Document:

EX-4.2

 Exhibit 4.2 
  

 
 Independent auditor’s report 

To the Shareholders of Docebo Inc. 
  

 
 Our opinion 

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Docebo Inc. and its
subsidiaries (together, the Company) as at December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board (IFRS). 
  
  

What we have audited 
 The Company’s consolidated
financial statements comprise: 
  

	 	•	 	 the consolidated statements of financial position as at December 31, 2019 and 2018; 

 

	 	•	 	 the consolidated statements of loss and comprehensive loss for the years then ended; 

 

	 	•	 	 the consolidated statements of changes in shareholders’ equity (deficiency) for the years then ended;

  

	 	•	 	 the consolidated statements of cash flows for the years then ended; and 

 

	 	•	 	 the notes to the consolidated financial statements, which include a summary of significant accounting policies.

  
  

Basis for opinion 
 We conducted our audit in accordance
with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 

Independence 
 We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. 

 
  

Other information 
 Management is responsible for the other
information. The other information comprises the Management’s Discussion and Analysis of Financial Condition and Results of Operations. 
  

	
	PricewaterhouseCoopers LLP
	 PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J oB2

	 T: +1 416 863 1133, F: +1 416 365 8215

 “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. 

 

 
 Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon. 
 In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. 

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard. 
  
  

Responsibilities of management and those charged with governance for the consolidated financial statements 

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. 

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. 

Those charged with governance are responsible for overseeing the Company’s financial reporting process. 

 
  

Auditor’s responsibilities for the audit of the consolidated financial statements 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing
standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these consolidated financial statements. 
 As part of an audit in accordance with Canadian generally accepted auditing
standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 
  

	 	•	 	 Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 

 

 
  

	 	•	 	 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. 

  

	 	•	 	 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management. 

  

	 	•	 	 Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. 

  

	 	•	 	 Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 

  

	 	•	 	 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

 We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 
 We also provide those charged
with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards. 
 The engagement partner on the audit resulting in this independent auditor’s report is Jennifer Psutka. 

 
 

 
 Chartered Professional Accountants, Licensed Public Accountants 

Toronto, Ontario 
 March 11, 2020 

 DOCEBO INC. 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 

As at December 31, 2019 and 2018 

(expressed in thousands of United States dollars) 
  

									
	 	  	2019	 	 	2018	 
	 	  	$	 	 	$	 
	 Assets
	  				 			
	 Current assets:
	  				 			
	 Cash and cash equivalents
	  	 	46,278	 	 	 	3,756	 
	 Trade and other receivables (Note 4)
	  	 	10,108	 	 	 	6,138	 
	 Prepaids and deposits
	  	 	1,858	 	 	 	1,502	 
	 Net investment in finance lease (Note 5)
	  	 	92	 	 	 	—  	 
	 Contract acquisition costs, net (Note 14)
	  	 	605	 	 	 	243	 
		  	  
	  
	 	 	  
	  
	 
		  	 	58,941	 	 	 	11,639	 
	 Non-current assets:
	  				 			
	 Contract acquisition costs, net (Note 14)
	  	 	698	 	 	 	375	 
	 Net investment in finance lease (Note 5)
	  	 	324	 	 	 	—  	 
	 Right-of-use
asset, net (Note 6)
	  	 	2,420	 	 	 	—  	 
	 Property and equipment, net (Note 7)
	  	 	1,477	 	 	 	1,286	 
		  	  
	  
	 	 	  
	  
	 
		  	 	63,860	 	 	 	13,300	 
		  	  
	  
	 	 	  
	  
	 
	 Liabilities
	  				 			
	 Current liabilities:
	  				 			
	 Trade and other payables
	  	 	9,589	 	 	 	6,784	 
	 Deferred revenue (Note 14)
	  	 	17,997	 	 	 	12,687	 
	 Deferred lease incentives
	  	 	—  	 	 	 	55	 
	 Lease obligations (Note 6)
	  	 	935	 	 	 	—  	 
	 Borrowings (Note 8)
	  	 	20	 	 	 	5,363	 
		  	  
	  
	 	 	  
	  
	 
		  	 	28,541	 	 	 	24,889	 
	 Non-current liabilities:
	  				 			
	 Deferred lease incentives
	  	 	—  	 	 	 	243	 
	 Lease obligations (Note 6)
	  	 	2,479	 	 	 	—  	 
	 Employee benefit obligations (Note 9)
	  	 	1,443	 	 	 	929	 
	 Borrowings (Note 8)
	  	 	16	 	 	 	4,015	 
		  	  
	  
	 	 	  
	  
	 
		  	 	32,479	 	 	 	30,076	 
	 Shareholders’ equity (deficiency)
	  				 			
	 Share capital (Note 11)
	  	 	89,745	 	 	 	30,716	 
	 Contributed surplus
	  	 	1,102	 	 	 	564	 
	 Other comprehensive income
	  	 	805	 	 	 	263	 
	 Deficit
	  	 	(60,271	) 	 	 	(48,319	) 
		  	  
	  
	 	 	  
	  
	 
	 Total equity (deficiency)
	  	 	31,381	 	 	 	(16,776	) 
		  	  
	  
	 	 	  
	  
	 
		  	 	63,860	 	 	 	13,300	 
		  	  
	  
	 	 	  
	  
	 

 Commitments and contingencies (Note 18) 

The accompanying notes are an integral part of these consolidated financial statements. 

  
 1 

 DOCEBO INC. 

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS 

For the years ended December 31, 2019 and 2018 

(expressed in thousands of United States dollars, except per share amounts) 

 

									
	 	  	2019	 	 	2018	 
	 	  	$	 	 	$	 
	 Revenue (Note 14)
	  	 	41,443	 	 	 	27,074	 
	 Cost of revenue (Note 15)
	  	 	8,261	 	 	 	5,650	 
		  	  
	  
	 	 	  
	  
	 
	 Gross profit
	  	 	33,182	 	 	 	21,424	 
	 Operating expenses
	  				 			
	 General and administrative (Note 16)
	  	 	15,872	 	 	 	10,940	 
	 Sales and marketing (Note 16)
	  	 	16,266	 	 	 	11,630	 
	 Research and development (Note 16)
	  	 	8,579	 	 	 	6,612	 
	 Share-based compensation (Note 12)
	  	 	659	 	 	 	253	 
	 Foreign exchange loss
	  	 	922	 	 	 	775	 
	 Depreciation and amortization (Note 6 and 7)
	  	 	693	 	 	 	169	 
		  	  
	  
	 	 	  
	  
	 
		  	 	42,991	 	 	 	30,379	 
		  	  
	  
	 	 	  
	  
	 
	 Operating loss
	  	 	(9,809	) 	 	 	(8,955	) 
	 Finance expense, net (Note 8)
	  	 	796	 	 	 	666	 
	 Loss on change in fair value of convertible promissory notes (Note 8)
	  	 	776	 	 	 	2,083	 
	 Other income
	  	 	(76	) 	 	 	(53	) 
		  	  
	  
	 	 	  
	  
	 
	 Loss before income taxes
	  	 	(11,305	) 	 	 	(11,651	) 
	 Income tax expense (Note 17)
	  	 	609	 	 	 	—  	 
		  	  
	  
	 	 	  
	  
	 
	 Net loss for the year
	  	 	(11,914	) 	 	 	(11,651	) 
		  	  
	  
	 	 	  
	  
	 
	 Other comprehensive loss
	  				 			
	 Item that may be reclassified subsequently to income:
	  				 			
	 Exchange gain on translation of foreign operations
	  	 	(652	) 	 	 	(819	) 
	 Item not subsequently reclassified to income:
	  				 			
	 Actuarial loss
	  	 	110	 	 	 	41	 
		  	  
	  
	 	 	  
	  
	 
		  	 	(542	) 	 	 	(778	) 
		  	  
	  
	 	 	  
	  
	 
	 Comprehensive loss
	  	 	(11,372	) 	 	 	(10,873	) 
		  	  
	  
	 	 	  
	  
	 
	 Net loss attributable to:
	  				 			
	 Equity owners of the Company
	  	 	(11,914	) 	 	 	(11,272	) 
	 Non-controlling interests (Note 10)
	  	 	—  	 	 	 	(379	) 
		  	  
	  
	 	 	  
	  
	 
		  	 	(11,914	) 	 	 	(11,651	) 
	 Loss per share - basic and diluted
	  	 	(0.49	) 	 	 	(0.52	) 
	 Weighted average number of common shares outstanding - basic and diluted (Note 13)
	  	 	24,363,789	 	 	 	21,543,100	 
		  	  
	  
	 	 	  
	  
	 

 The accompanying notes are an integral part of these consolidated financial statements. 

  
 2 

 DOCEBO INC. 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY) 

For the years ended December 31, 2019 and 2018 

(expressed in thousands of United States dollars, except number of shares) 

 

																													
	 	  	 	 	  	 	 	  	 	 	 	Non-	 	 	Other	 	 	 	 	 	 	 
	 	  	 	 	  	 	 	  	Contributed	 	 	controlling	 	 	comprehensive	 	 	 	 	 	 	 
	 	  	Common shares	 	  	  
	 	  	surplus	 	 	interests	 	 	income	 	 	Deficit	 	 	Total	 
	 	  	#	 	  	$	 	  	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	 Balance, December 31, 2017
	  	 	18,020,000	 	  	 	9,961	 	  	 	311	 	 	 	(1,055	) 	 	 	(515	) 	 	 	(14,858	) 	 	 	(6,156	) 
	 Share-based compensation (Note 12)
	  	 	—  	 	  	 	—  	 	  	 	253	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	253	 
	 Purchase of non-controlling interest with common shares
(Note 10)
	  	 	4,512,000	 	  	 	20,755	 	  	 	—  	 	 	 	1,434	 	 	 	—  	 	 	 	(22,189	) 	 	 	—  	 
	 Comprehensive loss
	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	(379	) 	 	 	778	 	 	 	(11,272	) 	 	 	(10,873	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, December 31, 2018
	  	 	22,532,000	 	  	 	30,716	 	  	 	564	 	 	 	—  	 	 	 	263	 	 	 	(48,319	) 	 	 	(16,776	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 IFRS 16 transition effect (Note 3)
	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(38	) 	 	 	(38	) 
	 Share-based compensation (Note 12)
	  	 	—  	 	  	 	—  	 	  	 	659	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	659	 
	 Conversion of convertible promissory note (Note 8)
	  	 	800,000	 	  	 	6,120	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	6,120	 
	 Exercise of stock options
	  	 	434,700	 	  	 	495	 	  	 	(121	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	374	 
	 Issuance of common shares upon initial public offering, net of share issuance costs (Note
11)
	  	 	4,687,500	 	  	 	52,414	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	52,414	 
	 Comprehensive loss
	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	542	 	 	 	(11,914	) 	 	 	(11,372	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, December 31, 2019
	  	 	28,454,200	 	  	 	89,745	 	  	 	1,102	 	 	 	—  	 	 	 	805	 	 	 	(60,271	) 	 	 	31,381	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

 The accompanying notes are an integral part of these consolidated financial statements. 

  
 3 

 DOCEBO INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

For the years ended December 31, 2019 and 2018 

(expressed in thousands of United States dollars) 
  

									
	 	  	2019	 	 	2018	 
	 	  	$	 	 	$	 
	 Cash flows used in operating activities
	  				 			
	 Net loss
	  	 	(11,914	) 	 	 	(11,651	) 
	 Adjustments to reconcile net loss to net cash used in operating activities:
	  				 			
	 Depreciation and amortization
	  	 	693	 	 	 	169	 
	 Share-based compensation
	  	 	659	 	 	 	253	 
	 Unrealized foreign exchange loss
	  	 	922	 	 	 	605	 
	 Amortization of deferred lease incentive
	  	 	—  	 	 	 	3	 
	 Finance expense
	  	 	796	 	 	 	666	 
	 Loss on change in fair value of convertible promissory notes
	  	 	776	 	 	 	2,083	 
	 Changes in non-cash working capital items:
	  				 			
	 Trade and other receivables
	  	 	(3,994	) 	 	 	(1,743	) 
	 Prepaids and deposits
	  	 	(335	) 	 	 	(927	) 
	 Contract acquisition costs
	  	 	(685	) 	 	 	(618	) 
	 Trade and other payables
	  	 	2,830	 	 	 	3,282	 
	 Employee benefit obligations
	  	 	420	 	 	 	247	 
	 Deferred revenue
	  	 	5,250	 	 	 	5,331	 
		  	  
	  
	 	 	  
	  
	 
	 Cash used in operating activities
	  	 	(4,582	) 	 	 	(2,300	) 
		  	  
	  
	 	 	  
	  
	 
	 Cash flows from investing activities
	  				 			
	 Purchase of property and equipment
	  	 	(366	) 	 	 	(410	) 
		  	  
	  
	 	 	  
	  
	 
	 Cash used in investing activities
	  	 	(366	) 	 	 	(410	) 
		  	  
	  
	 	 	  
	  
	 
	 Cash flows from financing activities
	  				 			
	 Payments received on net investment in finance lease
	  	 	87	 	 	 	—  	 
	 Repayment of lease obligation
	  	 	(879	) 	 	 	—  	 
	 Interest paid
	  	 	(432	) 	 	 	(649	) 
	 Proceeds from exercise of stock options
	  	 	374	 	 	 	—  	 
	 Proceeds from issuance of secured debentures, net
	  	 	3,000	 	 	 	3,960	 
	 Proceeds from drawdown on secured credit facility, net
	  	 	6,858	 	 	 	—  	 
	 Proceeds from issuance of common shares
	  	 	56,261	 	 	 	—  	 
	 Share issuance cost
	  	 	(3,847	) 	 	 	—  	 
	 Repayment of borrowings
	  	 	(14,055	) 	 	 	(21	) 
		  	  
	  
	 	 	  
	  
	 
	 Cash from financing activities
	  	 	47,367	 	 	 	3,290	 
		  	  
	  
	 	 	  
	  
	 
	 Net change in cash and cash equivalents during the year
	  	 	42,419	 	 	 	580	 
	 Effect of foreign exchange on cash and cash equivalents
	  	 	103	 	 	 	(185	) 
	 Cash and cash equivalents, beginning of the year
	  	 	3,756	 	 	 	3,361	 
		  	  
	  
	 	 	  
	  
	 
	 Cash and cash equivalents, end of the year
	  	 	46,278	 	 	 	3,756	 
		  	  
	  
	 	 	  
	  
	 

 The accompanying notes are an integral part of these consolidated financial statements. 

  
 4 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

	1	 Nature of business 

Docebo Inc. (the “Company” or “Docebo”) is a provider of cloud-based learning management systems. The Company was
incorporated on April 21, 2016 under the laws of the Province of Ontario. The Company’s head office is located at Suite 701, 366 Adelaide Street West, Toronto, M5V 1R9, Canada. 

On October 1, 2019, the Company filed articles of amendment to effect the change of the Company’s name from “Docebo Canada
Inc.” to “Docebo Inc.” and to split all of its issued and outstanding common shares on the basis of 100 common shares for every one common share outstanding. All share and per share amounts for all periods presented in these financial
statements have been adjusted retrospectively to reflect the share split. 
 On October 8, 2019, the Company completed an initial public
offering (“IPO”) and its shares began trading on the Toronto Stock Exchange under the symbol “DCBO”. 
 The Company has
the following subsidiaries: 
  

							
	 	  	Country	  	Ownership
percentage
December 31,
2019	  	Ownership
percentage
December 31,
2018
	Entity name	  	 	  	%	  	%
	 Docebo S.p.A
	  	Italy	  	100	  	100
	 Docebo NA Inc
	  	United States	  	100	  	100
	 Docebo EMEA FZ-LLC
	  	Dubai	  	100	  	100
	 Docebo UK
	  	England	  	100	  	100

  

	2	 Basis of preparation 

Statement of compliance 

These consolidated financial statements (“financial statements”) have been prepared by management on a going-concern basis in
accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The policies set out below have been consistently applied to all periods presented unless
otherwise noted. 
 These financial statements were approved and authorized for issuance by the Board of Directors of the Company on
March 11, 2020. 
 Basis of measurement 

These financial statements have been prepared on a historical cost basis except for convertible promissory notes that are measured at fair
value. Historical costs are generally based on the fair value of the consideration given in exchange for goods and services received. 
 Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the
asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2,
Share-based Payments and measurements that have some similarities to fair value but are not fair value, such as value in use in International Accounting Standard (“IAS”) 36, Impairment of Assets. 

Basis of consolidation 

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries, Docebo S.p.A., Docebo NA Inc.,
Docebo EMEA FZ-LLC and Docebo UK Ltd. 
 Subsidiaries are fully consolidated from the date of
acquisition, which is the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. Control is achieved when the Company has power over the investee, is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate there are changes to one or more of the
three elements of 
  

  
 5 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 control listed above. The financial statements of the subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting policies. All intercompany balances, transactions, unrealized gains and losses resulting from intercompany transactions and dividends are eliminated on consolidation. 

Functional currency and presentation currency 

These financial statements are presented in United States dollars. Docebo’s functional currency is Canadian dollars and the functional
currencies of the Company’s wholly owned subsidiaries are as follows: 
  

			
	 Docebo NA Inc.
	  	United States dollars
	 Docebo EMEA FZ-LLC
	  	United Arab Emirates dirham
	 Docebo S.p.A.
	  	Euros
	 Docebo UK
	  	British pounds

 The presentation currency is different than the functional currency of the Company for industry and market
comparability reasons. 
 Use of estimates and judgments 

The preparation of these financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could 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. 
 The following are the critical judgments, apart from those
involving estimations, that management has made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognized in the financial statements: 

 

	 	•	 	 Revenue recognition 

The Company derives its revenues from two main sources: software
as-a-service application (“SaaS”); and professional services revenue, which includes services such as initial project management and training, integration and
custom development. 
 Multi-element or bundled contracts require an estimate of the stand-alone selling price (“SSP”) of separate
elements. These assessments require judgment by management to determine if there are separately identifiable performance obligations as well as how to allocate the total price among the performance obligations. Deliverables are accounted for as
separately identifiable performance obligations if they can be understood without reference to the series of transactions as a whole. In concluding whether performance obligations are separately identifiable, management considers the transaction
from the customer’s perspective. Among other factors, management assesses whether the service or product is sold separately by the Company in the normal course of business or whether the customer could purchase the service or product
separately. 
  

	 	•	 	 Convertible promissory notes 

Convertible promissory notes are classified as fair value through profit or loss. The fair value of convertible promissory notes is based on
the underlying value of the equity instruments the convertible promissory notes are convertible into, which in turn requires estimates of the inherent value of the Company, considering value indicators including recent rounds of financing and market
comparable valuation metrics. 
  

	 	•	 	 Depreciation of property and equipment 

Depreciation of property and equipment is dependent on estimates of useful lives and residual values, which are determined through the exercise
of judgment. The assessment of any impairment of these assets is dependent on estimates of recoverable amounts that take into account factors such as economic and market conditions and the useful lives of assets. 

 

	 	•	 	 Trade and other receivables 

The recognition of trade and other receivables and loss allowances requires the Company to assess credit risk and collectability. The Company
considers historical trends and any available information indicating a customer could be experiencing liquidity or going concern problems and the status of any contractual or legal disputes with customers in performing this assessment. 

  
 6 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

	 	•	 	 Share-based payments 

For equity-settled plans, expense is based on the fair value of the awards granted, calculated on the grant date, with a corresponding increase
in equity. The expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are satisfied. 

