Annual Recurring Revenue (“ARR”) growth of 55%
and positive Adjusted EBITDA
Docebo Inc. (TSX:DCBO) (“Docebo” or the
“Company”), a leading AI-powered learning platform, today
announced financial results for the three and nine months ended
September 30, 2020. All amounts are expressed in US dollars unless
otherwise stated.
“Customer momentum remained strong in the third quarter as we
reported 55% year over year growth in ARR and 54% year over year
growth in subscription revenue, driven by another quarter of record
new logo and upsell performance,” said Claudio Erba, CEO and
Founder of Docebo. “This resulted in our first quarter of positive
Adjusted EBITDA as a public company as we are seeing strong returns
from our investments in growth. We will continue to focus on
increasing our sales reach, expanding our relationships with our
customers and broadening our product offering to capitalize on the
tailwinds we are seeing for Docebo and the LMS industry.”
Third Quarter 2020 Financial Highlights
- Revenue of $16.1 million, an increase of 52.0% from the
comparative period in the prior year
- Subscription revenue of $15.1 million, representing 93.8% of
total revenue, and an increase of 54.1% from the comparative period
in the prior year
- Annual Recurring Revenue1,2 as at September 30, 2020 of $64.6
million, an increase of $22.9 million from $41.7 million at the end
of the third quarter of 2019, or an increase of 55%
- Gross profit of $13.2 million, or 82.1% of revenue, a 200 bps
improvement from the comparative period in the prior year
- Net loss of $1.2 million, compared to net loss of $3.7 million
for the comparative period in the prior year
- Positive Adjusted EBITDA2 of $0.6 million, or 3.6% of revenue,
compared to ($1.4) million, or (13.1%) of revenue, for the
comparative period in the prior year
- Positive cash flow generated from operating activities of $0.5
million, compared to $(1.9) million for the comparative period in
the prior year
- Free cash flow2 was near break-even at ($0.140) million
compared to $(1.986) million for the comparative period in the
prior year
- Completed bought deal offering comprised of 500,000 common
shares issued from treasury for net proceeds of $18.1 million
(C$23.8 million) and 1,225,000 common shares sold by the certain
shareholders, including the exercise in full by the underwriters of
their overallotment option to purchase 225,000 common shares
- Cash and cash equivalents of $60.8 million as at September 30,
2020
1 Please refer to “Key Performance Indicators” section of
this press release. 2 Please refer to “Non-IFRS Measures and
Reconciliation of Non-IFRS Measures” section of this press
release.
Third Quarter 2020 Business Highlights
- Docebo is now used by 2,025 customers, an increase from 1,632
customers at the end of September 30, 20191
- Strong growth in average contract value, calculated as total
Annual Recurring Revenue divided by the number of active customers,
increasing from $25,551 to $31,9011
- Signed a customer expansion agreement with one of the largest
operators of quick-service restaurants in the world to scale their
learning across the globe. Originally signed in November of 2018 to
train in 3,000 restaurant locations, Docebo will now extend
training across 24,000 locations worldwide beginning in 2021, and
will include some of world’s most prominent and iconic
quick-service restaurant brands
- Signed a customer expansion agreement with Syngenta Group, the
world's largest agrochemical company, to scale internal training
across multiple departments across their global organization
- Signed a new customer agreement with Amazon Web Services
(“AWS”) to power its training and certification products across the
globe
- Added new customer agreements with Economical Insurance,
SiriusXM and the World Anti-Doping Agency (WADA) during the third
quarter of 2020
- Received first revenues from a second OEM partner, just one
month after completing the agreement
- In the third quarter of 2020, Docebo received 14 Learning
Excellence awards with Brandon Hall Group alongside their
customers
- Docebo has also been recognized as the #1 Learning Management
System of 2020 by eLearningIndustry and has been included on the
list of Canada’s top growing companies for 2020 by The Globe and
Mail Report on Business
- Subsequent to quarter end, launched Docebo Learning Impact
following the completion of the acquisition of forMetris Société
par Actions Simplifiée, a leading SaaS-based learning impact
evaluation platform
1 Historically, in calculating average contract value,
all references to the number of customers or companies we serve
