NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
1
Nature of business
Docebo Inc. (“Docebo” or the “Company”), a leading learning platform provider, was incorporated on April 21, 2016 under the Canada Business Corporations Act and is domiciled in Ontario, Canada. The Company’s head office is located at Suite 701, 366 Adelaide Street West, Toronto, Canada, M5V 1R9.
The Company’s shares are listed on both the Toronto Stock Exchange (“TSX”), as of October 8, 2019, and the Nasdaq Global Select Market (“Nasdaq”), as of December 3, 2020, under the stock symbol “DCBO”.
The Company has the following subsidiaries:
Entity name
Country
Ownership percentage
September 30,
2024
Ownership percentage
December 31, 2023
%
%
Docebo S.p.A
Italy
100
100
Docebo NA, Inc.
United States
100
100
Docebo EMEA FZ-LLC
Dubai
100
100
Docebo UK Limited
England
100
100
Docebo France Société par Actions Simplifiée (“Docebo France”)
France
100
100
Docebo DACH GmbH (“Docebo Germany”)
Germany
100
100
Docebo Australia Pty Ltd. ("Docebo Australia")
Australia
100
100
Docebo Ireland Limited
Ireland
100
100
Circles Collective Inc. ("PeerBoard")
United States
100
100
Edugo AI HK Limited ("Edugo.AI")
Hong Kong
100
100
Edugo AI Learning Software Limited ("Edugo.AI LS")1
Dubai
60
60
1Edugo AI Learning Software Limited was incorporated on October 3, 2023. As of September 30, 2024, the value of the identifiable net assets was nil. As such, no non-controlling interest was recognized.
2
Basis of preparation
Statement of compliance
The unaudited condensed consolidated interim financial statements (“financial statements”) have been prepared by management using the same accounting policies and methods as those used in the Company’s consolidated financial statements for the year ended December 31, 2023. These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting. Accordingly, certain disclosures normally included in annual financial statements prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) have been omitted or condensed. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2023.
These financial statements were approved and authorized for issuance by the Board of Directors of the Company on November 7, 2024.
Use of estimates, assumptions and judgments
The preparation of these financial statements in conformity with IFRS requires management to make estimates, assumptions and judgments that affect the application of accounting policies and the reported amounts of assets and
5
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from those estimates.
Estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
In preparing these financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of uncertainty are the same as those applied and described in the Company’s annual audited consolidated financial statements for the year ended December 31, 2023.
3
Summary of material accounting policies
The material accounting policies applied in these financial statements are the same as those applied and described in the Company’s annual audited consolidated financial statements as at and for the year ended December 31, 2023.
4
Trade and other receivables
The Company’s trade and other receivables as at September 30, 2024 and December 31, 2023 include the following:
2024
2023
$
$
Trade receivables
34,082
36,355
Accrued revenues
4,157
3,486
Tax credits receivable
1,625
1,890
Interest receivable
189
—
Other receivables
229
44
40,282
41,775
Included in trade receivables is a provision for expected credit losses of $1,408 as at September 30, 2024 and $1,053 as at December 31, 2023.
5
Leases
The Company’s right-of-use assets by class of assets are as follows:
Premises
Others
Total
$
$
$
Costs
Balance – December 31, 2023
5,154
332
5,486
Additions
1,273
—
1,273
Modifications to and disposals of lease contracts
(236)
(154)
(390)
Effects of foreign exchange
(17)
(3)
(20)
Balance – September 30, 2024
6,174
175
6,349
6
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
Premises
Others
Total
Accumulated amortization
Balance – December 31, 2023
3,886
258
4,144
Amortization
1,055
20
1,075
Modifications to and disposals of lease contracts
(217)
(154)
(371)
Effects of foreign exchange
(54)
17
(37)
Balance – September 30, 2024
4,670
141
4,811
Carrying value
Net balance – December 31, 2023
1,268
74
1,342
Net balance – September 30, 2024
1,504
34
1,538
The Company’s lease obligations are as follows:
2024
$
Balance – January 1
2,109
Additions
1,273
Disposals
(29)
Interest accretion
114
Lease repayments
(1,460)
Effects of foreign exchange
21
Balance -September 30
2,028
Current
1,703
Non-current
325
2,028
Expenses incurred for the three and nine months ended September 30, 2024 relating to short-term leases and leases of low-value assets were $23 and $77, respectively (2023 - $22 and $90).
