Docebo Inc
TSX:DCBO
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Docebo Inc
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Good morning, everyone, and welcome to the Docebo Inc. Fourth Quarter Fiscal 2019 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 related to forward-looking statements, please refer to the Docebo 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.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. It's great to have you join us for Docebo Fourth Quarter 2019 Earnings Call. With me today is Ian Kidson, our Chief Financial Officer.I want to begin by reviewing highlights for the quarter and providing commentary on some of our key initiatives. And then Ian will talk about the financial results. Then we will be happy to take Q&A from analysts. Please note that unless otherwise stated, all references to any financial figures are in U.S. dollars.In the fourth quarter and in 2019, we successfully executed against the growth strategy we outlined during our IPO process. Today, we have over 1,800 customers. We have virtually completed our planned 2020 account executive hiring and are already planning for 2021. We are setting out to build a robust partner program, and we continue to invest in product evolution, new artificial intelligence algorithm and new future product to take share and maintain our platform leadership.In the fourth quarter, I'm very pleased to report that once again Docebo generated revenue growth in excess of 50% over the prior year period. In the end of 2019, our annual recurring revenue run-rate was $47.1 million, 58% higher when compared to $29.9 million at the end of 2018. I'm proud of the execution of our team through this period.The fourth quarter has historically been our stronger quarter of the year, and 2019 was no exception as we added $5.5 million of ARR across the globe. In addition, we added 268 new customers from the end of 2018, reflecting our shift away from SMB and focus on midsized and large enterprises. This includes leading progressive organization like ZipRecruiter, who is using Docebo to deliver learning plans for leadership development.As a recurring revenue business, we think it's important to focus on the long-term growth trends, and we were very happy with how the business performed in 2019 as revenue for the full year increased 53%. We believe we are taking market share and growing much faster than the LMS market we serve, which we think is growing closer to 15%, 20% per year. Going forward, we still expect to significantly outgrow our market. And while we are cautious about the current coronavirus environment, we also believe the attention it is driving to remote training is also bringing more opportunities for us.To keep growing and to maintain our momentum, we are not losing sight of the ongoing investment we need to make as a technology and innovation leader. In the fourth quarter, we released the Docebo 7.8, which introduces a number of new advancement to our platform, including Virtual Coach, your online learning personal trainer and coach; Mobile Pages, which allows you to customize your e-learning mobile app with just a few clicks; and Docebo Discover, an AI algorithm that perform content curation by finding online training opportunities and articles based on your skills.Discover, in particular, is a feature that makes relevant content easy to find and consume. And this is something that is not found in traditional LMS platforms, but is a key feature in learning experience platform or LXP for short, that sits as a layer on top. We have incorporated some of the best feature of LXP, which include the intuitive UI and the content discovery, and embedded into our platform.One customer success example we would like to highlight this quarter is Take 5 Oil Change, who has over 530 location across 17 states and 38 locations in Canada. Take 5 chose Docebo in 2018 and grew the account substantially through 2019, adding more users and multi-domains. With such a broad footprint, mobility is a critical requirement, and they have taken advantage of Docebo's Mobile Pages to really clean up the look and feel of their daily board, so they are able to put the most relevant communication on their landing page to always keep team members in the know.Because of the success of Docebo at Take 5, their parent company, Driven Brands, is now deploying Docebo with 2 of their other brands: Maaco and 1-800-Radiator, making this a nice cross-sell win for us.During the fourth quarter, we were also proud to be recognized by Brandon Hall Group for the second year in a row at their annual knowledge technology awards. Docebo was awarded 2 gold for Excellence in Technology, one for Best Advance in Learning Management Technology and the other for Best Advance in Mobile Learning Technology.In January, we were once again named by Fosway as a Core Leader on its 2020 9-Grid. Fosway is Europe #1 HR industry analyst firm. And in reviewing the competitive landscape for learning system, they placed Docebo as the highest performing LMS for the second year in a row. The