included separate accounts per customer based on their
installation(s) count. For the third quarter of the fiscal year
ended December 31, 2020 and going forward, any separate accounts
that our customers may have will be aggregated and counted as one
customer based on the contracted customer for the purposes of
calculating our average contract value to provide a more precise
understanding of this metric. The following table outlines our
average contract value from the start of fiscal year 2019 using
this updated calculation method and historically reported
values:
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
$
$
$
$
$
$
Updated Methodology
Number of customers
1,491
1,549
1,632
1,725
1,831
1,923
Average contract value (in thousands of US
dollars)
$22,468
$23,848
$25,551
$27,362
$28,454
$29,616
As Previously Reported
Number of customers
1,596
1,651 1
1,712 1
1,808
1,938
2,046
Average contract value (in thousands of US
dollars)
$20,990
$22,374
$24,357
$26,106
$26,883
$27,835
1 Includes number of customers from OEM
contracts
Third Quarter 2020 Results
Selected Financial Measures
Three months ended September
30,
Nine months ended September
30,
2020
2019
Change
Change
2020
2019
Change
Change
$
$
$
%
$
$
$
%
Subscription Revenue
15,101
9,802
5,299
54.1
%
40,699
26,036
14,663
56.3
%
Professional Services
995
784
211
26.9
%
3,462
3,109
353
11.3
%
Total Revenue
16,096
10,586
5,510
52.0
%
44,161
29,145
15,016
51.5
%
Gross Profit Margin
13,213
8,476
4,737
55.9
%
35,597
23,087
12,510
54.2
%
Percentage of Total Revenue
82.1
%
80.1
%
80.6
%
79.2
%
Key Performance Indicators
As at September 30,
2020
2019
Change
Change %
Annual Recurring Revenue (in millions of
US dollars)
64.6
41.7
22.9
54.9
%
Average Contract Value (in thousands of US
dollars)
31.9
25.6
6.3
24.6
%
Customers
2,025
1,632
393
24.1
%
Non-IFRS Metrics
Three months ended September
30,
Nine months ended September
30,
2020
2019
Change
Change
2020
2019
Change
Change
$
$
$
%
$
$
$
%
Adjusted EBITDA
577
(1,388
)
1,965
(142
)
(2,698
)
(4,552
)
1,854
(40.7
)%
Free Cash Flow
(140
)
(1,986
)
1,846
(93.0
)%
(2,882
)
(1,395
)
(1,487
)
106.6
%
Conference Call
Management will host a conference call on Thursday, November 12,
2020 at 8:00 am ET to discuss these third quarter results.
To access the conference call, please dial 416-764-8688 or
1-888-390-0546. The audited financial statements for the three and
nine months ended September 30, 2020 and Management’s Discussion
& Analysis for the same period have been filed on SEDAR at
www.sedar.com. Alternatively, these documents along with a
presentation in connection with the conference call can be accessed
online at https://investors.docebo.com.
An archived recording of the conference call will be available
until November 19, 2020 and for 90 days on our website. To listen
to the recording, call 416-764-8677 or 1-888-390-0541 and enter
passcode 296548.
Forward-looking Information
This press release contains “forward-looking information” and
“forward-looking statements” (collectively, “forward-looking
information”) within the meaning of applicable securities laws.
Forward-looking information may relate to our future financial
outlook and anticipated events or results and may include
information regarding our financial position, business strategy,
the impact of COVID-19 on our business, growth strategies,
addressable markets, budgets, operations, financial results, taxes,
dividend policy, plans and objectives. Particularly, information
regarding our expectations of future results, performance,
achievements, prospects or opportunities or the markets in which we
operate is forward-looking information.
In some cases, forward-looking information can be identified by
the use of forward-looking terminology such as “plans”, “targets”,
“expects”, “is expected”, “an opportunity exists”, “budget”,
“scheduled”, “estimates”, “outlook”, “forecasts”, “projection”,
“prospects”, “strategy”, “intends”, “anticipates”, “believes”, or
variations of such words and phrases or statements that certain
actions, events or results “may”, “could”, “would”, “might” or,
“will”, “occur” or “be achieved”, and similar words or the negative
of these terms and similar terminology. In addition, any statements
that refer to expectations, intentions, projections or other
characterizations of future events or circumstances contain
forward-looking information. Statements containing forward-looking
information are not historical facts but instead represent
management’s expectations, estimates and projections regarding
future events or circumstances.
