Coveo Solutions Inc
TSX:CVO
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
5.22
11.96
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Coveo Solutions Inc
Earnings Call Analysis
Summary
Q1-2025
Coveo's first quarter of fiscal 2025 saw stronger-than-expected SaaS subscription revenue at $30.6 million, and total revenue increased by 6% to $32.2 million. The company experienced significant market momentum, driven by its AI and generative AI technologies. Gross margin remained stable at 78%. Coveo finalized 30 generative AI deals, attracting both existing and new clients. For Q2, the company anticipates SaaS revenue between $30.6 million and $31.0 million, with a modest adjusted EBITDA loss of up to $0.5 million. Guided annual SaaS subscription revenue remains $126 million to $130 million, with total revenue projected at $133 million to $138 million.
You don't have any saved screeners yet
Good afternoon. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coveo First Quarter Fiscal 2025 Financial Results Conference Call. (Operator Instructions) Thank you. I'll now turn the line over to Nick Goode, Chief Business Officer of Coveo. Mr. Goode, you may begin your conference.
Good afternoon and thank you for joining us today for Coveo's first quarter fiscal 2025 financial results conference call and webcast. With me on the call are Louis Tetu, Coveo's Chairman and Chief Executive Officer; and Brandon Nussey, Chief Financial Officer.
A reminder that remarks made during today's call may be forward-looking statements within the meaning of applicable securities laws including those regarding our plans, objectives, expected performance and our outlook for the second quarter and fiscal year 2025. These forward-looking statements are given as of today and while we believe any statements we make are reasonable, they are based on current expectations which are subject to risks and uncertainties and actual results could differ materially from those expressed or implied. Coveo disclaims any intent or obligation to update our forward-looking statements, whether as the result of new information, future events or otherwise.
Further information on factors that could affect the company's financial results is included in filings we make with Canadian securities regulators, including in the Risk Factors section of the company's most recently filed annual information form as well as in the key factors affecting our performance in the company's most recently filed MD&A, both of which are available under our SEDAR+ profile at www.sedarplus.ca and on ir.coveo.com.
Additionally, some of the financial measures and ratios discussed on this call are either non-IFRS measures or ratios or operating metrics used in our industry. A discussion on why we use these measures, ratios and metrics and where applicable, a reconciliation schedule showing IFRS versus non-IFRS results are available in our press release and our MD&A issued today, which may be found on ir.coveo.com and in our SEDAR+ profile. Please note that unless otherwise stated, all references to financial figures made today are in U.S. dollars.
Finally, presentation slides accompanying this conference call can be accessed on our IR website under the News and Events section. I will turn the call over to Louis first to review the highlights of our first quarter before Brandon takes you through the financial details and our outlook for Q2 and fiscal 2025. We will then open up the line for Q&A and would ask you to limit your questions to one at a time to maximize participation. So with that, Louis?
Thank you, Nick, and thank you all for joining us today. I'm pleased to share that Coveo's financial results have once again exceeded our revenue guidance and outperformed our profitability expectations. Building on the transformative year we saw in AI in fiscal '24 and driven by our industry leading AI search and generative experience platform, in particular our groundbreaking relevance augmented generative answering technology, we continued to experience positive business momentum. We see a market inflection moving from 18 months of discovery, education and experimentation of AI and GenAI to now validation, decision, and real adoption within enterprises. We believe that the few companies like Coveo, that pass the show me test and can demonstrate and deliver results will be highly rewarded. While many competing technologies are catching up to the reality of delivering AI for enterprises, we continue to roll out new innovation in full production with our clients. As a result of the above, we have delivered a quarter in line with what we said, and we remain positive around this market inflection and the acceleration of Coveo adoption.
Our mission is to bring AI to every point of experience across enterprises, powering remarkable individualized and generative experiences while optimizing their business outcomes at every interaction. Only AI, combined with powerful search and relevant technology, can achieve that. We continue to believe this will be one of the significant digital transformation enterprises will need to engage in, particularly as they increasingly compete against AI and GenAI-powered experiences from their competitors, and that this will happen across every industry.