industry recognition we get from groups like Brandon Hall and Fosway speaks volumes about the differentiation of our platform and the value we bring to our customers.Another key initiative for us this year is to expand our OEM partnership to access new customer channels and generate additional sources of revenues. A great example of this is the OEM partnership agreement we announced in February with Phenom People. Phenom has a great AI system that helps organization manage the career path and internal mobility for employees. This is high complementary to Docebo AI system, which recommends and delivers the learning employees need to achieve their target career goals. Together, we are addressing a big gap in the marketplace by automating the process to fill learning gaps before people move into a new role.We also recently announced a partnership agreement with Bluewater Learning, a consulting service leader in learning, talent and human capital management with location in U.S., Canada and Europe. This is another example of how we are expanding our value-added reseller relationship to not only sell the Docebo Learning Platform, but also to provide critical professional services enterprises require. The connection brings with it IT consulting enterprise (sic) [ expertise ], deep domain knowledge and unique ability to allow customer not to only build personalized learning experience, but also more easily integrate their wider HCM technology suites.In addition, we are well on track with the investment we are making to grow our sales infrastructure. In 2019, we have added 47 people to our sales, marketing and support team, including a new Vice President of Sales in North America and EMEA and as well a new SVP of Product and Services. The addition to our sales and support infrastructure help our ongoing effort to grow with mid-market enterprise and departments of larger companies, which has been the sweet spot for our growth.A majority of the new customers that we added in the fourth quarter were enterprise customers, and this is helping to drive an increase in our average contract value. North America continue to be the largest and most sophisticated market for us with the greatest variety and complexity in use cases. This is where our platform really shines as approximately 70% of the gross new ARR added in the fourth quarter of 2019 from the third quarter of 2019 came from North America.Lastly, I'd like to take a moment to comment on recent global event that are impacting us all, that is COVID-19. Docebo has its R&D development team near Milano, sales office in Toronto, Athens, Georgia and London and close to 70% of our revenues come from North America. As a B2B SaaS company, we are not directly impacted by disruption to a supply chain or lower customer traffic. But like every global organization, there are limits to our employee mobility and we are managing this with no obvious impact to date on productivity.We develop software that allows people to work remotely. So we have always set up our company to collaborate and work remotely. It's in our DNA. Prior to the outbreak of the virus, virtually all of our staff would work at home at least 1 day a week. And some of our employees work remotely full time. So this is not a new concept for us. That said, protecting the safety and health of our staff everywhere is our top priority, and we will continue to monitor this situation closely as we are not made to the global impact, including the potential negative impact to our business. Just last week, as media report and concern over COVID-19 grew, we saw the number of requests for contact through our website ramp progressively through the week, with the number on Friday being 36% higher than Wednesday, when Friday typically is our lowest day.We have also seen an increase in discussion with prospects in Italy and U.K., and the primary discussion point is how quickly can we implement Docebo. In our discovery calls, our salespeople are hearing that company that were previously looking at LMS casually are now making it more of a priority because of the COVID-19 outbreak. As an example, we examined the Amazon content delivery network data for a cohort of Italian user in mid-February, a region specifically impacted by the virus. And we found a very significant increase in Amazon content delivery network call, from 2.1 million per day prior to 3.9 million per day now. Although this global situation is still developing and we don't have enough data to see a clear trend, we believe Docebo is helping companies to operate remotely. So we think we are potentially resilient to this pandemic. I think this event really underscores the value for organization to have the right tools to be able to communicate, learn and operate and conduct business effectively to various digital channels. And we are proud to be able to help where we can by building software that allows companies to learn more efficiently with mobility and deploy within a short time frame. With that, I'd like to hand the call to Ian to discuss the results in greater detail.