The Company uses the Black-Scholes valuation model to determine the fair value of equity settled stock options. Estimates are required for
inputs to this model including the fair value of the underlying shares, the expected life of the option, volatility, expected dividend yield and the risk-free interest rate. Variation in actual results for any of these inputs will result in a
different value of the stock option realized from the original estimate. The assumptions and estimates used are further outlined in the stock options note. 
  

	 	•	 	 Income taxes 

The Company computes an income tax provision in each of the tax jurisdictions in which it operates. Actual amounts of income tax expense only
become final upon filing and acceptance of the tax return by the relevant tax authorities, which occurs subsequent to the issuance of the consolidated financial statements. Additionally, estimation of income taxes includes evaluating the
recoverability of deferred tax assets against future taxable income based on an assessment of the ability to use the underlying future tax deductions before they expire. To the extent that estimates of future taxable income differ from the tax
return, earnings would be affected in a subsequent period. 
 In determining the amount of current and deferred tax, the Company takes into
account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available
that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. 

 

	3	 Summary of significant accounting policies 

Foreign currency translation 

Foreign currency transactions are translated into functional currencies at exchange rates in effect on the date of the transactions. At the end
of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated into functional currencies at the foreign exchange rate applicable at that period-end date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Expenses are translated at the exchange
rates that approximate those in effect on the date of the transaction. Realized and unrealized exchange gains and losses are recognized in the consolidated statement of loss and comprehensive loss. 

On consolidation, assets and liabilities of operations with functional currency other than US dollars are translated into US dollars at period-
end foreign currency rates. Revenues and expenses of such operations are translated into US dollars at average rates for the period. Foreign currency translation gains and losses are recognized in other comprehensive income. The relevant amount in
cumulative foreign currency translation adjustment is reclassified into earnings upon disposition of a foreign operation. 
 Revenue
recognition 
 The Company recognizes revenue to depict the transfer of promised services to customers in an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those services by applying the following steps: 
  

	 	•	 	 identify the contract with a customer; 

 

	 	•	 	 identify the performance obligations in the contract; 

 

	 	•	 	 determine the transaction price; 

 

	 	•	 	 allocate the transaction price; and 

 

	 	•	 	 recognize revenue when, or as, the Company satisfies a performance obligation. 

Revenue represents the amount the Company expects to receive for products and services in its contracts with customers, net of discounts and
sales taxes. The Company derives revenue from subscription of its product (“subscription revenue”) comprised of its hosted SaaS and from the provision of professional services including implementation services, technical services and
training. Professional services do not include significant customization to, or development of, the software. 
 The Company recognizes
revenue upon transfer of control of products or services to customers at an amount that reflects the consideration the Company expects to receive in exchange for the products or services transferred. The Company’s contracts with customers often
include multiple products and services. The Company evaluates these arrangements to determine the appropriate unit of accounting (performance 

  
 7 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 obligation) for revenue recognition purposes based on whether the product or service is
distinct from some or all of the other products or services in the arrangement. A product or service is distinct if the customer can benefit from it on its own or together with other readily available resources and the Company’s promise to
transfer the good or service is separately identifiable from other promises in the contractual arrangement with the customer. Non-distinct products and services are combined with other goods or services until
they are distinct as a bundle and therefore form a single performance obligation. Subscription revenue and professional services are generally capable of being distinct for the Company and are accounted for as separate performance obligations. 

The total consideration for the arrangement is allocated to the separate performance obligations based on their relative fair value and the
revenue is recognized for each performance obligation when the requirements for revenue recognition have been met. The Company determines the fair value of each performance obligation based on the average selling price when they are sold separately.
We update our estimates of SSP on an ongoing basis through internal periodic reviews and as events or circumstances may require. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to
a customer. We satisfy performance obligations over time. 
 Subscription revenue related to the provision of SaaS is recognized rateably
over the contract term as the service is delivered. The contract term begins when the service is made available to the customer. The Company applies the time elapsed method to measure progress towards complete satisfaction of subscription revenue
performance obligations. The time elapsed provided a faithful depiction of the Company’s performance towards complete satisfaction of its performance obligations as a customer simultaneously received and consumes the benefits provided by the
Company’s performance as the Company performs on a daily basis. 
 Professional services revenue is recognized as services are rendered
which is normally over the first few months of a contract with progress being measured over the implementation and training period. The Company applies labour hours expended which is an input method to measure progress towards complete satisfaction
of professional services revenue performance obligations. Labour hours expended relative to the total expected labour hours to be expended provides a faithful depiction of the Company’s performance towards complete satisfaction of the
professional services performance obligations as it closely reflects the completion of activities based on budgeted labour hours and the value of the services transferred cannot be measured directly. 

The Company records contract assets for selling commissions paid at the inception of a contract that are incremental costs of obtaining the
contract, if the Company expects to recover those costs. Contract assets are subsequently amortized on a straight-line basis over a period consistent with the pattern of transfer of the products and services to which the asset relate. Incremental
selling commissions to obtain a renewal of a contract are capitalized and amortized on a straight-line basis over the renewal period of the contract. The Company applies the IFRS 15 practical expedient and does not recognize incremental costs of
obtaining a contract if the amortization period is one year or less. 
 The timing of revenue recognition and the contractual payment
schedules often differ, resulting in contractual payments being billed before contractual products or services are delivered. Generally, the payment terms are between 30 to 60 days from the date of invoice. These amounts that are billed, but not
earned, are recognized as deferred revenue. When products or services have been transferred to customers and revenue has been recognized, but not billed, the Company recognizes and includes these amounts as unbilled trade receivables. 

The Company has elected to apply the practical expedient to not adjust the total consideration over the contract term for the effect of a
financing component if the period between the transfer of services to the customer and the customer’s payment for these services is expected to be one year or less. 

Deferred revenue 

Deferred revenue primarily relates to subscription revenue agreements and professional services agreements, which have been paid for by
customers prior to the performance of those services. Generally, the services will be provided in the next twelve months and are classified as current based on the length of the arrangement. 

Cash and cash equivalents 

Cash and cash equivalents include short-term investments in highly liquid marketable securities, having a term to maturity of three months or
less. 
 Property and equipment 

The Company’s property and equipment are measured at cost less accumulated depreciation and impairment losses. 

The cost of an item of property and equipment includes expenditures that are directly attributable to the acquisition or construction of the
asset. 
 Depreciation is recorded over the estimated useful lives as outlined below: 

  
 8 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

			
	 Electronic equipment
	  	3 years straight line
	 Furniture
	  	5 years straight line
	 Building
	  	25 years straight line
	 Leasehold improvements
	  	straight-line over term of the lease

 The Company assesses an asset’s residual value, useful life and depreciation method on an annual basis and
if any events have indicated a change and makes adjustments if appropriate. 
 Gains and losses on disposal of property and equipment are
determined by comparing the proceeds from disposal with the carrying amount of the property and equipment and are recognized in the consolidated statement of loss and comprehensive loss. 

Impairment of non-financial assets 

The carrying amounts of the Company’s non-financial assets are reviewed for impairment at each
consolidated statement of financial position date or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. The recoverable amount of an asset or a cash
generating unit is the higher of its fair value, less cost to sell, and its value in use. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss by the amount by which the
carrying amount of the asset exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of recoverable amount and the carrying amount that would
have been recorded had no impairment loss been recognized previously. 
 Government assistance 

Government assistance, which mainly includes research and development and other tax credits, is recognized when there is reasonable assurance
it will be received and all related conditions will be complied with. When the government assistance relates to an expense item, it is recognized as a reduction of expense over the period necessary to match the government assistance on a systematic
basis to the costs it is intended to subsidize. 
 Research and development 

Research and development costs are expensed as incurred, net of Italian tax credits. The Company’s research and development costs consist
primarily of salaries and related personnel expenses. 
 The Company recognizes the benefit of Italian research and development investment
tax credits as a reduction of research and development costs when there is reasonable assurance the claim will be recovered. 

Provisions 

Provisions are recognized when the Company has a present obligation (legal or constructive) (a) as a result of a past event; (b) when
it is more probable than not an outflow of resources embodying economic benefits will be required to settle the obligation; and (c) when a reliable estimate can be made of the amount of the obligation. 

Deferred compensation 

The Company provides an employee severance indemnity, which is mandatory pursuant to the Italian Civil Code. Under this arrangement, the
Company is obligated to pay deferred compensation based on the employees’ years of service and the compensation earned by the employee during the service period. The expected costs of these benefits are accrued over the period of employment
using the same accounting methodology as used for a defined benefit plan. These benefits are unfunded. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. 

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in
other comprehensive income in the period in which they arise, and are not reclassified to profit or loss in subsequent periods. These obligations are valued annually. 

Past service costs are recognized in profit or loss on the earlier of: 

 

	 	•	 	 the date of the plan amendment or curtailment; and 

 

	 	•	 	 the date that the Company recognizes related restructuring costs. 

  
 9 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 Net interest is calculated by applying the discount rate to the net defined benefit liability
or asset. The Company recognizes the following changes in the net defined benefit obligation: 
  

	 	•	 	 service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and 

  

	 	•	 	 net interest expense or income. 

Income taxes 

Income tax expense represents the sum of the tax currently payable and deferred tax. 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from “profit before tax” as reported in the
consolidated statement of loss and comprehensive loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the year. 
 Deferred tax is recognized on temporary differences between the
carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax
assets are generally recognized for all deductible temporary differences to the extent it is probable taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities
are not recognized if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. 

The carrying amount of deferred tax assets is reviewed at the end of each year and reduced to the extent it is not probable sufficient taxable
profits will be available to allow all or part of the asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realized, based on
tax rates (and tax laws) that have been enacted or substantively enacted by the end of the year. 
 The measurement of deferred tax
liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the year, to recover or settle the carrying amount of its assets and liabilities. 

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive loss
or directly in equity, in which case the current and deferred taxes are also recognized in other comprehensive loss or directly in equity, respectively. 

The Company has not recognized deferred income tax assets as at December 31, 2019 and 2018 as it is not considered probable at this time
that the assets can be recovered. 
 Share-based payments 

For equity-settled plans, expense is based on the fair value of the awards granted, calculated on the grant date, with a corresponding increase
in equity. The expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are satisfied. 

The Company uses the Black-Scholes valuation model to determine the fair value of equity settled stock options. Estimates are required for
inputs to this model including the fair value of the underlying shares, the expected life of the option, volatility, expected dividend yield and the risk-free interest rate. Variation in actual results for any of these inputs will result in a
different value of the stock option realized from the original estimate. The assumptions and estimates used are further outlined in the stock options note. 

Loss per share 

The Company presents basic and diluted loss per share data for its common shares. Basic loss per share is calculated by dividing the loss
attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year. 
 Diluted
loss per share is determined by adjusting the loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for the effects of all dilutive potential common shares, which are comprised of additional
shares from the assumed exercise or conversion of share options and conversion of convertible promissory notes. 
 Financial
instruments 
 Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the instruments. 

  
 10 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 Financial assets and financial liabilities are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized
immediately in profit or loss. 
  

	 	•	 	 Financial assets 

On initial recognition, a financial asset is classified as measured at amortized cost, fair value through other comprehensive income
(‘‘FVOCI’’), or fair value through profit and loss (‘‘FVTPL’’). The classification of financial assets is based on the business model in which a financial asset is managed and its contractual cash flow
characteristics. 
 A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at
FVTPL: 
  

	 	•	 	 it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

  

	 	•	 	 its contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding. 

 A financial asset (unless it is a trade receivable without a significant
financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition. 

The following accounting policies apply to the subsequent measurement of financial assets. 

 

			
	 Financial assets at FVTPL
	  	Subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
		
	 Financial assets at amortized cost
	  	Subsequently measured at amortized cost using the effective interest method, less any impairment losses. Interest income, foreign exchange gains and losses and impairment losses are recognized in profit or loss. Any gain or loss on
derecognition is recognized in profit or loss.

  

	 	•	 	 Financial liabilities 

The Company initially recognizes financial liabilities at fair value on the date at which the Company becomes a party to the contractual
provisions of the instrument. 
 The Company classifies its financial liabilities as either financial liabilities at FVTPL or amortized cost.

 Subsequent to initial recognition, other liabilities are measured at amortized cost using the effective interest method. Financial
liabilities at FVTPL are stated at fair value with changes being recognized in profit or loss. 
 The Company derecognizes a financial
liability when its contractual obligations are discharged or cancelled or expire. 
  

	 	•	 	 Financial liabilities and equity instruments 

 

	 	•	 	 Classification as debt or equity 

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument. 
  

	 	•	 	 Equity instruments 

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue costs. 
 Repurchase of the
Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. 

 

	 	•	 	 Classification of financial instruments 

The Company classifies its financial assets and liabilities depending on the purpose for which the financial instruments were acquired, their
characteristics and management intent as outlined below: 
 Cash and cash equivalents
        Amortized cost 
 Trade and other receivables       Amortized
cost 
 Trade and other payables           Amortized cost 

  
 11 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

	
	 Convertible promissory notes         Fair value through profit or
loss

	 Secured debentures
                        Amortized cost

	 Mortgage payable
                          Amortized cost

  

	 	•	 	 Impairment of financial assets 

An expected credit loss (“ECL”) model applies to financial assets measured at amortized cost. The Company’s financial assets
measured at amortized cost and subject to the ECL model consist primarily of trade receivables. The Company applies the simplified approach to impairment for trade and other receivables by recognizing lifetime expected losses on initial recognition
through both the analysis of historical defaults and a reassessment of counterparty credit risk in revenue contracts on an annual basis. 

Convertible promissory notes 

Convertible promissory notes are convertible into common shares of the Company at a conversion price of US$2.50 per share. The Company
determined that the convertible promissory notes did not meet the IFRS definition of equity due to the variability of the conversion ratio, which is based on the foreign exchange rates at the time of conversion. Changes in the fair value of
convertible promissory notes are recognized through income in the period in which they occur except in cases where they result from changes in credit risk, in which case the fair value changes are recorded in other comprehensive income. 

New standards, amendments and interpretations recently adopted by the Company 

The Company has adopted and applied the following new and revised IFRS that have been issued and are effective: 

 

	 	•	 	 IFRS 16 - Leases 

The Company has adopted IFRS 16 retrospectively from January 1, 2019, but has not restated comparatives for the 2018 reporting period, as
permitted under the specific transitional provisions in the standard. The reclassifications and adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on January 1, 2019. The comparative period
continues to account for leases under IAS 17. 
 At inception of a contract, the Company assesses whether a contract is, or contains, a
lease based on whether the contract conveys the right of control for the use of an identified asset for a period of time in exchange for consideration. From January 1, 2019, the Company recognizes a right-of-use asset (“ROU asset”) and a lease liability at the lease commencement date, which is the date the leased asset is available for use. The ROU asset primarily related to office leases and
is initially measured based on the initial amount of the lease liability. The lease liabilities include the net present value of the following lease payments: 
  

	 	•	 	 fixed payments (including any in-substance fixed payments, less any lease
incentives receivable); 

  

	 	•	 	 variable lease payments that are based on an index or a rate; 

 

	 	•	 	 amounts expected to be payable by the lessee under residual value guarantees; 

 

	 	•	 	 exercise price of any purchase option if the company is reasonably certain to exercise that option; and

  

	 	•	 	 payments for penalties for terminating the lease, if the lease term reflects the company exercising that option.

 The ROU assets are depreciated to the earlier of the end of useful life of the ROU asset or the lease term using the
straight- line method as this most closely reflects the expected pattern of the consumption of the future economic benefits. 
 The lease
term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. In addition, the ROU asset can be periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the
lease liability. 
 Lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company’s incremental borrowing rate, which is the rate the company would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. The
Company used an incremental borrowing rate to measure the lease liabilities in the opening balance sheet at January 1, 2019 of 10%. 

ROU assets are measured at cost comprising the amount of the initial measurement of the lease liability, any lease payments made at or before
the commencement date less any lease incentives received, any initial direct costs, and restoration costs. 
 The lease liability is
classified and accounted for at the amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from change in an index or rate, if there is a change in the Company’s estimate of
the amount expected to be payable under a residual value guarantee, or if the Company changes its 

  
 12 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 assessment of whether it will exercise a purchase, extension or termination option. When the
lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the ROU asset unless it has been reduced to zero. Any further reduction in the lease liability is then recognized in profit or loss. 

The Company has elected to apply the practical expedient not to recognize ROU assets and lease liabilities for short-term leases that have a
lease term of twelve months or less and for leases of low value assets. The lease payments associated with those leases is recognized as an expense on a straight-line basis over the lease term. 

A lease modification will be accounted for as a separate lease if the modification increases the scope of the lease and if the consideration
for the lease increases by an amount commensurate with the stand-alone price for the increase in scope. For a modification that is not a separate lease or where the increase in consideration is not commensurate, at the effective date of the lease
modification, the Company will remeasure the lease liability using the Company’s incremental borrowing rate, when the rate implicit to the lease is not readily available, with a corresponding adjustment to the ROU asset. 

When the Company acts as an intermediate lessor, it accounts for its interests in the head lease and the
sub-lease separately. The Company assesses the lease classification of a sub-lease with reference to the ROU asset arising from the head lease, not with reference to the
underlying asset. To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the ROU asset. If this is the case, then the lease is accounted
for as a net investment in finance lease. If not, then it is an operating lease. As part of this assessment the Company considers certain indicators such as whether the lease is for the major part of the economic life of the ROU asset. 

Adjustments recognized on adoption of IFRS 16 

The following table reconciles the Company’s operating lease obligations as at December 31, 2018, as previously disclosed in the
Company’s consolidated financial statements, to the lease obligations recognized on initial application of IFRS 16 at January 1, 2019. 
  

					
	 	  	$	 
	 Aggregate lease commitments as disclosed at December 31, 2018
	  	 	4,181	 
	 Less: Recognition exemption for low-value leases
	  	 	246	 
	 Less: Recognition exemption for short-term leases
	  	 	1	 
		  	  
	  
	 
	 Adjusted lease commitments
	  	 	3,934	 
		  	  
	  
	 
	 Less: Impact of present value
	  	 	751	 
		  	  
	  
	 
	 Opening IFRS 16 lease liability as at January 1, 2019
	  	 	3,183	 
		  	  
	  
	 

 The cumulative effect of the changes made to the January 1, 2019 consolidated statement of financial
position for the adoption of IFRS 16 is as follows: 
  

													
	 	  	Balance as at
December 31, 2018	 	  	IFRS 16 adjustments	 	  	Balance as at
January 1, 2019	 
	 	  	$	 	  	$	 	  	$	 
	 Assets
	  				  				  			
	 Current assets:
	  				  				  			
	 Net investment in finance lease
	  	 	—  	 	  	 	85	 	  	 	85	 
	 Non-current assets:
	  	 	  	 	  				  			
	
Right-of-use-assets,
 net
	  	 	—  	 	  	 	2,406	 	  	 	2,406	 
	 Net investment in finance lease
	  	 	—  	 	  	 	357	 	  	 	357	 
	 Liabilities
	  				  				  			
	Current liabilities:	  				  				  			
	 Deferred lease incentives
	  	 	55	 	  	 	(55	) 	  	 	—  	 
	 Lease obligations
	  	 	—  	 	  	 	822	 	  	 	822	 
	 Non-current liabilities:
	  				  				  			
	 Deferred lease incentives
	  	 	243	 	  	 	(243	) 	  	 	—  	 

  
 13 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

													
	 Lease obligations
	  	 	—  	 	  	 	2,361	 	  	 	2,361	 
	 Equity
	  				  				  			
	 Deficit
	  	 	(48,319	) 	  	 	(38	) 	  	 	(48,357	) 

  

	 	•	 	 IFRIC 23, Uncertainty over Income Tax Treatment 

In June 2016, the IASB issued International Financial Reporting Interpretations Committee (“IFRIC”) 23, which clarifies the
accounting for uncertainties in income taxes. IFRIC 23 is effective for annual periods beginning on or after January 1, 2019. The requirements are applied by recognizing the cumulative effect of initially applying them in retained earnings, or
in other appropriate components of equity, at the start of the reporting period in which the Company first applies them, without adjusting comparative information. Full retrospective application is permitted, if the Company can do so without using
hindsight. The adoption of this standard did not result in a material impact on the financial statements of the Company. 
  

