure.

Buybacks are something that we have done in the past and continue to be a strategy that we will pursue in the future. There are different ways of deploying capital and buybacks are for sure one of the top ways we intend to use the cash on balance. The other opportunity, of course, although you haven't asked, but I understand it's part of the bigger picture is deploying this capital for strategic initiatives such as M and A. And we always continue to monitor opportunities also in the area In the past, we have looked more opportunities that we have defined as the tuck ins Some of those opportunities have been closer to the concept of [indiscernible] Now we're more open to opportunities that are going to broaden our impact in the overall earnings stack. That [indiscernible] give us an edge to accelerate that AI learning platform growth that I mentioned before. Expanding on our current capabilities. Valuations have come down in some instances. They've been fluctuating. And we monitor opportunities with a great level of attention. So those are the two primary I would say, dimensions that we are considering for capital allocation and both are on the table every day.

That's great. Thank you. Our next question comes from Stephanie Price from CIBC Capital Markets.

Please go ahead. Your line is open. Hi, good morning. Just curious if you could talk a little bit about what you're seeing in Q1 quarter to date It does seem like the Q1 guide, especially on the margin, is maybe not following the typical season patterns here. Hey, Steph.

Regarding for Q1, if you think about revenue, it's really baked from our Q4 bookings. Our seasonality with bookings is very heavy loaded towards March. So most of the revenue that we actually see from our Q1 bookings flow into From an adjusted EBITDA perspective, we are guiding 14.5% to 15%, which is impacted by a couple of things. First of all, we recognize revenue on a daily basis. So as two less days in Q4. Is about $1,200,000 that flows straight to the bottom line. Secondly, there are some seasonal aspects with costs such as the North America where benefits start off the year high then taper off throughout the year.

Okay. That's helpful color. And then just maybe more broadly, have there been any changes to the demand environment? And what are you seeing out there in terms of enterprise demand Good morning, staff first. Enterprise demand remains very healthy. And I would extend that comment to I would say, more broadly, our target priority market, which is the mid enterprise and enterprise space. Particularly, as I said before, in the question related to system integrators, we're seeing strong demand in deals above $500,000 in ARR or ACV. And those deals, albeit they are somewhat challenging to forecast given the complex procurement process. They continue to increase in quantity or units in our pipeline. Additionally, I would say that demand for our products remains on high quality. What do I mean by quality? I mean that customers that enter the pipeline more and more consistently have more than one use case address. We like that because there is a direct correlation between multiple use cases and top quartile unit economics of customers at Ocebo. We are focused essentially on creating them. Demand that is very in line with our product capabilities and strategy. That is accretive to long term success and that allows us to develop these customers over time and Brandon mentioned this before, by adding an engine that produces long term contracts, three, five, and recently even longer than that deals in terms of years.

We believe that this secular opportunity that we have ahead of us in the years to come is is incredible and we not only like today's demand, but we believe we have even further opportunities to improve it.

Thank you very much.

Our next question comes from Kevin Krishnaratni from Scotiabank. Please go ahead. Your line is open.

Hey there. Good morning. Just a question on the the net retention. It was down to 100% from 104%. I'm assuming some of that's impacted by the loss of the the large customer in Q1, but are there any other considerations we think about SMB churn Any thoughts on what happened with the net retention ratio?

Hey, Kevin. So you nailed the first one. The large customer downgrade we previously just goes impact NDR by slightly over the 1%. One aspect that impacted NDR as well is that we had a 40% increase in contracts that were up for renewal in 2024 compared to 2023. You think about Docebo, we historically ran on three year contracts. So all the customers that we acquired in 2021 were up for renewal in 2024. These are fundamentally different businesses. This is a different business environment. As you can imagine, our logo retention rate remains consistent with prior year but these customers are downsizing to the right user tier and the right module. At the end of the day, these are going to be happier customers over the long run, which we're seeing through improved NPS scores. And going forward, these customers can grow from here. So ultimately, 2024 was a tough year from a net retention perspective And Q1 twenty twenty five is actually our largest contract up for renewal quarter. But we do expect it to start inflecting from there.

So can you clarify that Brandon? Sorry, you said which quarter is your largest contract renewal quarter coming up? This current quarter, Q1 twenty twenty five.

Okay.

Okay. Thanks for that. It's great color.

The second question is on the competition Can you comment on win rates Have those been trending this year versus last year? Any specific [indiscernible] stronger than others? Just would love to get an update there. Thanks.

