Right before we begin, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. My name is Josh Baer, software analyst here at Morgan Stanley. Thrilled to have Docebo CFO, Brandon Farber here. Thank you so much for joining us.
No problem.
Brandon, as a bit of an intro, for those newer to the story, I was hoping you could provide a little bit of an overview of Docebo's key products and use cases. Who are your customers? What type of value do you bring to your customer base?
Yep. At its core, Docebo is an AI learning platform. Customers typically come to us and, you know, the core purchases are learning management system. Alongside of that, we have modules that we attach along, such as content, communities, advanced analytics. Recently, which I'm sure we're going to talk more about, is we became a multi-product company for the first time. We acquired a company called 365Talents that is more in the skills intelligence category. For the first time ever, Docebo is going to market with two different products. From a use case perspective, we track about 12 different use cases, if I could just simply break it down, it's really two main categories. It's the internal use case, which is your classic use cases that have been around since the beginning of time. It's your onboarding, it's your compliance, it's talent development.
You have, you know, more burgeoning interesting external use case, which is vendor partner training, customer academies, membership training, and QSRs. Maybe I'll give some real customer examples just to make it a little bit more real. For example, Target. Target uses us for vendor training. In order to become a certified vendor for Target or in order to be on Target shelves, you have to take training. You have to know everything about Target, rules, regulations. You have to get a certification to say, "I'm a certified Target supplier." Once you get that certification, you can officially get your items on Target shelves. You have to take that annually. If you're a new vendor, you have to take that training. That's one real example. Another one is membership training, which again, is really broken down into two different subcategories.
There's traditional, like, more sports organizations, then there's memberships that are professional organizations. Like Josh, I'm sure you're a CFA, you have to take annual compliance training, you need a system to take your compliance training. You need certifications. That's typically through an LMS. What's really interesting about these type of use cases is that, you know, I'll give a real example. We have a sports organization that uses Docebo. They use us for hybrid internal and external training. Their internal employees is roughly between 500-1,000. Their external academy is almost 100,000 users. They train referees, they train everyone in their youth organization. They train coaches. Everyone in their ecosystem needs to be trained on our platform.
The ticket sizes of these organizations, because they have large external academies, tend to be much greater than internal use cases. If we go to a customer academy, these could be monetized, could be unmonetized. You know, maybe I'll give a real example of Databricks. Databricks is, you know, has one of the most successful customer academies. They have both monetized and unmonetized content. What Databricks does is that they want to train people to become experts on Databricks. You could take advanced Databricks courses where they charge up to $1,000. You get certification, you could put it on your LinkedIn, you could put it on your resume. There's beginner courses that are free, and it's just really tools to get started on Databricks.
Really, there's a growing trend of companies trying to train their customers on how to use their system better and actually monetize learning, which is a fairly new concept.
Excellent. Great overview. Want to touch on demand. I mean, looking at it from a multi-year perspective, we saw extremely strong demand and growth in corporate learning and L&D budgets going back to the COVID period, and a tougher environment over the last few years. What's the current state of demand in corporate learning and skilling, and how does the potential GenAI disruption to the labor force impact the relevance of a learning platform for like Docebo?
It's interesting you bring that time period up. That's really why in the data in our recent prints, we mentioned a data point that our Q4 2025 bookings, it was the strongest bookings quarter we had since Q4 of 2021. When the demand was high, Docebo was growing 60% year-over-year. You know, those are the type of data points that we want to keep hitting because that means we're exceeding or meeting our bookings when Docebo had its best years. In 2025, funny enough, we actually saw demand in mid-market and EMEA really strong all year. Not only demand, but execution. The one segment that did lag in 2025 was our enterprise business. You know, 2025 started off in a noisy period. There was tariffs, there was no tariffs, there was tariffs again.