	4	 Trade and other receivables 

The Company’s trade and other receivables include the following: 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Trade receivables
	  	 	8,827	 	  	 	5,711	 
	 Unbilled trade receivables
	  	 	736	 	  	 	372	 
	 Tax credits receivable
	  	 	397	 	  	 	44	 
	 Other receivables
	  	 	148	 	  	 	11	 
		  	  
	  
	 	  	  
	  
	 
		  	 	10,108	 	  	 	6,138	 
		  	  
	  
	 	  	  
	  
	 

  

	5	 Net investment in finance lease 

The Company’s net investment in finance lease is presented in the consolidated statements of financial position as follows: 

 

					
	 	  	$	 
	 Balance – January 1, 2019
	  	 	442	 
	 Interest accretion
	  	 	39	 
	 Lease receipts
	  	 	(89	) 
	 Effects of foreign exchange
	  	 	24	 
		  	  
	  
	 
	 Balance – December 31, 2019
	  	 	416	 
		  	  
	  
	 
	 Current
	  	 	92	 
	 Non-current
	  	 	324	 
		  	  
	  
	 
		  	 	416	 
		  	  
	  
	 

 The following table sets out a maturity analysis of the lease payments receivable, showing the undiscounted
lease payments to be received on an annual basis, reconciliation to the net investment in lease. 
  
  

					
	 	  	$	 
	 Less than one year
	  	 	92	 
	 One to two years
	  	 	97	 
	 Two to three years
	  	 	97	 
	 Three to four years
	  	 	97	 
	 Four to five years
	  	 	97	 
	 Thereafter
	  	 	56	 
		  	  
	  
	 
	 Total undiscounted lease payments receivable
	  	 	536	 
	 Less: Interest accretion
	  	 	(126	) 
		  	  
	  
	 

  
 14 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

					
	 Add: Impact of present value
	  	 	6	 
		  	  
	  
	 
	 Net investment in lease – December 31, 2019
	  	 	416	 
		  	  
	  
	 

  

	6	 Leases 

The Company’s right-of-use assets by class of assets is as
follows: 
  

													
	 	  	Premises	 	  	Others	 	  	Total	 
	 	  	$	 	  	$	 	  	$	 
	 Costs
	  				  				  			
	 Balance – January 1, 2019
	  	 	2,209	 	  	 	197	 	  	 	2,406	 
	 Additions
	  	 	481	 	  	 	159	 	  	 	640	 
	 Disposals
	  	 	—  	 	  	 	(76	) 	  	 	(76	) 
	 Effects of foreign exchange
	  	 	33	 	  	 	(4	) 	  	 	29	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance – December 31, 2019
	  	 	2,723	 	  	 	276	 	  	 	2,999	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Accumulated amortization
	  				  				  			
	 Balance – January 1, 2019
	  	 	—  	 	  	 	—  	 	  	 	—  	 
	 Amortization
	  	 	494	 	  	 	105	 	  	 	599	 
	 Disposals
	  	 	—  	 	  	 	(29	) 	  	 	(29	) 
	 Effects of foreign exchange
	  	 	9	 	  	 	—  	 	  	 	9	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance – December 31, 2019
	  	 	503	 	  	 	76	 	  	 	579	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Net balance – December 31, 2019
	  	 	2,220	 	  	 	200	 	  	 	2,420	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 The Company’s lease obligations are as follows: 

 

					
	 	  	$	 
	 Balance – January 1, 2019
	  	 	3,183	 
	 Additions
	  	 	790	 
	 Disposals
	  	 	(47	) 
	 Interest accretion
	  	 	319	 
	 Lease repayments
	  	 	(883	) 
	 Effects of foreign exchange
	  	 	52	 
		  	  
	  
	 
	 Balance – December 31, 2019
	  	 	3,414	 
		  	  
	  
	 
	 Current
	  	 	935	 
	 Non-current
	  	 	2,479	 
		  	  
	  
	 

 Expenses incurred for the year ended December 31, 2019 relating to short-term leases and leases of low-value assets were $9 and $206, respectively. 

  
 15 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

	7	 Property and equipment 

 

																	
	 	  	Furniture and	 	  	Leasehold	 	  	Land and	 	  	 	 
	 	  	office equipment	 	  	improvements	 	  	Building	 	  	Total	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Cost
	  				  				  				  			
	 Balance – December 31, 2017
	  	 	375	 	  	 	634	 	  	 	384	 	  	 	1,393	 
	 Additions
	  	 	109	 	  	 	301	 	  	 	—  	 	  	 	410	 
	 Effects of foreign exchange
	  	 	(18	) 	  	 	(27	) 	  	 	(17	) 	  	 	(62	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance – December 31, 2018
	  	 	466	 	  	 	908	 	  	 	367	 	  	 	1,741	 
	 Additions
	  	 	114	 	  	 	252	 	  	 	—  	 	  	 	366	 
	 Dispositions
	  	 	—  	 	  	 	(37	) 	  	 	—  	 	  	 	(37	) 
	 Effects of foreign exchange
	  	 	—  	 	  	 	(5	) 	  	 	(7	) 	  	 	(12	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance – December 31, 2019
	  	 	580	 	  	 	1,118	 	  	 	360	 	  	 	2,058	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Accumulated depreciation
	  				  				  				  			
	 Balance – December 31, 2017
	  	 	183	 	  	 	85	 	  	 	31	 	  	 	299	 
	 Depreciation
	  	 	57	 	  	 	97	 	  	 	15	 	  	 	169	 
	 Effects of foreign exchange
	  	 	(7	) 	  	 	(4	) 	  	 	(2	) 	  	 	(13	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance – December 31, 2018
	  	 	233	 	  	 	178	 	  	 	44	 	  	 	455	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Depreciation
	  	 	55	 	  	 	54	 	  	 	14	 	  	 	123	 
	 Effects of foreign exchange
	  	 	3	 	  	 	—  	 	  	 	—  	 	  	 	3	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance – December 31, 2019
	  	 	291	 	  	 	232	 	  	 	58	 	  	 	581	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Carrying value
	  				  				  				  			
	 Balance – December 31, 2018
	  	 	233	 	  	 	730	 	  	 	323	 	  	 	1,286	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance – December 31, 2019
	  	 	289	 	  	 	886	 	  	 	302	 	  	 	1,477	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	8	 Borrowings 

The following table presents the borrowings for the Company: 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Mortgage payable
	  	 	36	 	  	 	57	 
	 Secured debentures
	  	 	—  	 	  	 	3,977	 
	 Convertible promissory notes
	  	 	—  	 	  	 	5,344	 
	 Revolving term credit
	  	 	—  	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 
	 Balance – End of period
	  	 	36	 	  	 	9,378	 
		  	  
	  
	 	  	  
	  
	 
	 Current
	  	 	20	 	  	 	5,363	 
	 Non-current
	  	 	16	 	  	 	4,015	 
		  	  
	  
	 	  	  
	  
	 
		  	 	36	 	  	 	9,378	 
		  	  
	  
	 	  	  
	  
	 

 Mortgage payable 

Mortgage payable represents the mortgage on the Sovico property with Banca Intesa San Paolo and expires in July 2021. The original amount of
the mortgage was €185 and is secured by the Sovico property and carries an interest rate of 5% per annum. 
 Credit
Facility 
 On July 25, 2019, the Company secured a committed revolving term credit facility (the “Credit Facility”)
from the Toronto-Dominion Bank. Upon the closing of initial public offering on October 8, 2019, the commitment was increased to $15,000. The amount available to be drawn 

  
 16 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 under the Credit Facility from time to time is equal to the lesser of (i) the commitment
and (ii) an amount equal to the trailing one-month consolidated recurring revenue of the Company (“MRR”) multiplied by six multiplied by the trailing twelve month gross retention rate percentage
on MRR (which rate shall not exceed 100%), minus the amount of any statutory prior claims then in existence. The Credit Facility will mature on July 25, 2022 (the “Maturity Date”). The Maturity Date may be extended for an additional
364 days, at the discretion of the lender, upon the Company providing written notice to the lender requesting such an extension. Interest on the drawn facility is set at LIBOR plus 2.75%. The standby fee on the undrawn balance is 0.50%. 

Upon closing of the Credit Facility, the Company immediately drew down $7,000 to repay the existing $7,000 of secured debentures previously
issued to the shareholders of the Company. The Company incurred cash transaction costs of $142 which are being amortized as accretion expense over the term of the facility using the effective interest rate method. 

On October 16, 2019, the Company repaid the full balance of the Credit Facility outstanding of $7,000 from net proceeds from IPO. 

Convertible promissory notes 

On May 24, 2017, the Company issued $2,000 convertible promissory notes to shareholders and directors of the Company with a maturity date
of May 24, 2019. The convertible promissory notes bore an interest rate of 10% payable monthly and were convertible into common shares of the Company at an exercise price of US$2.50 per share. 

The Company determined that the convertible promissory notes did not qualify as a compound instrument and therefore no equity component to the
instrument. This was due to the fact that the conversion price was denominated in a currency that is not the functional currency of the Company, resulting in variability of the conversion price. Accordingly, the convertible promissory notes were
classified and accounted for entirely as a financial liability, which the Company had elected under IFRS 9 to measure at fair value through profit or loss. The fair value of the convertible promissory notes were classified as Level 3 in the
fair value hierarchy. On May 24, 2019, the convertible promissory notes were converted into 800,000 common shares of the Company. Immediately prior to conversion, the fair value of the convertible promissory notes was $6,120 resulting in
recognition of loss on change in fair value of $776 (December 31, 2018 - $2,083). The fair value of the convertible promissory notes as at December 31, 2019 was nil (December 31, 2018 - $5,344). 

Secured debentures 

In February 2018, the Company issued secured debentures to the shareholders of the Company for total gross cash proceeds of $4,000. The Company
incurred financing fees of $40 to the lenders. These secured debentures bore an interest rate of 10% per annum, payable monthly with maturity on January 31, 2020. The debentures were collateralized by all present and future assets of the
Company. 
 In May 2019, the Company issued additional secured debentures to the same shareholders for total gross cash proceeds of $3,000
bearing interest rate of 10% per annum. As part of the additional secured debentures issued, the maturity date of all outstanding secured debentures was amended to December 31, 2020. 

On July 26, 2019, these secured debentures were repaid in full. 

These secured debentures were classified at amortized cost and accounted for using the effective interest rate method. The carrying value as at
December 31, 2019 was nil (December 31, 2018 — $3,977). 
  

					
	 	  	$	 
	 Principal balance
	  	 	7,000	 
	 Upfront financing fees
	  	 	(40	) 
	 Interest and accretion expense
	  	 	615	 
	 Interest paid
	  	 	(575	) 
	 Repayment of Principal
	  	 	(7,000	) 
		  	  
	  
	 
	 Balance – December 31, 2019
	  	 	—  	 
		  	  
	  
	 

 Finance expense for the fiscal year ended December 31, 2019 and 2018 is comprised of: 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Interest and accretion expense on secured debentures
	  	 	313	 	  	 	368	 
	 Interest expense on convertible promissory notes
	  	 	74	 	  	 	200	 
	 Interest on lease obligations
	  	 	278	 	  	 	—  	 
	 Interest on credit facility
	  	 	88	 	  	 	—  	 
	 Bank fees and other
	  	 	43	 	  	 	98	 
		  	  
	  
	 	  	  
	  
	 
		  	 	796	 	  	 	666	 
		  	  
	  
	 	  	  
	  
	 

  
 17 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

	9	 Employee benefit obligation 

The Company’s employee benefit obligation relates to an employee severance indemnity, which is mandatory pursuant to the Italian Civil
Code and obligates the employer to pay deferred compensation based on the employees’ years of service and the compensation earned by the employee during the service period. From January 1, 2007, Italian law gives an employee the choice of
directing his or her entitlement either to a supplementary pension fund or to leave the severance indemnity as an obligation to the Company. The liability is calculated by an external actuaries using the projected unit credit method. 

The carrying value of the benefit obligation as at December 31, 2019 and 2018 is: 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Opening balance
	  	 	929	 	  	 	672	 
	 Increases
	  				  			
	 Provisions for the year
	  	 	420	 	  	 	310	 
	 Actuarial losses
	  	 	110	 	  	 	41	 
	 Interest expense
	  	 	14	 	  	 	8	 
	 Reductions
	  				  			
	 Payments
	  	 	(16	) 	  	 	(63	) 
	 Foreign exchange translation
	  	 	(14	) 	  	 	(39	) 
		  	  
	  
	 	  	  
	  
	 
	 Ending balance
	  	 	1,443	 	  	 	929	 
		  	  
	  
	 	  	  
	  
	 

 The change in liability was recognized in statement of loss and comprehensive loss as follows: 

 

									
	 	  	2019	 	 	2018	 
	 	  	$	 	 	$	 
	 Cost recognized in profit or loss
	  				 			
	 Current period cost
	  	 	420	 	 	 	310	 
	 Interest cost on defined benefit obligation
	  	 	14	 	 	 	8	 
	 Remeasurement loss recognized in OCI
	  	 	110	 	 	 	41	 
	 Annual weighted average assumptions:
	  				 			
	 Discount rate
	  	 	0.79	% 	 	 	1.57	% 
	 Price inflation
	  	 	1.50	% 	 	 	1.50	% 

 A decrease of 50 basis points in the discount rate would result in an increase of the liability by $129; a
corresponding increase in basis points would result in a reduction of liability by $114. 
 A decrease of 50 basis points of price inflation
would result in reduction of the liability by $44; a corresponding increase in basis points would result in an increase of liability by $46. 
  

	10	 Non-controlling interests 

As at December 31, 2018, the Company had 100% ownership interest in Docebo S.p.A. (2017 — 69.9%) resulting in nil% (2017 - 30.1%)
ownership interest held by non-controlling shareholders. 
 In March 2018, the Company acquired the
remaining 30.1% interest in Docebo S.p.A. in exchange for 4,512,000 common shares. The fair value of the common shares issued was $20,755 and the carrying value of the non-controlling interest acquired was a
deficit of $1,434 resulting in recognition of $22,189 as a debit to shareholders’ deficit of the Company. No gain or loss was recorded as part of the acquisition of the remaining ownership interests. 

Reconciliation of non-controlling interest is as follows: 

  
 18 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

					
	 	  	$	 
	 Balance – January 1, 2018
	  	 	(1,055	) 
	 Share of net loss to date of acquisition
	  	 	(379	) 
	 Purchase of non-controlling interest
	  	 	1,434	 
		  	  
	  
	 
	 Balance – December 31, 2018 and December 31, 2019
	  	 	—  	 
		  	  
	  
	 

  

	11	 Share capital 

Authorized 
 Unlimited common
shares with no par value 
 Issued and outstanding: 
  

									
	 	  	Number of	 	  	 	 
	 	  	shares(iv)	 	  	Amount	 
	 Balance – December 31, 2017
	  	 	18,020,000	 	  	 	9,961	 
	 Purchase of non-controlling interest (i)
	  	 	4,512,000	 	  	 	20,755	 
	 Balance – December 31, 2018
	  	 	22,532,000	 	  	 	30,716	 
	 Stock option exercise (ii)
	  	 	434,700	 	  	 	495	 
	 Conversion of promissory notes (iii)
	  	 	800,000	 	  	 	6,120	 
	 IPO share issuance(v)
	  	 	4,687,500	 	  	 	52,414	 
		  	  
	  
	 	  	  
	  
	 
	 Balance – December 31, 2019
	  	 	28,454,200	 	  	 	89,745	 
		  	  
	  
	 	  	  
	  
	 

  

	 	i)	 On March 15, 2018, the shareholders of the Company acquired the remaining 30.1% non-controlling interest in Docebo S.p.A. from the non-controlling interest holders in exchange for the issuance of 4,512,000 common shares. The transaction was measured at
the fair value of the common shares issued of $20,755. The fair value of the common shares on date of issuance was $4.60 per share. 

	 	ii)	 On May 13, 2019, 386,100 stock options were exercised resulting in issuance of 386,100 common shares of
the Company for total cash proceeds of $311. On June 10, 2019, 6,900 stock options were exercised resulting in issuance of 6,900 common shares of the Company for total cash proceeds of $17. On July 8, 2019, 34,800 stock options were
exercised resulting in issuance of 34,800 common shares of the Company for total cash proceeds of $28. On August 14, 2019, 6,900 stock options were exercised resulting in issuance of 6,900 common shares of the Company for total cash proceeds of
$18. 

	 	iii)	 On May 24, 2019, the convertible promissory notes were converted into 800,000 common shares of the
Company. The fair value of the convertible promissory notes on the date of conversion was $6,120. 

	 	(iv)	 On October 1, 2019, the Company filed articles of amendment to split all of its issued and outstanding
common shares on the basis of 100 common shares for every one common share outstanding. All share and per share amounts for all periods presented in these financial statements have been adjusted retrospectively to reflect the share split.

	 	(v)	 On October 8, 2019, the Company completed an IPO and issued 4,687,500 common shares for a total gross
consideration of $56,261 (C$75,000). Share issuance costs amounted to $3,847 resulting in net proceeds of $52,414. 

