Good morning, everyone, and welcome to the Docebo Inc. First Quarter 2020 Earnings Call. [Operator Instructions] Docebo would like to remind listeners that certain information discussed today may be forward looking in nature. Such 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 in the forward-looking statements. For more information on the risks, uncertainties and assumptions relating to forward-looking statements, please refer to the Docebo's public filings, which are available on SEDAR. During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they're not recognized measures and do not have standardized meanings under IFRS. Please see our MD&A for additional information regarding our non-IFRS financial measures, including for reconciliations to the nearest IFRS measures. Please note that, unless otherwise stated, our references to any financial figures are in U.S. dollars. I would now like to turn the call over to Docebo's CEO, Claudio Erba. Please go ahead, Claudio.

Thank you, operator, and good morning, everyone. I'm speaking to you from my home in Italy; and our Chief Financial Officer, Ian Kidson, is home in Toronto. Joining us today's call is Alessio Artuffo, our Chief Revenue Officer, who is also in Toronto and will participate in the Q&A. We hope everyone is healthy and staying safe, and we're appreciating you joining us for our first quarter 2020 earning call. In the first quarter of 2020, we continue to see strong momentum in our business, and we are pleased to report revenues and ARR growth in excess of 50% for the third quarter in a row since our IPO last fall. Revenue for this first quarter grew 56.7% from the previous year to $13.5 million, and ARR grew 55.5% to $52.1 million at the end of this first quarter. Our growth was driven by new customers as we added more customers in the first quarter of 2020 than we did in the fourth quarter of 2019. At the end of the quarter, we had 1,938 customers, an increase of [ 130 ] from the end of the first quarter of 2019. I will also point out that March was a strong month for us as we added more new customers and ARR than we did in either January or February. We added some great new logo to the platform this quarter, including Walmart in North America and Barilla in Italy. Walmart will be using Docebo to enable their North American partners that sell their products on walmart.com. Walmart will leverage Docebo to train their partner on how to sell online, how to properly ship, how to do refunds and much more. Partner enablement and training is a very successful and powerful use case for us as almost half of our…

Thank you, Claudio, and hello, everyone. Before I start, I'd like to remind folks you can find a detailed breakdown of our financial results for the 3 months ended March 31, 2020, in our press release, the MD&A and financial statements, which are now available on our website and on SEDAR. Moving to our results for the quarter. Total revenue grew to $13.5 million, an increase of 57% from the prior year period. Subscription revenues were $12.2 million or nearly 90% of total revenue for the quarter with professional services revenue making up the difference at $1.3 million. Consistent with past quarters, the significant growth in revenue was driven by new customers, resulting in our number of customers increasing to 1,938, up from 1,596 at the end of the first quarter of 2019. Our ARR at the end of the quarter was $52.1 million, an increase of 56% from the $33.5 million at the end of the first quarter last year. It's also an increase of $4.9 million from the $47.2 million we reported at the end of the fourth quarter of 2019. Although ARR is not an accounting measure, it is the key metric that we use to evaluate our progress. As Claudio noted earlier, we added more new customers in the first quarter of 2020 than in the fourth quarter of 2019. Average contract values increased to approximately $27,000, up 28% from $21,000 at the end of the first quarter last year and is up from $26,000 at the end of the fourth quarter of 2019. Gross profit for the quarter was $10.7 million compared to $6.8 million in the prior year period, an increase of 58%. As a percentage of revenue, gross profit margin was 79.1% of sales, an increase up from 78.6% of sales in the…

[Operator Instructions] Your first question comes from Daniel Chan from TD Securities.

Congratulations on the Walmart and Barilla win. It sounds like the Walmart one is for their partners and for them to sell on that platform. But was I correct in hearing that the enterprise -- the Barilla one is more of an enterprise-wide deployment?

Can you state again the second part of the question, please?

Yes. What is the scope of the Barilla customer win? Is it for a specific department? Or is it for the entire enterprise?

Oh, no. It was internal training and was for the broad group. It involves like 8,000 employees. So if Walmart is one of our use case to support their partners to train -- to sell online because retail with the COVID online shopping became something big, so we are supporting this transition, for Barilla is -- the use case was replacing another learning management system for internal training only.

Okay. And how did these deals come about? Was it something that maybe some of your partners brought in? Or is it some outreach? Or was it more of an inbound type engagement?

I leave this part of the answer to Alessio Artuffo, Docebo CRO, that joined us for this Q&A. Alessio, you are muted probably.

Hey, Dan, great question. I'm happy to report that both Barilla and Walmart were part of our marketing inbound funnel.

Okay. That's good. So if I exclude -- if you exclude the smaller legacy customers that are outside of your target market now, has the churn rate of your customer base changed at all?