There was just a lot of noise and hesitation in the enterprise on should we spend, should we switch vendors? You know, we need to focus on, you know, where we're gonna manufacture tomorrow as opposed to learning management systems. There's, there's real structural headwinds in the enterprise space. Also, to be frank, our execution lacked as well in 2025, and we're seeing early signs that both the demand and execution is improving. Q4 was one data point. For me, a quarter does not mean something's turning, but we're seeing positive trends into Q1 that our enterprise business, uh, is gonna have a good year. If it does have a good year, I expect we're gonna be in raise for most of 2026.
On your question on AI and what's that doing to the labor force, to be honest, it's causing every organization to reskill their organization. Docebo, every time after we report earnings, we have an all-company meeting, and that was a couple days ago for us. We're talking about, you know, we expect all our employees to use AI to do more with less. A couple employees raised their hand and say, "Yeah, I would love to use AI, but you need to train me. I wanna use AI, but I don't know how to use AI." How do you train people on AI? You do it through an LMS.
You know, we need to be our best customer and, you know, we're figuring out, like, how do we give our employees the tools to actually learn how to use Claude, learn how, you know, concrete examples on how you could use AI in your day-to-day work. That's through content, that's through delivering it through an LMS, and we're working on that. Frankly, every company is working on that as well.
Right. Definitely seems like a great time to be a skilling and learning LMS, just given all the disruption and the demand for that. You mentioned Q4 results a couple of times and strongest bookings quarter in multiple years. Those results were last Friday. What were some other high-level financial takeaways from the results and guidance?
Yeah, that's a good question. You know, I brought up the bookings, so I won't go there again. You know, another data point that we're really proud of is our customer count above 100K grew 25%. You know, we started selling in the enterprise roughly five years ago. First logo was Thomson Reuters. Every year, we're getting better and better in that cohort. The reason why we highlight that number, the reason why we continue want to grow that number is that when we look under the hood at gross retention, net retention, the metrics are superior when customers spend $100,000 with us compared to less. These organizations tend to be complex. They tend to use Docebo for multiple different use cases.
The more you use Docebo, the more complex of an organization you are, the stickier an LMS becomes. That's a metric we're super proud of this quarter. Another one is EBITDA. You know, we grew EBITDA 40% year-over-year in Q4, 30% for the year. We have a very high-quality EBITDA to adjusted EBITDA ratio. You know, every time there's a downturn in technology, there's always talk about stock-based comp and software spends too much and issues too much SBC. I think Docebo is probably best in class with that. You know, our SBC is about 2% of our revenues. We barely have any dilution to SBC. Our share count is actually down 5% year-over-year. When you look at Docebo's EBITDA, we have a very high-quality EBITDA and it's growing rapidly.
Yeah. It's a great point. We're not just talking about, you know, strong EBITDA margins, but real GAAP net income.
Yes.
profitability.
Yeah.
Wanna stay on the topic of AI and ask you how you're using AI to augment your platform capabilities. Really, like, what AI offerings do you currently have available? Which ones are monetized and how?
Yeah. Yeah, it's a good question. I'll try to remember all of these. We started with our first GenAI product Q4 of 2024. It's called AI content authoring. If you're an L&D professional and you need to create content on your system, train your staff, you can now go into Docebo, you could create that content by just creating a prompt. It creates a learning asset for you. It's, it's widget-based, so you can plug and play the different, you know, the look and feel of it. You could prompt it to just change the content if you don't like certain slides. It's, it's a true GenAI content authoring. You know, frankly, when we announced that, it was fairly innovative, but the space is moving so fast, it's now table stakes for an LMS.
The other one is Harmony Search, which is, it's very interesting, you know, typically, historically, when you go into an LMS, your first interaction is the search bar. Let's say, you know, Josh, you're traveling to Toronto and you wanna go into an LMS to figure out what is your per diem per day, per dinner in Toronto instead of San Francisco. You go into an LMS, you search for your expense policy. It would give you the learning asset, maybe 'cause of Morgan Stanley, it's a 200-page learning asset. You have to go through all the pages and figure out the answer. Today, you could go into a search bar, you could ask the question and say...