Thank you, Claudio. I'd like to start the financial discussion today by first pointing out a change in how we measure one of our key performance indicators, as outlined in our press release and MD&A.Previously, we have excluded OEM subscription revenue from our ARR totals, and we have also excluded customers from our OEM arrangements from our total customer count. For the fourth quarter and going forward, OEM subscription revenue will be included in ARR as well as our total customer count in ACV. Even though we do not directly control the customer contracts through these OEM arrangements, we felt including the revenue and the customers will be a better reflection of our performance now and in the future as this revenue stream continues to grow.In the press release and MD&A, we have provided the ARR values for the last 4 quarters incorporating this change. Please note that OEM revenue has always and will continue to be excluded from our net dollar retention calculations as we believe that to include OEMs in the calculation would incorrectly enhance the resulting metric.Now moving on to the fourth quarter results. You'll find a detailed breakdown of our financial results for the 3 and 12 months ended December 31, 2019, in our press release, MD&A and financial statements, which are now available on our website as well as on SEDAR.Total revenue in the fourth quarter of 2019 grew to $12.3 million, reflecting an increase of 53% from the prior year period. Subscription revenues were $11.2 million or nearly 91% of total revenue for the quarter compared to $7.4 million or 92% of total revenue in the fourth quarter of 2018. Professional services revenue was $1.1 million in the fourth quarter of 2019 compared to $684,000 in the prior year period. This significant growth in revenue came primarily from new customers, which increased to 1,808 at the end of the year, up from 1,540 at the end of 2018. Our focus on quality, midsized enterprises as our target market resulted in average contract values increasing substantially to approximately $26,000 at the end of 2019, up 34% from $19,000 at the end of the fourth quarter of last year. Note, please, that average contract value is annual recurring revenue or ARR divided by the number of active customers.As Claudio said earlier, our ARR at the end of 2019 was $47.2 million, an increase of 58% from the $29.9 million we had at the end of 2018. It also reflects an increase of $5.5 million from $41.7 million at the end of the third quarter of 2019. The growth in ARR in the fourth quarter reflects the addition of new customers with higher ACVs and in particular, strength in our North American business and ongoing traction with our sweet spot client base, which consists of midsized enterprises and divisions of large companies. Although ARR is not an accounting measure, it is a key metric that we use to evaluate our progress.Gross profit in the fourth quarter was $10 million compared to $6.5 million in the prior year, an increase of 53%. As a percentage of revenue, gross profit margin for the quarter was 81.4% of sales, consistent with the 81.1% of sales in the prior year period as we maintained a similar mix of subscription versus professional services revenue.Operating expenses for the fourth quarter increased to $13.1 million as compared to $9 million for the prior year period, an increase of 45%. We still had a bit of noise in our expense categories in our fourth quarter related to certain costs associated with the IPO. But otherwise, our expense lines were largely within the expected parameters as a percentage of revenue that we discussed on our last earnings call.Sales and marketing expense for the fourth quarter was $4.6 million compared to $3.1 million for the prior year. As a percentage of revenue, sales and marketing expense was 37% compared with 38.1% for the prior year period. As Claudio outlined earlier, we continue to invest in our sales and marketing capability, and we are pleased with the progress that we've made in making key strategic hires, both in North America as well as in Europe.General and administrative expenses for the fourth quarter were $4.4 million compared to $3.6 million in the prior year, an increase of $850,000. In determining our adjusted EBITDA calculation, we have excluded approximately $700,000 of costs incurred in the fourth quarter that were directly related to our IPO. As a percentage of revenue, G&A expense for the fourth quarter declined to 36% or 30.2% excluding the IPO cost. This compares to 44% for the prior period as we continue to see the benefits from greater scale.R&D expense for the fourth quarter of 2019 was $2.8 million compared to $2 million in the prior year. As a percentage of revenue, R&D expense declined to 22.6% for the fourth quarter as compared to 24.6% for the comparable period. Investing in product development remains an absolute priority for Docebo. In the long term, we believe that R&D expense in the range of 20% of revenue is a good target for us. But we are comfortable with it running a little higher than that in the short term as we continue to work hard to improve our product.We reported an adjusted EBITDA loss for the fourth quarter of 2019 of $1.1 million compared to a loss of $1.9 million in the prior year. Net loss was $3.3 million for the fourth quarter compared to $3.2 million for the fourth quarter of 2018.Cash flow used by operating activities for the fourth quarter was $3.5 million and free cash flow was a negative $3.6 million. For the 12 months ended December 31, 2019, cash flow used by operating activities was $4.6 million and free cash flow was negative $4.9 million.Remaining capital efficient with our growth investments has always been and will continue to be a priority for us. For the full year 2019, we were able to grow ARR by $17.3 million while incurring sales and marketing expense of $16.3 million. This level of efficiency will be harder to maintain as we grow but will remain an absolute focus of your management team.In addition, our net dollar retention rate for 2019 remains over 100%, reflecting the stability of our revenue base and our ability to expand the relationships that we have with our customers.At the end of the fourth quarter, we had $46.3 million in cash and no debt. As you would expect, our accounts receivable and deferred revenue balances continued to grow, consistent with our growth trajectory.We have demonstrated strong capital discipline while growing rapidly through the years, and 2019 was no different. Looking forward to 2020 and 2021, our primary focus will be on revenue growth and making the necessary investments to maximize that growth, but we will not abandon our fiscal traditions.With that, I'll turn it back to the operator so we can take some questions. Thank you.