As we have previously reported, the initial adopters of Coveo's GenAI technology in fiscal '24 were our existing customers. They immediately understood the power of our AI search, indexing, semantics, and relevance technology to power generative AI and our unique ability to ground large language models prompts into secure, current, traceable and relevant data, all needed to deliver the degree of precision needed by enterprises. We have now signed over 30 generative AI deals in total, all with large enterprises and are in full production with many of these customers already having realized significant ROI and double-digit gains on top of the benefits they had previously gained using Coveo's AI search platform. I am pleased to report that we are now starting to see traction also winning net new clients as well with GenAI. In Q1, we achieved this new milestone by landing Trinity Life Sciences, a provider of evidence-based solutions for the life sciences industry. More recently, we signed another net new GenAI deal with a leading global manufacturer of GPUs, a company very familiar with AI technology, again, after extensive comparative tests.
Additionally, as mentioned during our last call, we secured new GenAI deployment work with F5 Network, a global security technology leader which was already a successful Coveo platform. And this this was following significant head-to-head testing over several months against a major platform vendor. We're excited to extend these benefits to our new customer and believe we are just getting started monetizing this Coveo technology advantage, particularly as our market has now gained maturity and a much better understanding of AI and GenAI. What works, what doesn't, and why a complete Coveo software stack is needed and differentiated.
As I've said from the beginning, since the November 22 ChatGPT and GenAI disruption, we believed Coveo would be the last to hype and the first to result. Well, I think we just did that. And I could not be more proud of the results we're achieving with our platform, now with the addition of relevant augmented generative answering in full production at large scale. This is because we see every day the significant ROI that we bring for enterprise customers that have also measured us against multiple other alternatives from homegrown to commercial software platforms. We continue to get more and more of those customer use datapoints and how transformative the technology is, validating our view that what Coveo does in AI and GenAI is a game changer.
I want to share with you a few real-life examples. SAP Concur, the leading business travel and expense management software provider in the world, only after 4 weeks of A/B testing achieved a 5% reduction in customer service cases and an 80% reduction in number of searches required for customer visits, thanks to our relevant augmented generative answering immediate and accurate responses. This is in addition to a 64% decrease in content gaps. Chamberlain Liftmaster, a global 6,000-employee leading manufacturer of intelligent access garage and commercial door openers and gate entry systems, saw a 23% click-through rate improvement in their online commerce experiences thanks to Coveo AI. F5 Networks, mentioned earlier, a leading application security company with $6 billion in revenue across 45 countries, saw an 11% improvement in self-service success rates using relevant augmented generative answering through a 28-day A/B test with Coveo. Forcepoint, another global security software company, saw a 14% improvement in self-service success rate on their customer community only after 3 months of using Coveo relevant augmented generative answering. This is an important measure of the reduction of the number of customer sessions that end up in a case submission for human assistance, hugely impacting service cost reductions and customer satisfaction. They are now live with our generative AI solutions across multiple other use cases as well. More of these great successes and recent hard metrics and gains using Coveo relevant augmented generative AI in particular, can be found on the Coveo website. And furthermore, these customers are not experimenting. They are alive with our solutions, and you can go and test them yourselves. Our volume of queries from relevant generative answering has increased 10x since January '24, another telling sign of the adoption and value we believe our customers are seeing from this solution.
At this point, I can unequivocally say, after dozens of deployments and comparative tests at large enterprise customers against a variety of competing solutions, that the differentiation and value of our platform has been validated and that our ability to deliver real and substantial results in generative AI is proven within the use cases we cover. We believe this is particularly important as the market enters the show-me phase, post-GenAI high, distilling what is needed and necessary. The risks, the precision, the security, the compliance, the traceability and explainability, the costs, use cases and benefits. This is why we believe that the few companies such as Coveo that can really deliver, prove the benefits, and scale in production globally will have an advantage in the market. While others continue to build, experiment and test, we are innovating on our competitive advantage and constantly delivering new cutting-edge capabilities to further drive value with our customers, working in full production with large-scale enterprise data. I'd like to remind everyone that customer is one single platform shared by all customers globally and in constant innovation.
In Q1, we also closed a substantial expansion transaction with a top 5 U.S. bank and initiated new work with Thalia, the leading German bookstore brand with 20 million products, over 500 locations, and a strong digital presence. As well as with Carlton One, a leading SaaS-based employee management solutions provider. These are just a few examples of leading companies in their respective industries which deployed Coveo, see the significant ROI, and want to lead with AI across their digital experiences.