7
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
6
Property and equipment
Furniture and office equipment
Leasehold improvements
Land and Building
Total
$
$
$
$
Cost
Balance – December 31, 2023
3,598
1,973
348
5,919
Additions
769
189
—
958
Effects of foreign exchange
36
21
11
68
Balance – September 30, 2024
4,403
2,183
359
6,945
Accumulated depreciation
Balance – December 31, 2023
2,382
1,328
101
3,811
Depreciation
665
249
9
923
Effects of foreign exchange
28
18
4
50
Balance – September 30, 2024
3,075
1,595
114
4,784
Carrying value
Balance – December 31, 2023
1,216
645
247
2,108
Balance – September 30, 2024
1,328
588
245
2,161
7
Intangible assets
Acquired
Customer relationships
Technology
Trademarks
Total
$
$
$
$
Cost
Balance – December 31, 2023
1,382
2,349
44
3,775
Effects of foreign exchange
16
6
1
23
Balance – September 30, 2024
1,398
2,355
45
3,798
Accumulated amortization
Balance – December 31, 2023
729
601
44
1,374
Amortization
170
351
—
521
Effects of foreign exchange
14
6
1
21
Balance – September 30, 2024
913
958
45
1,916
Carrying value
Balance – December 31, 2023
653
1,748
—
2,401
Balance – September 30, 2024
485
1,397
—
1,882
8
Goodwill
$
Balance – December 31, 2023
14,251
Effects of foreign exchange
69
Balance – September 30, 2024
14,320
8
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
9
Finance income, net
Finance income for the three and nine months ended September 30, 2024 and 2023 is comprised of:
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
$
$
$
Interest on acquisition related consideration
11
28
32
64
Interest on lease obligations
36
51
114
163
Interest income
(670)
(2,012)
(1,985)
(6,733)
(623)
(1,933)
(1,839)
(6,506)
10
Share capital
Authorized:
Unlimited common shares with no par value
Issued and outstanding:
Number of shares
Amount
#
$
Balance – December 31, 2023
30,305,156
247,496
Exercise of stock options
72,924
1,826
Issuance of common shares under employee share purchase plan
14,426
613
Release of restricted share units
54,776
2,054
Release of shares in escrow related to business combination (i)
8,728
330
Purchase of common shares held for cancellation (ii)
(282,494)
(2,211)
Balance – September 30, 2024
30,173,516
250,108
(i) Purchase consideration for the acquisition of Circles Collective Inc. (O/A PeerBoard) included the issuance of an additional 26,185 common shares, at a fair value of $40.74 (C$51.68) per share, payable through April 2026 to an employee of the acquiree contingent on continued employment and is accounted for as compensation for post-acquisition services. On April 3, 2024, 8,728 of the shares were released from escrow and recognized in share capital.
(ii) On May 6, 2024, the Company renewed its normal course issuer bid (“NCIB”) to repurchase and cancel up to 1,764,037 of its common shares, representing approximately 10% of the public float, over the 12-month period commencing May 20, 2024, and ending no later than May 19, 2025. All repurchases are made through the facilities of the Toronto Stock Exchange and are done at market prices. The amounts paid in excess of the average book value of the common shares are charged to deficit. During the nine months ended September 30, 2024, the Company repurchased a total of 282,494 common shares for cancellation at an average price of $39.01 (C$53.04) per common share for total cash consideration of $11,023 including transaction costs.
In connection with the NCIB, the Company entered into an automatic share purchase plan ("ASPP") with a designated broker for the purpose of allowing the Company to purchase its common shares under the NCIB during self-imposed trading blackout periods. Under the ASPP, the broker is authorized to repurchase common shares during blackout periods, without consultation with the Company, on predefined terms, including share price, time period and subject to other limitations imposed by the Company and subject to rules and policies of the TSX and applicable securities laws, such as a daily purchase restriction.