It already knows who you are, it knows your roles, you can just say, "Traveling to Toronto tomorrow, what's my per diem?" Give you the answer, show you the learning asset where you got the answer from. You wanna confirm that the answer is correct, you could do it for yourself or you just trust it. Really what it does is that it materially saves learnings time in an LMS. Another thing, you know, that again, that's unmonetized, but what it does is that it increases the amount of active users that count in the platform because we do sell some contracts that are on monthly active user counts.
What I'm really excited about Harmony is that, and I'm teasing a little bit of what's to come in Inspire, is what if you could take Harmony and not only search within Docebo, but search outside of Docebo? I say that because a lot of learning does happen outside of Docebo. For example, if you're a customer support agent, maybe a lot of your knowledge base is in Zendesk or Service Cloud in Salesforce. If you're a developer, maybe a lot of your learning assets are in Confluence or in Jira. What if you could tie Harmony into these platforms outside of Docebo, search inside Docebo, and you could get the answer while it scrapes not only Docebo, but assets all around Docebo? That's something you can monetize. That's unique. Virtual Coach is another AI, essentially AI role simulation.
You know, I'll give an example of, you know, a prospect that's looking at Docebo and, you know, they're looking at all the LMSs and saying, "Hey, you know, we like Docebo, but what's really standing you apart is your role play scenario. What do we wanna do with your role play scenario is we're an auto manufacturer, auto parts. We have technicians that are on the front line dealing with customers, and they have no idea how to interact with angry customers." You know, for auto manufacturer, if you think about the clients, how that comes, they're typically angry because something happened in their life that was unexpected. Their tire popped or, you know, they scratched their door and now they have to spend $ thousands unplanned.
They come into they come in, they're angry, they're speaking to a technician. What this Chief Learning Officer wants to do is, through Docebo, is they want to train everyone on conflict management through our virtual role play. It's fairly unique. It's kind of transforming Docebo from kind of static LMS-type learning to more virtual role-play scenarios. Right now, virtual role play is monetized through credits. You know, last year had a lot of, you know, he had a lot of commentary on credits. It's new. It's uncomfortable for the L&D market today. We're watching. We are going to see. You know, maybe we come out with a hybrid credit and per user cost. We're monitoring the space closely. It's just so new. We started selling this in January. We developed it. It got a lot better at the end of January.
We're collecting data. We're monitoring, but we're very pleased with how virtual role play is going. some other stuff is, you know, Copilot. Copilot is, I feel like every technology company has a copilot these days. it's not monetized, but it's something that customers expect.
Okay. Yeah, great rundown of all the AI products and features. Do wanna ask about skilling in 365Talents, which was a recent acquisition that you did. Just maybe to start on more broadly on skilling, just given your visibility into the customer's workforces as an LMS, are you seeing current behavioral shifts and changes around learner engagement that would be interesting to highlight already, or is this more like a future initiative around skilling and reskilling?
Yeah. I think I'll answer this in a couple ways. Number one is in Docebo, how customers are interacting differently. It's more on, you know, the role play is a different interaction for us. What's different is that prospects or even customers, they're asking questions on how Docebo is thinking. I'll give an example of is, you know, a lot of companies now or prospects are saying, "Hey, Docebo, what are you doing around MCP? Like, I would love to just hear your thoughts." When we ask them, you know, "Well, what do you wanna do with MCP?" The response is, "I don't really know, but I just want to know that you're thinking about it. I wanna know that I'm buying a tool that is gonna advance with the times-
Mm-hmm
... and continue to innovate." The fact that we had a good response on that and saying, "Hey, we're actually unleashing ability to use Docebo through MCP in a couple of weeks. You know, we could pilot on, you know, whether the reports that you wanna pull and how you wanna use Docebo through MCP is..." You know, that's what companies wanna hear. They don't. It's still just so new. It's moving so fast. No one really knows how to use it, but they wanna know you're thinking about it. The fact that we have a good answer is really leading to, you know, good win rates from for us in the enterprise space. From a skilling perspective, I would say in 2025, we saw a lot of RFPs that had not only LMS requirements, but very strong skills requirements.
