Good morning, everyone, and welcome to the Datebo, Inc. First Quarter 2021 Earnings Call. Will be provided at that time for research analysts to ask questions. And return to the queue for any follow ups. I'd now like to turn the conference over to Docebo's Investor Relations, Dennis Fong.
Please go ahead, Dennis.
Mode. Thank you, operator. Before we begin, 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, to the call.
For more information on the risks, to uncertainties and assumptions relating to forward looking statements, please refer to Docebo's public filings, which are available on SEDAR and EDGAR. Mode. During the call, we will reference certain non IFRS 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 and A for additional information regarding our non IFRS financial measures, mode, including for 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, Claudio Herba.
Thank you, Dennis. Good morning, everyone, and thank you for joining us on our first quarter 2021 earnings call. With me today is Ian Kitson, our Chief Financial Officer and Alessio Artufo, our recently appointed President and the Chief Revenue Officer. Learning technology has become a strategic investment for companies training for today. Tone.
And in a post pandemic world, we are seeing these in the ongoing strength of our sales pipeline and this is being reflected in our financial results. In the Q1, we were very pleased to report revenues and AR growth of over 60% mode. For the first time as a public company, once again, we saw broad based demand, adding 154 net new customers from the Q4 of 2020 with strength in new logo performance, upsell and OEM sales. Our ability to effectively deliver learning programs for both internal and external use cases on a single platform It's a core strength. In fact, many of our customer use the table for both.
We think this makes Our addressable market of learners much larger than a traditional LMS that is designed for internal training because we not only train our customers, but also our customers' customer. A great example of this was a contract we signed in the Q1 With the fellow Canadian success story, Lightspeed Paws, many listeners on this call will know that Lightspeed Has built a fantastic business with a software as a service platform that services over 135,000 customers' location. They selected Ducebo to launch a multi audience learning use case that includes their internal employees as well as customer are also becoming more vertical focused, and this has led to several recent success in the sports Industry with some great organization, including the Toronto Blue Jays, Sports Sports and Entertainment, The owners of the San Antonio stores and the First Tee. The Toronto Blue Jays selected the Chebo late in the Q3 to create a branded Blue Jay training experience for their game day staff. For Sports, Sports and Entertainment, Investing in their employees is core to their culture and values as a championship driven organization.
Tone. Through their use of the Cebo, they intend to give their staff constant access to learnings, tools and resources to equip them to be successful. Organization, including the PGA Tour that help kids and teens build their strength of character through the game of golf. They sold a platform that could provide digital access to its curriculum to parents, participants and coaches across a network of 150 chapters in the U. S.
And internationally. This was a larger than complex use case, And we are delighted to be working with an organization like the First Tee with core values that we admire and we share. Mode. We also had a record cross sell activity in the Q1. And one I'd like to highlight is with ClearCorrect.
ClearCorrect has been building confidence since 2006 with clear aligners, the alternative to braces. Clear Connect journey with Ducebo began in 2017. And after becoming a brand for the only. Strautman Group, the program has grown and shown a significant increase in engagement. This has led to clear correct expansion of their platform to other from a to other Sproutman Group brands and into other countries like Brazil in the Q1.
A third leg in our consistent growth performance has been our OEM business. For several quarters, Now we have talked about building a pipeline of OEM and partnership opportunities. And I'm happy to update you tone. On 4 that we have announced this week with Bartopia, Vinsys, Bluewater and MHR. Bartopia is a new OEM partner for the Cebo.
They have leading partner relationship management solution that connects technology vendors with a network of over 500,000 partners. Bartopia partnered with Docebo in an OEM agreement to deliver learning and certification through their partner solution deployed by their customers and partners around the world. VINCI is an example of how we are leveraging partners to enter new geographies. They are a global leader in the corporate training space and they have trained over 600,000 professionals around the world. VINCI's will scale Ducebo multi product learning suite to organization based in the Middle East and through Asia Pacific.
2 of our existing partners, Bluewater and MHR, Our expanding existing partnership, Bluewater is developing a group of managed service provider offering based on the Cebo, tone. Combining Bluewater expertise with our multiproduct learning suite, MHR is building on its early success with Docebo on their mode. Itrend platform by embedding the full learning suite into their global HCM platform People First. Mode. In addition, we continue to strengthen our relationship with AWS by joining the ISV partner, PaaS, in the Q1.
