Docebo - Q3 2024

Transcript

Operator (participant)

Good morning, everyone, and welcome to the Docebo third quarter 2024 earnings call. All participants are currently in listen-only mode. We will open the line for a question-and-answer session momentarily. Analysts can ask questions by pressing star, followed by the number one on your telephone keypad. We ask that analysts please limit themselves to two questions and return to the queue for any follow-ups. I'd now like to turn the call over to Docebo's Vice President of Investor Relations, Mike McCarthy. Please go ahead, Mike.

Mike McCarthy (VP of Investor Relations)

Thank you, Regina. Earlier this morning, Docebo issued its Q3 2024 results. The press release, which included a link to management's prepared remarks and our quarterly investor slide deck, were all posted to our Investor Relations website. This morning's call will allow participants to ask questions about our results and the written commentary that management provided this morning. Before we begin this morning's Q&A, Docebo would like to remind listeners that certain information discussed 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 relating to forward-looking statements, please refer to Docebo's public filings, which are available on SEDAR+ and EDGAR.

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 are 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 reconciliations to the nearest IFRS measures. Please note that unless otherwise stated, all references to any financial figures are in U.S. dollars. Now, I'd like to turn the call over to Docebo's CEO, Alessio Artuffo, and our CFO, Sukaran Mehta. Regina, we're ready to take the first question.

Operator (participant)

Our first question will come from the line of Ryan MacDonald with Needham. Please go ahead.

Ryan MacDonald (Managing Director and Senior Equity Research Analyst)

Hey, good morning, everyone, and congrats on a great quarter. Alessio, maybe just to start with you, obviously, the macro environment has been a tough one, but Docebo seems to continue to execute really well despite that. Can you just talk a little bit about what you're seeing sort of within the selling environment? What's enabled the company to continue to sort of really perform well, again, as things sort of continue to be elongated, and maybe talk about sort of the mix between sort of sales productivity from the direct team versus maybe support you continue to get as you expand those partner relationships. Thanks.

Alessio Artuffo (CEO)

100%. Hello, Ryan. So first, let me say I am really, really proud of the efforts of the Docebo team and how we've effectively been executing in what remains a stable yet somewhat challenging macro environment. Customers, for sure, continue to demonstrate appreciation for our services, for our products in particular. Our ability to serve multiple use cases remains our superpower. We are the sole company that can serve at scale a large enterprise's needs for both their employee experience, or EX, and the customer or partner experience, what we refer to as more CX. You are correct that our efforts are balanced and target both investing in our direct sales machine as well as our partner engine, which is an articulated engine where system integrators play a key role. This quarter alone, we have advanced our success with some of the system integrators.

For example, in partnership with Accenture, we were able to conclude positively a relationship with a leader in the insurance sector in Europe, actually, which to me underscores the fact that our investments in partnerships and our investments in establishing our presence, our go-to-market, even outside of North America, in this particular case, it was in the DACH region, are paying off, and our strategy is coming together really nicely. In terms of go-to-market more broadly, with the cutting of rates, we're seeing a resurgence of the sectors in which we have been historically very, very productive, such as software, professional services, and other sectors where our product suits them really well. For example, associations and retail is really performing really nicely in these industries. Look, in the enterprise space, no doubt, the deal cycle remains slightly elongated. So we are learning how to work within that environment.

But again, overall, let me underscore, we have performed in alignment with our expectations and are very proud of our results.

Ryan MacDonald (Managing Director and Senior Equity Research Analyst)

Appreciate all the color there. Maybe as a follow-up, in a week like this, it's probably impossible not to ask about anything government-related, but it seems like it was a good quarter within the SLED and a bit in Fed. But can you just give us a little bit of an update on the progress with FedRAMP? And is there any risk here as a new administration comes in that there's, I guess, maybe a pausing in the process as you work towards that FedRAMP certification? Thanks.

Alessio Artuffo (CEO)

Love the question. So let me touch first on the topic of new administration and then give you an update on where we stand relative to FedRAMP. What I've always loved about our technology is that, especially at times of, say, a search for efficiency and cost-cutting, what better technology is available than that that allows organizations to upskill their own workforce? There's nothing more important than having people on the job or customers by any means that are more competent and more ready to do the work at a fraction of the time. So our platform essentially does that. It supports upskilling and reskilling processes. And so we understand government agencies may be asked to do more with less. And we believe that in this environment, our products provide a natural edge against a search for increased efficiency. So that is on the new administration side.