[Operator Instructions] Your first question is from Robert Young from Canaccord Genuity.
Very strong growth in annual recurring revenue in the quarter, a little ahead of the subscription growth you reported. So I was hoping you could talk about the seasonality there. And also what we should take away from that as far as the growth expectations that you have for 2020?
Yes. First of all, ciao, Robert, great to hear again, Claudio speaking. So about the ARR growth, yes, we are very happy. And the quarter beat our internal expectation. This was not driven by any large enterprise contract, but with the mid-enterprise sweet spot where Docebo sell mainly, so there is not an outlier here.About the seasonality, yes, December, I mean, the Q4 for us is usually above the average growth. And about 2020, we are still aligned with the expectation of the analysts.
Okay. And then looking at the changes you made to the ARR for the OEM channel. I mean, backing out the changes from Q2 and Q3, it looks as though that was a very strong ramp. I was wondering if you could talk about that.And then secondly, if we're looking at the ARR change on a year-over-year basis, I understand that the OEM channel has largely appeared in 2019. And so there wouldn't be a reason why we would want to handicap the growth by removing the OEM channel. I mean, if you could talk about that a bit, that would be helpful.
Yes. About the OEM, there are several elements to consider altogether. First of all, you know that OEM for us is a product and was a new product when we released the OEM that was adopted as a first partner by Ceridian. So both companies had to learn how to sell, implement the product. And it takes time ramping new products, selling new products in a market that was not known by Docebo. It was new. It was a new experience for us. But now that we are extending the number of partners, we will be way faster on implementing because we had the knowledge. And that you are right, mainly the number will be reflected in 2019 just because it took time to ramp. But now we'll take shorter time to roll out new partners.Consider that our partners, your question about the stickiness, our partners are software as a service vendors like us that mainly rely on multiyear contracts. That brings their stickiness into our OEM product. And the fact that we are now onboarding additional OEM partners will make us more robust and not dependent by one partner only.
And did the OEM channel grow in Q4 over Q3? Did that ramp continue?
I'll leave this answer to Ian.
Sure. Rob, as Claudio said, it takes a while for this to become a smooth process. I think it's fair to say that Ceridian had a pent-up demand, if you will. So it's difficult for me to talk about what's going to happen in 2020 with respect to the speed of the growth this year. But in 2019, we ended the year with about $2 million of OEM revenue. And we added that over a little bit in Q2 and then the rest over Q3 and Q4.
Your next question is from Daniel Chan from TD Securities.
Congratulations on a good quarter. Claudio, thanks for the update on the pandemic issue. Can you remind us of how high-touch your sales process is and whether the pandemic affects your ability to sell? It doesn't sound like it is.
Yes. First of all, ciao, Dan. So about the sales process, you know that Docebo has a multiple channel revenue stream. One is inbound. The other one is outbound. And the other one is OEM. And we focus mainly on mid-enterprise business with some spec sale on large enterprise. Mainly 95% of our deals are closed remotely. That means we do not have to fly in the customer office to run demos like all the school company does. But that means that 5% of customers, which likely are the biggest deal that we will have in the future, require a presence. And then probably there will be some impact on that. But mainly, let's say, 95% of our deals that we have in pipeline are absolutely manageable working remotely.You know that when Alessio, our CRO, reshaped the sales organization, we created a dual role, which is account executive and sales consultant, where the sales consultant is mainly in charge to run product demo, which is our key differentiator. Usually, we nail the deal when we run the demo. And all these demo are run remotely, are managed remotely. So I'm very confident we can continue to demo the product remotely.
Okay. That sounds good. You also mentioned in your prepared remarks that you're seeing a lot of inbounds and people are asking whether you can deploy quickly enough. What is your ability to deploy given the high demand and in the current environment?