This partnership taps into a number of AWS tailored program with access to AWS resources and partner network to further broaden Duce Boric, particularly in emerging EMEA markets. What I like most about these deals is that they Are all very different. Our OEM and partnership program now clearly extend beyond the HCM space, Demonstrating the breadth of opportunities we see to partner with different software platform and channel partner to reach a wide range of industry vertical and audiences. Now, I have spent most of this call talking about our customer momentum, but I believe the most important announcement we made in the Q1 was the launch of the Ducebo Learning Suite, including Ducebo Shape, a content creation product that leverage AI to create engaging learning content in minutes. With the Cebo Learning Suite, we are transforming the Cebo with products for the future tone.
Earlier this week, we hosted a webinar to further illustrate our product vision with demonstration of some of the capability of their new product mode. For the investment community, we feature the Chebo Shape, the Chebo Content, the Chebo Learn LMS and the Chebo Learning Impact that are available now as well as future products like Docebo Flow that redefine the possibility of when Endao Learning is delivered. Docebo Content Hub and Docebo Learning Analytics, which we think will become available addition for many of our Learn LMS customers. Tone. If you haven't had the chance to watch the webinar, please go take a look.
It's posted on our Investor Relationships website. Tone. This suite launch has been years in the making, and we are tremendously excited because it sets the stage for our evolution over the coming years. Thank you for listening. I will now pass the call to Ian to speak to the financials.
Tone. Thank you, Claudio, and good morning, everyone. As always, I'll remind folks that a detailed breakdown of our financial results mode. The 3 months ended March 31, 2021 can be found in our press release, MD and A and financial statements, mode. The slide deck accompanying our earnings call discussion was made available on our Investor Relations website this morning.
For those who want to follow along, I'm starting my remarks on Slide 4. Docebo exited 2020 with strong momentum in its business mode. And this continued throughout the Q1, driven by higher new logo sales, customer expansion and OEM revenue. Mode. As messaged in our last earnings call, in the past 3 months, we have continued to aggressively expand our capabilities.
Since the end of the Q3 in 2020, we have hired nearly 170 additional people and our results are now beginning to reflect the benefits from the increased investment. Our focus on growing this investment will continue for the next couple of quarters as we prepare the company for the added complexity of managing its expanded portfolio of new products. Total revenue this quarter grew to $21,700,000 an increase of 61% from the prior year period. Subscription revenues grew 62% from the prior year at $19,800,000 from the prior year period. ARR growth is the driver behind higher subscription revenue We recorded $83,400,000 in ARR at the end of our Q1, an increase of 60% over the $52,100,000 in ARR that we had at the end of the Q1 in 2020.
The chart presented in Slide 4 is illustrative of our progression over the past 12 months. When compared to the Q4 of 2020, we added $9,400,000 in ARR this quarter, matching the 4th quarter's net ARR increase, which is a high watermark for us. We had 2,333 customers at the end of the Q1 of 2021 and our company wide average contract value or ACV increased to approximately $36,000 up 25% from $28,000 at the end of the Q1 of 2020. The ACV from our new customers added just this quarter was approximately $45,000 and 78% of our new logo and upsell contracts were multi year transactions. The ongoing shift in our customer profile to larger enterprises is the primary mode.
Slide 5 talks to gross profit for the Q1. As a percentage of revenue, gross profit margin was 82.2 percent of sales, an increase from 79.1% in the prior year. Gross margin has increased from the prior year due to the benefits of scale with our hosting provider and remains within our target on the range of 82% to 85%. It was down slightly from 84% in the last quarter for two reasons. From a year end true up in the contract with our service provider.
On Slide 6, you can see a summary of our operating expense lines. Total operating expenses for our Q1 increased to $23,500,000 as compared to 10,000,000 for the prior year. Included in the CAD23 1,000,000 of operating expenses is a foreign exchange loss of $2,000,000 that relates primarily to the cash held in our balance sheet and is therefore for the most part unrealized. Operating costs excluding this loss were $21,500,000 and compared to the $16,800,000 in operating costs, only mode, also excluding foreign exchange impacts that we reported in the Q4 of 2020. The quarterly increase in operating expenses was primarily driven by higher G and A and sales and marketing expenses.