In 2025, we did not have a good story to tell in the skills space. Frankly, I don't know if any LMS had a good story to tell in the skills space. You know, from an LMS perspective, skills are a little bit static. You create a skills taxonomy. It sits there. Someone needs to update it, someone needs to refresh it. I do think in the enterprise space, our win rates did lag a little bit because we didn't have a compelling skills story to tell. This acquisition was not something that we did to buy revenue growth, to buy customers. This is an acquisition we did because it makes our product story much more compelling. It's gonna allow us to win enterprise customers that we're losing in 2025.
That makes a lot of sense. How will 365Talents be sold? Is it integrated into the go-to-market? What's the roadmap there?
For H1 of 2026, most of the ARR we're gonna generate from 365 is from standalone. What I mean by standalone is that 365 is gonna continue to sell to any enterprise no matter what LMS they have. They use one of our competitors, fine, doesn't matter. They use Docebo, even better. The secondary motions that are gonna start more in H2 is selling 365 back to our customer base. Number two is when a customer comes to us, we're gonna sell them the combined solution of Docebo plus Skills, get a higher ticket on the onset, and kinda have a more complete integrated story and product strategy.
That makes a lot of sense. Like what was the profile of 365Talents just from a customer perspective? Was there a lot of overlap and any, you know, quick run-through of size and growth profitability impact of the acquisition on your financials?
Yep. 365Talents, we acquired on day one roughly seven and a half mil of ARR. They were previously growing anywhere between 45%-50%. We believe that we could continue to compound this asset 30% for the next three years. They had roughly 22 customers, and majority of these customers tend to be large, complex organizations that require skills intelligence, internal mobility, talent marketplace to really organize their organization and have, you know, an exact list of where their skills lie and the skills gaps they need to close. If you think about companies like Crédit Agricole, SNCF, these are large organizations, but also French-based organizations. Another reason why this was a very compelling organization is that we have a very strong sales force in the U.S. We're compounding more and more complex large enterprise organizations in the U.S.
We think we can take this asset, what they've done a really good job of selling into the French market and sell it into the U.S. market with the Docebo know-how and the Docebo sellers.
Excellent. Do you wanna ask a few on competition and how it relates to AI risks and competition, before we dig into some financials, given you're the CFO? First on competition, I mean, there's large HCM vendors out there. There's more content-specific platforms. There's also point solutions or private players, small players. I guess when you're talking about some challenges last year in the enterprise space, is there, you know, one of those groups that's doing, you know, what I guess, like, what are you seeing from the competitive landscape and how it's evolved because of AI in the last year or so?
In the HCM space, in the enterprise, you know, we, you know, the one advantage Docebo has is that the large HCM players, their buyer persona is the chief people officer, whereas Docebo plays in multiple different buyer personas. If we're selling a sales enablement tool, it's the CRO we're speaking to. If we're selling a customer academy, it's, you know, selling customer success, customer management. If we're selling a membership organization, sometimes it's the CEO, the, you know, whoever's running the whole organization. Typically, you know, we're really competing with the HCM players when it's an internal-only use case. You know, that's where Docebo really excels is, you know, selling multiple different use cases, consolidating all their learning assets under one platform. That really hasn't changed in 2025.
From a competition perspective, I wouldn't say there was one competitor that was winning more or we're losing more to. It was definitely slightly more on the macro and just overall Docebo performance that could have been a little bit better. From a mid-market perspective, you know, we had a really good year, one of our strongest years ever in the mid-market space, which is telling us that our product is resonating. What we see internally at Docebo is that the mid-market tends to be more of the fast adopter of AI.
Mm-hmm.