Yes. This is a good question because, first of all, I have a couple of additional data to share. We set last Friday a record on contact from the website, and this contact came mainly from Italy and U.K. Yesterday, we set another record on trials, means companies that activate the 14 days free trial in Docebo. And historically, yesterday was the strongest day on the trial. And the common question is, we are in a hurry, how we can roll out this very quickly because our employees need to work from home from today and tomorrow.And then we are approaching this from a gradual rollout. That means we roll out the platform immediately. We upload the content immediately. And let me tell you, we are announcing today that we will give for free in our bundle to all the Docebo users 2 courses, one about the coronavirus infection control and another about pandemic awareness. So in this case, they can start working literally in a few days because activating a platform and uploading the content is a process which is quick and seamless. And thanks for our software as a service infrastructure, it's very easy to deploy. And then probably it will take time to fine-tune the process and to tweak the processes. But into an emergency environment, literally, a customer can get the platform up and running in few days.
Great. And then final question for me. We saw a nice increase in ARR and ACV. You mentioned that a lot of that was driven by new mid-enterprise customers in the quarter. Did these customers also take on more modules than your typical contract? I'm just trying to understand whether the ARR growth is coming a lot from new seats or whether it's coming from additional modules.
Yes. No, I think, I mean, mainly, this is still driven by our shift from small business to mid enterprise. And then this makes us more resilient in a difficult economic environment because small business are the customers, the kind of customer that will be more impacted by the economic downturn. So actually, the ACV growth is mainly driven by a better positioning on the mid enterprise and by a shift by the mid-enterprise market where we want to focus, and also we want to focus on large enterprise departments.
The next question is from Paul Steep from Scotia Capital.
Claudio, could you talk a little bit about the OEM ramp, how we would think about your new partner, Phenom partners (sic) [ People ], coming on board and how that would sort of look in terms of building up and what the thought was in terms of actually further expanding OEM?
Yes. So in 2019, early 2019, Alessio Artuffo, our CRO, built a partnership team, which is now well-structured and well managed. And in the same time, we have created a specific product team for OEM that can focus only on these markets. Say that, the product took time to be developed but now is ready and it's a technology which is replicable for new OEM partners.Phenom People have a different use case from Ceridian because Phenom People, it's mainly focusing on filling the gap on internal mobility. You have to imagine that very large enterprise companies have internal career portal, and there are employees that require to move from one portal to another, from one position to another, but there is a skill gap. And then the artificial intelligence of Phenom People talk with artificial intelligence of Docebo, and Docebo is capable to train these individuals to fill the gap and to move them into a new specific career.Say that, with the possibility to replicate the OEM model and to cover different use cases, we are optimistic that we can accelerate the OEM conversation pipeline we have now because now we are more robust because the product is more robust and the sales organization is more robust and also the service to support these customers to onboard more OEM partners quickly.
Great. And then obviously, we saw a major consolidation within the space in the last week or so. Maybe speak to what's happened in prior large consolidations in the space, recognizing you've been fast growing the entire time. But what you've sort of seen when those disruptions occur, and then I've got one clarification.
Well, every company have its own strategy. Some company acquires competitors, some company merge to get economy scale, other company pursue other strategies. What we see is, the really small, small player that create only noise in the market probably will go away because of economic downturn or because they are acquired by some competitor that want to consolidate the market.But when 2 big players merge, what you have to expect is a high churn of customers that are scared on what can happen to their products. So we expect that some customers churn, and they are looking for new software, new solutions, and Docebo is there.
Just to further that for a second, should we expect like a ramp in sales and marketing cost as you go after an aggressive take back strategy over the next quarter or so, I guess, was where I was thinking about in the question.
First of all, I want to highlight the fact that we are more than on track on hiring the 2020 sales machine. Just from the operational standpoint, we are now already scouting for talent for 2021. Say that, you don't have to imagine an incredible climb on the cost of customer acquisition, but I'll let Ian answer more in detail about that.