Of course, it's early days, and we will see what happens next. On the FedRAMP side, our work has continued just upfront kind of to remember where we stand in our journey of certification. Docebo, first of all, is audit-ready, and what that means is we have done all our work on the so-called FedRAMP controls to ensure that our technology processes and documentation are ready for a sponsor relationship. We have been working, are working very actively, and this remains a top priority to finalize a sponsor relationship, and we remain cautiously optimistic by that. However, putting a date to that is basically impossible as this is outside of our control. However, we are cautiously optimistic on the outcome. One more thing I would like to say about this.

Let me remind that while FedRAMP is a priority and we have invested on it, we are seeing beautiful outcomes more broadly in the government space where we are executing very nicely in the SLED part of the business and are partnering with partners like Deloitte on advancing our positioning at the market and are selling actively together with them.

Operator (participant)

Our next question will come from the line of Suthan Sukumar with Stifel. Please go ahead. Suthan, your line might be on mute.

Suthan Sukumar (Managing Director)

Good morning.

Operator (participant)

We'll take our.

Suthan Sukumar (Managing Director)

Apologies. Good morning. Congrats on a solid quarter here. I just wanted to check in on an update on your pricing strategy. Just curious what early progress you've been seeing to date and what is some initial feedback you can share on sort of the success side of that strategy?

Sukaran Mehta (CFO)

Yeah, good morning, Suthan. Sukaran here. I'll cover this one. First, yeah, just as a reminder, when we launched our pricing in April, this is historically the company priced its customers on an à la carte basis, and we moved to what we call the core bundle pricing with incremental capabilities that are part of our core and more package. So what that effectively has meant is that in terms of the trends we're seeing, we're certainly driving a much higher value conversation of the problem that we want to solve for our customer in terms of the outcomes that we help solve for them, whether it's their customer education, onboarding, the capabilities, so on and so forth.

What we also drive as a result of that is aligning value to where we can extract value effectively, meaning that in the customer education use cases, we are able to have a conversation around e-commerce capabilities, which we can monetize separately as part of our new packages. So the new pricing has allowed our sales engine to drive a conversation, which is value-driven. We're certainly seeing that all our new deals effectively now are priced at the new price book. As we look to 2025, you'll expect us to start utilizing that price book for our renewal cycle with the new products that we've, sorry, the new modules that were launched at Docebo Inspire. It also gives us an opportunity to utilize our new price book to streamline the renewal book over time.

It will still take time because renewal book depends on when the customer is renewing, and you also have to be sensitive to their initial contract SLAs. But in general, on the net new deals, we're pretty pleased with it. You should expect that, and you're seeing that in the ACV growth even this quarter that we showed ACV was quite strong at $71,000. I mean, we've talked about it in the past that you can expect a reasonable increase in ACV as a result of how we go to market. The other thing that we're seeing also is that it helps us from a deal velocity perspective because from an objection handling perspective, you're now driving the conversation of value versus a la carte menu of items. So very pleased on that front.

I think looking forward to 2025, you'll see us utilize that with our new modules and expansion strategy in trying to bring as many customers as possible to the new price book.

Suthan Sukumar (Managing Director)

Great. Thank you. For my second question, I just want to follow up on the U.S. government opportunity. Noticed recently in the headlines that one of your partners, Carahsoft, is being investigated by the FBI. Just wondering, have you noticed any impact to your relationship or any impact on execution via that channel?

Alessio Artuffo (CEO)

No. This is one of our several partners in the government sector. We don't expect any impact in our relationship, and yeah, we'll continue to monitor developments, but it's pretty neutral to us. Thank you.

Operator (participant)

Our next question will come from the line of Robert Young with Canaccord Genuity. Please go ahead.

Robert Young (Managing Director and Head of Research)

Hi, good morning. First place I'd like to start is a couple of times you've given us some indication on growth by cohort. I think you said that the enterprise cohort is growing 30% or greater at the Investor Day. Can you update us on that and maybe just give us a sense of where the different cohorts are?