I'd also like to highlight our bookings performance in the EMEA region, with Q1 marking our best quarter for bookings since fiscal '23. We attributed this success in part to our recent appointment of a new executive, Nick Bold, as Managing Director in EMEA and who has a clear growth mandate in the region. And also to our partnership with SAP and as an endorsed partner globally. Our relationship with SAP continues to show growing signs of demand and success, and we anticipate sustained momentum for the remainder of the year in EMEA and elsewhere.
Our strong pipeline continues to give us confidence in our current growth projections for fiscal '25 and beyond. And another validation of our previously reported thesis that the AI market adoption is inflecting. Notably, Q1 marked our second best net new customer pipeline generation quarter ever. Additionally, in the quarter we saw record GenAI pipeline generation with more than 2x increase quarter-over-quarter in new customer GenAI pipeline. Those are additional encouraging metrics reflecting the strong demand for our innovative AI solutions as we continue to grow the number of customer proof points at various stages of testing and full production deployments.
In summary, we believe Coveo's leadership position continues to strengthen through the ongoing innovation of our AI platform, informed by real-world use cases with leading enterprises across the world and the solid results and benefits that this provides. In Q1, we've also announced an alliance with Genesis, a leading contact center as a service solutions provider, natively integrating our AI platform within the Genesis Cloud platform. Thanks to Coveo, agents will have access to personalized relevant knowledge exactly when needed, enhancing their workflow and empowering them with relevant insights and generated answers to customer questions. This enables them to onboard and upscale faster, reduce search time, improve first call resolution, and lower average handling time. We're also investing to grow strong relationships with leading and specialized systems integrators across the world as they too seek to embark on this new wave of digital transformation, serving the needs for their enterprise clients to bring AI to every point of experience. We believe that Coveo is uniquely positioned as the core technology platform to enable these large systems integration undertakings. Such alliances and partnership investments strongly support our growth and investment thesis.
Investments in our sales infrastructure continue, and I am thrilled to have recently announced the appointment of John Grosshans as our new Chief Revenue Officer globally. John brings over 30 years of global sales management experience in the SaaS industry and has a proven track record of driving significant revenue growth. His dedication to building value-based relationships with customers aligns perfectly with our mission at Coveo. Given the significant opportunities ahead, we are confident that John's leadership will further accelerate our growth and strengthen our position in the enterprise applied AI market.
At Coveo, we think we are at the forefront of a tidal wave of technological advancements as we navigate the growing importance of AI and generative AI in the Digital Experiences Industry segment. Our recently published customer, employee and commerce industry reports, available on our website, reveal critical insights. 61% of consumers believe effective search significantly impacts brand perception in the customer experience space. Over 40% of employees see GenAI as a way to enhance their work efficiency and 72% of shoppers expect generative AI to elevate their shopping experience online. By anticipating these growing trends, we're committed to innovating our AI-based solutions to ensure seamless product discovery and improved digital interactions, positioning Coveo ahead of the competition in this rapidly evolving landscape.
The ongoing investments in our platform also continue to be recognized by industry analysts such as Gartner, as I mentioned on the call last quarter. Most recently, Coveo once again demonstrated AI leadership by winning the AI Search and Innovation Award at the Seventh Annual AI Breakthrough Awards. This prestigious recognition was given due to our AI platform's breadth of functionalities providing advanced search, relevant recommendations, unrivaled personalization, and now generative answering empowering our solution areas.
In closing, our momentum from a transformative fiscal '25 continues as we gain market recognition, secure new customers, deliver results, and expand our partnerships. With our strategic investments and innovations in AI and GenAI, we are not only meeting the needs of our clients for this innovation, but doing so with an efficient business model. We're excited about the future as we navigate the growing importance of AI and continue to position Coveo as a leader in this dynamic landscape. With that, I will now hand the call over to Brandon to discuss our Q1 financial performance and outlook in more detail. Brandon?
Thanks, Louis. The first quarter of fiscal 2025 was a promising one. We delivered on our guidance for SaaS subscription and total revenue and continue to track well ahead of our plans on adjusted EBITDA and as well posted another quarter of solid positive cash from operations.
As we look at the details, SaaS subscription revenue was $30.6 million for the quarter, above the top end of our previously issued guidance. Again this quarter, we have broken out the contribution of Coveo's core platform and the platform we acquired from Qubit. As a reminder, our focus is on the Coveo core platform, which drove SaaS subscription revenue of $28.7 million, up 12% from a year ago. Our ARR for the Coveo core platform grew roughly by the same amount. This was offset by a decline of 34% in SaaS revenue for the platform we acquired from Qubit. As previously communicated, we expect the remaining SaaS revenue for the Qubit platform will largely churn this year as we prioritize investments in our core.
