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Coveo Solutions Inc T.CVO

Alternate Symbol(s):  CVOSF

Coveo Solutions Inc. is Canada-based company. Its software-as-a-Service (SaaS) artificial intelligence (AI) platform and suite of AI and generative AI models are designed to transform digital experiences across commerce, service, website, and workplace applications. Its AI platform connects to internal sources of content along with a variety of external sources to retrieve and index structured and unstructured content and combines this content with click-stream events and behavior patterns. The platform helps to determine what users are looking for in real-time, and learns which content delivers optimal outcomes based on a deep understanding of what worked best for others. As more data accumulates, the platform learns to better predict each user's needs, and then automatically recommends personalized content. Its Coveo Relevance Generative Answering capability integrates LLM technology with its platform to feed generative AI with a common, secured unified index and real-time content.


TSX:CVO - Post by User

Post by retiredcfon May 27, 2024 12:56pm
169 Views
Post# 36059032

TD

TDHave a $15.00 target. GLTA

Q4/F24 PREVIEW: LOW EXPECTATIONS HEADING INTO THE Q; FOCUS ON F2025 GUIDANCE

THE TD COWEN INSIGHT

The stock is down ~30% since March 1, significantly underperforming the peer group (down ~18%), and is now trading at ~2.7x EV/Revenue (C2025E) compared with the peer group average of ~6.8x. The shares are also trading below the C$8.50 SIB price from last July. We think the risk/reward looks attractive, given what we believe are relatively low expectations for the Q4 release/F2025 guidance.

Event:

Q4/F24 Results: Monday, June 3, 2024, after market close.
Conference Call: 5:00 p.m. ET (Dial-in: 1-888-664-6392; Webcast: 
Link). Impact: NEUTRAL

Expecting a slight rebound in growth. We are forecasting Q4/F24 revenue of $32.4mm,
in line with consensus, including SaaS subscription revenue of $30.6mm. Although y/y
SaaS subscription revenue growth is expected to continue moderating, primarily due to the expected Qubit-related churn, the mid-point of guidance and our estimate imply flattish to a slight improvement in q/q growth.

Our $2.0mm adjusted operating loss estimate is slightly ahead of consensus at $2.2mm and at the high end of guidance, as Coveo continues to execute well on its cost-optimization work. We note that Coveo has consistently delivered significant beats on its adjusted operating loss guidance in the past.

Focus on F2025 guidance. We believe investors will also be keying in on the guidance, particularly for F2025, as it should provide more insight into how management sees an expected rebound in organic growth to play out over the next year. Last quarter, Coveo indicated it was closing CRGA deals at an accelerating rate and across all four LoBs (~20% of bookings from CRGA), while the SAP partnership helped drive a doubling of European bookings y/y. However, we note that the enterprise IT spending environment remains challenging.

On the margin front, although Coveo now plans to increase S&M spend to take advantage of growth opportunities, we expect it to maintain its guidance of generating positive operating cash flow in F2025.

Building on early CRGA and SAP momentum is key to a re-acceleration in organic growth.

Our estimates/consensus assume an acceleration in organic revenue growth throughout F2025, with y/y organic growth getting back to ~20% y/y in Q3/F25 and strengthening further in Q4/F25. This significant re-acceleration in growth should be driven by the ramp of CRGA and the SAP partnership, as solid early bookings should translate into revenue in the coming quarters, and coincides with easier y/y comps starting in mid-F2025, as the headwind from the Qubit-related churn dissipates.


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