Sukaran Mehta (CFO)

Yep. Yeah. Hey, Rob. Sukaran here. In terms of the cohorts, I think you will see that in my prepared remarks. I mentioned it. So you'd see Enterprise segment, which is our customers at the large end of the market. We grew that segment at 25% this quarter, and then we saw some on the SMB side. I think it's pretty similar to what we've seen in the past, but mostly in the single-digits growth. But I think as we look forward, you can expect that even in Q4 and forward that you'll see more strength in the higher end of the market, and we'll continue to monitor how the rate environment impacts the lower end of the market. But there is an opportunity or potential that if there's some stabilization and confidence in the buyer, maybe the SMB market may perhaps start participating a bit more in 2025.

Robert Young (Managing Director and Head of Research)

Okay. So then I guess the obvious follow-on is, I mean, 25% is a downtick. So what would be the driver there? Is that tempers or those long-term expectations? Just maybe give a little more detail there.

Sukaran Mehta (CFO)

Yeah. It's just generally a seasonally slow quarter. We think about Q3 as a seasonally slow quarter. Last year, also just as a reminder, Rob, we had a large deal, Google, that was part of our marquee deal. So there's a bit of a calm in the prior too.

Operator (participant)

Our next question will come from the line of Josh Baer with Morgan Stanley. Please go ahead.

Josh Baer (Executive Director and Software Equity Research Analyst)

Thanks for the question and congrats on a strong quarter. Something to get an update on just the OEM strategy broadly and also wondering as we head into 2025, are we going to start to see any headwinds show up from some of those prior changes around Ceridian Dayforce?

Alessio Artuffo (CEO)

Morning, Josh. Our partner strategy continues to be very strong. As we mentioned in the past, we brought on board a new executive to lead our strategic partnership efforts that includes our OEM channel. When we think about partnerships, we think about OEM, we think about system integrators, and we think about partnerships that are creative from a go-to-market standpoint in terms of product capabilities, in terms of product extensions. We've been working on all these fronts and are quite pleased with our return on the business development side. I believe in the quarters to come, we will continue to expand our wallet of significant partners, and we will update you as we go through it. But I would say from a results standpoint, our focus has been to support these large enterprises that we're working with.

Really, the relationship with the SIs has been a tremendous area of focus for us, and the developments with the Accenture and the Deloitte have taken a lot of our time, but we believe this time is very well spent, and we get great ROI.

Sukaran Mehta (CFO)

And I think, Josh, the second part of your question, my apologies if there was another around pricing or.

Josh Baer (Executive Director and Software Equity Research Analyst)

No. I think that's helpful. But Sukaran, I would ask you just not to guide, but maybe the opportunity to help shape analyst thoughts on growth trajectory ahead. On the one hand, you have 18% ARR growth this quarter. On the other, you guided to 14% revenue growth in Q4. Is there a reason to expect stabilization in 2025 from a growth perspective, more deceleration from that Q4 exit rate? Any thoughts on the trajectory there?

Sukaran Mehta (CFO)

No, I guess I can give some color. I think, as you know, we'll provide our annual guidance for 2025 when we report in February. I think the way to shape it first is qualitatively is that the focus in 2025 will be coming from a perspective of Enterprise segment being the most important, especially on the external use cases, customer experience use cases. As we spoke about some investments that we're making around our, not just FedRAMP, around our SLED market, and that's important as we look into 2025 with a bit of delay perhaps on the FedRAMP that we just spoke about. But the pipeline, the way it's shaping right now is that more than 50% of our pipeline is CX learning-driven. Almost 30% of our pipeline going into 2025 is also participating from an SI perspective, which speaks to the large end of the market.

So we certainly are increasing our pipeline in the large end of the market, and that will certainly increase some deal cycles, but also give us an opportunity to show some strength into 2025. At a high level, I think that as we exit this year, we'll provide more guidance, but there is an opportunity for us to continue to maintain some growth as we look into 2025.

Operator (participant)

Our next question will come from the line of Richard Tse with National Bank Financial. Please go ahead.

Richard Tse (Managing Director and Technology Analyst)

Yes. Thank you. It's sort of along the similar question. Can you maybe help us understand how the sales and marketing organization is structured or organized in sort of the different markets you're pursuing? So you've got large enterprise, you have sort of small/mid. Are they kind of all under the same group? Do they have different groups? Just trying to understand the mechanics of how that works.