Our G and A expense increased by $1,700,000 as compared to the Q4 of 2020, up to $7,400,000 in total as a result of experiencing a full quarter Within G and A, there was also $348,000 of nonrecurring costs and represented 41.9 percent of revenue. As we messaged in our year end earnings call, tone. We have been aggressively investing in our sales and marketing infrastructure. There are also some seasonal aspects to the hiring on the sales side as we tend to onboard significantly more sales and marketing people at the beginning of the year as opposed to the middle or the end. Our medium term expectation for sales and marketing expense as a percentage of total revenue remains unchanged at 35% to 40% and will continue to remain there for so long as our growth trajectory continues at or close to its current level.
R and D expense for the Q1 was $4,100,000 an increase from 3,900,000 mode that we reflected in the Q4 of 2020. The increase was driven primarily by a growth in headcount and the work that we have been doing to launch the Docebo Learning Suite. As a percentage of revenue, R and D was 19.1% of revenue compared 20.8% in the Q4 last year and will likely remain around 20% of sales in the medium term mode as we continue to proportionally invest with our sales growth. We reported an adjusted EBITDA loss of $2,500,000 for the Q1 of 2021 compared to a loss of $2,400,000 in the prior year. We also reported a net loss of $5,600,000 for the Q1 this year, and that compares to a $700,000 net income for the prior year period.
Mode. As we've already noted, the net loss for the Q1 this year reflects a $2,000,000 foreign exchange loss. Finally, free cash flow was negative $2,400,000 in the 1st quarter and our balance sheet continues to be very healthy with the net cash and cash equivalents balance of $217,000,000 As a management team, we are focused on continuing to drive organic revenue growth mode. For so long as our CAC ratio remains attractive. At this stage, there's nothing that I can see in the near term tone.
That would suggest the momentum in our sales pipeline or customer acquisition costs have materially changed to the downside. As a result, we're going to keep driving the business on the path that we're on. And with the new products and OEM relationships Now entering the mix, along with a very healthy core growth engine, we are very excited for the future. Mode. And with that, I'll turn it over to the operator now to take some questions from the analysts.
On your touch tone phone. You will hear a 3 tone prompt acknowledging your request and your questions will be pulled in the order they are received. Mode. Mode. Your first question comes from Robert Young with Canaccord.
Please go ahead. Mode.
Hi, good morning. First, I'd like to start is in the incremental ARR in the quarter, second quarter over $9,000,000 Is there a way to unpack that a bit to Understand that the range of the ACV doesn't tell a full story around how large the largest are and how small the smallest are. And I was wondering if you could Give a sense of how large some of the larger contracts that you're winning now and if that's a big factor in driving ARR to where it is today, The incremental ARR, which is where to say rather.
Sure, Rob. We had one large customer that we signed and recorded in actually we recorded in the ARR in the Q1. It was in excess of $1,000,000 but other than that, we had A very nicely distributed set, similar actually to what we had in the 4th quarter.
Okay. And then if you look at the what you said record customer expansion activity, That's an ongoing trend. But can you talk about the size of expansions? Are they getting larger? I think The ACV data, if you just look at the incremental numbers, I think you gave $45,000 for net new, mode.
The math would suggest 60,000 there. And so it seems just that the expansions on average are larger than net new. Is that correct? And what would that imply?
Well, just to remind people, we This is the quarter where we recorded the expansion with the fast food service company. And so that helped all of our numbers this quarter on the connection side.
Okay. So it's driven by one contract rather than like a general trend towards larger expansions?
Tone. I'll let Alessio add some color to that. But the short answer is no. It obviously was a big positive, But we were really pleased overall with our expansion activity outside Of that single contract?
Yes. Ian, you're correct. That single contract that was Significant in nature certainly helped, but we're observing our Upsell, cross sell business, we are observing success not only in more transactional User upgrades that are indicative of good adoption and growth across our customers, but Multi department strategy is paying back and we're succeeding in cross sales activities, which effectively yield additional customers at higher ACD than average from the past.
Mode. Okay.
