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Coveo Solutions (TSE:CVO)
TSX:CVO
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Coveo Solutions
(TSX:CVO)
61Neutral
Positive Factors
Competitive Advantage
Coveo is a leading vendor in providing relevance and personalization to digital experiences and can sustain strong organic SaaS revenue growth.
Growth Opportunities
CVO is starting to see a growing volume of GenAI pilots translating into signed deals, and expects this to drive better growth.
Market Expansion
CVO is seeing an acceleration in EMEA, helped by a leadership change in the region and the SAP partnership.
Negative Factors
Coveo Solutions (CVO) vs. S&P 500 (SPY)
Market Cap
C$600.50M
Dividend YieldN/A
Average Volume (3M)87.63K
Price to Earnings (P/E)―
Beta (1Y)1.22
Revenue Growth8.86%
EPS Growth56.67%
CountryCA
Employees743
SectorTechnology
Sector Strength67
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.15
Shares Outstanding52,713,146
10 Day Avg. Volume51,254
30 Day Avg. Volume87,626
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap0.85
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit5.16
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$9.50Price Target Upside51.76% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Coveo Solutions Business Overview & Revenue Model
Company DescriptionCoveo Solutions Inc. provides applied artificial intelligence (AI) solutions. Its cloud-native, multi-tenant software as a service (SaaS) platform is the intelligence layer that injects search, recommendations, and personalization solutions into digital experiences to provide connected relevance for various-use cases across commerce, service, website, and workplace applications. It serves high tech, healthcare, manufacturing, financial services, and telecommunication industries. Coveo Solutions Inc. has strategic technology partnerships with Adobe, SAP, Salesforce, ServiceNow, Zendesk, Sitecore, AppDirect, and commercetools. The company was incorporated in 2004 and is headquartered in Quebec, Canada.
How the Company Makes MoneyCoveo Solutions generates revenue through a subscription-based model, providing its AI-powered search and relevance solutions to businesses across various industries. The company's key revenue streams include software licensing fees, subscription services, and professional services such as implementation and support. Additionally, Coveo has strategic partnerships with major technology companies, which help expand its market reach and enhance its product offerings. These partnerships, along with a focus on innovation and customer satisfaction, significantly contribute to the company's earnings.
Coveo Solutions Financial Statement Overview
Summary
Coveo Solutions shows strong revenue growth and a solid balance sheet with low leverage. Despite these strengths, profitability challenges remain significant, with negative margins affecting overall financial health. The positive cash flow trajectory is promising, but careful management is needed to sustain growth and improve profitability.Income Statement
Coveo Solutions demonstrated a strong revenue growth of 17.4% in the TTM compared to the previous year, indicative of robust market demand. However, profitability remains a challenge with negative EBIT and net income margins, reflecting ongoing operational inefficiencies. The improvement in EBITDA margin from the previous period suggests potential for future profitability enhancements.67
Positive
Balance Sheet
The company's balance sheet reflects strong equity with an equity ratio of 56.5%, indicating a stable capital structure. The debt-to-equity ratio remains low at 0.05, highlighting minimal leverage risks. However, the decline in stockholders' equity from the previous year is a concern that requires monitoring.72
Positive
Cash Flow
Coveo Solutions has improved its cash flow position, with positive operating and free cash flows. The free cash flow to net income ratio is favorable, suggesting efficient cash generation relative to reported losses. However, fluctuations in financing cash flow indicate potential volatility in capital management.60
Neutral
| Breakdown | ||||
| Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 126.09M | 112.00M | 86.49M | 64.86M | 55.48M | Gross Profit |
| 98.45M | 85.33M | 65.03M | 48.45M | 42.58M | EBIT |
| -29.70M | -44.42M | -57.26M | -20.54M | -14.25M | EBITDA |
| -12.20M | -30.32M | -49.37M | -14.55M | -37.26M | Net Income Common Stockholders |
| -23.61M | -39.73M | 418.28M | -600.02M | -61.81M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 166.59M | 198.45M | 223.07M | 131.87M | 115.79M | Total Assets |
| 275.88M | 308.82M | 345.50M | 194.04M | 175.34M | Total Debt |
| 9.04M | 10.87M | 13.09M | 14.14M | 12.45M | Net Debt |
| -157.55M | -187.58M | -209.99M | -41.26M | -3.64M | Total Liabilities |
| 97.36M | 90.28M | 90.06M | 1.19B | 521.10M | Stockholders Equity |
| 178.52M | 218.53M | 255.44M | -999.08M | -345.76M |
| Cash Flow | Free Cash Flow | |||
| 3.08M | -7.85M | -37.57M | 2.19M | -19.20M | Operating Cash Flow |
| 4.20M | -6.26M | -35.42M | 5.78M | -12.49M | Investing Cash Flow |
| -1.12M | -2.27M | 36.62M | 30.71M | -100.40M | Financing Cash Flow |
| -35.59M | -2.43M | 163.40M | 2.18M | 112.67M |
Coveo Solutions Technical Analysis
Positive
6.26
Price Trends
5.76
Positive
6.15
Positive
6.21
Positive
Market Momentum
0.17
Negative
63.16
Neutral
79.24
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CVO, the sentiment is Positive. The current price of 6.26 is above the 20-day moving average (MA) of 5.78, above the 50-day MA of 5.76, and above the 200-day MA of 6.21, indicating a bullish trend. The MACD of 0.17 indicates Negative momentum. The RSI at 63.16 is Neutral, neither overbought nor oversold. The STOCH value of 79.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CVO.