Well, over time, over the past 2 years, our customer base transitioned from the small business customers to the mid-enterprise companies or department of large enterprises. That means we are not that much exposed to the small business storm because most small business has been hit by COVID. And as you can see, the typical large enterprise customer that adopted Docebo by department was Walmart that it is using Docebo into a context, which is called extended enterprise. That means training external partners and not internal training.

Okay. And then last question for me. You mentioned that your strategy has switched from aggressive growth to prudent growth. What signs are you looking for that will cause you to kind of switch back to more of an aggressive growth strategy?

Yes. I'll leave to Ian Kidson this answer.

Thanks, Dan. I think we are in the same position that a lot of companies are in right now where we're waiting for some return to normalicy, right -- or normalcy. And until we see that, we really like the way our company is positioned today for what we're seeing in the world. But I think it will take a -- it'll take the world being comfortable to having a sigh of relief and back to work.

[Operator Instructions] The next question comes from Suthan Sukumar from Eight Capital.

The first question I had was on the, I guess, looking at buyer behavior within your existing base, curious to know if you've seen any trends from your existing customers with respect to any cross-sell or up-sell opportunities?

Well, the trend -- the data we have in our hands are mainly the fact [ the top 12 ] customers have increased a lot the platform usage. I mean this started in Italy. If you remember, we discussed that the CDN delivery traffic climbed. But we confirm that on a global base now, we have seen a lot of adoption. That means increase on the average number of active users that are doing, that are attending online training courses. So if we can detect and decode some signal from the market is that our actual customers are using the platform more and more than before the COVID. I don't know if this answer your question.

Yes. And I was also -- just also curious to also see if your existing customers are also -- are they looking at adding more modules in addition to the lift in usage that you're seeing?

What we are seeing now is mainly more curiosity from new prospect. And our actual customer now are mainly so busy to deliver more training, and if there is a request from the actual customer is on content. Like they want to train people about COVID. They want to train people on how better work remotely. They want to train people on how manage people remotely. So if you consider the content and module, and don't forget that Docebo is embedding the GO1 content marketplace, yes. Customers are asking additional content about these topics.

Okay. Okay. Great. No, that's good to hear. And then from a product road map perspective, just given the pandemic and the lift in usage and some of this demand you're seeing from new prospect customers, do you see any opportunity to accelerate timing of any of your -- any new product releases or potential to introduce any new use cases into the platform?

So about the product road map, I want to highlight 2 facts. Fact #1, also, if our people are working from home, both March and April release has been released on time. Second, we have anticipated the rebuilding the refresh of the cost base of our models that is built to support virtual instructor-led training. That means online classroom and webinars, instead making the refresh or the rebuild of our ILT model that was the classroom logistic and hardware mapping. We have anticipated the virtual instructor-led training model because we have seen an increase of adoption obviously on virtual instructor-led training activities.

Okay. Okay. Great. And the last question for me is I was curious to see how your OEM partnerships have been performing during this crisis. Sounds like one of your HR partner -- HR software partners, on the earnings call last week, said they saw an uptick in demand for learning capabilities. I'm curious to see what you're seeing on your side and if there's been any changes in the level of interest or the type of partners that have been approaching you from an OEM perspective.

So from the actual -- both, from the actual partners and from the pipeline of OEM we have, we don't see anything strange. I mean the OEM strategy for us is confirmed to be a really interesting channel that is driving the more interest, especially from the HR software industry.

Okay. Great. And then any color on how your existing OEM partnerships have been performing during the crisis?

I'll let Ian handle.

I think we've said a bunch of times that the OEM business is a long-term game. We have one material relationship that people are aware of. There's been significant progress that we've made in the past quarter, and I'm choosing my words carefully here, with a number of our partners that we've been working towards establishing revenue-based relationships with. But Suthan, as we said many times, these transactions happen over the course of years, not weeks or months. So yes, we are really happy with how that business is proceeding. We've spent a lot of effort getting the team properly positioned and supported, but it's take a patience pill from my perspective.

The next question comes from Richard Tse from National Bank Financial.

Just wondering if sort of the change in the environment has changed the way you market. Are you just going to hold back spending here until we return normalcy? Or are there different tactics that you can sort of use here to pursue the market?

Yes. So actually, Docebo is historically a company that manage inbound leads. And managing inbound leads means answering to different kind of customers that have different needs. As of today, as you know, we have seen an increase of inbound traffic. And so if it change -- something has changed, is that we need to process more volume, process different requests because part of their requests were emotional, other request get irrational. Some requests have an urgency to roll out the system. Other requests were more pragmatic and then they were doing business as usual. For sure, online education now became a hot topic, especially in the business because delivers [ ROI ] immediately. And there is more consciousness that the learning management system industry now became a solid part of the enterprise of the stack. It's now a must-have. It's a technology to prioritize and to integrate into the enterprise software ecosystem. So that are the changes that we have seen in the industry during these past 2 months.