Thank you
very much. And then for my second question, just really quickly, just given your exposure to Italy and the cadence Of 2020, I was wondering if you could remind people how that year played out. A lot of people are looking at Q2 and beyond has been a tougher compare for most companies and that may be different in the case for Gocebo. So I thought you could remind us of how that Played out last year and then I'll pass the line.
Yes, Rob, I think you're right. Mode. We had last year, if you go back to Q4 twenty nineteen and then look at Q1 2020, Q2 2020, We had, to all intents and purposes, flat ARR growth over those three quarters. So we will as we get to Q3 and Q4 this year, we will have more difficult comps. No question.
Of course, just to put a plug in there. Having said that, I think that underscores What we've been saying all along is that the growth in our business has not been COVID driven. We've been very clear, COVID has been a tailwind And the headwind was immediate sorry, yes, the headwind was immediate that benefiting from that over the next 5 years.
Thanks a lot.
Tone. Your next question comes from Chris Merwin with Goldman Sachs. Please go ahead.
Mode. Great. Thanks so much for taking my question. I just wanted to ask about the Table Learning Suite. I know it's very early days here, but anything you can share about initial And then I guess as a related question, does this change the competitive map for you all in any way?
And Is this something also that's going to be sold through your OEM sales channel? Thanks.
Hey, Chris. It's Algo speaking. Mode. Strategically speaking, the Cebo suite is a strategic move to be positioned in mode. In a completely different way compared to our competitors.
2nd, it's built tone. Based on our on what we think our customer needs, they need to analyze more data, they need to build content tone. Quickly, they need to get decision tools to improve their learning efficacy and so on and so on. Tone. Let's say that it's something that in the future, we will expand into I mean, the technology has been built, like we said on Monday in our product demo, to be also included Into the OEM use cases, but not only, also into the extender enterprise cases.
I mean, Learning analytics, for example, can be used for internal training, but also to analyze data for the external training. This said, We started selling the first product, which is BLI, which is a delivering impact, which is the rebranding of the acquisition we made for Formatrice. I mean, we start market these in April. So as of today, we do not have any KPI to say tone. What will perform, what will not perform, for sure.
Over 1 year and a half, we are releasing a lot. We are transitioning to a single from a single product to a suite and there will be product that will perform better than others. We made our bet internally. So it's a journey that just started. And as you know, I don't like to Make projection without having any data.
We have our entrepreneurial spirit that Make our customer buy from one vendor only without aggregating these homogeneous technologies. And we know the industry. I mean, we aim to know the industry because we saw 16 years me, 16 years, Alessio And many others that are in the input, you saw maybe we had some kind of feeling on how to improve it.
Mode. Okay, perfect. Thank you. Maybe just one more question. I mean, given the strength we saw in ARR growth this quarter, are you able to tone.
Maybe just qualitatively help us understand the strength of OEM relative To direct sales within, yes, the uptick in ARR that we saw this quarter?
Sure. So the OEM growth has been Relatively steady, Chris, over the last three quarters. Having said that, the growth has been growing consistently. It's not growing anywhere near, obviously, at the same rate as we are overall. But we've been working very closely with our partners and we're really happy with the progress that we're making there.
We are still fundamentally realizing The majority of I'll say 80% to 90% of our OEM revenue from a single OEM partner. And so that's why and you've heard me say this several times. When I look over the next 2 to 3 years and Think about sort of the hidden gems of why this company is going to succeed. It's the OEM side that gets me The most excited.
Perfect. Thanks very much.
Your next question comes from Daniel Chan with TD. Please go ahead.
Hi, good morning. Ian, on that last point you made, so Ceridian continues to win new customers and grow its recurring revenues. Would you say that you're seeing greater success with the new customers that they win? Or have Have you also been successful at selling into their existing customer base as well?
They're doing both, Dan. It's like anything else. So, Chabil got better at selling and implementing its products 20 16 to 2020 and Ceridian is getting better at selling on our behalf Dayforce Learning over the past 18 months or 24 months. And Their internal infrastructure is now well set and established to attack both fronts.
Mode. Okay. That's helpful. Thank you. And then you mentioned in your prepared remarks, that you're going to continue pushing.
