Coveo Solutions. Buy, Sell or Hold?

National Bank Financial analyst Richard Tse said Coveo Solutions (Coveo Solutions Stock Quote, Chart, News, Analysts, Financials TSX:CVO) delivered an in-line fiscal third quarter but that the stock still needs to show clearer evidence of growth acceleration before a valuation re-rating is warranted.

On Jan. 29, Tse maintained his “Sector Perform” rating and C$9.00 price target, citing the need for sustained reacceleration in growth and profitability before becoming more constructive on the shares. The target is based on a discounted cash flow valuation and implies 3.6x EV/Sales on fiscal 2026 estimates.

Coveo reported fiscal Q3/26 revenue of $38.0-million, modestly ahead of both National Bank’s $37.4-million estimate and Street consensus of $37.3-million, driven by 13.3% year-over-year SaaS subscription growth. Adjusted EBITDA was a loss of $0.2-million, broadly in line with expectations for near-breakeven profitability.

Following the quarter, Coveo narrowed its fiscal 2026 revenue guidance to the upper end of its prior range, now calling for $148.0-million to $148.5-million, while maintaining guidance for approximately breakeven Adjusted EBITDA. Fourth-quarter revenue was guided to $37.1-million to $37.6-million, also implying near-breakeven profitability.

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Tse said the quarter showed improved stability after a softer second quarter, highlighted by record bookings, including Coveo’s largest customer win to date, a seven-figure annual contract value agreement with a Fortune 500 global industrial company. He said this helped alleviate concerns raised earlier in the year around customer concentration and ACV pressure related to Salesforce.

He also pointed to continued traction in GenAI and Commerce, noting that GenAI accounted for more than 25% of quarterly bookings, while Commerce represented nearly half of new business bookings, supported by Coveo’s SAP partnership. A large expansion with Cardinal Health, supporting more than $220-billion in healthcare commerce distribution, underscored Coveo’s ability to operate at scale in complex enterprise environments.

Despite the improving booking profile, Tse said visibility on sustained revenue acceleration remains limited. Fourth-quarter guidance implies mid-single-digit to high-single-digit growth, a step up from last year but still below levels that would drive multiple expansion in the current enterprise software backdrop.

Coveo is a Quebec-based applied artificial intelligence software company whose cloud-native SaaS platform delivers search, recommendations and personalization across commerce, service, website and workplace applications. The company serves customers across technology, healthcare, manufacturing, financial services and retail, and partners with platforms including Adobe, SAP, Salesforce, ServiceNow and Zendesk.

Tse said Coveo should generate an Adjusted EBITDA loss of $1.2-million on revenue of $148.3-million in fiscal 2026, improving to Adjusted EBITDA of $7.1-million on revenue of $167.6-million in fiscal 2027.

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