  

	12	 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 performance share units (“PSUs”). Share-based compensation expense for the year ended December 31, 2019 was $659 (2018 — $253). The expense associated with each component is as follows: 

  
 19 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Stock options
	  	 	550	 	  	 	253	 
	 DSU
	  	 	109	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 
		  	 	659	 	  	 	253	 
		  	  
	  
	 	  	  
	  
	 

 Stock options 

In 2016, the Company established a stock option plan (the “Legacy Option Plan”) for directors, officers, employees and consultants of
the Company. The Company’s Board of Directors has the authority to determine, among other things, the eligibility of individuals to participate in the Legacy Option Plan and the term, vesting periods and the exercise price of options granted to
individuals under the Legacy Option Plan, subject to the provisions of the Legacy Option Plan. Each share option is exercisable for one common share of the Company. No amounts were paid or payable by the individual on receipt of the option. The
options carry neither rights to dividends nor voting rights. 
 In connection with the IPO on October 8, 2019, the Legacy Option Plan
was amended such that no further awards can be made under the Legacy Option Plan. In connection with the IPO, the Company adopted an omnibus incentive plan (the “Omnibus Incentive Plan”) which allows the Board of Directors to grant
long-term equity-based awards, including stock options, DSUs, RSUs and PSUs, to eligible participants. As determined by the Company’s Board of Directors, the Compensation Nominating and Governance Committee of the Company’s Board of
Directors is the Plan Administrator (as defined in the Omnibus Incentive Plan) of the Omnibus Incentive Plan. The Plan Administrator determines which directors, officers, consultants and employees are eligible to receive awards under the Omnibus
Incentive Plan, the time or times at which awards may be granted, the conditions under which awards may be granted or forfeited to the Company, the number of common shares to be covered by any award, the exercise price of any award, whether
restrictions or limitations are to be imposed on the common shares issuable pursuant to grants of any award, and the nature of any such restrictions or limitations, any acceleration of exercisability or vesting, or waiver of termination regarding
any award, based on such factors as the Plan Administrator may determine. 
 The number of common shares reserved for issuance under the
Omnibus Incentive Plan and the Legacy Option Plan, collectively is 2,845,420. 
 The changes in the number of stock options during the fiscal
year ended December 31, 2019 and 2018 were as follows: 
  

																	
	 	  	2019	 	  	2018	 
	 	  	 	 	  	Weighted	 	  	 	 	  	Weighted	 
	 	  	Number of	 	  	average	 	  	Number of	 	  	average	 
	 	  	options	 	  	exercise price	 	  	options	 	  	exercise price	 
	 	  	#	 	  	C$	 	  	#	 	  	C$	 
	 Options outstanding – January 1
	  	 	1,546,700	 	  	 	0.98	 	  	 	1,546,700	 	  	 	0.98	 
	 Options granted
	  	 	601,347	 	  	 	13.59	 	  	 	—  	 	  	 	—  	 
	 Options forfeited
	  	 	(21,000	) 	  	 	2.14	 	  	 	—  	 	  	 	—  	 
	 Options exercised
	  	 	(434,700	) 	  	 	1.13	 	  	 	—  	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Options outstanding – December 31
	  	 	1,692,347	 	  	 	5.41	 	  	 	1,546,700	 	  	 	0.98	 
	 Options exercisable – December 31
	  	 	943,300	 	  	 	0.99	 	  	 	1,073,300	 	  	 	1.05	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 The weighted average fair value of share options granted during the year ended December 31, 2019 was
estimated at the date of grant using the Black-Scholes option pricing model using the following inputs: 
  

					
	Weighted average assumptions	  	2019	 
	 Fair value, per option
	  	C$	5.87	 
	 Grant date share price
	  	C$	13.71	 
	 Exercise price
	  	C$	13.59	 
	 Expected dividend yield
	  	 	nil	% 
	 Risk free interest rate
	  	 	1.69	% 

  
 20 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

					
	 Expected option life
	  	 	7 years	 
	 Expected volatility
	  	 	39.9	% 

 There were no share options granted during the year ended December 31, 2018. 

Expected volatility was estimated by using the historical volatility of technology index and comparable benchmarks. The expected option life
represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on government bonds with a term equal to the expected life of the options. 

The following table is a summary of the Company’s share options outstanding as at December 31, 2019: 

 

									
	 	  	 Options outstanding
	  	 Options exercisable

	  	 	  	 Weighted average

remaining contractual
	  	Weighted average	  	 
	 Exercise price range
	  	 Number outstanding
	  	 life (years)
	  	 exercise price
	  	 Number exercisable

	C$	  	#	  	#	  	C$	  	#
	0.0001 - 1.09	  	1,079,400	  	7.36	  	0.0001 - 1.09	  	934,100
	3.09 - 3.29	  	23,200	  	9.55	  	3.09 - 3.29	  	9,200
	8.86 - 8.90	  	181,600	  	11.1	  	8.86 - 8.90	  	—  
	15.79 - 16.00	  	408,147	  	9.79	  	15.79 - 16.00	  	—  
	  
	  	  
	  	  
	  	  
	  	  

	5.41	  	1,692,347	  	8.38	  	0.99	  	943,300
	  
	  	  
	  	  
	  	  
	  	  

 DSUs 

Pursuant to the Omnibus Incentive Plan, the Company’s Board of Directors may fix, from time to time, a portion of the total compensation
(including annual retainer) paid by the Company to a director in a calendar year for service on the Board (the “Director Fees”) that are to be payable in the form of DSUs. In addition, subject to the terms of the Omnibus Incentive Plan,
directors may elect to receive all or a portion of their cash Director Fees in the form of DSUs. The number of DSUs that a director will receive in respect of any period is calculated by dividing (a) the amount of any bonus or similar payment
that is to be paid in DSUs by (b) the market price of a share on the date of the grant, with the balance, if any, being paid in cash. Except as otherwise determined by the Plan Administrator, DSUs shall vest immediately upon grant or be subject
to a one-year vesting period. 
 The following table presents information concerning the number of
DSU units granted by the Company: 
  

					
	 	  	#	 
	 DSU units – January 1, 2019
	  	 	—  	 
	 Granted (at C$16 per unit)
	  	 	36,250	 
		  	  
	  
	 
	 DSU units – December 31, 2019
	  	 	36,250	 
		  	  
	  
	 

  

	13	 Loss per share 

For all the periods presented, diluted loss per share equals basic loss per share due to the anti-dilutive effect of convertible promissory
notes and share options and DSUs. The outstanding number and type of securities that could potentially dilute basic net loss per share in the future but would have decreased the loss per share (anti-dilutive) for year ended December 31
presented are as follows: 
  

									
	 	  	2019	 	  	2018	 
	 	  	#	 	  	#	 
	 Convertible promissory notes
	  	 	—  	 	  	 	800,000	 
	 Share-based compensation
	  	 	1,728,597	 	  	 	1,546,700	 
		  	  
	  
	 	  	  
	  
	 
		  	 	1,728,597	 	  	 	2,346,700	 
		  	  
	  
	 	  	  
	  
	 

  

	14	 Disaggregated revenue 

The Company derives its revenues from two main sources, software-as-a-service application (“SaaS”), and professional services revenue, which includes services such as initial project management and training, integration and custom development.
Subscription revenue related 

  
 21 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 to the provision of SaaS is recognized ratably over the contract term as the service is
delivered. Professional services revenue is recognized as services are rendered. 
 The following table represents disaggregation of revenue
for the year ended December 31: 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Subscription revenue
	  	 	37,283	 	  	 	23,881	 
	 Professional services
	  	 	4,160	 	  	 	3,193	 
		  	  
	  
	 	  	  
	  
	 
		  	 	41,443	 	  	 	27,074	 
		  	  
	  
	 	  	  
	  
	 

 The following table presents revenue expected to be recognized in future years related to performance
obligations that are unsatisfied as at December 31: 
  

													
	 	  	 	 	  	 	 	  	2022 and	 
	 	  	2020	 	  	2021	 	  	thereafter	 
	 	  	$	 	  	$	 	  	$	 
	 Subscription revenue
	  	 	33,051	 	  	 	17,321	 	  	 	8,415	 
	 Professional services
	  	 	977	 	  	 	—  	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
		  	 	34,028	 	  	 	17,321	 	  	 	8,415	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 The Company recognizes a contract asset for incremental costs of obtaining a contract with a customer. An asset
is only recognized when the Company expects to fully recover those costs. Incremental costs of obtaining a contract include sales commissions that otherwise would not have been incurred had the contract not been obtained. The asset recognized is
amortized on a straight line basis over the non- cancellable period of the related service that is provided. 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Beginning balance
	  	 	618	 	  	 	—  	 
	 Contract acquisition costs
	  	 	1,084	 	  	 	762	 
	 Amortization expense
	  	 	(399	) 	  	 	(144	) 
		  	  
	  
	 	  	  
	  
	 
	 Ending balance
	  	 	1,303	 	  	 	618	 
		  	  
	  
	 	  	  
	  
	 
	 Current
	  	 	605	 	  	 	243	 
	 Non-current
	  	 	698	 	  	 	375	 
		  	  
	  
	 	  	  
	  
	 
		  	 	1,303	 	  	 	618	 
		  	  
	  
	 	  	  
	  
	 

 The following tables provide information about unbilled trade receivable and deferred revenue: 

Unbilled trade receivable 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Beginning balance
	  	 	372	 	  	 	266	 
	 Decrease from transfers to trade receivables
	  	 	(372	) 	  	 	(266	) 
	 Increase from revenue recognized
	  	 	736	 	  	 	372	 
		  	  
	  
	 	  	  
	  
	 
	 Ending balance
	  	 	736	 	  	 	372	 
		  	  
	  
	 	  	  
	  
	 

 Deferred revenue 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Beginning balance
	  	 	12,687	 	  	 	7,581	 
	 Decrease from revenue recognized
	  	 	(40,707	) 	  	 	(26,703	) 
	 Increase due to amounts invoiced
	  	 	45,406	 	  	 	30,713	 
	 Foreign exchange and other movements
	  	 	611	 	  	 	1,096	 
		  	  
	  
	 	  	  
	  
	 
	 Ending balance
	  	 	17,997	 	  	 	12,687	 
		  	  
	  
	 	  	  
	  
	 

  
 22 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

	15	 Cost of revenue 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Employee wages and benefits
	  	 	5,875	 	  	 	3,867	 
	 Web hosting fees
	  	 	1,776	 	  	 	1,412	 
	 Partner fees
	  	 	343	 	  	 	333	 
	 Other
	  	 	267	 	  	 	38	 
		  	  
	  
	 	  	  
	  
	 
		  	 	8,261	 	  	 	5,650	 
		  	  
	  
	 	  	  
	  
	 

  

	16	 Employee compensation 

The total employee compensation comprising salaries and benefits for the year ended December 31, 2019 was $29,460 (2018 — $20,508).

 Employee compensation costs were included in the following expenses: 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Cost of revenue
	  	 	5,875	 	  	 	3,867	 
	 General and administrative
	  	 	5,296	 	  	 	3,399	 
	 Sales and marketing
	  	 	11,317	 	  	 	8,460	 
	 Research and development
	  	 	6,972	 	  	 	4,782	 
		  	  
	  
	 	  	  
	  
	 
		  	 	29,460	 	  	 	20,508	 
		  	  
	  
	 	  	  
	  
	 

  

	17	 Income taxes 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Current tax expense
	  	 	642	 	  	 	—	 
	 Deferred tax recovery
	  	 	(33	) 	  	 	—	 
		  	  
	  
	 	  	  
	  
	 
		  	 	609	 	  	 	—	 
		  	  
	  
	 	  	  
	  
	 

 Rate reconciliation 

A reconciliation of income tax expense and the product of accounting income before income tax multiplied by the combined Canadian federal and
provincial statutory income tax rate is as follows: 
  

									
	 	  	2019	 	 	2018	 
	 	  	$	 	 	$	 
	 Loss before income taxes
	  	 	(11,305	) 	 	 	(11,651	) 
	 Statutory tax rate
	  	 	26.5	% 	 	 	26.5	% 
		  	  
	  
	 	 	  
	  
	 
	 Tax at statutory rate
	  	 	(2,996	) 	 	 	(3,087	) 
	 Foreign tax rate differential
	  	 	175	 	 	 	(65	) 
	 Change in unrecognized deferred tax asset
	  	 	2,508	 	 	 	2,479	 
	 Effect of permanent differences
	  	 	922	 	 	 	673	 
		  	  
	  
	 	 	  
	  
	 
	 Income tax expense
	  	 	609	 	 	 	—	 
		  	  
	  
	 	 	  
	  
	 

  
 23 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 Unrecognized deferred income tax 

Deferred income tax assets in excess of deferred income tax liabilities have not been recognized in respect of the following attributes because
it is not probable that future taxable profit will be available against which the Company can use the benefits. 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Deferred income tax assets
	  				  			
	 Non-capital loss carry forwards
	  	 	6,046	 	  	 	3,160	 
	 Net capital loss carry forwards
	  	 	131	 	  	 	—	 
	 Intangible assets
	  	 	2,261	 	  	 	2,003	 
	 Unrealized foreign exchange losses
	  	 	56	 	  	 	78	 
	 Non-deductible reserves
	  	 	360	 	  	 	231	 
	 Excess tax over accounting basis in property, plant and equipment and other assets
	  	 	75	 	  	 	26	 
	 R&D tax credits
	  	 	—	 	  	 	123	 
	 Financing charges
	  	 	875	 	  	 	—	 
	 Other
	  	 	67	 	  	 	—	 
		  	  
	  
	 	  	  
	  
	 
		  	 	9,871	 	  	 	5,621	 
	 Deferred income tax liabilities
	  				  			
	 Contract asset
	  	 	(69	) 	  	 	(122	) 
	 Excess accounting over tax basis in property, plant and equipment and other assets
	  	 	—	 	  	 	(27	) 
	 Other
	  	 	—	 	  	 	(65	) 
		  	  
	  
	 	  	  
	  
	 
		  	 	(69	) 	  	 	(214	) 
		  	  
	  
	 	  	  
	  
	 
	 Net unrecognized deferred income tax assets
	  	 	9,802	 	  	 	5,407	 
		  	  
	  
	 	  	  
	  
	 

 Unrecognized tax losses 

As at December 31, 2019, deferred income tax assets have not been recognized in respect of the following tax losses in each jurisdiction
because it is not probable that future taxable profit will be available against which the Company can use the benefits. 
  

													
	 	  	Canada	 	  	Italy	 	  	Total	 
	Year of expiry	  	$	 	  	$	 	  	$	 
	 2036
	  	 	113	 	  	 	—	 	  	 	113	 
	 2037
	  	 	2,661	 	  	 	—	 	  	 	2,661	 
	 2038
	  	 	4,469	 	  	 	—	 	  	 	4,469	 
	 2039
	  	 	6,195	 	  	 	—	 	  	 	6,195	 
	 Indefinite
	  	 	644	 	  	 	9,954	 	  	 	10,598	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total unrecognized tax losses
	  	 	14,082	 	  	 	9,954	 	  	 	24,036	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	18	 Commitments and contingencies 

Commitments 
 As at
December 31, 2019, the Company is committed under operating and finance leases, primarily relating to office space and equipment leases, for the following minimum annual rentals: 

  
 24 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

					
	 	  	$	 
	 2020
	  	 	1,204	 
	 2021
	  	 	1,013	 
	 2022
	  	 	898	 
	 2023
	  	 	723	 
	 2024
	  	 	552	 
	 Thereafter
	  	 	424	 
		  	  
	  
	 
		  	 	4,814	 
		  	  
	  
	 

 Contingencies 

In the ordinary course of business, from time to time, the Company is involved in various claims related to operations, rights, commercial,
employment or other claims. Although such matters cannot be predicted with certainty, management does not consider the Company’s exposure to these claims to be material to these financial statements. 

 

	19	 Related party transactions 

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling activities of the
entity, directly or indirectly, including the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Technology Officer and equivalent and Directors. 

Compensation expense for the Company’s key management personnel for the years ended December 31, 2019 and 2018 is as follows: 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Salaries and benefits
	  	 	2,057	 	  	 	1,832	 
	 Share-based compensation
	  	 	1,995	 	  	 	241	 
		  	  
	  
	 	  	  
	  
	 
		  	 	4,052	 	  	 	2,073	 
		  	  
	  
	 	  	  
	  
	 

 In May 2019, the Company issued $3,000 of additional secured debentures to the shareholders of the Company as
described in Note 8. On July 26, 2019, these secured debentures were repaid in full. 
  

	20	 Capital management 

The Company’s capital management objectives are to maintain financial flexibility in order to pursue its strategy of organic and
acquisition growth and to provide returns to its shareholders. The Company defines capital as the aggregate of its capital stock and borrowings. 

Total managed capital is as follows: 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Borrowings
	  	 	36	 	  	 	9,378	 
	 Share capital
	  	 	89,745	 	  	 	30,716	 
		  	  
	  
	 	  	  
	  
	 
		  	 	89,781	 	  	 	40,094	 
		  	  
	  
	 	  	  
	  
	 

 The Company manages its capital structure in accordance with changes in economic conditions. In order to
maintain or adjust its capital structure, the Company may elect to issue or repay financial liabilities, issue shares, repurchase shares, pay dividends or undertake any other activities as deemed appropriate under the specific circumstances. The
Company is not subject to any externally imposed capital requirements. 

  
 25 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

	21	 Financial instruments and risk management 

Credit risk 

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. The Company performs credit checks for all customers who wish to trade on credit terms. As
at December 31, 2019 and 2018, no customer represented greater than 10% of the outstanding receivable balance. 
 The Company does not
hold any collateral as security but mitigates this risk by dealing only with what management believes to be financially sound counterparties and, accordingly, does not anticipate significant loss for
non-performance. 
 The aging of trade receivables is as follows: 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Not past due
	  	 	5,121	 	  	 	3,844	 
	 1-30 days past due
	  	 	323	 	  	 	271	 
	 31-60 days past due
	  	 	1,347	 	  	 	932	 
	 61-90 days past due
	  	 	688	 	  	 	239	 
	 91-120 days past due
	  	 	533	 	  	 	240	 
	 Greater than 120 days past due
	  	 	1,289	 	  	 	632	 
		  	  
	  
	 	  	  
	  
	 
		  	 	9,301	 	  	 	6,158	 
	 Less: credit loss impairment
	  	 	474	 	  	 	447	 
		  	  
	  
	 	  	  
	  
	 
		  	 	8,827	 	  	 	5,711	 
		  	  
	  
	 	  	  
	  
	 

  

	
	 The credit loss impairment was determined as follows:

  

									
	 	  	Expected loss
rate	 	 	Loss allowance	 
	 	  	 	 	 	$	 
	 Not past due
	  	 	0.4	% 	 	 	20	 
	 1-30 days past due
	  	 	0.1	% 	 	 	—	 
	 31-60 days past due
	  	 	1.3	% 	 	 	18	 
	 61-90 days past due
	  	 	3.9	% 	 	 	27	 
	 91-120 days past due
	  	 	20.0	% 	 	 	107	 
	 Greater than 120 days past due
	  	 	23.4	% 	 	 	302	 
		  				 	  
	  
	 
		  				 	 	474	 
		  				 	  
	  
	 

 Changes in credit loss impairment were as follows: 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Beginning balance
	  	 	447	 	  	 	236	 
	 Write-offs
	  	 	(258	) 	  	 	—	 
	 Impairment loss recognized
	  	 	285	 	  	 	211	 
		  	  
	  
	 	  	  
	  
	 
	 Ending balance
	  	 	474	 	  	 	447	 
		  	  
	  
	 	  	  
	  
	 

 Liquidity risk 

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they come due. The Company mitigates liquidity
risk by management of working capital, cash flows, the issuance of share capital and the issuance of debt. Our trade and other payables are all due within twelve months from the date of these financial statements. 

If unanticipated events occur that impact the Company’s ability to meet its forecast and continue to fund customer acquisition cost,
infrastructure improvement, maintenance and administrative requirements, the Company may need to take additional measures to increase its liquidity and capital resources, including obtaining additional debt or equity financing or strategically
altering the business forecast and 

  
 26 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 plan. In this case, there is no guarantee that the Company will obtain satisfactory financing
terms or adequate financing. Failure to obtain adequate financing on satisfactory terms could have a material adverse effect on the Company’s results of operations or financial condition. 

Market risk 

Market risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: foreign currency risk, interest rate risk and other price risk. 
  