A liability, representing the maximum amount that the Company could be required to pay the designated broker
9
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
under the ASPP, was recorded for $18,170 as at September 30, 2024. The offsetting amount to the liability has been recorded within deficit.
11
Share-based compensation
The Company has four components of its share-based compensation plan: stock options, deferred share units (“DSUs”), restricted share units (“RSUs”), and employee share purchase plan (“ESPP”). Share-based compensation expense for the three and nine months ended September 30, 2024 was $1,815 and $5,670, respectively (2023 - $1,845 and $4,438). The expense associated with each component is as follows:
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
$
$
$
Stock options
713
743
2,290
1,769
DSUs
263
269
778
722
RSUs
811
806
2,526
1,862
ESPP
28
27
76
85
1,815
1,845
5,670
4,438
The following table presents share-based compensation expense by function for the three and nine months ended September 30:
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
$
$
$
Cost of revenue
91
90
241
206
General and administrative
1,245
1,005
3,662
2,530
Sales and marketing
268
552
1,104
1,056
Research and development
211
198
663
646
1,815
1,845
5,670
4,438
The changes in the number of stock options during the nine months ended September 30, 2024 and 2023 were as follows:
2024
2023
Number of options
Weighted average exercise price
Number of options
Weighted average exercise price
#
C$
#
C$
Options outstanding – January 1
825,091
28.37
1,349,001
13.60
Options granted
205,076
61.61
236,753
52.15
Options forfeited
(40,519)
61.97
(98,570)
42.67
Options exercised
(72,924)
22.78
(194,188)
4.88
Options expired
(1,037)
49.84
—
—
Options outstanding – September 30
915,687
34.75
1,292,996
19.75
Options exercisable – September 30
498,973
20.01
850,250
7.59
The weighted average fair value of share options granted during the nine months ended September 30, 2024 and 2023 was estimated at the date of grant using the Black-Scholes option pricing model using the following inputs:
10
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
2024
2023
C$
C$
Weighted average stock price valuation
$
61.61
$
52.15
Weighted average exercise price
$
61.61
$
52.15
Risk-free interest rate
3.56
%
3.11
%
Expected life in years
4.5
4.5
Expected dividend yield
—
%
—
%
Volatility
57
%
64
%
Weighted average fair value of options issued
$
30.71
$
28.15
The following table is a summary of the Company’s stock options outstanding as at September 30, 2024:
Options outstanding
Options exercisable
Exercise price range
Number outstanding
Weighted average remaining contractual life (years)
Exercise price range
Number exercisable
C$
#
#
C$
#
0.0001 - 1.09
235,320
1.98
0.0001 - 1.09
235,320
8.86 - 11.06
23,985
6.24
8.86 - 11.06
21,242
15.79 - 16.00
119,981
5.02
15.79 - 16.00
80,413
26.43 - 60.00
436,293
5.05
26.43 - 60.00
149,790
60.01 - 95.12
100,108
4.56
60.01 - 95.12
12,208
915,687
4.24
498,973
The following table is a summary of the Company’s stock options outstanding as at September 30, 2023:
Options outstanding
Options exercisable
Exercise price range
Number outstanding
Weighted average remaining contractual life (years)
Exercise price range
Number exercisable
C$
#
#
C$
#
0.0001 - 1.09
639,920
2.13
0.0001 - 1.09
639,920
8.86 - 11.06
43,811
7.16
8.86 - 11.06
27,126
15.79 - 16.00
196,930
5.82
15.79 - 16.00
107,481
26.43 - 60.00
374,010
5.84
26.43 - 60.00
58,316
60.01 - 95.12
38,325
5.40
60.01 -95.12
17,407
1,292,996
4.03
850,250
DSUs
The following table presents information concerning the number of DSUs granted by the Company:
#
DSUs – December 31, 2023
115,576
Granted (at C$51.95 - C$68.04 per unit)
26,257
DSUs - September 30, 2024
141,833
11
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
RSUs
The following table presents information concerning the number of RSUs granted by the Company:
#
RSUs – December 31, 2023
160,150
Granted (at C$50.39 - C$73.54 per unit)
102,196
Released (at C$40.30 - $86.38 per unit)
(54,776)
Forfeited (at C$52.15 - $86.38 per unit)
(17,958)
RSUs - September 30, 2024
189,612
12
Earnings per share
Basic and diluted net income per share for the three and nine months ended September 30 are calculated as follows:
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
Net income attributable to common shareholders
4,959
4,047
$
14,826
$
(382)
Basic weighted average number of common shares outstanding
30,221,380
32,474,975
30,296,756
32,907,374
Stock options
365,478
730,652
390,798
—
DSUs
141,106
113,272
124,898
—
RSUs
212,208
194,202
201,499
—
Diluted weighted average number of common shares outstanding
30,940,172
33,513,101
31,013,951
32,907,374
Basic earnings per common share
$
0.16
$
0.12
$
0.49
$
(0.01)
Diluted earnings per common share
$
0.16
$
0.12
$
0.48
$
(0.01)
For the three and nine months ended September 30, 2024, there were 46,831 and 33,744 stock options, respectively, (three and nine months ended September 30, 2023 - 87,867 and all stock options, respectively) that were not taken into account in the calculation of diluted earnings per share because their effect was anti-dilutive.