You're not seeing any changes. This time last year, you did talk about increased inbound momentum. Can you just give us some color on what you're seeing in some of these Markets that are reopening, getting past the pandemic, what are you seeing there that's giving you the confidence to continue pushing ahead?
Yes. Sorry, I had an audio trouble with my headphones. Then I was saying we're very satisfied with our mode. Audio with our results in inbound in quarter 1. Definitely, Inbound is still the primary contributor to our growth tone.
So when you look at channel mix between inbound and outbound, in quarter 1, we have Our goals and we were very, very happy to see that, not only in North America, But also in Europe, where to an extent, we've seen that things have been A little bit more difficult with regards to the pace of vaccination and so on and so forth. So we've absolutely Seeing an uptick in inbound results. And we believe, frankly, it's Product and the response to the investments that we've made. We spoke about this in past calls. We've staffed our marketing and digital marketing organization to really be aggressive tone.
On the search front, on the various channels that we can win Several investments in strategic account based marketing channels. And We're seeing the fruits of that day and very, very happy to see that.
Great. Thank you.
You bet.
Your next question comes from Richard Tay with National Bank. Please go ahead.
Mode. Yes, thank you. I just had a question on the competitive environment. Just sort of wondering, has there sort of been any change in terms of who you're displacing most
mode. I got it. Hi, Richard. Tone. It's a good question.
Look, we certainly are It's easier in a way to Establish the vendors that we're displacing in those segments Because there's less, right, when compared to the smaller market where there's more fragmentation. And really, we're strategically very focused on winning the business of enterprise organizations on a departmental level. So when you think of the enterprises That have a learning product as part, for example, of their HCM or their talent management suite. Look, There's not many companies that we compete with, and you guys know who those players are. And what we're hearing from these Organizations from the companies that we're winning, some were named today, when they choose us, They're very dialed in learning.
They have a vision for learning that goes beyond internal. We spoke about Lightspeed. It's not uncommon for a company In that space that has the goal of training 2 audiences, internal and external, To select us over a more, maybe standard internal corporate solution at enterprise level It does a good job in the context of an HR suite, but perhaps is not as innovative and specialized on the learning front. And that's our angle and that's how we win that business.
Okay.
Richard, can I address it?
Yes. My second question has related to the Chabot Learning Suite. It sounds like obviously a pretty compelling opportunity. I'm just trying to understand the relative size of the opportunity. So if you looked at the current base you have today in terms of the product You had prior to this announcement and you kind of look at what that opportunity is, had that product been Around at the beginning, is it sort of 3x, 5x, 10x?
I'm just trying to get an understanding of the relative mode. Sort of increase in market opportunity here was that recent announcement.
Yes. Claudia speaking. Tone. Unfortunately, I brought my crystal ball yesterday, so I don't have a real Number and I think that everyone that is trying to make projections on numbers tone. He's just throwing random numbers.
I mean, we are not here to start defining the market size And then building products to try to fulfill the market, the total addressable market. We are here to build great products tone. That makes our customer happy. So this is the real tech. I mean, the bet is, are these products creating value for my customers?
The growth For sure, if we are growing 60, we don't want product. If we catch if we will win a couple of others, probably we will grow faster. Tone. Let's say, you raised the great question, which is the total addressable market and the scope. The total addressable market of elements is someone is saying is €10,000,000,000 other €11,000,000 other €7,000,000 That means that no one knows how big it is.
Okay. It's just a benchmark. But no one, for example, is addressing How big is the external use case for the learning management system? So and there is one piece of the puzzle that is completely missing. And the AEI content creation for learning, which is our shape, tone.
Is the total new product, how can you estimate the total addressable market? I mean, how you can be realistic and get numbers that are not existing? And the same is for Learning Analytics. I can tell numbers, but these are really it's not the way that Chebo works. Tone.
The way this channel work is that we think that our customer had challenges. In the past, we didn't solve these needs tone. For our customers, we learn from our mistakes and then we are building great products. Success and growth is a consequence. It's not an estimate on how big we can be.
And I'm not saying that I mean, maybe All the products that we are building will be 0 completely. We will miss our own power because our vision is completely broad. Or a product will be a great success or in the middle, some product will perform way better, Some product will perform not good. I mean, in my heart, Why the training is successful in the organization? What is the contribution?