	 	•	 	 Foreign currency risk 

Foreign currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are
measured. The Company’s primary exposure with respect to foreign currencies is from US dollar denominated cash, trade and other receivables, trade and other payables and borrowings in entities whose functional currency is other than US dollars.
The net carrying value of these US denominated balances held in entities with Euro and Canadian dollars as their functional currency as at December 31, 2019 and 2018 presented in US dollars is as follows: 

 

																	
	 	  	2019	 	  	2018	 
	 	  	Euro	 	  	CAD	 	  	Euro	 	  	CAD	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Cash and cash equivalents
	  	 	110	 	  	 	38,759	 	  	 	155	 	  	 	105	 
	 Trade and other receivables
	  	 	636	 	  	 	2,109	 	  	 	259	 	  	 	1,412	 
	 Trade and other payables
	  	 	(746	) 	  	 	(33	) 	  	 	(356	) 	  	 	(104	) 
	 Borrowings
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	(9,344	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
		  	 	—  	 	  	 	40,835	 	  	 	58	 	  	 	(7,931	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 If there was a 1% strengthening of the US dollar against the Canadian dollar or the euro, there would be a
corresponding increase (decrease) in net loss of: 
  

																	
	 	  	2019	 	  	2018	 
	 	  	Euro	 	  	CAD	 	  	Euro	 	  	CAD	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Cash and cash equivalents
	  	 	1	 	  	 	298	 	  	 	2	 	  	 	1	 
	 Trade and other receivables
	  	 	7	 	  	 	16	 	  	 	3	 	  	 	10	 
	 Trade and other payables
	  	 	(8)	 	  	 	—  	 	  	 	(4)	 	  	 	(1)	 
	 Borrowings
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	(69)	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
		  	 	—  	 	  	 	314	 	  	 	1	 	  	 	(59)	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 There would be an equal and opposite impact if there was a 1% weakening of the Canadian dollar or the euro
against the US dollar. 
  

	 	•	 	 Interest rate risk 

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company is not exposed to interest rate risk as at December 31, 2019 as there are no material long-term borrowings outstanding. 
  

	 	•	 	 Other price risk 

Other price risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices
(other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the
market. The Company is not exposed to other price risk as at December 31, 2019. 
 Fair values 

The carrying values of cash and cash equivalents, trade and other receivables, trade and other payables and borrowings approximate fair values
due to the short-term nature of these items or being carried at fair value or, for borrowings, interest payables are close to the current market rates. 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. 

  
 27 

 DOCEBO INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

December 31, 2019 and 2018 

(expressed in thousands of US dollars, except share amounts) 
  

 Financial instruments recorded at fair value on the consolidated statement of financial
position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes
the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest-level input significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy
are defined as follows: 
  

	 	•	 	 Level 1 — Unadjusted quoted prices as at the measurement date for identical assets or liabilities in
active markets. 

  

	 	•	 	 Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices
for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

  

	 	•	 	 Level 3 — Significant unobservable inputs that are supported by little or no market activity. The fair
value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. 

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the
lowest level of the hierarchy for which a significant input has been considered in measuring fair value. 
 Convertible promissory notes were
classified as Level 3 financial instruments. The valuation method and significant assumptions used to determine the fair value of convertible promissory notes have been disclosed in the borrowings note. During the year, there were no transfers
of amounts between levels. 
  

	22	 Segmented information 

The Company reports segment information based on internal reports used by the chief operating decision maker (“CODM”) to make
operating and resource 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 table presents details on revenues derived and details on property and equipment domiciled in the following
geographical locations as at and for the years ended December 31, 2019 and 2018. 
 Revenue for the years ended December 31, 2019
and 2018: 
  

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 North America
	  	 	28,800	 	  	 	17,931	 
	 EMEA
	  	 	12,643	 	  	 	9,143	 
		  	  
	  
	 	  	  
	  
	 
	 Total
	  	 	41,443	 	  	 	27,074	 
		  	  
	  
	 	  	  
	  
	 

 Property and equipment as at December 31, 2019 and 2018: 

 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 North America
	  	 	468	 	  	 	194	 
	 EMEA
	  	 	1,009	 	  	 	1,092	 
		  	  
	  
	 	  	  
	  
	 
	 Total
	  	 	1,477	 	  	 	1,286	 
		  	  
	  
	 	  	  
	  
	 

 ROU asset as at December 31, 2019: 

 

					
	 	  	2019	 
	 	  	$	 
	 North America
	  	 	1,319	 
	 EMEA
	  	 	1,101	 
		  	  
	  
	 
	 Total
	  	 	2,420	 
		  	  
	  
	 

  
 28EX-4.3

 Exhibit 4.3 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

As used in this management’s discussion and analysis of financial condition and results of operations (“MD&A”), unless the context
indicates or requires otherwise, all references to the “Company”, “Docebo”, “we”, “us” or “our” refer to Docebo Inc., together with our subsidiaries, on a consolidated basis as constituted on
December 31, 2019. 
 This MD&A for the fourth quarter and fiscal years ended December 31, 2019 and 2018 should be read in conjunction
with the Company’s audited consolidated financial statements and the accompanying notes for the fiscal years ended December 31, 2019 and 2018. The financial information presented in this MD&A is derived from the Company’s audited
consolidated financial statements for the fourth quarter and fiscal years ended December 31, 2019 and 2018 which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”). All amounts are in thousands of United States dollars except where otherwise indicated. 
 This
MD&A is dated as of March 11, 2020. 
 Forward-looking Information 

This MD&A contains “forward-looking information” and “forward-looking statements” (collectively, “forward- looking
information”) within the meaning of applicable securities laws. Forward looking information may relate to our financial outlook and anticipated events or results and may include information regarding our financial position, business strategy,
growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or
opportunities or the markets in which we operate is forward-looking information. 
 In some cases, forward-looking information can be identified by
the use of forward-looking terminology such as “plans”, “targets”, “expects”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”,
“outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or statements that certain
actions, events or results “may”, “could”, “would”, “might” or, “will”, “occur” or “be achieved”, and similar words or the negative of these terms and similar terminology. In
addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts
but instead represent management’s expectations, estimates and projections regarding future events or circumstances. 
 This forward-looking
information includes, but is not limited to, statements regarding industry trends; our growth rates and growth strategies; addressable markets for our solutions; the achievement of advances in and expansion of our platform; expectations regarding
our revenue and the revenue generation potential of our platform and other products; our business plans and strategies; and our competitive position in our industry. 

This forward-looking information is based on our opinions, estimates and assumptions that, while considered by the Company to be appropriate and reasonable
as of the date of this prospectus, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed
or implied by such forward-looking information, including but not limited to: 
  

	 	•	 	 the Company’s ability to execute on its growth strategies; 

 

	 	•	 	 the impact of changing conditions in the global corporate e-learning
market; 

  

	 	•	 	 increasing competition in the global corporate e-learning market in
which the Company operates; 

  

	 	•	 	 fluctuations in currency exchange rates and volatility in financial markets; 

 

	 	•	 	 changes in the attitudes, financial condition and demand of our target market; 

 

	 	•	 	 developments and changes in applicable laws and regulations; and 

 

	 	•	 	 such other factors discussed in greater detail under the “Risk Factors” section of our Annual
Information Form. 

  
 1 

 If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions
underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in
greater detail in “Summary of Factors Affecting our Performance” and in the “Risk Factors” section of our Annual Information Form dated March 11, 2020, which is available under our profile on SEDAR at www.sedar.com, should
be considered carefully by prospective investors. 
 Although we have attempted to identify important risk factors that could cause actual results to
differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially
from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No
forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this MD&A represents
our expectations as of the date specified herein, and are subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information,
future events or otherwise, except as required under applicable securities laws. 
 All of the forward-looking information contained in this MD&A
is expressly qualified by the foregoing cautionary statements. 
 Additional information relating to Docebo, including our Final Prospectus, can be
found on SEDAR at www.sedar.com. 
 Overview 
 At
Docebo, our mission is to redefine the way enterprises, including their internal and external workforces, partners and customers, learn by applying new technologies to the traditional corporate LMS market. Founded in 2005, we provide an easy-to-use, highly configurable and affordable learning platform with the end-to-end
capabilities and critical functionality needed to train internal and external workforces, partners and customers. Our solution allows our customers to take control of their desired training strategies and retain institutional knowledge, while
providing efficient course delivery, tracking of learning progress, advanced reporting tools and analytics. Our robust platform helps our customers centralize a broad range of learning materials from peer enterprises and learners into one LMS to
expedite and enrich the learning process, increase productivity and grow teams uniformly. 
 Our platform is now used by more than 1,800 companies of all
sizes, providing access to learners situated around the world in a variety of languages. Our clients range from select small local businesses, with a focus on mid-sized enterprises, to large multi-nationals,
including service, financial, technology and resource-based companies and consulting firms. Our platform is sold primarily through a direct sales force with offices in Toronto, Canada, Athens, Georgia (USA), Biassono, Italy and London, United
Kingdom. We also have some relationships with resellers and other channel partners, such as human resource and payroll services providers. 
 Our cloud
platform currently consists of three interrelated modules: (i) “Docebo Learn”; (ii) “Docebo Discover, Coach & Share”; and (iii) “Docebo Extended Enterprise”. Docebo Learn, our foundational module, helps
learning administrators centralize, organize and distribute learning content, track certifications and measure results with customer analytics. Docebo Discover, Coach & Share provides learners with access to social learning by encouraging
the sharing of knowledge through formal, social, interactive and experiential learning across an organization. Docebo Extended Enterprise allows businesses to manage multiple portals for different audiences with their own administration, branding
and authentication, which demonstrates our commitment to our customers’ success. 
 We generate revenue primarily from the sale of our platform, which
is typically sold on the basis of an annual subscription fee and prepaid on an annual basis. We offer our customers the flexibility to choose annual or multi- year contract terms, with the majority of our enterprise customers choosing between one to
three years. This results 

  
 2 

 in a relatively smooth revenue curve with good visibility into near-term revenue growth. We typically enter
into subscription agreements with our customers, with pricing based on the number of end learners in the customer’s organization and the number of modules requested by the customer. Our goal is to continue to grow revenues arising from our
existing customer base as well as adding new subscription customers to our platform. Our business does not have significant seasonal attributes, although historically the sales in the fourth quarter have tended to be slightly stronger than the first
three. The Company operates on a global basis and for this reason has decided to report its consolidated financial results in U.S. dollars notwithstanding that the Company’s functional currency is the Canadian dollar. The Company does not
currently hedge its exposure to fluctuations in Canadian dollar or other European currency denominated revenues and expenses. 
 On October 1, 2019,
the Company filed articles of amendment to effect the change of the Company’s name from “Docebo Canada Inc.” to “Docebo Inc.” and to split all of its issued and outstanding common shares on the basis of 100 common shares for
every one common share outstanding (the “Share Split”). All share and per share amounts for all periods presented in the MD&A and the Company’s audited consolidated financial statements have been adjusted retrospectively to
reflect the Share Split. 
 On October 8, 2019, the Company completed an initial public offering (“IPO”) and its shares began trading on the
Toronto Stock Exchange under the symbol “DCBO”. 
 Key Performance Indicators 

We recognize subscription revenues ratably over the term of the subscription period under the provisions of our agreements with customers. The terms of our
agreements, combined with high customer retention rates, provides us with a significant degree of visibility into our near-term revenues. Management uses a number of metrics, including the ones identified below, to measure the Company’s
performance and customer trends, which are used to prepare financial plans and shape future strategy. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies. 

 

	 	•	 	 Annual Recurring Revenue. We define Annual Recurring Revenue as the annualized equivalent value of the
subscription revenue of all existing contracts (including Original Equipment Manufacturer (“OEM”) contracts) as at the date being measured, excluding non-recurring implementation, support and
maintenance fees. Our customers generally enter into one to three year contracts and are non- cancelable or cancellable with penalty. All the customer contracts, including those for one-year terms, automatically renew unless cancelled by our customers. Accordingly, our calculation of Annual Recurring Revenue assumes that customers will renew the contractual commitments on a periodic basis as
those commitments come up for renewal. Subscription agreements are subject to price increases upon renewal reflecting both inflationary increases and the additional value provided by our solutions. In addition to the expected increase in
subscription revenue from price increases over time, existing customers may subscribe for additional features, learners or services during the term. We believe that this measure provides a fair real-time measure of performance in a
subscription-based environment. Annual Recurring Revenue provides us with visibility for consistent and predictable growth to our cash flows. Our strong total revenue growth coupled with increasing Annual Recurring Revenue indicates the continued
strength in the expansion of our business and will continue to be our target on a go-forward basis. 

  

	 	•	 	 Net Dollar Retention Rate: We believe that our ability to retain and expand a customer relationship is an
indicator of the stability of our revenue base and long-term value of our customers. We assess our performance in this area using a metric we refer to as Net Dollar Retention Rate. We compare the aggregate subscription fees contractually committed
for a full month under all customer agreements (the “Total Contractual Monthly Subscription Revenue”) of our total customer base (excluding OEM partners) as of the beginning of each month to the Total Contractual Monthly Subscription
Revenue of the same group at the end of the month. Net Dollar Retention Rate is calculated on a weighted average annual basis by first dividing the Total Contractual Monthly Subscription Revenue at the end of the month by the Total Contractual
Monthly Subscription Revenue at the start of the month for the same group of customers. 

  
 3 

 Net Dollar Retention Rate and Annual Recurring Revenue for the fiscal years ended at December 31, 2019
and 2018, was as follows: 
  

									
	 	  	2019	 	 	2018	 
	 Net Dollar Retention Rate
	  	 	Greater than 100	% 	 	 	Greater than 100	% 
	 Annual Recurring Revenue (in millions of US
dollars)(1)
	  	 	47.2	 	 	 	29.9	 
		  	  
	  
	 	 	  
	  
	 

 Note: 
  

	1.	 Historically, subscription revenue from OEM contracts (“OEM Subscription Revenue”) was excluded from
our calculation of Annual Recurring Revenue. For the fourth quarter of the fiscal year ended December 31, 2019 and going forward, OEM Subscription Revenue will be included in Annual Recurring Revenue to provide a more comprehensive
representation of our subscription revenue. The following table outlines our Annual Recurring Revenue for the last four quarters including OEM Subscription Revenue: 

 

																	
	 	  	2019	 
	 	  	Q1	 	  	Q2	 	  	Q3	 	  	Q4	 
	 Annual Recurring Revenue (in millions of US dollars)
	  	 	33.5	 	  	 	36.9	 	  	 	41.7	 	  	 	47.2	 

 Non-IFRS Measures and Reconciliation of
Non-IFRS Measures 
 This MD&A makes reference to certain non-IFRS
measures including key performance indicators used by management and typically used by our competitors in the
software-as-a-service (“SaaS”) industry. These measures are not recognized measures under IFRS and do not have a
standardized meaning prescribed by IFRS and are therefore not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing
further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures and SaaS metrics are used to provide investors with supplemental measures of our operating performance and liquidity and thus highlight trends in our business that may not otherwise be apparent
when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including SaaS industry metrics, in the evaluation of
companies in the SaaS industry. Management also uses non-IFRS measures and SaaS industry metrics in order to facilitate operating performance comparisons from period to period, the preparation of annual
operating budgets and forecasts and to determine components of executive compensation. The non-IFRS measures and SaaS industry metrics referred to in this MD&A include “Adjusted EBITDA” and
“Free Cash Flow”. 
 Adjusted EBITDA 

Adjusted EBITDA is used by management as a supplemental measure to review and assess operating performance and, in conjunction with the financial statements,
provides a more comprehensive picture of factors and trends affecting our business. Management believes that Adjusted EBITDA is a useful measure of operating performance and our ability to generate cash-based earnings, as it provides a useful view
of operating results by excluding the effects of financing and investing activities which removes the effects of interest, depreciation and amortization expenses as non-cash items that are not reflective of
our underlying business performance, and other one-time or non-recurring expenses. The Company defines Adjusted EBITDA as net loss excluding taxes (if applicable), net
finance expense, depreciation and amortization, loss on change in fair value of convertible promissory notes, loss on disposal of assets (if applicable), share-based compensation, transaction related expenses and foreign exchange gains and losses.
Management believes that these adjustments are appropriate in making Adjusted EBITDA an approximation of cash-based earnings from operations before capital replacement, financing, and income tax charges. Adjusted EBITDA does not have a standardized
meaning under IFRS and is not a measure of operating income, operating performance or liquidity presented in accordance with IFRS and is subject to important limitations. The Company’s definition of Adjusted EBITDA may be different than
similarly titled measures used by other companies. 

  
 4 

 Adjusted EBITDA 

The following table reconciles Adjusted EBITDA to net loss for the periods indicated: 

 

																	
	 	  	Three months ended December 31,	 	  	Fiscal year ended December 31,	 
	 	  	2019	 	  	2018	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Net loss
	  	 	(3,299	) 	  	 	(3,160	) 	  	 	(11,914	) 	  	 	(11,651	) 
	 Finance expense, net(1)
	  	 	89	 	  	 	202	 	  	 	796	 	  	 	666	 
	 Depreciation and amortization(2)
	  	 	99	 	  	 	49	 	  	 	693	 	  	 	169	 
	 Loss on change in fair value of convertible promissory notes(3)
	  	 	—  	 	  	 	525	 	  	 	776	 	  	 	2,083	 
	 IPO issuance costs(4)
	  	 	705	 	  	 	—  	 	  	 	1,946	 	  	 	—  	 
	 Share-based compensation(5)
	  	 	408	 	  	 	46	 	  	 	659	 	  	 	253	 
	 Foreign exchange loss(6)
	  	 	878	 	  	 	403	 	  	 	922	 	  	 	605	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Adjusted EBITDA
	  	 	(1,120	) 	  	 	(1,935	) 	  	 	(6,122	) 	  	 	(7,875	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Notes: 
  

	(1)	 Finance expense is primarily related to interest and accretion expense on the Credit Facility (as defined
below), secured debentures and convertible promissory notes. In addition, finance expense for the three months and fiscal year ended December 31, 2019 also includes net finance expense of $71 and $278, respectively, on lease obligations as a
result of the adoption of IFRS 16 – Leases effective January 1, 2019. 

	(2)	 Depreciation and amortization expense is primarily related to depreciation expense on right-of-use assets and property and equipment. As a result of the adoption of IFRS 16 – Leases effective January 1, 2019 depreciation and amortization
expense for the three months and fiscal year ended December 31, 2019 includes amortization expense on right-of-use assets of $138 and $570, respectively.

	(3)	 These costs are related to the change in valuation of our convertible promissory notes from period to period,
which is a non-cash expense and is thus not indicative of our operating profitability. These costs should be adjusted for in accordance with management’s view of Adjusted EBITDA as an approximation of
cash-based earnings from operations before capital replacement, financing, and income tax charges. In May 2019, these convertible promissory notes were converted into common shares. There will be no further impact on our results of operations from
such convertible promissory notes and the Company does not currently intend to issue any additional convertible promissory notes. 

	(4)	 These expenses are related to our IPO and include professional, legal, consulting and accounting fees that are non-recurring and would otherwise not have been incurred and are not considered an expense indicative of continuing operations. 

	(5)	 These expenses represent non-cash expenditures recognized in connection
with the issuance of share-based compensation to our employees and directors. 

	(6)	 These non-cash losses relate to foreign exchange translation.

 Free Cash Flow 
 Free Cash Flow is
defined as cash used in operating activities less additions to property and equipment. The following table reconciles our cash flow used in operating activities to Free Cash Flow: 

 

																	
	 	  	Three months ended December 31,	 	  	Fiscal year ended December 31,	 
	 	  	2019	 	  	2018	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Cash flow used in operating activities
	  	 	(3,493	) 	  	 	23	 	  	 	(4,582	) 	  	 	(2,300	) 
	 Additions to property and equipment
	  	 	(60	) 	  	 	—  	 	  	 	(366	) 	  	 	(410	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Free Cash Flow
	  	 	(3,553	) 	  	 	23	 	  	 	(4,948	) 	  	 	(2,710	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  
 5 

 Summary of Factors Affecting Our Performance 

We believe that the growth and future success of our business depends on many factors, including those described below. While each of these factors presents
significant opportunities for our business, they also pose important challenges, some of which are discussed below and in the “Risk Factors” section of the Final Prospectus dated October 1, 2019. 