Coveo Solutions Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Performance Comparison
TSE:CVO
Coveo Solutions
6.26
-1.85
-22.81%
OTEX
Open Text
26.82
-2.37
-8.12%
BB
BlackBerry
3.59
0.70
24.22%
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Constellation Software
4,994.41
1,243.95
33.17%
TSE:KXS
Kinaxis Inc
188.12
42.53
29.21%
EGHSF
Enghouse Systems
18.30
-2.92
-13.76%
Coveo Solutions Earnings Call Summary
Earnings Call Date:Feb 10, 2025
(Q2-2025)
| % Change Since: 2.79%|
Next Earnings Date:May 20, 2025
Earnings Call Sentiment Positive
Coveo demonstrated strong financial performance exceeding guidance, with significant growth in new customers and strategic partnerships enhancing their market position. However, challenges remain with maintaining high NER due to budget constraints in the current enterprise environment.Q2-2025 Updates
Positive Updates
Exceeded Guidance with Strong Financial Performance
Coveo delivered SaaS subscription revenue of $31.2 million, cash flows from operations of $1.4 million, and adjusted EBITDA of $1.5 million, exceeding their guidance for Q2 2025.
Significant New Customer Growth
The second quarter was the best for new logos in the past two years, with a 50% increase in customers using Coveo's relevance augmented generative answering solution over the last 90 days.
Partnership with Major Platforms
Coveo announced new partnerships with Shopify, AWS, and Optimizely, enhancing its market reach and solution offerings.
Strong Performance in Generative AI
Generative AI solutions represented over 25% of new bookings in the quarter, with significant improvements in customer self-service and cost reduction metrics reported by clients like SAP Concur.
Continued Innovation and Product Enhancement
Launched Relevance-Augmented Passage Retrieval API, expanding their TAM and addressing new market segments.
Negative Updates
Challenges with Net Expansion Rate (NER)
NER, excluding the Qubit platform, was 104%, down from 106% in Q1, due to enterprise customers' budget sensitivity and M&A activities.
Impact of Qubit Platform Churn
SaaS revenue for the Qubit platform declined by 51%, with expectations of further churn impacting total revenue.
Budget Sensitivity Among Enterprise Customers
Some enterprise customers continue to be budget sensitive, impacting expansion rates, although efforts are underway to counteract this.
Company Guidance
In the recent earnings call for Coveo's second quarter of fiscal year 2025, the company reported impressive financial performance and exceeded guidance on several key metrics. The SaaS subscription revenue reached $31.2 million, surpassing expectations, with the core Coveo platform contributing $29.9 million, marking an 11% increase from the previous year. The company also achieved $1.4 million in cash flows from operations and improved its adjusted EBITDA to $1.5 million. Coveo's strategy to leverage applied AI and generative AI solutions has shown significant traction, as evidenced by a 50% increase in customers using its relevance-augmented generative answering solution in just 90 days. The company achieved its best quarter for new logo additions in the last two years and maintains a strong financial position with $128.2 million in cash and no debt. Looking forward, Coveo anticipates SaaS subscription revenue for Q3 to be between $31.8 million and $32.3 million, and it remains on track to achieve its annual guidance, expecting to land towards the lower to midpoint of the forecasted range.Coveo Solutions Corporate Events
Business Operations and StrategyFinancial Disclosures
Coveo Solutions Achieves Strong Q3 Fiscal 2025 Results with AI-Relevance Growth
Positive
Feb 10, 2025
Coveo Solutions reported its third quarter fiscal 2025 financial results, highlighting significant growth in SaaS subscription revenue, reaching $32.3 million. The company experienced record new bookings and a 36% increase in customers, driven by its innovations in generative AI and commerce. Coveo’s strong performance underscores its leadership in AI-Relevance, as enterprises increasingly adopt its solutions to enhance digital and generative experiences. The financial results showed a 7% increase in total revenue and a notable improvement in net income, reflecting the company’s successful strategic positioning and operational momentum.
Executive/Board ChangesBusiness Operations and Strategy
Coveo Solutions Restructures Leadership to Drive Growth and Innovation
Positive
Feb 10, 2025
Coveo Solutions has announced changes in its senior executive team to align with its growth and strategic ambitions. Louis Têtu will transition to a full-time Executive Chair role, with Laurent Simoneau stepping up as CEO and John Grosshans becoming COO. These leadership adjustments are intended to capitalize on market opportunities and ensure operational excellence, positioning Coveo for continued success in the AI-Relevance industry.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.