Coveo Solutions (TSE:CVO) reported a record third quarter for fiscal 2026, highlighting the strongest new bookings performance in the company’s history and revenue that came in above management’s guidance. On the company’s Q3 earnings call, executives pointed to balanced momentum across new customer wins and expansions, continued growth in commerce and generative AI solutions, and increasing demand for offerings designed to help enterprises ground generative and agentic AI in governed, permission-aware data.
Record bookings and customer momentum
Executive Chairman Louis Têtu said the third quarter delivered “new records in both subscription bookings and net bookings,” calling it the strongest new bookings quarter in the company’s history. He said total revenue and SaaS revenue both exceeded guidance, leading the company to reaffirm fiscal 2026 guidance and expect SaaS subscription revenue and total revenue to land at the top end of the previously provided range.
Commerce was a key contributor, with Têtu describing “exceptional growth” in the offering. He highlighted the company’s second-largest AI commerce expansion transaction to date, an expansion with Cardinal Health, which he said supports more than $220 billion in healthcare commerce distribution.
Platform strategy: RAG, MCP, and interoperability
Executives repeatedly emphasized the company’s focus on relevance, governance, and secure connectivity as enterprises adopt generative and agentic AI. Têtu said Coveo is particularly excited about “RAG as a Service” and a “Coveo-hosted MCP Server,” positioning these as tools that allow customers to securely ground generative AI and digital agents in “permission-aware, context-aware enterprise data.”
During the quarter, Coveo announced availability of RAG as a Service for “AWS Agentic Services,” and also launched a “Coveo App for OpenAI ChatGPT Enterprise,” which management said brings “secure enterprise-grade relevance” into natural language workflows.
Chief Executive Officer Laurent Simoneau said the market for applied AI is moving “from confusion to clarity,” with customers increasingly focused on operationalizing AI against company-specific data and measurable outcomes. He said Coveo’s strategy is centered on “interoperability, flexibility, and unique value,” adding that enterprises are likely to adopt multiple agentic platforms over time and will need a common relevance and connectivity layer.
Partner activity and public sector opportunity
Coveo also discussed partner activity, including a strategic partnership with Deloitte intended to expand reach across joint customers. Têtu said Coveo signed a memorandum of understanding with the Government of Canada to support modernization of digital services using Coveo AI, noting the company already serves the governments of Australia and New Zealand with search and generative solutions.
In the Q&A, Têtu characterized the Canadian MOU as similar to a letter of intent, saying discussions were underway to evaluate “large-scale deployments across agencies.” He said the opportunity could include citizen services and civil servant insights, but emphasized no formal deployments had been announced.
Financial results: revenue above guidance, margins steady
Incoming Interim CFO Karine Hamel detailed quarterly results, stating SaaS subscription revenue was $36.6 million, up 13% year-over-year and ahead of guidance. Core platform subscription revenue was $35.8 million, growing 15% year-over-year. Total revenue was $38.0 million, up 12% from the prior year.
Hamel said the Qubit platform has been fully deprecated, and the company does not expect any further Qubit revenue beyond the quarter.
- Net expansion rate (core platform): 105% in Q3, which management said reflected a one-time contract renegotiation that began impacting results in the prior quarter. Without that event, Hamel said NER would have been 108%.
- Gross margin: 78%; product gross margin: 81%, described as broadly in line with last year.
- Adjusted EBITDA: -$0.2 million, compared with $0.6 million a year ago.
- Operating cash flow: $0.5 million, compared with -$0.2 million a year ago.
- Cash position: $100.8 million as of Dec. 31, with no debt.
Hamel noted that adjusted EBITDA and operating cash flow included $1.4 million in one-time severance expense tied to “targeted workforce optimization actions.” She also said Coveo deployed $4.7 million during the quarter to retire about 1.1 million shares under its normal course issuer bid (NCIB).
Outlook and leadership update
For the fourth quarter of fiscal 2026, Coveo guided SaaS subscription revenue to $35.6 million to $36.1 million and total revenue to $37.1 million to $37.6 million. Hamel said Q4 includes two fewer calendar days than Q3, which she estimated impacts sequential revenue comparison by about $0.8 million. For full-year fiscal 2026, the company expects SaaS subscription revenue of $142.2 million to $142.7 million and total revenue of $148.0 million to $148.5 million, with SaaS subscription revenue and total revenue now expected at the high end of the previously announced range.
Management reiterated expectations for adjusted EBITDA to be approximately break-even in Q4 and for the full fiscal year, and to deliver positive operating cash flows for fiscal 2026.
On the call, the company also acknowledged a CFO transition. Têtu thanked outgoing CFO Brandon Nussey, who is stepping down, and noted the appointment of Karine Hamel as incoming interim CFO.
About Coveo Solutions (TSE:CVO)
Coveo Solutions Inc is an AI-powered platform. It provides applied AI solutions enabling enterprises to deliver relevant digital experiences at scale. The company’s solutions provide value to its customers by helping drive revenue growth, reduce customer support costs, increase customer satisfaction and website engagement, and improve employee proficiency and satisfaction.