Market adoption of our SaaS platform 
 We intend to
continue to drive adoption of our SaaS platform by scaling our solutions to meet the needs of both new and existing customers of all types and sizes. We believe that there is significant potential to increase penetration of our total addressable
market and attract new customers. We plan to do this by further developing our products and services as well as continuing to invest in marketing strategies tailored to attract new businesses to our platform, both in our existing geographies and new
markets around the world. We plan to continue to invest in our platform to expand our customer base and drive market adoption. The success of our operations may fluctuate as we make these investments. 

Up-selling with existing customers 

Our existing customers represent a significant opportunity to up-sell additional functionality with limited incremental
sales and marketing expense. We plan to continually invest in product development and sales and marketing to add additional solutions to our platform as well as increase the usage and awareness of our platform. Our future revenue growth and our
ability to achieve and maintain profitability is dependent upon our ability to maintain existing customer relationships and to continue to expand our customers’ use of our platform. 

Scaling our sales and marketing team 
 Our ability to
achieve significant growth in future revenue will largely depend upon the effectiveness of our sales and marketing efforts. The majority of our sales and marketing efforts are accomplished in-house and we
believe the strength of our sales and marketing team is critical to our success. We have invested, and intend to continue to invest meaningfully, in the expansion of our sales force and consequently, we anticipate that our headcount will continue to
increase as a result of these investments. 
 Foreign currency 

Our functional currency is Canadian dollars and the local currency for each of the subsidiaries and our presentation currency is the U.S. dollar. Our results
of operations are converted from our functional currency to U.S. dollars using the average foreign exchange rates for each period presented. As a result, our results of operations will be adversely impacted by a decrease in the value of the U.S.
dollar relative to the Euro and Canadian dollar. See “Risk Factors” section of our Final Prospectus dated October 1, 2019 for a discussion on exchange rate fluctuations and their potential negative effect on our results of operations.

 Natural disasters, public health crises, political crises, or other catastrophic events 

Natural disasters, such as earthquakes, hurricanes, tornadoes, floods, and other adverse weather and climate conditions; unforeseen public health crises such
as the recent global outbreak of a novel coronavirus, COVID-19, and other pandemics and epidemics; political crises, such as terrorist attacks, war, and other political instability; or other catastrophic
events, could disrupt our operations in any of our offices or the operations of one or more of our third-party providers and vendors. To the extent any of these events occur, our business and results of operations could be adversely affected. For
example, the recent outbreak of COVID-19 in early 2020, particularly in Northern Italy where Docebo offices are located, may adversely affect our employees and customers. While Docebo’s employees,
including those located in Italy, generally have the ability to work remotely, the extent to which COVID-19 may impact our business and results of operations and reputation remains uncertain. 

  
 6 

 Key Components of Results of Operations 

Docebo has always been operated and managed as a single economic entity, notwithstanding the fact that it has operations in several different countries. There
is one management team that directs the activities of all aspects of the company and it is managed globally through global department heads. As a result, we believe that we have one reporting segment, being the consolidated company. Over time, this
may change as the company grows and when this occurs we will reflect the change in our reporting practice. 
 Revenue 

We generate revenue from the following two primary sources: 
  

	 	•	 	 Recurring Subscriptions to Our Learning Platform and Related Products. Our customers enter into agreements
that provide for recurring subscription fees. The majority of the customer agreements currently being entered into have a term of one to three years and are non-cancelable or cancellable with penalty. All the
customer agreements, including those for one-year terms, automatically renew unless cancelled by our customers. Subscription revenue per contract will vary depending upon the particular products that each
customer subscribes for, the number and type of learners intended to utilize the platform and the term of the agreement. Subscription revenue is typically recognized evenly over the life of a contract, commencing on the in-service date and terminating on the end date of the agreement. 

  

	 	•	 	 Professional Services. Our clients generally require support in implementing our product and training
their learners. This support can include system integration, application integration, learner training and any required process-change analysis. Normally, these services are purchased at the same time as the original customer agreement is completed
and are usually delivered during the 90 days immediately following the effective date of the customer agreement. When customer agreements are renewed, there is not typically a need for additional professional services so as overall revenue increases
over time, the percentage of revenue that is generated from professional services will decrease. Revenues derived from professional services are recognized over the term that the service is provided and proportionately to the work performed.

 Our agreements generally do not contain any cancellation or refund provisions without penalty, other than in the case of our default.

 Cost of Revenue 
 Cost of revenue is comprised
of costs related to hosting our learning platform and related products and the delivery of professional services. Significant expenses included in cost of revenue include employee wages and benefits expenses, web hosting fees and partner fees. 

Operating Expenses 
 Our primary operating expenses
are as follows: 
  

	 	•	 	 General and Administrative. General and administrative expenses are comprised primarily of employee
salaries and benefits expenses for our administrative, finance, legal and human resources teams, rent, travel and general office and administrative expenses, consulting and professional fees and credit impairment losses. We anticipate increases to
general and administrative expenses as we incur the costs of compliance associated with being a public company, including increased accounting and legal expenses. However, as the Company grows, we expect that general and administrative expenses will
decrease as a percentage of revenue. 

  

	 	•	 	 Sales and Marketing. Sales and marketing expenses are comprised primarily of employee salaries and
benefits related to our sales and marketing teams, amortization of contract acquisition costs and 

  
 7 

	 	advertising and marketing events. To implement our growth strategy, we intend to continue to grow our sales and marketing teams. As the Company continues to grow, we expect sales and marketing expenses to increase, while these
expenses may fluctuate from year to year, consistent with our overall growth. 

  

	 	•	 	 Research and Development. Research and development expenses are comprised primarily of employee salaries
and benefits related to our research and development team, consulting and professional fees and web hosting fees. Our research and development team is focused on both continuous improvement in our existing learning platform, as well as developing
new product modules and features. In the immediate future, as Docebo’s growth continues, we expect our research and development costs to increase proportionately, however, over time we believe it is reasonable to expect that they would decline
as a percentage of revenue. 

  

	 	•	 	 Share-based compensation. Share-based compensation expenses are comprised of the value of stock options
granted to employees expensed over the vesting period of the options and the deferred share units (“DSUs”). The Company’s Board of Directors may fix, from time to time, a portion of the total compensation (including annual retainer)
paid by the Company to a director in a calendar year for service on the Board (the “Director Fees”) that are to be payable in the form of DSUs. 

  

	 	•	 	 Foreign exchange loss/gain. Foreign exchange loss/gain primarily relates to translation of monetary assets
and liabilities denominated in foreign currencies being translated into functional currencies at the foreign exchange rate applicable at the end of each period. 

 

	 	•	 	 Depreciation and amortization. Depreciation and amortization expense primarily relates to depreciation on
property and equipment and amortization of right-of-use assets. Property and equipment are comprised of furniture and office equipment, leasehold improvements and land
and building. Right-of-use assets relate to the adoption of IFRS 16 on January 1, 2019 which requires all major leases to be recognized on the statement of
financial position. 

 Other Expenses 
  

	 	•	 	 Loss on change in fair value of convertible promissory notes. These costs include costs with respect to
the change in valuation of the Company’s convertible promissory notes from period to period. In May 2019, these convertible promissory notes were converted into common shares and there will be no further impact on our results of operations from
such convertible promissory notes. 

  

	 	•	 	 Finance expense. These costs include interest on secured debentures, interest on convertible promissory
notes, interest on lease obligations and bank fees. 

  

	 	•	 	 Other income. Other income is primarily comprised of rental income from subleasing office space.

 Results of Operations 
 The
following table outlines our consolidated statements of loss and comprehensive loss for the three months and fiscal years ended December 31, 2019 and 2018: 
  

 

																	
	 	  	Three months ended December 31,	 	  	Fiscal year ended December 31,	 
	 	  	2019	 	  	2018	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Revenue
	  	 	12,298	 	  	 	8,049	 	  	 	41,443	 	  	 	27,074	 
	 Cost of revenue
	  	 	2,286	 	  	 	1,523	 	  	 	8,261	 	  	 	5,650	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Gross profit
	  	 	10,012	 	  	 	6,526	 	  	 	33,182	 	  	 	21,424	 

  
 8 

																	
	 Operating expenses
	  			
	 General and administrative
	  	 	4,423	 	  	 	3,573	 	  	 	15,872	 	  	 	10,940	 
	 Sales and marketing
	  	 	4,555	 	  	 	3,067	 	  	 	16,266	 	  	 	11,630	 
	 Research and development
	  	 	2,776	 	  	 	1,980	 	  	 	8,579	 	  	 	6,612	 
	 Share-based compensation
	  	 	408	 	  	 	46	 	  	 	659	 	  	 	253	 
	 Foreign exchange loss
	  	 	820	 	  	 	284	 	  	 	922	 	  	 	775	 
	 Depreciation and amortization
	  	 	99	 	  	 	49	 	  	 	693	 	  	 	169	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
		  	 	13,081	 	  	 	8,999	 	  	 	42,991	 	  	 	30,379	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Operating loss
	  	 	(3,069	) 	  	 	(2,473	) 	  	 	(9,809	) 	  	 	(8,955	) 
	 Finance expense, net
	  	 	89	 	  	 	202	 	  	 	796	 	  	 	666	 
	 Loss on change in fair value of convertible promissory notes
	  	 	—  	 	  	 	525	 	  	 	776	 	  	 	2,083	 
	 Other income
	  	 	(19	) 	  	 	(40	) 	  	 	(76	) 	  	 	(53	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Loss before income taxes
	  	 	(3,139	) 	  	 	(3,160	) 	  	 	(11,305	) 	  	 	(11,651	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Income tax expense
	  	 	160	 	  	 	—  	 	  	 	609	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Net loss for the year
	  	 	(3,299	) 	  	 	(3,160	) 	  	 	(11,914	) 	  	 	(11,651	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Other comprehensive loss
	  				  				  				  			
	 Item that may be reclassified subsequently to income:
	  				  				  				  			
	 Exchange gain on translation of foreign operations
	  	 	(583	) 	  	 	(411	) 	  	 	(652	) 	  	 	(819	) 
	 Item not subsequently reclassified to income:
	  				  				  				  			
	 Actuarial loss
	  	 	80	 	  	 	10	 	  	 	110	 	  	 	41	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
		  	 	(503	) 	  	 	(401	) 	  	 	(542	) 	  	 	(778	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Comprehensive loss
	  	 	(2,796	) 	  	 	(2,759	) 	  	 	(11,372	) 	  	 	(10,873	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Net loss attributable to:
	  				  				  				  			
	 Equity owners of the Company
	  	 	(3,299	) 	  	 	(3,160	) 	  	 	(11,914	) 	  	 	(11,272	) 
	 Non-controlling interests (Note 10)
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	(379	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
		  	 	(3,299	) 	  	 	(3,160	) 	  	 	(11,914	) 	  	 	(11,651	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Loss per share—basic and diluted
	  	 	(0.12	) 	  	 	(0.14	) 	  	 	(0.49	) 	  	 	(0.52	) 
	 Weighted average number of common shares outstanding—basic and diluted (Note 13)
	  	 	28,046,591	 	  	 	21,543,068	 	  	 	24,363,789	 	  	 	21,543,100	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Review of Operations for the three months and fiscal years ended December 31, 2019 and 2018 

Revenue 
  

																																	
	 	  	Three months ended December 31,	 	 	Fiscal year ended December 31,	 
	 	  	2019
$	 	  	2018
$	 	  	Change
$	 	  	Change
%	 	 	2019
$	 	  	2018
$	 	  	Change
$	 	  	Change
%	 
	 Subscription Revenue
	  	 	11,247	 	  	 	7,365	 	  	 	3,882	 	  	 	53	% 	 	 	37,283	 	  	 	23,881	 	  	 	13,402	 	  	 	56	% 
	 Professional Services
	  	 	1,051	 	  	 	684	 	  	 	367	 	  	 	54	% 	 	 	4,160	 	  	 	3,193	 	  	 	967	 	  	 	30	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total Revenue
	  	 	12,298	 	  	 	8,049	 	  	 	4,249	 	  	 	53	% 	 	 	41,443	 	  	 	27,074	 	  	 	14,369	 	  	 	53	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Revenue increased from $8.0 million to $12.3 million or 53% for the three months ended December 31, 2019 as
compared to the equivalent period in the prior year. For the fiscal year ended December 31, 2019 and 2018 revenues were $41.4 million and $27.1 million, respectively, an increase of $14.4 million or 53%. In both periods, the
significant revenue increase was primarily attributable to revenue from new customers, as the number of customers rose from 1,540 as at December 31, 2018 to 1,808 as at December 31, 2019 and the average contract value per customer
increased from approximately $19 as at December 31, 2018 to approximately $26 as at December 31, 2019. Average contract value is calculated as total Annual Recurring Revenue divided by the number 

  
 9 

 of active customers. All references to the number of customers or companies we serve include separate
accounts per customer. 
 Subscription revenue increased from $7.4 million to $11.2 million or 53% in the fourth quarter of 2019 as compared to
the same quarter in 2018 and from $23.9 million to $37.3 million or 56% for the fiscal years ended December 31, 2019 as compared to the same period in the prior year. 

Revenues from professional services increased by $0.4 million or 54% in the fourth quarter of 2019 as compared to the same quarter in 2018 and by
$1.0 million or 30% for the fiscal year ended December 31, 2019 as compared to the same period in the prior year. Increase in revenue attributed to professional services is primarily associated with sales of new subscriptions. 

Cost of Revenue 
  

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	 	2018	 	 	Change	 	  	Change	 	 	2019	 	 	2018	 	 	Change	 	  	Change	 
	 	  	$	 	 	$	 	 	$	 	  	%	 	 	$	 	 	$	 	 	$	 	  	%	 
	 Cost of revenue
	  	 	2,286	 	 	 	1,523	 	 	 	763	 	  	 	50	% 	 	 	8,261	 	 	 	5,650	 	 	 	2,611	 	  	 	46	% 
	 Percentage of total revenue
	  	 	18.6	% 	 	 	18.9	% 	 				  				 	 	19.9	% 	 	 	20.9	% 	 				  			

 Cost of revenue increased from $1.5 million to $2.3 million or 50% for the three months ended December 31, 2019
as compared to the equivalent period in the prior year and increased from $5.7 million to $8.3 million or 46% for the fiscal year ended December 31, 2019 as compared to the equivalent period in the prior year. The period over period
absolute increases in cost of revenue were closely related to the increase in revenue. 
 Gross profit 

 

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	 	2018	 	 	Change	 	  	Change	 	 	2019	 	 	2018	 	 	Change	 	  	Change	 
	 	  	$	 	 	$	 	 	$	 	  	%	 	 	$	 	 	$	 	 	$	 	  	%	 
	 Gross profit
	  	 	10,012	 	 	 	6,526	 	 	 	3,486	 	  	 	53	% 	 	 	33,182	 	 	 	21,424	 	 	 	11,758	 	  	 	55	% 
	 Percentage of total revenue
	  	 	81.4	% 	 	 	81.1	% 	 				  				 	 	80.1	% 	 	 	79.1	% 	 				  			

 Gross profit, being revenue less cost of revenues, increased from $6.5 million to $10.0 million and improved from
81.1% of revenue to 81.4% of revenue for the three months ended December 31, 2019 as compared to the three months ended December 31, 2018. For the fiscal year ended December 31, 2019, gross profit increased from $21.4 million to
$33.2 million and improved from 79.1% to 80.1% as compared to the prior year’s fiscal year. The improvement is primarily due to the realization of some benefit of scale in our infrastructure cost structure. As we continue to grow our
revenues, we anticipate that we will continue to realize an improved gross profit margin, but the incremental benefits will reduce over time. 

Operating Expenses 
  

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	  	2018	 	  	Change	 	  	Change	 	 	2019	 	  	2018	 	  	Change	 	  	Change	 
	 	  	$	 	  	$	 	  	$	 	  	%	 	 	$	 	  	$	 	  	$	 	  	%	 
	 General and administrative
	  	 	4,423	 	  	 	3,573	 	  	 	850	 	  	 	24	% 	 	 	15,872	 	  	 	10,940	 	  	 	4,932	 	  	 	45	% 
	 Sales and marketing
	  	 	4,555	 	  	 	3,067	 	  	 	1,488	 	  	 	49	% 	 	 	16,266	 	  	 	11,630	 	  	 	4,636	 	  	 	40	% 
	 Research and development
	  	 	2,776	 	  	 	1,980	 	  	 	796	 	  	 	40	% 	 	 	8,579	 	  	 	6,612	 	  	 	1,967	 	  	 	30	% 
	 Share-based compensation
	  	 	408	 	  	 	46	 	  	 	362	 	  	 	787	% 	 	 	659	 	  	 	253	 	  	 	406	 	  	 	160	% 
	 Foreign exchange loss
	  	 	820	 	  	 	284	 	  	 	536	 	  	 	189	% 	 	 	922	 	  	 	775	 	  	 	147	 	  	 	19	% 

  
 10 

				              				              				              				              				              				              				              				              	
	 Depreciation and amortization
	  	 	99	 	  	 	49	 	  	 	50	 	  	 	102	% 	 	 	693	 	  	 	169	 	  	 	524	 	  	 	310	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total operating expenses
	  	 	13,081	 	  	 	8,999	 	  	 	4,082	 	  	 	45	% 	 	 	42,991	 	  	 	30,379	 	  	 	12,612	 	  	 	42	% 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 General and Administrative Expenses 
  

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	 	2018	 	 	Change	 	  	Change	 	 	2019	 	 	2018	 	 	Change	 	  	Change	 
	 	  	$	 	 	$	 	 	$	 	  	%	 	 	$	 	 	$	 	 	$	 	  	%	 
	 General and administrative
	  	 	4,423	 	 	 	3,573	 	 	 	850	 	  	 	24	% 	 	 	15,872	 	 	 	10,940	 	 	 	4,932	 	  	 	45	% 
	 Percentage of total revenue
	  	 	36.0	% 	 	 	44.4	% 	 				  				 	 	38.3	% 	 	 	40.4	% 	 				  			

 General and administrative expenses increased from $3.6 million to $4.4 million or 24% for the three months ended
December 31, 2019 as compared to the equivalent period in the prior year and increased from $10.9 million to $15.9 million or 45% for the fiscal year ended December 31, 2019 as compared to the equivalent period in the prior year.
The increase in both period comparatives was primarily due to higher salaries and benefits and office costs from an increase in personnel required to support the Company’s growing operations. We also experienced an increase in consulting and
professional fees as a result of the IPO. Our general and administrative expenses as a percentage of total revenue decreased from 44.4% to 36.0% for the three months ended December 31, 2018 and December 31, 2019, respectively, and
decreased from 40.4% to 38.3% for the fiscal years ended December 31, 2018 and December 31, 2019, respectively. We expect that our general and and administrative expenses as a percentage of revenue will decrease in the future as a result
of IPO related expenses incurred in the current fiscal year that are non- recurring. 
 Sales and Marketing
Expenses 
  

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	 	2018	 	 	Change	 	  	Change	 	 	2019	 	 	2018	 	 	Change	 	  	Change	 
	 	  	$	 	 	$	 	 	$	 	  	%	 	 	$	 	 	$	 	 	$	 	  	%	 
	 Sales and marketing
	  	 	4,555	 	 	 	3,067	 	 	 	1,488	 	  	 	49	% 	 	 	16,266	 	 	 	11,630	 	 	 	4,636	 	  	 	40	% 
	 Percentage of total revenue
	  	 	37.0	% 	 	 	38.1	% 	 				  				 	 	39.2	% 	 	 	43.0	% 	 				  			

 Sales and marketing expenses increased from $3.1 million to $4.6 million or 49% for the three months ended
December 31, 2019 as compared to the equivalent period in the prior year and increased from $11.6 million to $16.3 million or 40% for the fiscal year ended December 31, 2019 as compared to the equivalent period in the prior year.
The increase was due to the Company’s continued focus on growing its subscription revenue in multiple jurisdictions, necessitating an increase in the number of employees and related employee salaries and wages. These additional employees are
required to support our sales expansion in new markets, as well as servicing the growing customer base. We will continue to add staff in this area and incrementally invest in advertising and marketing events resulting in higher sales and marketing
costs for so long as we can efficiently increase our revenue base. Our sales and marketing expenses as a percentage of total revenue decreased from 38.1% to 37.0% for the three months ended December 31, 2018 and December 31, 2019,
respectively, and decreased from 43.0% to 39.2% for the fiscal years ended December 31, 2018 and December 31, 2019, respectively. 
 Our sales and
marketing expenses as a percentage of total revenue will fluctuate quarterly within any given year based on the timing of advertising and marketing events; therefore, expressing sales and marketing expenses as a percentage of total revenue for any
given quarter is not necessarily indicative of annual results. As we grow, these fluctuations in sales and marketing expenses as a percentage of total revenue which are attributable to the fluctuations in the timing of advertising and marketing
events will diminish. Our long term expectation for sales and marketing expense as a percentage of total revenue is to be in the 35% to 40% range. 