This forward-looking information includes, but is not limited
to, statements regarding industry trends; our growth rates and
growth strategies; addressable markets for our solutions; the
achievement of advances in and expansion of our platform;
expectations regarding our revenue and the revenue generation
potential of our platform and other products; our business plans
and strategies; and our competitive position in our industry.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions that, while considered by the
Company to be appropriate and reasonable as of the date of this
press release, are subject to known and unknown risks,
uncertainties, assumptions and other factors that may cause the
actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking information, including but not limited to:
- the Company’s ability to execute on its growth strategies;
- the impact of changing conditions in the global corporate
e-learning market;
- increasing competition in the global corporate e-learning
market in which the Company operates;
- fluctuations in currency exchange rates and volatility in
financial markets;
- the extent of the impact of COVID-19 and measures taken to
contain the virus on our results of operations and overall
financial performance;
- changes in the attitudes, financial condition and demand of our
target market;
- developments and changes in applicable laws and regulations;
and
- such other factors discussed in greater detail under the “Risk
Factors” section of our Annual Information Form dated March 11,
2020 (“AIF”), which is available under our profile on SEDAR at
www.sedar.com.
If any of these risks or uncertainties materialize, or if the
opinions, estimates or assumptions underlying the forward-looking
information prove incorrect, actual results or future events might
vary materially from those anticipated in the forward-looking
information. The opinions, estimates or assumptions referred to
above and described in greater detail in the “Summary of Factors
Affecting our Performance” section of our MD&A for the three
and nine months ended September 30, 2020 and in the “Risk Factors”
section of our AIF, should be considered carefully by prospective
investors.
Although we have attempted to identify important risk factors
that could cause actual results to differ materially from those
contained in forward-looking information, there may be other risk
factors not presently known to us or that we presently believe are
not material that could also cause actual results or future events
to differ materially from those expressed in such forward-looking
information. There can be no assurance that such information will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. No
forward-looking statement is a guarantee of future results.
Accordingly, you should not place undue reliance on forward-looking
information, which speaks only as of the date made. The
forward-looking information contained in this press release
represents our expectations as of the date specified herein, and
are subject to change after such date. However, we disclaim any
intention or obligation or undertaking to update or revise any
forward-looking information whether as a result of new information,
future events or otherwise, except as required under applicable
securities laws.
All of the forward-looking information contained in this press
release is expressly qualified by the foregoing cautionary
statements.
Additional information relating to Docebo, including our Annual
Information Form, can be found on SEDAR at www.sedar.com.
About Docebo
Docebo is redefining the way enterprises learn by applying new
technologies to the traditional corporate learning management
system market. Docebo provides an easy-to-use, highly configurable
learning platform with the end-to-end capabilities designed to make
customers, partners, and employees love their learning
experience.
Results of Operations The following table outlines our
consolidated statements of loss and comprehensive loss for the
following periods:
Three months ended September
30,
Nine months ended September
30,
(In thousands of US dollars, except per
share data)
2020
2019
2020
2019
$
$
$
$
Revenue
16,096
10,586
44,161
29,145
Cost of revenue
2,883
2,110
8,564
6,058
Gross profit
13,213
8,476
35,597
23,087
Operating expenses
General and administrative
3,575
3,219
11,260
9,342
Sales and marketing
5,796
5,711
17,559
13,104
Research and development
3,265
2,175
9,476
6,434
Share-based compensation
512
99
1,317
251
Foreign exchange (gain) loss
440
148
(1,607
)
102
Depreciation and amortization
279
207
771
594
13,867
11,559
38,776
29,827
Operating loss
(654
)
(3,083
)
(3,179
)
(6,740
)
Finance expense, net
78
228
37
707
Loss on change in fair value of
convertible promissory notes
—
—
—
776
Other income
(19
)
(18
)
(57
)
(57