So I'm not making any
Fair enough. Thanks, guys. Richard, the only thing I'll add is tone. When Claudio says maybe there'll be 0, you know that makes me squirm. But look, The reality is that like just to get a little philosophical for a moment, this company values intellectual honesty As much as any organization I've ever known.
What we're trying to say is It's too early. We have no data, truly no data to respond to your question. Tone. And we want to know just as eagerly as you do. And Probably by the 3rd, certainly the Q4 this year, We'll have some data that is at least indicative of where we think we're going to be.
And mode. I know you really would love us to put a peg in the board on this, But please, please just be a little patient. As soon as we have some information that we think Is meaningful and reliable, then we'll be communicating it.
Yes. And Ian, mode. I'm asking one another point here. There are 2 cluster of companies tone that we are learning from. There are the Microsoft and the Salesforce that are product business driven.
And then there are companies that are engineering driven like Google and AWS. Google is building products, products in the market and some products will be hyper successful like Android. We are trying to mix both. We think that all the products we have released has a great chance of success because we need it internally mode. As we achieve by the company, but in the same time, we are sure that some products will have more success and other products will have less success.
Tone. What we did was covering all the lifecycle from content building to data analytics. Tone. And let's say that when I say product and I'm not saying modules, it's because the product that we have built Which is for maintenance is already running under other competitors' technology. So this is the big framework
That's great. Thanks guys.
Your next question comes from Martin Toner with ATB Capital. Please go ahead.
Thanks very much. Congrats on a great quarter and congrats to Alessio
tone. Thanks, Martin.
My first question is on partner programs. The Bluewater extension sounds like a dedicated consulting practice that's dedicated to docepa solution. Is that the case? And also, Are you dedicating resources to this growing list of partners? I mean, growing are you adding to Your team to manage this program, I'm sure there is a large number of prospective partners out there that you could add over time.
Martin, thank you for the question. The brief answer on Bluewater is you're correct. Tone. As you know, Bluewater has been for many, many years a leader in the professional services, managed services and overall knowledge In the consulting aspect behind the learning and HCM solution more broadly, they have presented big brands of Learning Management Systems and beyond and have a deep industry knowledge In North America, but also reaching to Europe. With their leadership team, who we have a long standing relationship with, we saw an opportunity mode.
Beginning to refine their knowledge in our technologies, and they started to help us on the Integration implementation front, so on the professional services side, but they are a go to market organization as well. And so other than just mode. Doing consulting, they also had a commercial arm that was very, very interested in incorporating our technology mode. In a laser focused managed services approach, where they would offer to their customer A set of services that incorporate us as the learning technology enabler. So we're very proud of it because These guys work with some of the best companies in North America and beyond.
They know what they're doing. They are high quality people, great people and high quality learning professional, Overall, yes, we are very intentional and deliberate in the way we design our partnership organization. We don't share resources across the OEM and the strategic partner business in the sense that OEM tone. It's own thing, has its own strategy and management and strategic sellers. They need a certain and different type of approach.
Like Blue Water in the World and the announcement of VynSys is a similar one. We like Strategic resellers and strategic partners in geographies where we don't have a very strong physical presence. That's a good example for Middle East and APAC. And I don't know if you asked about it, but MHR a portion of their technology, but then they were so satisfied with our technology adoption that They decided to extend it to their People First platform, their global HCM. So overall, We're very pleased with that progress.
Ale, there is another point about consulting companies These are our partners. There are some verticals, some industry and some geography that really need and During the transition into the digital transformation, some company, our comfort zone IT company is Very high growing, innovative company doesn't need an internal consultant to be digitally transformed. Other companies need. Tone. And we have to realize that a learning tool is one of the big pillars of digital transformation in mode.
Young and high growth or traditional, hyper profitable organization. And that's where the consultant can help, going hand to hand with us and with the customer through a digital transformation process.
That's great. I really appreciate that thoughtful answer. Next question, Ian mentioned That most of the sales came from inbound requests. I know you guys are building out your outbound sales force. Mode.
Can you talk a little bit about
that? What your expectations are for these people? And when you think it will
Sure. I believe what I heard what we said is that inbound is a great contributor. We are actually satisfied and Very aligned with the plan that we had for outbound in terms of contribution, the source channel of lead generation. Well, our plan is to continue to support the sales execution with both inbound and outbound. And In addition to outbound with our account development teams that, if you will, you can see them as an outbound workforce In the context of existing customers to support what we have said over and over, our cross selling and upselling strategy.