Alessio Artuffo (CEO)

Sure. So the setup in the international markets is primarily driven by the countries. So relative to international markets, we have the concept of regional allocations, whether it's U.K. and Nordics, France and Benelux, South EMEA, and our APAC or Asia-Pacific region. Sorry, and I forgot our DACH region, where we're seeing, by the way, great results to date. And with regards to our biggest market opportunity, North America, where, of course, we don't have the complexity of dealing with multiple languages and multiple cultures, our design is pretty straightforward and, I would say, typical, where we have our business development organization that works to expand and grow our funnel in alignment with our marketing and revenue marketing function. These are the organizations that really fill in our funnel with combined GTM activities.

Then on the sales execution side, those that are in charge of actually winning the deals are account executives, account managers, and global account directors that specialize in working through the pipeline. They are set up by segments where our primary segments are the mid-market segment and the Enterprise segments, the ones that we are the most focused on. As a supporting unit, we have an organization of partnerships that works around the sales organization to support our sales efforts by bringing in new partners, educating partners, and supporting the sales team on partner execution. We have vertical initiatives. The one vertical initiative that we began more than a year ago has been our government effort, which runs as its unit, given the very specific GTM of government and the skill set required, both in SLED and Fed.

As we continue to grow, our organization will continue to evolve. There are different moments in the life of a company with different strategies, and those strategies typically reflect on how you go about designing the sales org, seeking more efficiency. That's always our prerogative and our priority. We focus our spend and efforts where we believe there is a higher chance of winning, where we have a higher win rate and higher commission.

Richard Tse (Managing Director and Technology Analyst)

Okay. Thanks. And my second question, when you look at the sort of feature set you have, it seems to me that one of the most prominent is around kind of AI Authoring and helping create content. Is that what you feel from your customers you speak to? And is that the biggest pain point? And from a cost perspective, how much does that actually help them save in terms of using something like AI Authoring? And what does a margin profile on something like that look to the table?

Alessio Artuffo (CEO)

Yeah. Brilliant question. So let me preface by saying AI Authoring is set to launch later this month, actually in about 11 days. And so at this point, we don't have, let's say, an already live use case with AI Authoring with customer proof point of results that we can report. However, let me share a few thoughts. Number one, AI Authoring was the most participated beta program in the history of the company. There has been a tremendous amount of interest, which confirms your input that it is a highly sought-after technology. AI Authoring is the evolution of Docebo Shape, a module that we've launched years ago that we have reshaped to meet better the needs of customers.

AI Authoring is going to be an important part of our uses, not just per se for the return on investment, which is going to be quite simple, frankly, to quantify once we are paying customers on it because it's quite simple to demonstrate how a content production cycle that tends to be very heavy on the cost side can be streamlined and automated thanks to AI. We're equally excited about products, frankly, that we have launched and where we are seeing return in the market. In the past few months, we've launched respectively Insights, which is our advanced analytics technology that helps enterprises really power a BI technology within the LMS and run very complex, yet streamlined reporting needs, and Communities, which plays into our CX customer experience posture and allows companies to run a Community highly interactive within the LMS.

We have deep conviction in these two, and we have sold units and dollars in accordance with our ambitious plans and expectations on both. I will say, back to AI Authoring, that one of the reasons why I'm super excited about it is not just the capability to create content, but I view it as an integral part of our future vision of a company that focuses on learning and knowledge transformation because knowledge is going to be the number one asset that every company has available and transforming knowledge into instruction and into learning is going to be the big opportunity. Authoring is the glue that allows us to connect the knowledge to transforming it into instruction and learning, and that is just a component of what will be the Docebo powerhouse of the future.

Operator (participant)

Our next question will come from the line of Erin Kyle with CIBC. Please go ahead.

Erin Kyle (Equity Research Associate)

Hi. Good morning. It's Erin Kyle on for Stephanie Price. In your prepared remarks, you call out partnerships with those offering services complementary to LMS. Could you just dig into that strategy a bit more? You talk about buy, build, and partner. Is that also the way you would order those in terms of priority?

Alessio Artuffo (CEO)

Hello, Stephanie. For sure. We see a tremendous opportunity in the market. Part of our vision is to become a more holistic partner to our customers. And it's not just our vision. That's what our customers are asking us to be better at. In 2015, when we listened carefully to the market as a much smaller company, we listened to customers that said to us, "We'd like to do more with LMS than just delivering training for our employees." We listened to that feedback back then. We made a conscious bet on our product, and we developed CX capabilities, and that remains to date our best investment because it has allowed us to gain a market share that most LMS players did not see for many years to come. Similarly, our idea of listening to customers and listening to their need to do more is to be a good partner today.

