Coveo sees 39 percent year-over-year revenue growth in “record” Q3

This is the first earnings report since Coveo went public on the TSX.

Québec City-based Coveo, which offers artificial intelligence (AI)-powered enterprise search solutions, has released its first earnings report since going public on the Toronto Stock Exchange (TSX) last November.

In the third quarter of fiscal 2022, which covers the three months ending December 31, Coveo drew in total revenue of $21.2 million (all numbers USD unless otherwise noted), an increase of 39 percent year-over-year compared to Q3 2021. This growth was driven in part by a 50 percent rise Coveo saw in its SaaS subscription revenue, which was $21.2 million.

“We delivered record results in [Q3] demonstrating the demand for AI-powered relevance within modern digital businesses.”
-Louis Têtu, Coveo

But despite these strong results, the company’s shares are trading at $10.52 CAD apiece at time of publication, below the company’s initial public offering (IPO) target of $15 per share. Since Coveo’s November IPO, the company’s stock price has dropped about 35 percent, amid a broader tech stock selloff that has also impacted fellow Canadian tech companies like Shopify and Lightspeed.

Founded in 2005, Coveo currently trades on the TSX under the symbol ‘CVO.’

The company, which describes itself as an “AI‐powered relevance platform,” offers search, recommendation, and personalization solutions for commerce, service, website, and workplace applications.

“We delivered record results in the third quarter demonstrating the demand for AI-powered relevance within modern digital businesses,” said Louis Têtu, Coveo’s chairman and CEO, who said he believes Coveo is “well positioned to capture this demand across industries.”

According to Têtu, “people expect personalized and relevant digital experiences when interacting with businesses across commerce, websites, customer service, and in the workplace, and this can only be achieved by leveraging sophisticated AI.”

Since the release of its Q3 results yesterday evening after market close, Coveo’s share price fell from $11.75 CAD Tuesday morning to $10.52 CAD at time of publication. This price remains above the company’s 52-week low of $8.88 CAD, but far below its 52-week high of $18 CAD.

RELATED: Anatomy of an IPO: How Coveo prepared to take itself public

In the fiscal third quarter of 2022, Coveo’s net income was $426.3 million, a sharp increase compared to the net loss of $101.7 million it saw during the same period last year. These results were heavily impacted by a non-cash gain of $269.2 million and an associated income tax recovery of $184.4 million, each of which were related to Coveo’s preferred shares, which were converted into multiple voting shares prior to its IPO.

During Q3, Coveo made its TSX debut in November 2021, after filing to go public earlier that month. The Québec company raised $215 million CAD through its TSX IPO, selling 14.3 million shares priced at $15 each, in addition to a fully exercised over-allotment option that saw the company secure an additional $32 million CAD.

In the fiscal third quarter of 2022, Coveo also completed its acquisition of Qubit, released its Deep Learning Case Classification model and Smart Snippets feature, announced a deeper integration with Adobe Experience Manager, and launched Coveo Search and recommendations for SAP Commerce.

In response to Coveo’s Q3 results, analysts covering the company highlighted the company’s “strong performance” in the third quarter, but reduced their targets slightly.

Feature image courtesy Coveo.

Josh Scott

Josh Scott

Josh Scott is a BetaKit staff writer who loves to tell Canadian business and tech stories. His coverage is more complete than his moustache.

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