There have been no material changes to the landscape of competition and equally, there have been no material changes to win rates. We are working very hard and we believe that there is room to improve our win rate over the near future by A, improving our execution in the field, which remains an evergreen objective and two, arming our field team with the product that address the needs of customers at a rapid pace. In terms of competition, we continue to, unsurprisingly, substitute legacy players that don't meet the modern needs of workforce and customer experience as the customers that we are targeting. And certainly, we're seeing in the down market, meaning in the SMB space, which is not by for clarity a strategic market for Docebo, a lot of pricing pressure. A lot of crowd and a what we call race to the bottom to achieve a logo acquisition but with oftentimes negative margins. And for this reason, we have shifted years ago now our focus in the mid to mid enterprise strategic enterprise space and that's where we're focused for the years to come.

Good stuff. Thanks a lot. I'll pass the line. Thank you.

Our next question comes from Kieran Sridharan from TD Cowen. Please go ahead. Your line is open.

Hey, good morning, guys. Thanks for taking my questions.

Can you comment on the contribution to ARR growth from your current customers versus the new logos? Looking ahead, how much of your guide is in new logo wins? [indiscernible] to 2024 or 2025? '25.

So we don't disclose forward looking NUR. I think you can take part of the color I gave previously where we do expect NER to reflect after Q1 twenty twenty five. Given the fact that we did have a tough year with contracts significant contracts for renewal. Customers are rightsizing to the right, value and right user base then we can start growing them from there.

Okay.

Thanks. And then you called out [indiscernible] That baked into your current TAM calculation? And how do you think your staff on both sales and R and D as you start developing these products?

Sure. There is no doubt that this strategy as for many companies it's a nascent stage, at an early stage. We have acquired capabilities, as I mentioned prior years ago, with the acquisition of Edugo to staff our team with highly specialized capabilities. I do envision continuing to deploy investments and making investments very targeted in the in the area of highly specialized AI engineering and product leaders to augment our current capabilities. Argentic, however, is one of a few strategic initiatives. I spoke to that in detail a few minutes ago. But it doesn't stop there. Our goal is to become really these single one hub for an AI first learning experience. That starts from creating content in varying ways whether it's AI video, AI audio, podcasting, hands on virtual apps that can go on and on. Through AgenTek as an automation play. It really is a game changer for the industry. And to do that, we're going to staff the company with the brightest minds in the space And we're going to do that with a lot of conviction we're going to focus on our five year plan.

Our last question will come from Yifu Li from Cantor Fitzgerald. Thank you for taking my questions and good morning, Alexio and Brandon.

So my question is related to the launch of three new products, AI authoring, advanced analytics, and communities. I was wondering if you could give us some feedback and traction from the customers so far? And what's the customer journey like And lastly is like which of these products do you think have the most potential upside in the midterm versus longer term? And I also have a follow-up on the guidance with Brandon after this. Thanks.

I'll take the product and lead guidance to Brandon. And good morning, to you. As I said before, the impact of this product from the early days has been very positive. I don't have a magic sphere to determine what the exact ARR would be, even though as you imagine, we do have plans expectations and we are attacking those very carefully. I think one part of your question was which one of these products has the highest potential? We believe that they all have a different degree of potential. And the reason for that is they all provide benefits depending on the use case and the stage that the company is at the time of acquisition of the Chebo. There is going to be some companies in the [indiscernible] that point in time are going to index more on the power of collaboration community and others that will see the benefits in advanced content creation.

I'd like to spend ten seconds and maybe it's not true, it will be thirty seconds or a minute on the concept of offering. Offering per se is a dated concept in the industry. There are many offering technologies in the market I have been in this space for nearly twenty years operating is not a new word. It existed back then. We are not aiming to replicating the success story of some of the more well known operators. Our strategy is very different actually. I believe that the creation capability will need to be a pervasive capability across every single customer of the I believe that creation capabilities are going to be embedded in every learning strategy of any company. Whether they're used for learning structures or knowledge dissemination, creation of content, it's something that will be highly commoditized. We're thinking about that in that way. AI is a game changer. In this context. We are going to enable customers with a click of a few buttons to create a CEO, highly personalized video, in 10 different languages across the company in a matter of seconds. We're going to cut down cost by 1000% in certain use cases. We're going to be able to prove ROI in minutes So the new frontier of the learning class it's not anymore about delivering content.

It's hyper personalization. At scale through a very sophisticated learning creation engine. That's what we're building.

We have no further questions. I'll turn the call back over to Alessio for closing remarks.

We are very thankful, as every quarter for your continued support, for your questions, for your participation in our story. Like I said in the call, we have a really deep conviction in our strategy and future We are super excited about opportunity ahead. We are really, really looking forward to seeing you at Inspire where some of the things we teased today will have more color, more detailed and why not some demo. I look forward to seeing you all and thank you for your time.