13
Revenue and related balances
Disaggregated revenue
The Company derives its revenues from two main sources, subscription to its SaaS application and associated premium support services, and professional services revenue, which includes services such as initial implementation, project management, training, and integration.
The following table presents a disaggregation of revenue for the three and nine months ended September 30:
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
$
$
$
Subscription revenue
52,615
43,588
150,326
123,278
Professional services
2,818
2,918
9,564
8,281
55,433
46,506
159,890
131,559
12
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
14
Cost of revenue
The following table represents cost of revenue for the three and nine months ended September 30:
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
$
$
$
Employee salaries and benefits
4,786
4,576
14,646
13,875
Web hosting fees
1,629
1,299
4,701
3,701
Third party service fees
3,764
2,605
10,383
6,878
Other
283
299
915
789
10,462
8,779
30,645
25,243
15
Employee compensation
The total employee compensation comprising salaries and benefits, and excluding share-based compensation, for the three and nine months ended September 30, 2024 was $29,172 and $85,731, respectively (2023 - $27,104 and $81,927).
Employee compensation costs were included in the following expenses for the three and nine months ended September 30, 2024 and 2023 is as follows:
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
$
$
$
Cost of revenue
4,786
4,576
14,646
13,875
General and administrative
4,476
4,089
12,792
11,909
Sales and marketing
12,296
11,380
35,231
35,957
Research and development
7,614
7,059
23,062
20,186
29,172
27,104
85,731
81,927
16
Related party transactions
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling activities of the Company, directly or indirectly. Key management personnel includes the Company’s Directors and Officers.
Compensation awarded to key management personnel for the three and nine months ended September 30, 2024 and 2023 is as follows:
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
$
$
$
Salaries and benefits
688
1,308
2,166
3,589
Share-based compensation
845
1,108
2,554
3,245
1,533
2,416
4,720
6,834
17
Financial instruments and risk management
13
DOCEBO INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2024
(expressed in thousands of US dollars, except share amounts)
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from deposits with banks and outstanding receivables. The Company trades only with recognized, creditworthy third parties. Due to the Company’s diversified customer base, there is no particular concentration of credit risk related to the Company’s trade and other receivables. Trade and other receivables are monitored on an ongoing basis to ensure timely collection of amounts.
The carrying values of cash and cash equivalents, trade and other receivables, and trade and other payables approximate fair values due to the short-term nature of these items or being carried at fair value. The risk of material change in fair value is not considered to be significant. The Company does not use derivative financial instruments to manage this risk.
During the three and nine months ended September 30, 2024, there were no transfers of amounts between levels in the fair value hierarchy.
18
Segment information
The Company reports segment information based on internal reports used by the chief operating decision maker (“CODM”) to make operating and resource allocation decisions and to assess performance. The CODM is the Chief Executive Officer. The CODM makes decisions and assesses performance of the Company on a consolidated basis such that the Company is a single reportable operating segment.
The following tables present details on revenues derived in the following geographical locations for the three and nine months ended September 30, 2024 and 2023.