We wanted to solve more problems for our customers because the learning tech stack is very fragmented. Enterprises are known to have contracts in place with dozens of providers to solve what fundamentally is a comprehensive learning need for various types of audiences in the organization. So, of course, in an ideal world, if all things were possible, we would snap our fingers and have all these capabilities at hand from day one to tomorrow. But that's not the way it works. And the way it works is we will prioritize building what we have deep conviction and highest synergies with our products. We will continue to partner where we think there are assets that are synergic and that we can establish product integrations with commercial alliances attached. And why not?

We will capture opportunities inorganically in the market for technologies we believe have merit, and we focus on very healthy quality assets that we can leverage our cash to buy and improve our market position with that.

Erin Kyle (Equity Research Associate)

Okay. Thank you. That's helpful color there. And then maybe I just have a modeling question.

Alessio Artuffo (CEO)

I meant to say Erin, and I apologize.

Erin Kyle (Equity Research Associate)

That's okay. That's okay. Thanks, Alessio. My other question is just on the modeling front. The free cash flow, it was a bit lower than we had expected in the quarter, and I see that's working capital-driven and impacted by the timing of some payments and some bonuses. My question is, is that a seasonality thing? Should we be modeling Q3 as a negative change in working capital going forward, or how should I think about that?

Sukaran Mehta (CFO)

Yeah. Good question, Erin. Sukaran here. Morning. Yeah. This is just on a first and foremost, like I've said before, when you look at our free cash flow on a trailing 12-month basis or an annualized basis, you'll always find our free cash flow will be give or take ±1% to adjusted EBITDA. What you're pointing out is, yeah, it's just basically our annual bonuses are now paid semi-annually. So that's just something you should just factor in as you look forward or going forward from a free cash flow perspective. But on a trailing 12-month basis, there's no difference.

Operator (participant)

Our next question comes from the line of Daniel Chan with TD Cowen. Please go ahead.

Daniel Chan (Director and Equity Research of Technology)

Hi. Good morning. As you wait for FedRAMP certification, what's your confidence that you're going to be able to participate in some of the large RFPs that are coming to market? You mentioned that the Veterans Affairs RFP came out around your Inspire conference. So what's your level of confidence you're going to be able to participate in these large opportunities?

Alessio Artuffo (CEO)

Look, this is a great question. I would say the reason why we are so focused on our FedRAMP certification is that the TAM for the federal market is so impressive. Participation to opportunities will be tied to achieving our FedRAMP status, and that's why that's our priority. The TAM for the federal market we researched is an excessive $1 billion opportunity in our market alone. And so it goes without saying that the sooner we accomplish our certification, the better we will be positioned to respond to these bids and when they come out.

Sukaran Mehta (CFO)

Yeah. I think the only thing Alessio spoke earlier, there was a similar question that I've added. I think as you look at the infrastructure within the government organizations, we spoke about it, I think, at Inspire a bit, but you will find that these are organizations that are sitting on very legacy old solutions that have to be modernized just because they can't even sustain their current operational practices. Forget about the advancements in technology that have happened over the last 20 years. So a lot of the solutions that some of these agencies are utilizing today have been built on Moodle and legacy platforms that are just not sustainable to even operate in the.

And as you look at what Alessio just spoke about, the potential and looking for efficiencies in government, technology is going to be an important factor in terms of solving that productivity efficiency that might be a focus as we look forward to the new administration.

Daniel Chan (Director and Equity Research of Technology)

Thanks for that. Switching gears, new logo ACV came in flat at about $71,000. Just wondering whether this is a level we should expect the ACV to stabilize at or whether there are levers to take that higher? Thank you.

Sukaran Mehta (CFO)

Good question, Dan. Yeah. We were pleased with actually the strength we showed in Q3, which is seasonally a slower quarter. But what you're seeing is that as we move up market, the pipeline is also increasing up market, but that's also showing in terms of the ACV strength even in Q3. I think, yeah, look, going forward, it's the way the pipeline also is shaping and generally how we go to market from a mid-market and large enterprise perspective. And with the changes we've made in the pricing, you can expect that we should show some consistent strength in terms of the size of the deals we are landing. But as we said, it's a story of segments too.