Total revenue was $32.2 million, up 6% from a year ago. Total revenue was impacted by the aforementioned Qubit churn and lower professional services revenue. Our first quarter new bookings were improved from a quarter ago and from the prior year. We saw continued momentum in our CRGA offering, which represented over 20% of new bookings once again this quarter and is tracking well against our plans for the year. We also saw a strong quarter of bookings in EMEA on the back of our go-to-market investments made in the past year and our ongoing SAP partnership. While new bookings did improve in the quarter, they are not yet at our targeted levels and our assumptions remain that we will see bookings momentum build as the year progresses and more customers finalize their AI purchasing decisions, and we realize on more of our growth initiatives.
Our NER excluding the Qubit platform for the quarter was 106%, down slightly from 107% in Q4. This was mainly due to a single lost customer I mentioned on last quarter's call, whereby a financial services customer undertaking a significant cost reduction exercise chose an alternative path. Our gross retention rates continue to be very healthy through Q1 as compared to our peers in enterprise software.
Gross margin for the quarter was 78%, and product gross margin was 82%, both in line with a year ago. Combined, I remain encouraged by the strong unit economics inherent in our business model. With 95% of our revenue coming from recurring SaaS subscriptions, carrying 80% plus product gross margins, gross retention rates in the 95% range, and 105% to 110% net expansion rates for the Coveo core platform, we have a solid long-term business model that provides good leverage for investment in growth opportunities and/or greater profitability. This foundation is a strong positive as we continue our focus on driving improved new bookings.
Adjusted EBITDA loss for the quarter was $1.7 million compared to a loss of $1.8 million a year ago and well ahead of our guidance of $2.2 million to $2.7 million, positioning us well to achieve a year of positive adjusted EBITDA. We've also increased our focus and emphasis on driving positive cash flow from operations, and I'm quite pleased with our progress in this area. We drove positive cash flow from operations of $3 million in the quarter, up from $1 million a year ago. We have delivered positive cash flow from operations in 4 of the past 5 quarters, over $6 million in the trailing 12 months, and are tracking well to our original guidance of driving $10 million in positive cash flow from operations for the current fiscal year, all while still investing for growth.
We ended the quarter with cash on hand of $168 million and no debt. After the close of the quarter, we completed our substantial issuer bid, whereby we repurchased approximately 6.5 million shares for total repurchase consideration of $50 million CAD. On a pro forma basis, after considering the results of our SIB, we would have ended the quarter with USD 130 million in cash and our pro forma share count would have been 97.1 million.
Finally, turning to guidance, for the second quarter we are expecting SaaS subscription revenue of between $30.6 million and $31.0 million and total revenue of between $32.0 million and $32.4 million. We also expect adjusted EBITDA of minus $0.5 million to $0.0 million. Our second quarter guidance assumes the ongoing attrition in Qubit will continue as we continue to invest in the Coveo core. At this time, we'll leave our annual guidance unchanged at SaaS subscription revenue of between $126.0 million and $130.0 million, with total revenue of between $133.0 million and $138.0 million. We expect annual adjusted EBITDA between $0.0 million and $4.0 million. We continue to expect that our second half bookings performance will be stronger than first half and that SaaS subscription revenue growth for the Coveo core will improve thereafter. As mentioned last quarter, we expect Qubit SaaS subscription revenue will continue to churn through the year and continue to expect a revenue impact of approximately $4 million as a result when comparing fiscal '25 to fiscal '24.
And finally, as I just mentioned, we are tracking well towards our target of generating cash from operations of approximately $10 million for the year, although we do expect some seasonality related to working capital to create some variability in our quarterly cash flow results.
In closing, we continue to make positive progress towards reaccelerating our growth this quarter. And while we still have more work to do, I'm encouraged by what I've seen so far. And with that, operator, you may now open the line for questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) Your first question comes from the line of Thanos Moschopoulos from BMO Capital Markets.
Louis, as far as the customers you're winning for GenAI, are there any common themes that you'd highlight? Are they weighted towards particular verticals, particular pain points, some other underlying elements like the demand structure? Or is it really across vertical, across geography? And also, just to clarify, is it safe to assume that these are customer support deals?