)
Loss before income taxes
(713
)
(3,293
)
(3,159
)
(8,166
)
Income tax expense
445
449
754
449
Net loss for the year
(1,158
)
(3,742
)
(3,913
)
(8,615
)
Other comprehensive loss
Item that may be reclassified subsequently
to income:
Foreign currency translation loss
(gain)
117
(471
)
2,035
(69
)
Item not subsequently reclassified to
income:
Actuarial loss
—
10
—
30
117
(461
)
2,035
(39
)
Comprehensive loss
(1,275
)
(3,281
)
(5,948
)
(8,576
)
Loss per share - basic and diluted
(0.04
)
(0.16
)
(0.14
)
(0.37
)
Weighted average number of common shares
outstanding - basic and diluted
28,748,652
23,760,149
28,560,806
23,122,698
Key Statement of Financial Position Information
(In thousands of US dollars, except
percentages)
September 30,
2020
December 31,
2019
Change
Change
$
$
$
%
Cash and cash equivalents
60,835
46,278
14,557
31.5
%
Total assets
88,738
63,860
24,878
39.0
%
Total liabilities
43,740
32,479
11,261
34.7
%
Total long-term liabilities
4,477
3,938
539
13.7
%
Non-IFRS Measures and Reconciliation of Non-IFRS
Measures
This press release makes reference to certain non-IFRS measures
including key performance indicators used by management and
typically used by our competitors in the software-as-a-service
(“SaaS”) industry. These measures are not recognized measures under
IFRS and do not have a standardized meaning prescribed by IFRS and
are therefore not necessarily comparable to similar measures
presented by other companies. Rather, these measures are provided
as additional information to complement those IFRS measures by
providing further understanding of our results of operations from
management’s perspective. Accordingly, these measures should not be
considered in isolation nor as a substitute for analysis of our
financial information reported under IFRS. These non-IFRS measures
and SaaS metrics are used to provide investors with supplemental
measures of our operating performance and liquidity and thus
highlight trends in our business that may not otherwise be apparent
when relying solely on IFRS measures. We also believe that
securities analysts, investors and other interested parties
frequently use non-IFRS measures, including SaaS industry metrics,
in the evaluation of companies in the SaaS industry. Management
also uses non-IFRS measures and SaaS industry metrics in order to
facilitate operating performance comparisons from period to period,
the preparation of annual operating budgets and forecasts and to
determine components of executive compensation. The non-IFRS
measures and SaaS industry metrics referred to in this press
release include “Annual Recurring Revenue”, “Adjusted EBITDA” and
“Free Cash Flow”.
Key Performance Indicators
We recognize subscription revenues ratably over the term of the
subscription period under the provisions of our agreements with
customers. The terms of our agreements, combined with high customer
retention rates, provides us with a significant degree of
visibility into our near-term revenues. Management uses a number of
metrics, including the ones identified below, to measure the
Company’s performance and customer trends, which are used to
prepare financial plans and shape future strategy. Our key
performance indicators may be calculated in a manner different than
similar key performance indicators used by other companies.
Annual Recurring Revenue. We define Annual Recurring Revenue as
the annualized equivalent value of the subscription revenue of all
existing contracts (including Original Equipment Manufacturer
(“OEM”) contracts) as at the date being measured, excluding
non-recurring implementation, support and maintenance fees. Our
customers generally enter into one to three year contracts which
are non-cancellable or cancellable with penalty. All the customer
contracts, including those for one-year terms, automatically renew
unless cancelled by our customers. Accordingly, our calculation of
Annual Recurring Revenue assumes that customers will renew the
contractual commitments on a periodic basis as those commitments
come up for renewal. Subscription agreements may be subject to
price increases upon renewal reflecting both inflationary increases
and the additional value provided by our solutions. In addition to
the expected increase in subscription revenue from price increases
over time, existing customers may subscribe for additional
features, learners or services during the term. We believe that
this measure provides a fair real-time measure of performance in a
subscription-based environment. Annual Recurring Revenue provides
us with visibility for consistent and predictable growth to our
cash flows. Our strong total revenue growth coupled with increasing
Annual Recurring Revenue indicates the continued strength in the
expansion of our business and will continue to be our target on a
go-forward basis.