Okay. And then you talked about the 90 to 100 days in terms of building this lead. Can you give us a sense of the coverage in the pipeline today versus what it may have been in the prior quarter?

Yes, I leave it to Alessio. Ale, you are muted.

Richard, thanks for the question. So we're -- the month of April was one in which, like Claudio said, since the start of COVID, we've seen continued increase in the demand. Google trends reports nearly double demand for LMS and e-learning. So there is no doubt that demand is surging and part of it is emotional. So our job is to stay extremely focused and execute against qualification in manners that are both automatic via our marketing automation stack as well as with very strong business development processes that aim at maintaining focus in working with those organizations that are best suited to make the best use of our services.

Okay. That's helpful. And just one other question with respect to the comments you made, the potential sort of helping your customers at -- with payment deferrals. Can you give us a sense of the order of magnitude of your base that you'll be looking to sort of extend those terms to?

Yes. So all the industry, first of all, Docebo is a software that cover all the use case and is horizontal. That means it's not focused on a single vertical. That means that our exposure to specific vertical is very limited. But Ian will dig -- will go deep in this question, please.

Sure. I mean the industries that everybody is obviously sensitive to at this point are things like travel, restaurants and any sort of hospitality related, airlines, et cetera. And our -- as Claudio noted, our exposure to what we would characterize as industries that are under significant pressure or high at risk industries is less than 5% of our customer base. So we're working with those folks. And to the extent that we believe a customer is going to survive, then we're doing whatever we can to support them. Look, all companies, whether you're in the travel business or not, all companies today are very focused on managing their balance sheet and managing their cash positions. We're no different. We're doing exactly the same. We're looking at our balance sheet and thinking hard about every balance on it. So we say we're working with our customers. I don't think really we're doing anything else or anything that anyone else in the industry is not doing.

The next question comes from Gavin Fairweather from Cormark Securities.

So just on the additions to your sales team, and this might be for Claudio or might be for Alessio. But can you remind us how long it takes the average kind of sales rep to reach expected productivity? And as you think about the reps that you've added recently reaching those productivity levels, how do you think about your sales capacity in terms of how ARR you can kind of book?

Yes. Before handing this to Alessio, like Ian said, the investment and the hiring we made in Q1 was meant to be made to build a machine for 2021. So we are building the foundation, the base to grow in 2021. And it's -- I mean, you have to hire people in advance to make them productive. That means that we are here for the long run. But I'll let Alessio detail the strategy -- on the strategy we follow on, on how we onboard our people, especially in the sales team. Ale, you are muted.

Gavin, great question. So there was a question prior in which another analyst asked if we made any change into our tactics as we approach this new world. And there is no doubt that an extreme focus on onboarding and enablement has been put to ensure our success of onboarding and continued performance of salespeople that have joined Docebo relatively recently in order to perform at best and to ensure their enablement despite being enabled at home. I will not lie to you. This is not something that we expected, but fortunately, we're very resilient to this type of dynamic because, in fact, we use our own technology to train our own people remotely and we've seen very, very encouraging signs of productivity already early for those new hires. In addition, I think you asked how long it takes for a sales rep to ramp. The answer is, in general, and on average, it takes about 6 to 9 months to achieve what we would call a consistent level of productivity. However, there are other variables to be taken into consideration. The #1 variable is the segment in which the seller operates, whether this is a commercial, major, mid-market or more aftermarket. Those deals yield longer or shorter sales cycle, and therefore, the rent gets affected as a result. And the second one is the tenure of the seller. We are implementing a strategy of diversification of sales that are more tenured and others that are growing from within our base of business development to maintain efficiency. So all in all, I would say that, while 6 to 9 months is a good average measure, we continue to work hard to implement better enablement to fasten that cycle.

Okay. That's very helpful. And then you talked about how your minimum now is about $20,000 in terms of your ACV. Can you just remind us how that's changed over the last year or 2?

Yes. So this -- the price increase is consistent with our shift from small business to mid-enterprise. The fact that we have unified now the offering from 2 products, the growth and the, what we call, enterprise CS to a single product, which is a CS, same dynamics of sales, same service, just differentiated by the number of users, allowed us to position with an entry point to entry-level product into the mid-enterprise market. So it's only consistent to our strategy to -- not to sell to small business but to focus mid-enterprise and department of large enterprise, which both of these segments are our weak spots.

There are no further questions. You may proceed.

That's the end of the questions, operator?

Correct. There are no further questions in queue.

Perfect. Yes. Thanks again for listening to our call. We look forward to speaking with you again when we report our quarter -- our next quarter results. Thank you, and goodbye.

Thanks, everybody.

Thank you, everybody.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.