Hi, Thanos. Good question. They are across verticals. But as you know, historically, a lot of the early adopters over the years of the Coveo technology where the tech and the large leading global tech companies. This has also transposed itself in GenAI. A lot of, I would say a majority of the early adopters of our GenAI solution were the companies that tested our solution against either homegrown or other providers and ended up selecting us. The vast majority of them are some of the leading tech company names you would know. And so we're very proud of that because these are some of the most educated companies obviously in the software industry and within AI and generative AI in particular. And after these extensive tests and comparisons and A/B tests, they ended up selecting Coveo. As it relates to your other question, Thanos, it has been predominantly the vast majority in customer service, in the customer service area where the benefits don't have to be proven anymore. Clearly, generative AI on top of existing Coveo can increase self-service and reduce cases submission, cases that require human assistance by double digits, and we routinely measure that. This is a huge use case for these types of companies but also other verticals as well. We also see GenAI applications in the workplace area, in the commerce area, and in the websites area, so across all of our 4 businesses. Pretty much every conversation right now includes generative AI and positions us, really differentiates us.
And your next question comes from the line of Adhir Kadve from Eight Capital.
Maybe just on these net new customers that you're winning, I think last quarter you guys continue to call out the strength from this pipeline in net new. Can you give us a sense of how these deals are materializing? Is it largely outreach from your sales force? Or is it largely inbounds that you're seeing just given the strong ROI that you guys have spoken to in your prepared remarks?
Love the question. I think it's both. And increasingly, inbound as well as we publish the results. We had to -- I always say we have to close the loop. Whenever you come up with new innovation, be it in the software industry or in any other innovation industry, you have to put it to work, put it in production, and then it doesn't stop there. You have to actually measure. And ideally, you're allowed to use some of these measures and these results and publish that in the market. And we've been able, being one of the first companies to deliver in full production with generative AI if you recall, the Zero story last summer. And now we've published stories around our work with SAP and other customers. This resonates really, really well in the market. And as a result, is starting to create some inbound as well and some new customers as well who also want to put generative AI to work in these areas. This is really -- obviously, we do employ a sales team, and their job is to go out in the market and generate new leads and go knock on companies' doors and talk about what we can do and the benefits we can bring. But we're also increasingly getting inbound as well. It's really both.
And your next question comes from the line of Suthan Sukumar from Stifel.
I wanted to touch on your partnership strategy. Could you talk a little bit about how important are these partnerships to your, to Coveo's broader growth strategy? And can you remind us what percentage mix of business is coming in through partners today? And where would you like to be call it over the medium to long term?
Two types of partnerships. The number one partnerships with the systems integrators that we see an increased amount of interest from systems integrators. And obviously, that's probably very motivated by the fact that their customers are asking them. These systems integrators are the family doctors, I've used this term before, the family doctors of large enterprises. They're also the whisper masters towards these large enterprises, telling enterprises which technology works best and who leads in tech in certain segments and etc. The adoption, there's no question that AI and generative AI is top of mind for most enterprises right now. And so they turn to these systems integrators for that advice. But also, these systems integrators want to jump on the digital transformation bandwagon. And one of these areas of application is digital experience. We talk about commerce, we talk about service, workplace and website types of experiences, anything that's a digital experience and has someone online at the other end. This is a massive digital transformation campground that will be established over the next couple of years. We think it will unfold pretty quickly. And so these partnerships are really, really important because Coveo wants to position itself and I think is really viewed by these partners as the foundation technology that can scale across a large global enterprise and enable these transformations. So that's one. The second part is the alliances, we call them alliances at Coveo, that we have with software companies. We've announced partnerships with SAP. We've obviously been a long-time partner of Salesforce. We work with companies like Adobe. We've announced during the quarter the partnership with Genesis, which is the leading call center or contact center as a service company. And they too need best-of-breed technologies such as Coveo to improve their offerings and cater to the complex needs of enterprises. This is the reason for these partnerships, and we just hired some new leaders in the alliances and partnerships channels area. And we expect that we'll continue to get a greater proportion of referrals. In fact, in collaboration with these companies. And so this is a key area of investment for us. As it relates to the percentage of our pipeline that comes from these channels, I would say it varies. If you look over the past couple of years, it varied I would say between 1/4 to 1/3 of our pipeline. Obviously, our market as you know was a bit in a holding pattern as companies were discovering AI and try to distill AI and GenAI, etc. And as we know it's reopening right now, so we expect the proportion of -- we expect the contribution of channels to grow very, very significantly. In summary, these partnerships are really, are extremely important to us. And we think we can bring a lot of benefits to these integrators and these large software companies as well.