So on whether or not this is going to make an impact, Paul, I don't think it will. And obviously, this is an instinctive response. But whether companies who are customers of 1 of those 2 entities decide that they're going to go through a shift, in the context of the market, it's not going to make a significant impact. It's obviously helpful from our perspective in the sense that when we enter into that kind of conversation, the likelihood or the receptiveness of that customer to entertain a shift is higher perhaps than what it would otherwise be. But from a cost perspective, does this mean we're going to have to add another 20% of sales and marketing efforts? The answer is no. We won't.
Your next question comes from Stephanie Price from CIBC.
Just following on Paul's question there. Cash burn was a bit higher than we were expecting in the quarter. Can you talk about some of the investments that contributed to it? And how you kind of think about that cash burn going forward?
Yes. I'll leave this to Ian.
Sure. Thanks, Stephanie. We still had, I guess, some IPO costs in the quarter, which we have adjusted out. We also had -- which, by the way, were not adjusted. We had $0.5 million of some severance payments, which we didn't adjust because severance is ongoing, but it's really the first time that as a company we've ever had that. And it was material, which is why I mentioned it.And as Claudio has said a couple of times, we worked hard in '19 to try to get ahead of positioning the company for 2020. And so our hiring in sales and marketing and the like was a little bit ahead of where we otherwise have been. Is that helpful?
That is. And then in terms of the OEM partnerships, obviously, you're seeing growth there. Can you talk a little bit about the pipeline and what types of OEM partnerships are there and most interesting? And how you're seeing the ramp given COVID-19, if there's been any impact yet?
Yes. So about the OEM, the good of the product that we have developed is that it can be a multi-sector. I mean, not only payroll, HCM platform, but also ATS, also internal mobility portals, also talent management and also ERP. In all that industries, we have active conversations and active pipelines not only in North America but in Europe as well and something in Asia. That means that the pipeline is ramping up. For sure, some conversations are on a more mature stage than other conversation, but the team is solid. We have now the knowledge. We have now the team that can manage this. And I'm excited on seeing also the possibility to expand the feature of the product. For example, having some kind of persistent learning widgets inside the customer software, it's part of the OEM product road map. So we are very excited about the opportunity there.Sorry, what was your second question, sorry?
Just around whether you're seeing an increase in inbounds given COVID-19 and partners looking for additional remote learning offerings.
Yes. I want to be very pragmatic here. I believe that part of this kind of inbound are driven by emotions. I mean people that are scared and want to understand how quickly they can put in place the enterprise software stack to work remotely. And the enterprise software stack for working remotely is video conferencing, Zoom or similar; remote collaboration, Slack or Microsoft Team; and remote learning, Docebo or Docebo. But there is also quality in these leads because, for example, in Italy, we have had the record of inbound leads converted in deal in March. So there is also some solid opportunity out there.And also, we do not have to forget another thing. That COVID-19 is playing a lot of marketing to us because now there is more awareness that you can train people remotely, that you can grow people remotely and so on and so on. Frankly speaking, from an ethical perspective, from a karma perspective, I'm not happy that such a tragedy is playing marketing to me, but at least it's proving that Docebo is resilient to this situation.
The next question comes from Suthan Sukumar from Eight Capital.
Congrats on a very strong quarter.
Thank you, Suthan.
Thanks, Suthan.
On my first question, I wanted to touch on what the upsell opportunity looks like within the base currently. I'm kind of curious to know what modules that you're seeing greater traction with your existing base? And given that you've recently launched stuff like Docebo Discover and Content, how was adoption of these kind of newer modules trending?
You know that Docebo have different modules that are now live in the market. One of the main differentiator is the Extended Enterprise. Extended Enterprise for us is the key differentiator and also one of the main upsell opportunity. Extended Enterprise is a module that allows Docebo to run multiple portals to cover with one single installation multiple use cases. When we talk about multiple use cases, it means internal training, multi-department training like internal training with 2 portals, one for marketing training, one for sales training, but also customer academy that target an external audience, partner academy that target an external audience and all these kind of use cases. But also, we have the new mobile app rebranded, which is another upsell opportunity. And we had the Coach & Share that now we've renamed Discover, Coach & Share because the Discover, which is the LXP feature of getting content from external sources bringing to the learner is now part of the Coach & Share suite. Coach & Share suite is now used by 30% of all the customer base in Docebo, and 50% of new contracts are buying the Discover, Coach & Share platform, which is the social learning module of Docebo.In addition to that, we are beta testing new future products that will address different needs, still in the learning space, not talking about HR or talent. And this will be visible and announced in the next quarter. I'm not sure when, but we are starting beta testing with selected customers.
