John Shao

John Shao asked about the current mentality of Descartes' customers regarding AI features, specifically if they are actively requiring them or if AI is still considered a 'nice-to-have.' He also requested a breakdown of service organic growth, differentiating between upselling and market share gains.

Answer

Edward Ryan (CEO) noted that customers are increasingly asking about AI agents to solve problems, though many are still in the early stages of understanding AI's full potential. He emphasized that Descartes is proactively building and anticipating these agents. He confirmed that organic growth is driven by both upselling and market share gains, attributing the latter to new AI functionality, outperforming competitors, and Descartes' consistent, customer-friendly approach as a technology provider.

John Shao from TD Cowen asked about the current customer sentiment regarding AI features, specifically if they are actively demanding them or if it's still an early-stage conversation. He also requested a breakdown of service organic growth, differentiating between upselling and market share gains.

Answer

Edward Ryan, CEO, noted that customers are increasingly asking for AI agents to solve problems, though their understanding may be less advanced than Descartes'. He confirmed that service organic growth is driven by both upselling and market share gains, attributing share gains to Descartes' comprehensive solutions, reputation as a safe choice, and fair pricing strategy, which contrasts with some competitors' approaches.

John Shao asked for a breakdown of Docebo's 'data moat,' differentiating between data owned by Docebo and its customers, and the liberty to leverage customer data. He also inquired how the average ACV of $67K compares to corporate learning budgets and if AI disruption, particularly cost savings, is influencing customer spending.

Answer

Alessio Artuffo (CEO) explained that Docebo's data moat includes complex workflow data, historical compliance data (critical for regulated industries), external use case data, and now millions of records of skills data, all of which are unique to Docebo and essential for agent-driven automation. Brandon Farber (CFO) noted that the learning tech stack is wide, with HRIS being significantly larger than LMS. He stated that Docebo's average ACV of $67K reflects its move upmarket, with enterprise deals around $250K, and that pricing is holding strong with no pushback, as companies recognize the value of an LMS.

John Shao from TD Cowen asked for a breakdown of Docebo's 'data moat,' clarifying what data is owned by Docebo versus its customers, and the extent to which customer data can be leveraged as an additional resource.

Answer

CEO Alessio Artuffo explained that the LMS holds complex workflow data, historical compliance data, and external use case data (customer/partner education), which is invaluable and not available to third parties. He stressed that this clean, structured data is crucial for agents to execute workflows and provide outcomes. CFO Brandon Farber noted that the average ACV of $67,000 reflects Docebo's move upmarket, with enterprise tickets around $250,000, and stated that pricing is holding strong with no pushback, as companies recognize the value of an LMS.

John Shao inquired about the trajectory of payment penetration in Lightspeed's markets outside its primary growth engines, referred to as 'efficiency markets'.

Answer

CFO Asha Bakshani noted that payments penetration in efficiency markets is in the low 30s, presenting a significant opportunity for growth. It's a key cross-sell/upsell module, and despite tempered new business, software and payments revenue in these markets have remained flat to slightly up. She expects penetration to climb to 40s-50s over time, highlighting higher payment margins in international markets.

John Shao inquired about the timeline for Lightspeed AI's advanced features, such as catalog assistants and store generators, and their potential implications for profit margins, considering increased token consumption. He also asked for an explanation of the payment penetration trajectory in markets outside Lightspeed's core growth engines, referred to as 'efficiency markets'.

Answer

CEO Dax Dasilva stated that Lightspeed AI, officially rolled out during NRF and previewed for hospitality customers, is currently with select customers and will be expanded in the coming months, with a focus on adding agentic workflows. CFO Asha Bakshani confirmed no significant impact on margins from Lightspeed AI, maintaining confidence in over 80% software margins. For efficiency markets, Ms. Bakshani noted payments penetration is in the low 30s, presenting a significant cross-selling opportunity, and is expected to climb to the 40s and 50s over time, positively impacting overall margins due to higher take rates in international markets.

John Shao asked how much price increases for key components or materials are baked into the guidance, if Celestica is still comfortable with the supply chain, and if inflation in the supply chain could be a source of potential margin compression.

Answer

Mandeep Chawla (CFO) confirmed that inflation and pricing are factored into the numbers. He explained that networking is typically turnkey (including silicon), while compute is not. He noted that silicon price inflation is passed on to customers, so no margin compression is currently observed. He added that while average selling prices (ASPs) are contributing to revenue growth, the vast majority of growth is due to units.

John Shao asked how much price increases for key components or materials are baked into the guidance, if Celestica is still comfortable with the supply chain, and if inflationary environments in the supply chain could lead to margin compression.

Answer

CFO Mandeep Chawla confirmed that inflation and pricing are factored into the numbers. He explained that networking is typically turnkey (including silicon), while compute usually does not. He noted that silicon price inflation is passed on to customers, so no margin compression is currently observed. He added that while average selling prices (ASPs) are contributing to revenue growth, the vast majority of growth is due to units.