And your next question comes from the line of David Kwan from TD Cowen.
You guys talked about I think it's like 30 CRGA deals that you've signed. Can you talk about how many of those are live production or revenue generating? And how many are from net new customers? And any color you can provide from that standpoint on the new customers in terms of how much they compose of the CRGA pipeline would be great.
Right. We don't report the detail of the breakdown, but I can certainly say that if we signed these deals, that is because they are contributing to our revenue. We have, in addition to that, dozens of other deployments right now at various stages of decision-making and testing, experimentation or negotiation and procurement. These 30 that we referred to are signed and therefore accounted for. We have some deals, a few -- when we sign deals, their optionality on the part of customers for some of them, to -- as it relates to the duration of the contract and the ability to opt in or opt out. But that's very, very few right now that have not fully opted in for the longer term I would say with us.
And your next question comes from the line of Paul Treiber from RBC Capital Markets.
Your comment on the 30 deals signed is quite encouraging. But how do we align that or dovetail that with the ARR growth? It's up 12%. Can you give us a sense of how ARR growth has trended, and if this 30 deals is fully impacting that ARR growth?
Yes, as Louis mentioned, if we mention a signed order, it is because there is a firm order that will be in ARR and then revenue. I think we've talked over the past several quarters about just what's been going on in the market more broadly, how many companies have paused decision-making and so on, and that's impacted all aspects of our business. CRGA continues to be a very bright spot for us of primarily inside of our existing base, getting them to add on some of our generative answering capabilities. But the broader macro issue that we've been working through is just paused and delayed customer decision cycles as the market spent their time educating and getting up to speed on everything that's been affecting our market in general. Q1 did show some promising signs, and as we mentioned in the prepared comments, we expect that momentum to continue to build as the year goes on.
Just a quick follow-up, if I may. Just the pipeline comments are quite encouraging. You did mention the elongated sales cycles are delaying the conversion. Could you comment on your win rates, what you've sort of seen to date in terms of actual win rates?
Paul, I think in the case of relevance augmented generative answering, I would say extremely high. Now, when you peel the onion, and it depends what you compare it to, from a competitive standpoint, I would say big picture we don't lose. We haven't found any other solution for the use cases we cover yet, at least as of yet, that can deliver the level of precision on customers' current data, highly secured, etc., that meets the threshold where an enterprise would move forward to deploy. Some may decide not to move forward for various reasons or pause or pursue the testing from that perspective. But if you look at the numbers right now, I would say it's less than 10% that are what we call internally lost or de-qualified. There's some on hold. There's some still actively testing. There are some where the tests are completed and are in final decision phase. I will tell you, for us it's more than encouraging. It was really about this inflection and the proof points. The takeaway here that we're trying to say, communicate, in helping you understand what we're going through and what we're seeing is that this market is moving into the show-me phase. And that's really, really important. After 18 months of education and testing and experiment, there were -- companies are willing to move forward and make decisions. Obviously, we're not immune to the general software industry and etc., and every software company says deals take longer and blah, blah, blah. We don't talk much about that because that's the overall dynamic. What's really, really exciting is the value that this technology creates. The numbers are stunning in terms of immediate benefits. And the fact that right now, we've moved -- the demonstration has been made. Companies, if they can see and if they can test with their own data and see the results, they'll find money for it and they'll move. And that -- those signs are very encouraging. Obviously, this is a new technology, and this has been a major disruption in the search market. But from a competitive perspective, just to wrap it up, we're definitely not seeing losses to competition in that particular area.
(Operator Instructions) Your next question comes from the line of Koji Ikeda from Bank of America Securities.
This is George McGrean on for Koji. Forgive me if I missed this earlier, but I was kind of wondering if there's anything worth calling out in terms of how, as relevant to answering is increasingly in the mix, how that changes sales cycle times for bookings?