And so if you think about the segments that we've had historically, the more and more you move away from SMB into the mid-market and enterprise, you should see us continue to show strength and hopefully increase this steadily in the next few quarters.

Operator (participant)

Our next question comes from the line of Kevin Krishnaratne with Scotiabank. Please go ahead.

Kevin Krishnaratne (Director and Equity Research Analyst of Software and Services)

Hey there. Good morning. I joined a bit late, so apologies if this is what asked. But Sukaran, can you comment on your ARR booked trend so far through Q4 relative maybe to last year? And can we expect typically you see a pretty good bump in Q4, sort of like $12 million, I think, the last couple of quarters. Do we expect that trend to continue, or is there something else going on? Because in your script, you talk about elevated levels of scrutiny for the foreseeable future. Just any color you can give us on what you're seeing. Thanks.

Sukaran Mehta (CFO)

Yeah. Kevin, morning. The way to think about, firstly, I'd say that our pipeline, as you understand, is mostly heavily in these quarters and future quarters in the mid-market and large enterprise as we are driving a pretty high pipeline in those segments. And the commentary that we provided is to kind of highlight that some of these deals, they are taking longer, but we're seeing our execution consistently improve. As we guided for Q4, we will provide the next year's guidance when we kind of report February. But as we uplifted our guidance for revenue, you'll see that we are pretty comfortable in terms of our 2024 targets. And as we look into 2025 and what that bookings will come as a result of our Q4 quarter, we'll provide that highlight in early 2025.

But generally, the way to think about it going forward is that the mix of the business is meaningfully in the large enterprise cycle, and that certainly is a factor in terms of when and how we close some amount of those deals. And that should also be hopefully an opportunity to maintain our growth as we look forward and potentially show some improvements in our ACV.

Kevin Krishnaratne (Director and Equity Research Analyst of Software and Services)

Got it. Nope. I appreciate that. In good quarter. Thanks. I'll pass the line.

Sukaran Mehta (CFO)

Thank you.

Kevin Krishnaratne (Director and Equity Research Analyst of Software and Services)

Thank you.

Operator (participant)

As a reminder to ask a question, press star one. And our next question comes from the line of Martin Toner with ATB Capital Markets. Please go ahead.

Martin Toner (Managing Director of Institutional Research, Growth and Innovation)

Hi. Thanks for taking the call. Just wondering, in the prepared remarks, you used the term improving pipeline. You've talked a little bit about it over the course of the call, but just wondered if you could just revisit it and give us a little more depth into why you put that into the prepared remarks.

Alessio Artuffo (CEO)

Yeah. It's a story of focus, Martin. Focus of our engine that I have described before, whether there was a question prior about organizational setup. And we have, over time, continued to learn operationally how to allocate our resources and efforts in a more narrow way where we are focused. This is no easy task when, for many, many years, we were operating across the SMB, mid-market, and enterprise space. We have continued to adjust our business development motion, marketing motion, both in the form of paid and non-paid marketing and branded campaigns towards a more focused mid-market and enterprise outcome, which in return will have resulted in marginal improvements in the pipeline because our units are bigger and because the customer profile is more in line with what we're looking for.

I would add to that that one of the tactics that we are implementing more and more is the so-called ABM approach, where we are putting quite a bit of effort in strategic revenue analysis of our top performing industries and verticals and carving our territories accordingly across the board from demand to execution. Again, that is with the objective of creating better unit economics in terms of cost, for sure, but also in terms of improved pipeline. So we're pleased with those efforts. I believe that we have a long way to go more. I believe that we have an even greater opportunity. And as we continue to launch new products and establish new partnerships and increase our addressable market as a result, the opportunity ahead of us is really exciting.

Martin Toner (Managing Director of Institutional Research, Growth and Innovation)

That's great. Thank you very much, Alessio. I'm going to be in Atlanta soon, so I'm going to hit you up for some restaurant recos.

Alessio Artuffo (CEO)

Let's do it.

Martin Toner (Managing Director of Institutional Research, Growth and Innovation)

All right. Thank you.

Operator (participant)

Our next question will come from the line of Kiran Sritharan with Eight Capital. Please go ahead.