The fact that we're selling in the mid-market space really gives us confidence that our AI story is actually resonating because the enterprise AI adoption tends to lag the mid-market space a little bit. We still have enterprise customers that come to us and say, "Hey, we wanna use Docebo, but we wanna disable all of the AI functionality because, you know, the risks are too high, the compliance requirements are too large, and we don't wanna risk any potentially regulatory fines." They use our platform, and they strip out AI entirely. There's definitely a little bit of lag, and, you know, for us, we see a strong side that we're doing the right things from a product perspective when we're winning in the mid-market space.
That makes sense. Brandon, two quick follow-ups on AI and competition. Are you seeing new AI startups and entrants coming into the market and into your like competitive bake-offs doing something in an innovative way around learning? Second, are any of your customers experimenting with in-housing just given all the advances around coding tools and developer efficiency. Are any of your customers thinking about developing components of the LMS internally?
From a competition perspective, the one competitor we are tracking the closest was Sana Labs. They had a very interesting market position that was not only an LMS, but almost more of an also an enterprise search through agents. You know, as you know, Workday did purchase Sana Labs last year and is integrating, Sana into their own system. You know, that takes Sana off the market. You know, other than that, you know, we're not seeing any hot startup in the LMS space that we're concerned about at the moment. The second part of your question, remind me.
on in-housing.
In-housing. Listen, in-housing, the only customer we've heard of in-housing was AWS, but funny enough, that was before all these tools started. In order to get off our platform on December 31, 2025, they probably started building this platform in 2024. They were thinking about it before all these tools were created. We're not seeing customers in-house LMS at the moment. You know, it's funny enough, I was actually speaking to our CIO, and I was asking them, "Hey, you know, how many SaaS platforms do we have at Docebo?" Just to get a general idea of like, is this insourcing really real? We have over 100 different SaaS platforms at Docebo. We're only a 1,000-employee company. If you think about that, if you extrapolate to that to a large enterprise, that's probably a much larger number.
I think to myself, can a company really create 100 different platforms, support it, maintain it, get it better year-over-year? Are they just gonna focus on their core business and do that a lot better? You know, it's interesting to see where it goes. I can't predict what's gonna happen in 2028, 2029, but, you know, it's hard to imagine companies not purchasing best-in-class SaaS platforms and building everything themselves as to just focusing on their core business.
Yep, definitely agree with you there. Shifting gears to talk about financials and growth. You mentioned AWS. You're working through also some a wind down of an OEM sort of Dayforce.
Yeah.
business too. Can you bridge to a normalized ARR growth?
In Q4, our ARR growth normalized, excluding Dayforce, was 12.5%. If we exclude AWS, it was closer to 14.5%. Clearly, you know, when you look at our headline numbers, you know, it is below 10%, which is scary. When you look under the hood, there's a lot of good things happening. If you really start building all the puzzle pieces, if you start bridging 2026, if you look at Q3 and Q4, we're gonna start lapsing some pretty easy comps. You know, Q3 in 2025, you know, Dayforce accelerated their wind down. It was roughly $4.5 million of churn in one quarter. In Q4, we had AWS wind down, which was $4 million. Dayforce again had another $4 million.
We had $8 million of churn just from non-structural churn that's, you know, likely not gonna repeat in 2026. For us to re-accelerate headline numbers in 2026, you know, we feel very confident that we're gonna come out in Q3 and Q4 and show accelerated growth in our business.
Excellent. A normalized mid-teens type of ARR growth and coming off one of your strongest bookings quarters in many years. Can we unpack, when you think about the growth algorithm looking ahead, any way to frame how much comes from new customers, existing customers, or from sort of the multi-product approach, you know, any decomposition of that growth outlook?
Yeah. Traditionally we've been at 65% of our gross bookings comes from new logos, 35% expansion. You know, we would love to get that to a closer to a 55%, 45% percentage and improve our NRR. If you think about like 2026 and 2027, how do we compound growth? Number one, 365, 30% year-over-year growth. You already know it's 7.5%. $7.5 million ARR, you could really just model that yourself. Number two is government. We are ground zero of government. Q3 of 2026 will be our true first quarter where we're selling into the gov. We do think the government is a strong avenue for us to re-accelerate growth. Number three is enterprise. We talked about enterprise struggling in 2025.
