Coveo Solutions Inc. (TSX: CVO) reported SaaS subscription revenue of $37.4 million for the three months to June 30, 2026, its first quarter of fiscal 2027, and said it had signed the largest contract in its history shortly after the quarter closed. The Montreal company reports in US dollars under IFRS. Total revenue was $38.5 million, up 8%, and the net loss narrowed to $5.8 million from $15.1 million. Adjusted EBITDA of $0.1 million turned positive against a $1.9 million deficit a year earlier.
The quarter as reported
SaaS subscription revenue rose 9% from $34.2 million. Within that, revenue from the Coveo core platform grew 13% to $37.4 million, with the legacy Qubit platform contributing nothing after full deprecation against $1.0 million in the comparable quarter. Professional services revenue fell to $1,187 thousand from $1,395 thousand. Gross margin was 78%, up from 77%, while product gross margin held at 81%.
Operating expenses fell to $36,956 thousand from $38,300 thousand. The move came almost entirely from sales and marketing, which dropped to $17,339 thousand from $19,113 thousand, while research and product development rose to $11,213 thousand from $10,518 thousand and general and administrative was broadly flat at $7,010 thousand. Operating loss narrowed to $6.9 million from $10.9 million. Cash flow from operating activities was $9.2 million against $7.1 million, and Coveo closed the quarter with $107.1 million in cash and equivalents.
Chief executive Laurent Simoneau said the quarter “reflected continued customer adoption across our core solution areas and further demonstrated the strategic role Coveo is playing as enterprises scale their AI initiatives”. New and expanded customers named in the release included Nespresso, Linde AG, Enbridge, Conforama Iberia, Fleetpride, Forcepoint, Familiprix, Brandbank Group and Littelfuse. Coveo also closed a seven-figure commerce expansion with a Fortune 500 distributor of healthcare products, and was named a Leader in the 2026 Gartner Magic Quadrant for Search and Product Discovery.
Analysis: read the expansion rate and the currency line
Two disclosures inside the release complicate the headline. The first is net expansion rate, which Coveo puts at 99% as of June 30, 2026, or 102% excluding attrition from customers on the deprecated Qubit platform. The metric measures the annualised contract value of a fixed cohort of customers twelve months on, excluding anything won from new customers. A reading of 99% means that cohort was worth slightly less at the end of the year than at the start. Growth of 9% therefore came from new logos and from customers outside that cohort, not from the installed base expanding. That is a different growth engine from expansion within the installed base, and it costs more to run.
The second is currency. The 61% narrowing of the net loss is larger than the improvement in the operating loss, and the gap sits below the operating line. In the prior year quarter Coveo booked a foreign exchange loss of $5,409 thousand; this year it booked a gain of $990 thousand. Nothing about the underlying business produced that swing. Coveo reports in US dollars while carrying Canadian operations and buying back its own shares in Canadian dollars, and the Bank of Canada daily rate moved from 1.3643 US dollars to the Canadian dollar on June 30, 2025 to 1.4210 on June 30, 2026. The operating loss, at $6.9 million against $10.9 million, is the cleaner measure of what changed, and even that improvement leans on the $1,774 thousand reduction in sales and marketing spend as much as on gross profit growth.
The record contract needs reading carefully too. Coveo says it closed the largest transaction in its history with a Fortune Global 500 technology company after quarter end, and that the deal brings that customer’s total annualised SaaS subscription spend to eight figures. Eight figures is the customer’s total commitment, not the size of the new order, and the release does not disclose the incremental amount, the term or the start date. It also lands in the second quarter at the earliest, so none of it is in the $37.4 million reported here. This is the second consecutive time the company has flagged a largest-ever deal: the fourth quarter of fiscal 2026 release described what it called the largest new customer deal in its history for the second consecutive quarter.
Against guidance the quarter was orderly rather than surprising. In May the company had guided first quarter SaaS subscription revenue to $37.1 million to $37.6 million and adjusted EBITDA to a loss of $1.5 million to $0.5 million. Revenue landed inside that range and adjusted EBITDA came in above it at positive $0.1 million. The full-year outlook was left unchanged.
Guidance and the year behind it
For the second quarter Coveo guided SaaS subscription revenue of $38.5 million to $39.0 million, total revenue of $39.7 million to $40.2 million and adjusted EBITDA of $0.5 million to $1.5 million. For fiscal 2027 as a whole it repeated the ranges given in May: SaaS subscription revenue of $154.0 million to $158.0 million, total revenue of $160.0 million to $164.0 million, and adjusted EBITDA of $2.0 million to $7.0 million, with operating cash flow expected above $10 million.
Fiscal 2026, the year ended March 31, 2026, produced SaaS subscription revenue of $142.5 million, up 13%, and total revenue of $148.3 million against $133.3 million. The operating loss widened slightly to $27.4 million from $25.9 million and the net loss more than doubled to $28.9 million from $13.8 million. Adjusted EBITDA was negative $0.8 million after a positive $1.0 million the year before. Set against that, the fiscal 2027 SaaS guidance implies growth roughly in line with the year just finished.
Buying back stock while running a loss
On July 15, 2026 Coveo said the Toronto Stock Exchange had approved a renewed normal course issuer bid to buy back for cancellation up to 5,101,789 subordinate voting shares over the twelve months from July 17, 2026, ending no later than July 16, 2027. That is roughly 10% of the public float as measured on July 6, 2026, when 53,476,424 shares were outstanding and 51,017,890 were counted as float. Daily purchases are capped at 58,808 shares, a quarter of average daily volume under exchange rules. Under the previous bid the company was authorised to buy 5,423,244 shares and actually bought 3,912,990, at a weighted average of C$6.78. Across fiscal 2026 it cancelled 4,423,978 shares at a weighted average of C$6.83 for $22.0 million.
What to watch next
The second quarter report is the first that can carry any revenue from the record contract, and the number to read alongside it is the net expansion rate. If that metric moves back above 100% the growth mix changes materially; if it does not, growth continues to depend on newly signed customers rather than on the installed base, while cash is returned through the buyback. The other open item is the sovereign AI partnership with Bell announced on March 10, 2026, which puts the Coveo platform inside Bell AI Fabric for Canadian federal and provincial government work and builds on a memorandum of understanding with the Government of Canada. No revenue has been attributed to it in any disclosure so far.