Mode. Our strategy overall at a high level remains unchanged. What some things that I'm happy to share mode. We have reinforced our outbound organization with certain new Management individuals that are bringing experience and are bringing the skill set that before was very no time to reinforce with transformational talent that helps us accelerate that plan that we have ahead of us. In terms of contribution for the future, you can stay assured that we are very much Interested in continuing to manage the mix of inbound and outbound.
And here's what we like about outbound. We know That by creating outbound deals, we are able to enter in the organizational goals earlier mode. Then when we do so with inbound and that means really the projects have a wider scope oftentimes And they also are less competitive because we established a much more strategic relationship from the get go. So Not only very excited about outbound, but very dialed in it. And with the addition of the new talents on the management side, looking forward to growing the business further.
Thanks very much, Alicia. I appreciate it.
I appreciate you.
Your next question comes from Sutan Sukumar with 8 Capital. Please go ahead.
Mode. First question I had was, wanted to get an update mode. On Formatrice, how is the integration progressing to date? Has there been any change in your outlook or impact that you
Susan, I apologize, But my connection this morning is terrible and you were breaking up. I couldn't understand the question.
Apologies. I was asking if you guys can provide an update on your recent acquisition For Matrice, just curious how the integration is progressing to date and has there been any kind of change in the outlook or impact that you guys are expecting to generate from the business this year?
Mode. Yes, Suthan, the Cheboe transform matrix has been referenced with a very nice logo, by the way, tone. Into the Cheybaud earnings impact, friendly DLI. And it's already integrated So actually, we are demoing the product. We are analyzing the feedback of the customers.
Tone. We have built a strong roadmap that, if I'm not wrong, have 3 releases relying on the actual software stack Plus a fuller rewrite of the front end and the can keeping the AI algorithms that are very well trained and The Formetrius AI algorithm in 2022, so there is a very solid roadmap and a very The approach of the product because do not forget that DLI, whichever I mean impact AKA for metrics, tone. This is solving an industry dilemma that is 15 years of this year. The ROI of learning, the return of investment, Because you cannot you can only guess the return of investment when you measure quantitative data, like how long the train the learner has inside the course, what are the scores, the quiz or whatever. But in order to assess the return of learning, The return of investment, you need to call it a financial answer.
And the fact that the learner can answer info training got a positive impact tone. On his career on the business and also running industry benchmark is the way to provide the ROI. So yes, we are marketing the product. We are excited. We are fan favorite and we can't wait to We have 140 percent attachment rate I am keeping.
I am keeping.
Perfect. Thank you. Mode. And just to touch on kind of your broader M and A strategy, you guys are obviously in aggressive ramp up mode and you guys are focused on execution mode. On kind of from an organic perspective, but do you guys see more opportunity now to do more M and A in kind of the near to midterm here mode to further enhance your platform and roadmap.
So assuming we have an interesting cash tone. We are not we don't want to make M and A Just because we have money in the bank and we need to prove what we use this money. The first thing that we want to avoid is making mistakes. Mode. And this is what worries me a lot.
That said, We are not oriented by any competitor for sure. We if there are opportunities there With an interest in price, what we would like to explore are possibility to acquire something we cannot build internally Because we do not have the knowledge to do it. So if there is something that is consistent to our We're learning the suite mission and vision that we cannot build internally. Mode. And we were joking with Rob Young like, oh, you have Opholus, you are buying something This was a joke, but this is the kind of technology that we don't have experience to build.
So if you have to build to buy a technology is and this is not VR, but it's something that we really don't have In this case, we are open to explore these. Tone. Let's not forget that some assets are overpriced, other assets are not fitting the digital
Your next question comes from Nick Agostino with Laurentian Bank. Please go ahead.
Tone. Yes, good morning and congrats on the quarter. I guess, one, maybe two questions for me. First, you guys talked about Supporting the new module launches, you talked about obviously having adding more people to support the outbound initiatives and to support OEMs in general. I'm just wondering, is there an org structure or something you guys think you need to change internally to manage tone.