Talked about we had some product gaps with skills. We've filled the skills gap. We've filled the execution gap. We're seeing strong demand. While it's not in our guide, we're seeing strong signs that the enterprise is gonna improve. If you put all those three things together in 2026 and 2027, you know, we feel good about compounding our growth.
Excellent. Maybe shifting gears and thinking about investments. Anything to highlight as far as key areas of investment? Also wondering about sources of leverage. Maybe we can walk through some of the different OpEx categories as a start.
Yeah. From a capital allocation perspective, we just spent roughly $50-$55 million on 365Talents. We're doing an SIB that's again, roughly $60 million. That will close in a couple days. From a capital allocation perspective, post SIB, I think an acquisition the size of 365 is unlikely. We're really focused on execution, product integration, and we really just wanna focus on doing this acquisition well. From a capital allocation perspective on buybacks, you know, we do think our stock is trading at attractive valuations. If we see our stock still at depressed valuations after the SIB, you know, I wouldn't be surprised for us to continue to buy back shares under our NCIB. From a leverage perspective, Q4, we had about roughly $75 million of cash on our balance sheet.
We used $50 of debt to fund the acquisition. We're gonna do $30 of debt to fund the SIB and $30 of cash. We're gonna have, let's call it $80 million of debt on our balance sheet, $40 million of cash. Net debt of $40 million or our EBITDA guidance for 2026 was $55 million. Still, a leverage ratio that is comfortable, it's low. We definitely do not want to go above 3x net debt to EBITDA ratio. I don't think we're gonna add anywhere close to 3x, frankly. We're gonna continue to look at, you know, what we do and how we invest in the business.
Reinvesting back in the business, I think the one area that we're not gonna sacrifice on, and we've talked about this for a number of years, even with the GenAI tools, we are going to be hiring developers. The reason why I say that is, you know, Josh, you talked about everyone has the same tools. Are people gonna insource? Well, we wanna make sure that we have hundreds of developers using those same tools, so our system gets better and better and better every day, so that if someone just builds a, you know, a blank LMS and Docebo is 10x, 100x better than that because we have 100x developers using those same tools and our system is just that much better.
We're really focusing on, you know, shipping code better, faster than ever before, and that's another strong focus for us in 2026.
Excellent. We've talked about EBITDA margins 20%+ and sort of also highlighted the low stock-based comp. You've got a mid-teens GAAP net income margin on a trailing basis. I think shares are trading at 14 times trailing GAAP EPS and on my non-GAAP EPS looking ahead, it's like less than 10 times. You've got this substantial issuer bid, I know you believe that shares are undervalued at these levels. What do you think the market is really getting wrong about Docebo and positioning around AI?
I don't know if it's the market getting wrong about Docebo. It's just the general SaaS market is declining. If you look at Docebo versus other SaaS peers, we're declining at the same rates. You know, everyone talks about terminal value and how do you value software in today's in today's market, and they're taking that into effect. I think 2025 was a bit of a noisy year for us. You know, we talked about the loss of AWS, the management turnover. You know, I think any investor who looks in the front view mirror as to as opposed to the back view mirror is gonna see a compelling story. They're gonna see a company that has the ability to re-accelerate growth with expanding EBITDA margins.
You know, hopefully, as every quarter passes and we continue to grow and we continue to expand EBITDA, the fears of AI will go away. You know, we're continuing to sign three five-year contracts with large enterprise, even in Q1 and if you think about a three-year contract today, that takes us into 2029. Companies are not saying, you know, "Hey, you're a software company. You're not gonna exist in one year from now, so I'm only gonna sign one-year contracts." Every enterprise is still buying for three years. That's not changing. I think it's just a general market dynamic. I think we'll get over that, and we just have to come out every quarter, deliver top line, deliver bottom line, and our stock price will follow.
Excellent. Great place to end. Thank you very much, Brandon, for the conversation.