I think just building on the last answer, George, and this is a very good question because, yes, it does in the sense that in general, if you look across the entire generative AI segment and etc., very few companies were buying, but most companies were experimenting and learning and discovering and learning one way or another. And from that perspective, that lengthened the sales cycle because they want to touch it on their own data and etc. This was less of a repeatable sales process where you buy a solution that's been sold hundreds of times and you can relate to similar situations and ensure that this is going to work for you and etc., like we see across the enterprise software industry. GenAI was an amazing disruption, probably one of the most important in the history of technology. And so for that reason, yes, it does elongate the sales cycle. But at the same time, we're active with these customers and deploying and talking to them and showing it with their data, etc. And we see these results. And these customers, I can assure you, are extremely, extremely engaged. And it gets to a point where the ROI is so obvious that they need to move forward. And we think now the major issues, that if you're a CIO of a global enterprise or a large enterprise, the major issues are for the most part behind you. You worried a year ago about security, about compliance, about the fact that this needed to run on your own data, about the fact that you couldn't load your customer data into a large language model, about the traceability and the explainability and the lineage of content and all of that. And those things are now understood and behind you. This is a long answer, pardon me, George, but just to say that from that perspective, it did elongate the sales cycles because the whole industry was in a holding pattern until the few companies like Coveo that can deliver now are standing with real results. And now companies have 2 choices. They will either adopt this technology or compete against it. And it's going to be pretty binary, it's going to be pretty brutal because the quantum leap and the benefits are just too high to ignore.
And your next question comes from the line of David Weiss from Scotiabank.
Could we just maybe get an update on just the progress that you're seeing with the SAP endorsed partnership in terms of co-selling? I mean you had mentioned EMEA, but perhaps also globally, any commentary on that in terms of recent deals being signed or the contributions to the pipeline and the opportunity there globally?
Yes. Well, first of all, we were also pleased to report the progress we've made with SAP Concur as a key customer and the benefits. And you can find that story on our website, which is quite impressive. And the fact that SAP is a customer of Coveo and is speaking publicly about their results is obviously fueling some awareness amongst their installed base. If you look -- and their customers in the market. If you look at SAP as a company, obviously headquartered in Waldorf, Germany, I would say half of SAP's business is in EMEA and probably a higher proportion of their brand is in that region. We're enjoying quite a lot of success in building the pipeline and signing joint deals. We announced during the quarter the signature of a large -- well, a significant transaction I should say to qualify it, with Thalia, which is the sort of the Barnes & Nobles of Germany and the dock region and a very particular company, leading German book store. That's a customer, the kind of customer I would say that we win with SAP. 20 million products, a very strong online presence, certainly one of the most important online brands in Germany. And we're seeing more and more of these types of transactions and customers and prospects come into the pipeline with SAP. We're also active with SAP and ANZ in North America as well. So that partner continues to grow. Now the dynamic, I just want to close by saying that the dynamic, whether it's SAP or Adobe or Salesforce or any of our alliances, they've experienced the exact same dynamic as it relates to AI, which is their customers too were sort of a little bit in a holding pattern and trying to talk to them and discover what are the risks and costs and use cases and so on of AI. We're really at the same pace here. But there's no question that the SAP partnership and particularly in e-commerce, we've reported before that SAP is the most important e-commerce vendor by gross merchandise value that they process. And so that's a really, really important partnership. And yes, we do see it at a very high level. We do see it growing very well, sorry, in the pipeline.
And your next question comes from the line of Richard Tse from National Bank Financial.
Just on your full year guidance, it sort of implies a pretty sizable pickup here in the back half of this year when it comes to revenue. I'm just trying to understand the lag between bookings and when revenue is recognized. And I guess sort of part of that question, of those bookings, is the lion's share of that coming from these GenAI deals?
Well, we expect bookings to generally improve across the board. This quarter had some promising signs in Europe and CRGA continuing to go well. But we've -- we're seeing signs that bookings will continue to improve as the year goes, Richard. We've still got a pretty wide range out there, so in terms of your comment on ramp I think at the low end, there's not much of a ramp required at the high end. Obviously, we need to see bookings pick up and that turn into revenue. But as we've said, the order here is let's get bookings going in the right direction and the revenue will follow thereafter.
There are no further questions at this time. I will now hand the call back to Mr. Louis Tetu for any closing remarks.
Very good. Well, thank you. I want to thank everyone on behalf of Coveo for attending this first quarter earnings call as you're all there every quarter. And with that, operator, you can now end the conference call. Thanks, everyone.
This concludes today's call. Thank you for participating. You may all disconnect.