Okay. Great. No, that's helpful. And it's great to see that your OEM opportunity is ramping, but you guys are also adding new partners. I'm kind of thinking about the recent Bluewater announcement. Can you guys speak about your strategy with respect to partners? Is it really a market expansion opportunity here with them or is it an opportunity to get really deeper penetration in key verticals?
Yes. You are completely right on making a differentiation between OEM partners and value-added reseller partners like Bluewater because there are use cases where there are partners that already manage the HCM suite or other suite and there are opportunities to have a really modern look and feel LMS to integrate in this suite that they manage for their customers. These are the use cases we like for value-added reseller. That doesn't mean that they are box movers like they buy Docebo and they sell Docebo to someone else. But they have a stack of enterprise software that they manage for their end customer, and then they need another stack to integrate and create value on top. And now they can create value, the value that Docebo cannot create on its own because this is not focusing on professional services, exactly on professional services.Let me give you an example. Custom integrations between suites, analyzing or analysis of business data, creation of custom bespoken content. Those are a set of services that the industry need and that Docebo as a software as a service doesn't provide because, as you know, we are fanatic about ARR and recurring revenues.So in this case, where there are opportunities, where a partner has a specific market niche and they can create value on top, makes sense to work with value-added reseller. But Bluewater is a strong company, big. So it's a unique partner, and this is the kind of partner we love.
The next question comes from Richard Tse from National Bank Financial.
Yes. I think you said that you added 47 people to sales and marketing. Can you maybe give us some color in terms of whether those people are coming in to service the existing market opportunity? Are you sort of looking at deploying them to look at new markets?
Yes. So you know that this year, in 2019, Alessio, our CRO, had a lot on his own plate in 2019, and 2020 will be more busy. Docebo sales and marketing team were 2 separate teams. Now we have unified the 2 teams. Sales and marketing are working together. And this was the first move.The second move was creating the split between account executive and sales consultant. That means that account executive now is focusing on closing the deal and creating value, but the sales consultant is more focused on running the demo and explore with the customer in detail what are the technical details that he requires.Then we have increased the number of outbound people, especially in North America. We have increased substantially our U.K. business that now is taking care of U.K., Benelux and Nordics. We have increased also the operation part and the sales enablement because with such a big sales machine, we need to train and orchestrate our team. So it was an organic growth of the machine that now includes not only sales and marketing, but now also customer success reported to the Chief Revenue Officer. That means that this machine is becoming a unique sales machine that orchestrates all the workflow from the start to the end under Alessio Artuffo leadership.
Okay. That's helpful. I couldn't help but sort of recognize your comments on new features and you referred to LXPs. And I think I asked that question last quarter on terms of LXPs. Are you kind of signaling here that, that could be a potential new market opportunity for you given that you're adding some of those features?
Yes. So LXP can be identified in different ways, but mainly the LXP solve one single need: old school platform that require a simple layer that sits on top of them because the users don't want to use this old school platform.In this case, the LXP makes sense because the user experience is everything. There are 2 ways where Docebo can play in this game. First of all, our UX and UI are very smart. So our mobile app -- and they're very nice, very nice to use, makes our end users happy. So with our mobile app, we already have Docebo Discover, which is the feature of the LXP inside. And then we can grab content from any blog or source on the web and suggest to the user, which is one of the main use cases of the LXP, creating a personalized user experience.We have one R&D project that can be probably labeled as LXP 2.0 because we think that LXP can really go over the simplification of the user experience. There is more value there. For example, targeting specific skill, drive the users to follow a specific curricula path to get a specific skill, more interaction and stuff like that. And I think that you will be pleased in the future seeing Docebo playing in this field.
Thank you. There are no further questions at this time. I will now turn it back over for closing comments.
Yes. I want to thank you. I want to thank you, everyone here, and let's meet next quarter.
Thank you, everyone.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating. And at this time, we ask that you please disconnect your lines. Have a great day.