  
 11 

 Research and Development Expenses 

 

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	 	2018	 	 	Change	 	  	Change	 	 	2019	 	 	2018	 	 	Change	 	  	Change	 
	 	  	$	 	 	$	 	 	$	 	  	%	 	 	$	 	 	$	 	 	$	 	  	%	 
	 Research and development
	  	 	2,776	 	 	 	1,980	 	 	 	796	 	  	 	40	% 	 	 	8,579	 	 	 	6,612	 	 	 	1,967	 	  	 	30	% 
	 Percentage of total revenue
	  	 	22.6	% 	 	 	24.6	% 	 				  				 	 	20.7	% 	 	 	24.4	% 	 				  			

 Research and development expenses increased from $2.0 million to $2.8 million or 40% for the three months ended
December 31, 2019 as compared to the equivalent period in the prior year and increased from $6.6 million to $8.6 million or 30% for the fiscal year ended December 31, 2019 as compared to the equivalent period in the prior year.
The increase in both period comparatives was due to the Company’s continued focus on maintaining and improving its platform and developing related new products. The majority of the increase in costs related to an increase in employees resulting
in higher salaries and wages and, to a lesser extent, due to a change in the fourth quarter in the policy of the Italian Government with respect to qualification of R&D tax credits resulting in $0.3 million provision reversal. Research and
development expenses will continue to grow as the Company maintains its efforts to keep its product at the leading edge of learning technology and builds new features on the current platform. Our research and development expenses as a percentage of
total revenue decreased from 24.6% to 22.6% for the three months ended December 31, 2018 and December 31, 2019, respectively, and decreased from 24.4% to 20.7% for the fiscal years ended December 31, 2018 and December 31, 2019,
respectively. 
 Share-Based Compensation 
  

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	 	2018	 	 	Change	 	  	Change	 	 	2019	 	 	2018	 	 	Change	 	  	Change	 
	 	  	$	 	 	$	 	 	$	 	  	%	 	 	$	 	 	$	 	 	$	 	  	%	 
	 Share-based compensation
	  	 	408	 	 	 	46	 	 	 	362	 	  	 	787	% 	 	 	659	 	 	 	253	 	 	 	406	 	  	 	160	% 
	 Percentage of total revenue
	  	 	3.3	% 	 	 	0.6	% 	 				  				 	 	1.6	% 	 	 	0.9	% 	 				  			

 Share-based compensation expense increased from $46 to $408 or 787% for the three months ended December 31, 2019 as
compared to the equivalent period in the prior year and increased from $253 to $659 or 160% for the fiscal year ended December 31, 2019 as compared to the equivalent period in the prior year. The increase is primarily due to the additional
stock options and DSUs granted in the fourth quarter of 2019 in association with the IPO. 
 Foreign exchange loss/gain 

 

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	 	2018	 	 	Change	 	  	Change	 	 	2019	 	 	2018	 	 	Change	 	  	Change	 
	 	  	$	 	 	$	 	 	$	 	  	%	 	 	$	 	 	$	 	 	$	 	  	%	 
	 Foreign exchange loss
	  	 	820	 	 	 	284	 	 	 	536	 	  	 	189	% 	 	 	922	 	 	 	775	 	 	 	147	 	  	 	19	% 
	 Percentage of total revenue
	  	 	6.7	% 	 	 	3.5	% 	 				  				 	 	2.2	% 	 	 	2.9	% 	 				  			

 Foreign exchange loss/gain primarily relates to translation of monetary assets and liabilities denominated in foreign
currencies being translated into functional currencies at the foreign exchange rate applicable at the end of each period. The change in foreign exchange loss/gain is primarily attributable to the change in Canadian dollar and Euro compared to the
U.S. dollar for the periods presented. 

  
 12 

 Depreciation and amortization 

 

																																	
	 	  	Three months ended December 31,	 	  	 	 	 	Fiscal year ended December 31,	 	  	 	 
	 	  	2019	 	 	2018	 	 	Change	 	  	Change	 	 	2019	 	 	2018	 	 	Change	 	  	Change	 
	 	  	$	 	 	$	 	 	$	 	  	%	 	 	$	 	 	$	 	 	$	 	  	%	 
	 Depreciation and amortization
	  	 	99	 	 	 	49	 	 	 	50	 	  	 	102	% 	 	 	693	 	 	 	169	 	 	 	524	 	  	 	310	% 
	 Percentage of total revenue
	  	 	0.8	% 	 	 	0.6	% 	 				  				 	 	1.7	% 	 	 	0.6	% 	 				  			

 Depreciation and amortization expense was $99 and $693, respectively for the three and twelve month periods ended
December 31, 2019 compared to $49 and $169 for the comparable periods in 2018. The increase in depreciation and amortization expense is primarily due to the adoption of IFRS 16 accounting standard on January 1, 2019 which requires recognition
of right-of-use assets for all major leases which are subsequently depreciated over the term of the lease. Our depreciation and amortization expense as a percentage of
total revenue increased from 0.6% to 0.8% for the three months ended December 31, 2018 and December 31, 2019, respectively, and increased from 0.6% to 1.7% for the fiscal years ended December 31, 2018 and December 31, 2019, respectively.

 Non-operating items 
  

																																	
	 	  	Three months ended December 31,	 	 	 	 	 	Fiscal year ended December 31,	 	 	 	 
	 	  	2019	 	  	2018	 	  	Change	 	 	Change	 	 	2019	 	  	2018	 	  	Change	 	 	Change	 
	 	  	$	 	  	$	 	  	$	 	 	%	 	 	$	 	  	$	 	  	$	 	 	%	 
	 Finance expense, net
	  	 	89	 	  	 	202	 	  	 	(113	) 	 	 	(56	)% 	 	 	796	 	  	 	666	 	  	 	130	 	 	 	20	% 
	 Loss on change in fair value of convertible promissory notes
	  	 	—  	 	  	 	525	 	  	 	(525	) 	 	 	(100	)% 	 	 	776	 	  	 	2,083	 	  	 	(1,307	) 	 	 	(63	)% 

 Finance expense 
 Finance
expense decreased from $202 to $89 for the three months ended December 31, 2019 as compared to the equivalent period in the prior year. This decrease was due to the repayment of the Credit Facility (as defined below) at the beginning of the
fourth quarter in fiscal 2019. On a year-over-year basis, finance expense increased from $666 to $796 which is primarily due to accretion expense on lease obligations from adoption of IFRS 16 which was partly offset by a decrease in interest expense
relating to financing activities that were repaid with the proceeds from the IPO. 
 Loss on change in fair value of convertible promissory notes

 Loss on change in fair value of convertible promissory notes is related to the change in fair value of the convertible promissory notes being driven
by the increase in value of common shares of the Company. In May 2019, these convertible promissory notes were converted into common shares. There will be no further impact on our results of operations from such convertible promissory notes. 

Selected Annual Information 
  

													
	 	  	2019	 	  	2018	 	  	2017	 
	 	  	$	 	  	$	 	  	$	 
	 Revenue
	  	 	41,443	 	  	 	27,074	 	  	 	17,126	 
	 Net loss for the year
	  	 	(11,914	) 	  	 	(11,651	) 	  	 	(8,240	) 
	 Net loss attributable to equity owners of the Company
	  	 	(11,914	) 	  	 	(11,272	) 	  	 	(7,314	) 
	 Loss per share - basic and diluted
	  	 	(0.49	) 	  	 	(0.52	) 	  	 	(0.43	) 
	 Total assets
	  	 	63,860	 	  	 	13,300	 	  	 	9,502	 
	 Total liabilities
	  	 	32,479	 	  	 	30,076	 	  	 	4,194	 

  
 13 

 Revenue 

For the years ended December 31, 2019 and 2018, revenues were $41.4 million and $27.1 million, respectively. In each fiscal year, the
significant revenue increase was primarily attributable to revenue from new customers, as the number of customers rose from 1,540 as at December 31, 2018 and 1,808 as at December 31, 2019 and the average contract value per customer
increased from approximately $19 as at December 31, 2018, to approximately $26 as at December 31, 2019. Average contract value is calculated as total ARR divided by the number of active customers. Professional services revenue increased by
$1.0 million or 30% in 2019 as compared to 2018. Increase in revenue attributed to professional services is primarily associated with sales of new subscriptions. 

Net loss 
 For the years ended December 31, 2019 and
2018, net loss was $11.9 million and $11.7 million, respectively. In each fiscal year, the increase in net loss was primarily attributable to the increase in operating expenses of $43.0 million and $30.4 million for the years
ended December 31, 2019 and 2018, respectively. The increase in operating expenses for each year presented was consistent with increases in revenue, and was primarily due to higher salaries and benefits related to an increase in headcount,
other operating costs required to support the Company’s growing operations and an increase in consulting and professional fees as a result of the IPO. Net loss in fiscal 2019 and 2018 also increased due to recognition of loss on change in fair
value of convertible promissory notes in the amount of $776 and $2,083, respectively. 
 Total Assets 

Total assets increased $50.6 million or 380% from Fiscal 2019 to Fiscal 2018, with cash and cash equivalents accounting for $42.5 million of the
increase, largely due to the proceeds raised from the IPO. Trade and other receivables increased by $4.0 million reflecting growth in revenue. The Company also recognized
right-of-use assets (“ROU assets”) of $2.4 million and net investment in finance lease of $0.4 million as at December 31, 2019 from the adoption
of IFRS 16 on January 1, 2019. 
 Total Liabilities 

Total liabilities increased $2.4 million or 8% from Fiscal 2019 to Fiscal 2018. The main drivers of the increase was deferred revenue and lease
obligations, increasing $5.3 million and $3.4 million, respectively. The growth in sales of our subscription revenue offering resulted in an increase of deferred revenue while the adoption of IFRS 16 resulted in the lease obligations in
fiscal 2019 related to obtaining ROU assets. Additionally, trade and other payables increased by $2.8 million due to increased expenses incurred with the Company’s growth and employee benefit obligations increased by $0.5 million due
to an increase in the provision and actuarial loss slightly offset by a decrease in payments. These increases were partly offset by a decrease in borrowings of $9.3 million through repayment of the secured debentures and convertible promissory
notes in Fiscal 2019 from IPO proceeds that were outstanding as of December 31, 2018. 
 Quarterly Results of Operations 

The following table sets forth selected unaudited quarterly statements of operations data for each of the eight quarters commencing March 31, 2018 and
ending December 31, 2019. The information for each of these quarters has been prepared on the same basis as the audited annual financial statements for the year ended December 31, 2019, except for the impact of IFRS 16 that was adopted on
January 1, 2019. This data should be read in conjunction with our audited annual financial statements for the year ended December 31, 2019. These quarterly operating results are not necessarily indicative of our operating results for a
full year or any future period. 

  
 14 

  

																																	
	 	  	Three months ended	 
	 	  	December	 	 	September	 	 	June 30,	 	 	March 31,	 	 	December	 	 	September	 	 	June 30,	 	 	March 31,	 
	(In thousands of US dollars,	  	31, 2019	 	 	30, 2019	 	 	2019	 	 	2019	 	 	31, 2018	 	 	30, 2018	 	 	2018	 	 	2018	 
	 except per share data)
	  	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 
	 Revenue
	  	 	12,298	 	 	 	10,587	 	 	 	9,923	 	 	 	8,636	 	 	 	8,050	 	 	 	6,892	 	 	 	6,436	 	 	 	5,697	 
	 Net loss before income taxes
	  	 	(3,139	) 	 	 	(3,293	) 	 	 	(2,336	) 	 	 	(2,537	) 	 	 	(3,160	) 	 	 	(2,114	) 	 	 	(3,448	) 	 	 	(2,930	) 
	 Net loss attributable to equity owners of the Company
	  	 	(3,299	) 	 	 	(3,742	) 	 	 	(2,336	) 	 	 	(2,537	) 	 	 	(3,160	) 	 	 	(2,114	) 	 	 	(3,448	) 	 	 	(2,552	) 
	 Loss per share - basic and diluted
	  	 	(0.12	) 	 	 	(0.16	) 	 	 	(0.10	) 	 	 	(0.11	) 	 	 	(0.14	) 	 	 	(0.09	) 	 	 	(0.15	) 	 	 	(0.14	) 

 Revenue     

Our total quarterly revenue increased sequentially for all periods presented due primarily to increased sales to existing and new customers. The increase in
total revenue was due to increases in both subscription revenues and professional services revenue. We cannot assure you that this pattern of sequential growth in revenue will continue. 

Expenses 
 Total cost of revenue and operating expenses
generally increased sequentially for each period presented. Cost of revenue increased to support the increase in revenue and total operating expenses increase was primarily due to the additional resources such as headcount required to support our
growing business in all areas of the Company as well as higher sales and marketing expenses required to attract additional customers. 
 Liquidity,
Capital Resources and Financing 
 Overview 
 The
general objectives of our capital management strategy are to preserve our capacity to continue operating, provide benefits to our stakeholders and provide an adequate return on investment to our shareholders by selling our platform and services at a
price that is commensurate with the level of operating risk we assume. We thus determine the total amount of capital required consistent with risk levels. This capital structure is adjusted on a timely basis depending on changes in the economic
environment and risks of the underlying assets. We are not subject to any externally imposed capital requirements. 
 Working Capital 

Our primary source of cash flow is revenue from operations, equity capital raises totaling $52.4 million including proceeds, net of underwriting
commissions from our IPO completed on October 8, 2019 and net debt financing through the Credit Facility (as defined below). Our approach to managing liquidity is to ensure, to the extent possible, that we always have sufficient liquidity to
meet our liabilities as they become due. We do so by monitoring cash flow and performing budget-to-actual analysis on a regular basis. 

Working capital surplus as at December 31, 2019 was $30.6 million. On July 25, 2019, the Company entered into a revolving term credit facility
(the “Credit Facility”) with the Toronto-Dominion Bank, which provides for a maximum availability of up to $15 million all of which was available as at December 31, 2019. Immediately upon closing of the Credit Facility,
$7 million was drawn to repay the secured debentures previously issued to certain shareholders of the Company and certain of their affiliates, being Klass.com Subsidiary LLC; Klass Capital Corporation, an affiliate of Klass.com Subsidiary LLC;
Intercap Income Inc., an affiliate of Intercap Equity Inc. and Gresilent Holding Srl, an entity that Claudio Erba beneficially owns and controls or directs. The facility may be drawn in either U.S. or Canadian dollars by way of Canadian prime rate
loans, U.S. base rate loans or LIBOR loans bearing interest at the Canadian prime lending rate plus applicable margin, U.S. base rate plus applicable margin or LIBOR for the interest period plus applicable margin. 

  
 15 

 On October 16, 2019, the Company repaid the full balance of the Credit Facility outstanding of
$7 million from the net proceeds of the IPO. 
 In addition to cash balances including proceeds, net of issuance costs, of $52.4 million from IPO
completed on October 8, 2019, the Credit Facility with the availability of up to $15 million may be drawn to meet ongoing working capital requirements. Our principal cash requirements are for working capital. Given our existing cash and
cash equivalents and the funds available from the Credit Facility, along with net proceeds obtained from our IPO, we believe there is sufficient liquidity to meet our current and short-term growth requirements in addition to our long- term strategic
objectives. 
 Cash Flows 
 The following table
presents cash and cash equivalents as at December 31, 2019 and 2018, and cash flows from operating, investing, and financing activities for the fiscal years ended December 31, 2019 and 2018: 

 

									
	 	  	Fiscal year ended December 31,	 
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Cash and cash equivalents
	  	 	46,278	 	  	 	3,756	 
		  	  
	  
	 	  	  
	  
	 
	 Net cash provided by (used in):
	  				  			
	 Operating activities
	  	 	(4,582	) 	  	 	(2,300	) 
	 Investing activities
	  	 	(366	) 	  	 	(410	) 
	 Financing activities
	  	 	47,367	 	  	 	3,290	 
	 Effect of foreign exchange on cash and cash equivalents
	  	 	103	 	  	 	(185	) 
		  	  
	  
	 	  	  
	  
	 
	 Net increase in cash and cash equivalents
	  	 	42,522	 	  	 	395	 
		  	  
	  
	 	  	  
	  
	 

 Cash Flows Used in Operating Activities 

Cash flows used in operating activities for the fiscal year ended December 31, 2019 were $4.6 million compared    to
$2.3 million for the fiscal year ended December 31, 2018. The increase in cash outflows from operating activities was primarily the result of $2.5 million of additional cash outflow from changes in working capital during the fiscal
year ended December 31, 2019 compared to the equivalent period the year prior. Additionally, as a result of non- cash change in the fair value of the convertible promissory notes, cash flows from
operating activities decreased $1.3 million from Fiscal 2018 to 2019. These outflows were partly offset by increases in non-cash activities including depreciation and amortization of $0.5 million due
to recognition of ROU assets in Fiscal 2019, share- based compensation of $0.4 million due to additional stock options and DSUs granted during Fiscal 2019 and unrealized foreign exchange loss of $0.3 million due to fluctuation foreign
exchange rates. 
 Cash Flows Used in Investing Activities 

Cash flows used in investing activities for the fiscal year ended December 31, 2019 were $0.4 million compared to $0.4 million for the fiscal
year ended December 31, 2018. The slight decrease in cash outflows for investing activities was due to less additions to property and equipment during Fiscal 2019 compared to 2018. 

Cash Flows from Financing Activities 
 Cash flows
from financing activities for the fiscal year ended December 31, 2019 were $47.4 million compared to $3.3 million for the fiscal year ended December 31, 2018. The increase in cash inflows from financing activities of
$43.9 million was mainly due to the closing of our IPO on October 8, 2019 which yielded proceeds of $52.4 million net of issuance costs. This inflow was partly offset by the net repayment of borrowings of $4 million during the
fiscal year. 