Those multi layers of growth that you're seeing right now both from a product and from a sales perspective mode. Or is there a layer that you need to introduce within the organization to be able to manage just the level of growth you're seeing right now?
Tone. Nick, thank you for the question because it's for me the opportunity to welcome Alastio as the President during this earning call tone. Because I didn't do it yet. You know that Alexio got his own promotion. Yes.
And the fact that I have tone. We and the Board have decided to promote Alexio as the President is because he has shown to be a person on the small organization chart. So the fact that we are moving to Alessio, we are adding the new duties on Alessio role And this will be done in the night because of today he is the Chief Revenue Officer. He is the first step We appreciate the organization to support the multiproduct strategy. And then to Alexio, chime in Just to highlight what are the changes we are making and especially in these organizations, it's actually is
tone. Thank you, Claudio. And Nick, great question. The one that we are certainly very passionate about. I know I am and mode.
I know this is some aspect that we think about a lot these days. The first comment that comes to mind, Nick, When I hear your question is that, when you're part of the company that grows at the pace that we've been posting for the past, only. Not only since we became public, but even before my history at Atebo, year over year And really quarter over quarter, we have a DNA and we've developed mode. I'm calling the ability to understand where we're going to go in the future and adapt our skin to what's next. That is a continued process.
And this change towards multiproduct is just Another milestone where we need to execute some evolution. Now to the multi product changes. Claudia alluded to changes in the sales organization, professional services. I'll start from the outcomes. What we want out of any organizational improvement that we approach?
We want happier customers that adopt our products better and stay with us longer. So rather than focusing on the inputs as in the products, we look at the outcome as a starting point. Tone. Then if we think that there's more complexity in terms of products, so we need to think about how our people are going to create where to create specialization, At what point in time and to what extent? This is Jordi.
If you don't do all of this in one shot one day, It is I'd rather call it a program that gets designed and executed over time. One decision that we've been public about, we've shared this in our recent call is implementing certain overlays at sales execution level that guarantee an ownership of overlay quota at product family level, where those product families are made of certain products that have something in common, where product management, Head of Sales Product Lines and Product Marketers work together in a virtual hybrid pod to really lead the organization towards building better products, marketing products appropriately and then enabling the workforce overall from sales through professional services via customer experience and in support to really then have the customers that have great experiences. This is the journey that Started a few months ago. We're in the middle of it. We'll continue to keep you updated, but just know that this is front and center of what we're dialed in.
Mode. Okay, great. And then my second question, just looking at your sales pipeline, I know you guys talk about having an extensive one. In the quarter itself, you indicated you had 1 large customer. Can you maybe give some indication or color as to the Your outlook sales pipeline, do you have some other large customers within that pipeline?
Are there new geographies that you're seeing interest from? And are there any new verticals that you might be seeing interest from? And I'll leave it there. Thanks.
Yes. Yes. So I'll respond to this question. Starting from the end of Your question, you're referring to verticals. Verticals is one of those areas where to your Prior question, we look at that as a very important area to focus on for the future.
We understand and appreciate tone. When you sell into a company, understanding their business deeply and intimately makes a difference. And When we look at the verticals that we do really well with, at a high level, there's 8 to 9 verticals that really we Repeat success, and we have found some level of magic sauce and magic formula. With regards to the health of our pipeline and with regards to are we going to land other big logos and big wins, the answer is yes, we will. We will.
I'm very confident that we will land both good companies with good ARRs as well as OEMs. And tone. We sound pretty bullish about it because we look at the data and the data speaks highly for our team's efforts in generating these opportunities. And now will we be able to say the names of these companies? That's a fine grain detail that is oftentimes, as you very well know, mode in the court of our customers' legal and procurement officers, but we certainly will do our best to do so.
We're excited about the names that we have in our pipeline, tone. And we project some exciting wins ahead of us.
Okay, great. Thank you.
Mode. You're welcome.
At this time, I'd like to turn the conference back for any closing remarks.
Mode. Yes. Thank you again for the time you dedicated to us during this call. Tone. I think we will speak again like in August.
Speak soon. Have a nice day. Mode. Thanks, everybody.
Thanks, everyone.
Ladies and gentlemen, this concludes