Annual Recurring Revenue was as follows as at September 30:
2020
2019
Change
Change %
Annual Recurring Revenue (in millions of
US dollars)
64.6
41.7
22.9
54.9%
Adjusted EBITDA
Adjusted EBITDA is used by management as a supplemental measure
to review and assess operating performance and, in conjunction with
the financial statements, provides a more comprehensive picture of
factors and trends affecting our business. Management believes that
Adjusted EBITDA is a useful measure of operating performance and
our ability to generate cash-based earnings, as it provides a
useful view of operating results by excluding the effects of
financing and investing activities which removes the effects of
interest, depreciation and amortization expenses as non-cash items
that are not reflective of our underlying business performance, and
other one-time or non-recurring expenses. The Company defines
Adjusted EBITDA as net loss excluding taxes (if applicable), net
finance expense, depreciation and amortization, loss on change in
fair value of convertible promissory notes, loss on disposal of
assets (if applicable), share based compensation, transaction
related expenses and foreign exchange gains and losses. Management
believes that these adjustments are appropriate in making Adjusted
EBITDA an approximation of cash-based earnings from operations
before capital replacement, financing, and income tax charges.
Adjusted EBITDA does not have a standardized meaning under IFRS and
is not a measure of operating income, operating performance or
liquidity presented in accordance with IFRS and is subject to
important limitations. The Company’s definition of Adjusted EBITDA
may be different than similarly titled measures used by other
companies.
The following table reconciles Adjusted EBITDA to net loss for
the periods indicated:
Three months ended September
30,
Nine months ended September
30,
(In thousands of US dollars)
2020
2019
2020
2019
$
$
$
$
Net loss
(1,158
)
(3,742
)
(3,913
)
(8,615
)
Finance (income) expense, net(1)
78
228
37
707
Depreciation and amortization(2)
279
207
771
594
Income tax expense
445
449
754
449
Loss on change in fair value of
convertible promissory notes(3)
—
—
—
776
Share-based compensation(4)
512
99
1,317
251
Other income(5)
(19
)
(18
)
(57
)
(57
)
Foreign exchange (gain) loss(6)
440
148
(1,607
)
102
Transaction related expenses(7)
—
1,241
—
1,241
Adjusted EBITDA
577
(1,388
)
(2,698
)
(4,552
)
Notes:
- Finance expense for the three and nine months ended September
30, 2019 is primarily related to interest and accretion expense on
the secured debentures and convertible promissory notes. As these
were repaid in October 2019 with the net proceeds from the IPO, no
further interest expenses on debt have been incurred during the
three and nine months ended September 30, 2020. In fiscal 2020
interest income was earned on the net proceeds from the IPO as the
funds are held within short-term investments in highly liquid
marketable securities which is offset by interest expenses incurred
on lease obligations.
- Depreciation and amortization expense is primarily related to
depreciation expense on right-of-use assets (“ROU assets”) and
property and equipment. As a result of the adoption of IFRS 16 –
Leases effective January 1, 2019 depreciation and amortization
expense for the three and nine months ended September 30, 2020
includes amortization expense on ROU assets of $190 and $523,
respectively (2019 - $150 and $432).
- These costs are related to the change in valuation of our
convertible promissory notes from period to period, which is a
non-cash expense and is thus not indicative of our operating
profitability. These costs should be adjusted for in accordance
with management’s view of Adjusted EBITDA as an approximation of
cash-based earnings from operations before capital replacement,
financing, and income tax charges. In May 2019, these convertible
promissory notes were converted into common shares. There will be
no further impact on our results of operations from such
convertible promissory notes and the Company does not currently
intend to issue any additional convertible promissory notes.
- These expenses represent non-cash expenditures recognized in
connection with the issuance of share-based compensation to our
employees and directors.
- Other income is primarily comprised of rental income from
subleasing office space.
- These non-cash losses relate to foreign exchange (gain)
loss.
- These expenses are related to our IPO and include professional,
legal, consulting and accounting fees that are non-recurring and
would otherwise not have been incurred and are not considered an
expense indicative of continuing operations.
Free Cash Flow
Free Cash Flow is defined as cash used in operating activities
less additions to property and equipment and non-current assets.
The following table reconciles our cash flow used in operating
activities to Free Cash Flow:
Three months ended September
30,
Nine months ended September
30,
(In thousands of US dollars)
2020
2019
2020
2019
$
$
$
$
Cash flow used in operating
activities
455
(1,893
)
(1,891
)
(1,089
)
Additions to property and equipment and
non-current assets
(595
)
(93
)
(991
)
(306
)
Free Cash Flow
(140
)
(1,986
)
(2,882
)
(1,395
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201112005187/en/
Dennis Fong, Investor Relations (416) 283-9930
investors@docebo.com
Docebo (TSX:DCBO)
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