  
 16 

 Credit Facility 

On July 25, 2019, the Company secured the Credit Facility from Toronto-Dominion Bank (the “Lender”), which provides for the availability of up
to $15 million (the “Commitment”) of which $15 million was available as at December 31, 2019. The amount available to be drawn under the Credit Facility from time to time is equal to the lesser of (i) the Commitment and
(ii) an amount equal to the trailing one-month consolidated recurring revenue of the Company (“MRR”) multiplied by six multiplied by the trailing 12-month
gross retention rate percentage on MRR (which rate shall not exceed 100%), minus the amount of any statutory prior claims then in existence. The Credit Facility will mature on July 25, 2022 (the “Maturity Date”). The Maturity Date may
be extended for an additional 364 days, at the discretion of the Lender, upon the Company providing written notice to the Lender requesting such an extension. Interest on the drawn facility is set at LIBOR plus 2.75%. The standby fee on the undrawn
balance is 0.50%. 
 Immediately upon closing of the Credit Facility, $7 million was drawn to repay the secured debentures previously issued to certain
shareholders of the Company and certain of their affiliates, being Klass.com Subsidiary LLC; Klass Capital Corporation, an affiliate of Klass.com Subsidiary LLC; Intercap Income Inc., an affiliate of Intercap Equity Inc. and Gresilent Holding Srl,
an entity that Claudio Erba beneficially owns and controls or directs. 
 On October 16, 2019, the Company repaid the full balance of the Credit
Facility outstanding of $7 million from the net proceeds of the IPO. As at December 31, 2019, no further balance has been drawn from the Credit Facility. 

Use of Proceeds from the IPO 
 As a result of the
completed IPO on October 8, 2019, the Company raised net proceeds of $52.4 million. With these proceeds, the Company repaid the full balance of the Credit Facility outstanding of $7 million on October 16, 2019. The remaining
proceeds have been placed in cash and cash equivalents that include short-term investments in highly liquid marketable securities, having a term to maturity of three months or less. The Company’s use of proceeds from the IPO has not changed
from the disclosure set forth in the “Use of Proceeds” section of our Final Prospectus dated October 1, 2019 to the date of this MD&A. 

Contractual Obligations 
 During the fiscal year
ended December 31, 2019, there were no significant changes in the Company’s contractual obligations other than the Credit Facility described above. 

Off-Balance Sheet Arrangements 

We have not entered into off-balance sheet financing arrangements. Except for operating leases not recognized as ROU
assets under IFRS 16, all of our liabilities and commitments are reflected as part of our statement of financial position. From time to time, we may be contingently liable with respect to litigation and claims that arise in the normal course of
operations. 
 See “Change in Accounting Policies” below for more details on adoption of IFRS 16. 

Related Party Transactions 
 We have no related
party transactions, other than those noted in our audited consolidated financial statements, which are summarized below. These related party transactions are with key members of management and directors of the Company, specifically Claudio Erba,
Martino Bagini, Alessio Artuffo, Fabio Pirovano, Francesca Bossi, Jason Chapnik, James Merkur, Steven E. Spooner, Daniel Klass, Kristin Halpin Perry, William Anderson, Klass Capital Corporation, an affiliate of Klass.com Subsidiary LLC and with
Logan Peak Capital Inc., an entity that is beneficially owned, controlled or directed, directly or indirectly, by James Merkur, in respect of compensation for services provided to the Company. Compensation expense for these persons for the years
ended December 31, 2019 and 2018 is as follows: 

  
 17 

									
	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 
	 Salaries and benefits
	  	 	2,057	 	  	 	1,832	 
	 Share-based compensation
	  	 	1,995	 	  	 	241	 
		  	  
	  
	 	  	  
	  
	 
		  	 	4,052	 	  	 	2,073	 
		  	  
	  
	 	  	  
	  
	 

 In May 2019, the Company issued $3 million of additional secured debentures to certain shareholders of the Company and
certain of their affiliates, being Klass.com Subsidiary LLC; Klass Capital Corporation, an affiliate of Klass.com Subsidiary LLC; Intercap Income Inc., an affiliate of Intercap Equity Inc. and Gresilent Holding Srl, an entity that Claudio Erba
beneficially owns and controls or directs. These secured debentures were issued to provide additional financing for the Company’s ongoing operations. 

On July 26, 2019, $7 million was drawn from the Credit Facility to repay all outstanding secured debentures previously issued to certain
shareholders of the Company and certain of their affiliates, being Klass.com Subsidiary LLC; Klass Capital Corporation, an affiliate of Klass.com Subsidiary LLC; Intercap Income Inc., an affiliate of Intercap Equity Inc. and Gresilent Holding Srl,
an entity that Claudio Erba beneficially owns and controls or directs. 
 Financial Instruments and Other Instruments 

Credit Risk 
 Generally, the carrying amount in our
consolidated statement of financial position exposed to credit risk, net of any applicable provisions for losses, represents the maximum amount exposed to credit risk. 

Our credit risk is primarily attributable to our cash and cash equivalents and trade receivables. We do not require guarantees from our customers. Credit risk
with respect to cash and cash equivalents is managed by maintaining balances only with high credit quality financial institutions. 
 Due to our diverse
customer base, there is no particular concentration of credit risk related to our trade receivables. Moreover, balances for trade receivables are managed and analyzed on an ongoing basis to ensure allowances for doubtful accounts, which are
established and maintained at an appropriate amount. 
 We estimate anticipated losses from doubtful accounts based upon the expected collectability of all
accounts receivable, which estimate takes into account the number of days past due, collection history, identification of specific customer exposure and current economic trends. An impairment loss on trade receivables is calculated as the difference
between the carrying amount and the present value of the estimated future cash flow. Impairment losses are charged to general and administrative expense in the consolidated statements of loss and comprehensive loss. Receivables for which an
impairment provision was recognized are written off against the corresponding provision when it is deemed uncollectible. Starting January 1, 2018, impairment losses for trade receivables have been calculated based on the expected credit losses
model instead of historical collection evidence as under the previous standards. 
 The maximum exposure to credit risk at the date hereof is the carrying
value of each class of receivables mentioned above. We do not hold any collateral as security. 
 Foreign Currency Exchange Risk 

We are exposed to currency risk due to financial instruments denominated in foreign currencies. The Company’s primary exposure with respect to foreign
currencies is from U.S. dollar denominated cash and cash equivalents, trade and other receivables, trade and other payables and borrowings in entities whose functional currency is other than U.S. dollars. The net carrying value of these U.S.
denominated balances held in entities with Euro and 

  
 18 

 Canadian dollars as their functional currency as at December 31, 2019 and 2018 presented in U.S.
dollars is as follows: 
  

																	
	 	  	2019	 	  	2018	 
	 	  	Euro	 	  	CAD	 	  	Euro	 	  	CAD	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Cash and cash equivalents
	  	 	110	 	  	 	38,759	 	  	 	155	 	  	 	105	 
	 Trade and other receivables
	  	 	636	 	  	 	2,109	 	  	 	259	 	  	 	1,412	 
	 Trade and other payables
	  	 	(746	) 	  	 	(33	) 	  	 	(356	) 	  	 	(104	) 
	 Borrowings
	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	(9,344	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
		  	 	—  	 	  	 	40,835	 	  	 	58	 	  	 	(7,931	) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 We have not entered into arrangements to hedge our exposure to currency risk. 

Critical Accounting Policies and Estimates 
 The
preparation of our consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We review these
estimates on an ongoing basis based on management’s best knowledge of current events and actions that we may undertake in the future. Actual results could differ from these estimates. Areas requiring the most significant estimates and judgments
are outlined below. Management has determined that we operate in a single operating and reportable segment. 
 Revenue Recognition 

The Company derives its revenues from two main sources: SaaS and professional services revenue, which includes services such as initial project management and
training, integration and custom development. 
 As of January 1, 2018, we implemented the new revenue standard which required revenue to be recognized
in a manner that depicts the transfer of promised services to customers and at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services by applying the following steps: 

 

	 	•	 	 identify the contract with a customer; 

 

	 	•	 	 identify the performance obligations in the contract; 

 

	 	•	 	 determine the transaction price; 

 

	 	•	 	 allocate the transaction price; and 

 

	 	•	 	 recognize revenue when, or as, the Company satisfies a performance obligation. 

Revenue represents the amount the Company expects to receive for products and services in its contracts with customers, net of discounts and sales taxes. The
Company derives revenue from subscription of its product (subscription revenue) comprised of its hosted SaaS and from the provision of professional services including implementation services, technical services and training. Professional services do
not include significant customization to, or development of, the software. 
 The Company recognizes revenue upon transfer of control of products or
services to customers at an amount that reflects the consideration the Company expects to receive in exchange for the products or services transferred. The Company’s contracts with customers often include multiple products and services. The
Company evaluates these arrangements to determine the appropriate unit of accounting (performance obligation) for revenue recognition purposes based on whether the product or service is distinct from some or all of the other products or services in
the arrangement. A product or service is distinct if the customer can benefit from it on its own or together with other readily available resources and the Company’s promise to transfer the good or service is separately identifiable from 

  
 19 

 other promises in the contractual arrangement with the customer.
Non-distinct products and services are combined with other goods or services until they are distinct as a bundle and therefore form a single performance obligation. Subscription revenue and professional
services are generally capable of being distinct for the Company and are accounted for as separate performance obligations. 
 The total consideration for
the arrangement is allocated to the separate performance obligations based on their relative fair value and revenue is recognized for each performance obligation when the requirements for revenue recognition have been met. The Company determines the
fair value of each performance obligation based on the average selling price when each performance obligation is sold separately. 
 Subscription revenue
related to the provision of SaaS is recognized ratably over the contract term as the service is delivered. The contract term begins when the service is made available to the customer. The Company applies the time elapsed method to measure progress
towards complete satisfaction of subscription revenue performance obligations. The time elapsed provides a faithful depiction of the Company’s performance towards complete satisfaction of its performance obligations as a customer simultaneously
receives and consumes the benefits provided by the Company’s performance as the Company performs on a daily basis. 
 Professional services revenue is
recognized over time as services are performed based on the proportion performed to date relative to the total expected services to be performed, which is normally over the first few months of a contract with progress being measured over the
implementation and training period. The Company applies labour hours expended which is an input method to measure progress towards complete satisfaction of professional services revenue performance obligations. Labour hours expended relative to the
total expected labour hours to be expended provides a faithful depiction of the Company’s performance towards complete satisfaction of the professional services performance obligations as it closely reflects the completion of activities based
on budgeted labour hours and the value of the services transferred cannot be measured directly. 
 The timing of revenue recognition and the contractual
payment schedules often differ, resulting in contractual payments being billed before contractual products or services are delivered. Generally, the payment terms are between 30 to 60 days from the date of invoice. The amounts that are billed, but
not earned, are recognized as deferred revenue. When products or services have been transferred to customers and revenue has been recognized, but not billed, the Company recognizes and includes these amounts as unbilled trade receivables. 

The Company has elected to apply the practical expedient to not adjust the total consideration over the contract term for the effect of a financing component
if the period between the transfer of services to the customer and the customer’s payment for these services is expected to be one year or less. 

Multi-element or bundled contracts require an estimate of the stand-alone selling price of separate elements. These assessments require judgment by management
to determine if there are separately identifiable performance obligations as well as how to allocate the total price among the performance obligations. Deliverables are accounted for as separately identifiable performance obligations if they can be
understood without reference to the series of transactions as a whole. In concluding whether performance obligations are separately identifiable, management considers the transaction from the customer’s perspective. Among other factors,
management assesses whether the service or product is sold separately by the Company in the normal course of business or whether the customer could purchase the service or product separately. 

Convertible promissory notes 
 Convertible promissory
notes are classified as fair value through profit or loss. The fair value of convertible promissory notes is based on the underlying value of the equity instruments that the convertible promissory notes are convertible into, which in turn requires
estimates of the inherent value of the Company, considering value indicators including recent rounds of financing and market comparable valuation metrics. 

  
 20 

 Share-based payments 

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the related instruments at the date at which they
are granted. Estimating fair value for share-based payments requires determining the most appropriate valuation model for a grant, which depends on the terms and conditions of the grant. This also requires making assumptions and determining the most
appropriate inputs to the valuation model including the expected life of the share-based payment, volatility and dividend yield. 
 Change in Accounting
Policies 
 Leases 
 The Company has adopted IFRS 16
with an initial adoption date of January 1, 2019. The Company utilized the modified retrospective approach to adopt the new standard and therefore comparative information has not been restated and continues to be reported under IAS 17, Leases
and related interpretations. 
 IFRS 16 specifies how leases will be recognized, measured, presented and disclosed and it provides a single lessee model
requiring lessees to recognize right-of-use assets and lease liabilities for all major leases. The Company’s accounting policy under IFRS 16 is as follows: 

At contract inception, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right of control for the use
of an identified asset for a period of time in exchange for consideration. The Company recognizes a ROU asset and a lease liability at the lease commencement date. The ROU asset primarily relates to office leases and is initially measured based on
the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of the costs to dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less any lease incentives received. The assets are depreciated to the earlier of the end of useful life of the ROU asset or the lease term using the straight-line method as this most closely
reflects the expected pattern of the consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain it will exercise such option. In addition, the ROU asset can be
periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The weighted-
average rate applied is 10%. 
 Lease liability is measured at the amortized cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether
it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the ROU asset unless it has been reduced to zero. The Company has elected
to apply the practical expedient not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less and for leases of low value assets. The lease payments associated with those leases is recognized as
an expense on a straight-line basis over the lease term. 
 When the Company acts as an intermediate lessor, it accounts for its interests in the head lease
and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the ROU asset arising from the head lease, not with reference to the
underlying asset. To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the ROU asset. If this is the case, then the lease is accounted
for as a net investment in finance lease. If not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the ROU asset. 

  
 21 

 The following table reconciles the Company’s operating lease obligations as at December 31, 2018,
as previously disclosed in the Company’s consolidated financial statements, to the lease obligations recognized on initial application of IFRS 16 at January 1, 2019. 

 

					
	(In thousands of US dollars)	  	$	 
	 Aggregate lease commitments as disclosed at December 31, 2018
	  	 	4,181	 
	 Less: Recognition exemption for low-value leases.
	  	 	246	 
	 Less: Recognition exemption for short-term leases.
	  	 	1	 
		  	  
	  
	 
	 Adjusted lease commitments.
	  	 	3,934	 
		  	  
	  
	 
	 Less: Impact of present value.
	  	 	751	 
		  	  
	  
	 
	 Opening IFRS 16 lease liability as at January 1, 2019
	  	 	3,183	 
		  	  
	  
	 

 The cumulative effect of the changes made to the January 1, 2019 consolidated statement of financial position for the
adoption of IFRS 16 is as follows: 
  

													
	(In thousands of US dollars)	  	 December 31,

2018
	 	  	 IFRS 16

adjustments
	 	  	Balance as at
January 1, 2019	 
	 	  	$	 	  	$	 	  	$	 
	 Assets
	  				  				  			
	 Current assets:
	  				  				  			
	 Net investment in finance lease.
	  	 	—  	 	  	 	85	 	  	 	85	 
	 Non-current assets:
	  				  				  			
	 Right-of-use-assets, net.
	  	 	—  	 	  	 	2,406	 	  	 	2,406	 
	 Net investment in finance lease.

Liabilities
	  	 	—  	 	  	 	357	 	  	 	357	 
	 Current liabilities:
	  				  				  			
	 Deferred lease incentives.
	  	 	55	 	  	 	(55	) 	  	 	—  	 
	 Lease obligations.
	  	 	—  	 	  	 	822	 	  	 	822	 
	 Non-current liabilities:
	  				  				  			
	 Deferred lease incentives.
	  	 	243	 	  	 	(243	) 	  	 	—  	 
	 Lease obligations.
	  	 	—  	 	  	 	2,361	 	  	 	2,361	 
	 Equity
	  				  				  			
	 Deficit
	  	 	(48,319	) 	  	 	(38	) 	  	 	(48,357	) 

 Outstanding Share Information 

We are currently authorized to issue an unlimited number of common shares. As of the date hereof, 28,454,200 common shares, 1,692,347 stock options and 36,250
DSUs are issued and outstanding. 
 Foreign Currency Exchange (“FX”) Rates 

Although our functional currency is the Canadian dollar, we have elected to report our financial results in U.S. dollars to improve the comparability of our
financial results with our peers. Reporting our financial results in U.S. dollars also reduces the impact of foreign currency exchange fluctuations in the Company’s reported amounts, as our transactions denominated in U.S. dollars are
significantly larger than Canadian dollars or the Euros. 
 Our consolidated financial position and operating results have been translated to U.S. dollars
applying FX rates outlined in the table below. FX rates are expressed as the amount of U.S. dollars required to purchase one Canadian dollar. FX rates represent the daily closing rate published by the European Central Bank. 

  
 22 

					
	 	  	Consolidated Statement of Financial	 	Consolidated Statement of Loss and
	 	  	Position	 	Comprehensive Loss
	 Period
	  	Current Rate	 	Average Rate
	 Fiscal year ended December 31, 2017
	  	$ 0.7971	 	$0.7701
	 Fiscal year ended December 31, 2018
	  	$ 0.7337	 	$0.7718
	 Fiscal year ended December 31, 2019
	  	$ 0.7696	 	$0.7536

 FX Impact on Consolidated Results 

The following tables have been prepared to assist readers in assessing the FX impact on selected results for the fiscal years ended December 31, 2019 and
2018. 
 Fiscal 2019 
  

																	
	 	  	December 31,	 	  	December 31,	 	  	December 31,	 	  	December 31,	 
	 	  	2018	 	  	2019	 	  	2019	 	  	2019	 
	 	  	(as reported)	 	  	(as reported)	 	  	(FX impact)	 	  	(current period
amounts
applying prior
period FX rate)	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Revenue
	  	 	27,074	 	  	 	41,443	 	  	 	716	 	  	 	42,159	 
	 Cost of revenue
	  	 	5,650	 	  	 	8,261	 	  	 	266	 	  	 	8,527	 
	 Gross profit
	  	 	21,424	 	  	 	33,182	 	  	 	450	 	  	 	33,632	 
	 Operating expenses
	  	 	30,379	 	  	 	42,991	 	  	 	1,105	 	  	 	44,096	 
	 Net loss
	  	 	(11,651	) 	  	 	(11,914	) 	  	 	(674	) 	  	 	(12,588	) 

 Fiscal 2018     
  

																	
	 	  	December 31,
2017	 	  	December 31,
2018	 	  	December 31,
2018	 	  	December 31,
2018	 
	 	  	(as reported)	 	  	(as reported)	 	  	(FX impact)	 	  	(current period
amounts
applying prior
period FX rate)	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Revenue
	  	 	17,126	 	  	 	27,074	 	  	 	(60	) 	  	 	27,014	 
	 Cost of revenue
	  	 	4,353	 	  	 	5,650	 	  	 	(12	) 	  	 	5,638	 
	 Gross profit
	  	 	12,773	 	  	 	21,424	 	  	 	(47	) 	  	 	21,377	 
	 Operating expenses
	  	 	19,654	 	  	 	30,379	 	  	 	(112	) 	  	 	30,267	 
	 Net loss
	  	 	(8,240	) 	  	 	(11,651	) 	  	 	69	 	  	 	(11,582	) 

 Disclosure Controls and Procedures and Internal Controls over Financial Reporting 

In accordance with Item 4.3 of National Instrument 52-109—Certification of Disclosure in Issuers’ Annual
and Interim Filings (“NI 52-109”), the Company has filed an annual certificate in the Form 52-109F1—IPO/RTO relating to its annual information form,
annual financial statements and the accompanying notes and the MD&A for the year ended December 31, 2019 because it is the first financial year that has ended after the Company became a reporting issuer. 

In particular, the certifying officers filing the certificate in the Form 52-109F1—IPO/RTO required under NI 52-109 are not making any representations relating to the establishment and maintenance of: 

  
 23 

	 	•	 	 controls and other procedures designed to provide reasonable assurance that information required to be disclosed
by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

  

	 	•	 	 a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with the Company’s GAAP. 

  
 24

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