Kiran Sritharan (Associate Analyst)

Hey. Good morning, guys. Congratulations on the call, too. And with yourself as CEO, Alessio, and a recently promoted CRO, there's obviously been some shuffling in senior leadership this year. I wanted to ask you broadly on any structural tweaks you've made that's seeing results? And also, can we have an update on what your hiring priorities are across the different teams into next year?

Alessio Artuffo (CEO)

For sure. Well, look, first of all, I am honored and super excited to be in the permanent CEO position, and I am so grateful to the team that I work with closely every day, to our champion and the players who are on board and investors who have the trust they put in me. In terms of decisions and people, you're right to think that one of my top priorities is the focus on people. People more broadly as the champions, every employee of the company, but for sure, assembling the A-players team that I work with every day.

In the first few months from my appointment, I was very happy to welcome to the business a few new executives, a new Chief of Staff, Noel Miller, a new EVP of Corporate Development and Partnerships, Travis Burke, more recently, a new SVP in Product Management, Andrea Sivieri, and very critical to our go-to-market execution, a new Chief Marketing Officer, Alex Asnovich. Is there more to come? Look, we're always looking to improve our organization. We're always looking for areas where we can do things better. And so I'm really proud of the team that we've assembled, but we're never happy, never good enough, and we look for opportunities to strengthen ourselves, both in people, products, and services.

Kiran Sritharan (Associate Analyst)

I appreciate the color there. This is my second. Can you discuss the new Communities product and how adoption and feedback has been since that launch? And more broadly, how your appetite or case for M&A has changed up, given that growing meaningful free cash flow you mentioned?

Alessio Artuffo (CEO)

Absolutely. Great questions. Communities. Communities have me really excited. As you may have learned over time in the earnings call, I've always been very enthusiastic, so to speak, of our CX posture, meaning our ability to serve our customers to enable their own customers, partners, and external audiences. Communities is the result of a small acquisition that we did of a company called PeerBoard that had a, I would say, startup product focused on the Community business. We took that technology and the talent that was also of high quality and brought it in the fold in the Docebo and continued to develop, and we've recently released the Communities product. The beta involved dozens of customers at the Docebo, all showing great signs of engagement during the beta program.

One of the things that Communities excites me tremendously is that while its main focus is one of addressing the needs of external audiences, we found in the market that there are many organizations that actually want to implement Communities for their own internal use case as well. So not only is it going to be accretive for us as intended for the customer experience use case, it will also give us an opportunity to further strengthen and differentiate our EX or employee experience capabilities. Now, further, I will tell you one thing that is very factual. We have several thousand customers of the Docebo interacting every day with our own Community technology. Our desire is to continue to drink our own champagne, to show to our customers, our prospects, how the Docebo leverages and makes a company better using a Community technology.

We have years now of history of doing that. We have developed best practices. So not only have we developed a product, Communities, that is strong, but we also have the expertise to go out there in the market and showcase how we've actually implemented and how you have a really good return out of it by having done. On the M&A front, we are first of all, I would say job number one is a very clear thesis. A very clear thesis of where we want to go, what we want to do, when, and under what circumstances. That, to me, is job number one. It's part of drawing a very clear vision for our company, which we believe that we have very crystal clear. M&A are a tool at our disposal. Our financial profile is elite.

We are positioned really well with no debt and very healthy cash on the balance sheet. And more importantly, an EBITDA profile and a free cash flow profile that supports M&A efforts now and in the future. We are active in the market. We look for opportunities, but we're very selective. The opportunities we're looking for are accretive to our story. They are value creation for our customers and the companies we are interested in have a positive to neutral profile to our existing balance sheet. But again, more important, there have to be good technologies and healthy businesses. So we are at work. Travis Burke is a professional that has done this for many years. He supports us in this effort. And we will see. We will keep you updated as things evolve, but we're very excited.

Operator (participant)

That will conclude our question-and-answer session, and I'll now turn the call over to Alessio for closing remarks.

Alessio Artuffo (CEO)

Thank you very much. We are really pleased to report another successful quarter marked by consistent execution and profitability. We are in a trajectory to become the complete AI-driven learning and knowledge platform used by enterprises for their end-to-end learning needs. The world will learn with Docebo. This position will increase our TAM and strengthen our position of innovative and differentiated company. Thank you for your time. We look forward to updating you when we report Q4 results in February. Thank you.

Operator (participant)

Ladies and gentlemen, that will conclude today's meeting. Thank you all for joining, and you may now disconnect.