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Docebo is headed to $75, says Laurentian

Look for strong organic growth ahead from Canadian e-learning platform Docebo (Docebo Stock Quote, Charts, News, Analysts, Financials TSX:DCBO), according to Laurentian Bank Securities analyst Nick Agostino. In a Wednesday preview of Docebo’s upcoming quarter, Agostino reiterated a “Buy” rating and C$75.00 target price on the stock, saying the company is on track for positive EBITDA by the end of the year.

Toronto-based Docebo has a SaaS-based, proprietary Learning Management System (LMS) with five supporting modules. The company uses artificial intelligence to create course content and track user progress, with the platform aimed at both the small and medium-sized business market as well as enterprise clients. Docebo currently has business in 74 countries worldwide supporting over 40 different languages on its LMS.

The company is expected to report its second quarter 2022 financials on August 11 prior to the market open. Docebo last reported in May where its Q1 featured revenue growth of 47 per cent to $32.1 million, with subscription revenue making up the bulk of it at $29.1 million. The company had a net loss of $7.0 million for the quarter or a loss $0.21 per share. (All figures in US dollars except where noted otherwise.)

Docebo showed its growth execution in its customer numbers which grew to 2,947 by the end of the first quarter compared to 2,333 a year earlier, while its average contract value went from $35,739 to $43,875 over the same period.

“Docebo is at the forefront of a long secular growth trend driven by companies using learning technologies to solve mission critical challenges. We see this macro trend creating a prolonged demand opportunity that is enabling employees, customers and other stakeholders to drive favourable business outcomes,” said CEO and Founder Claudio Erba in the company’s first quarter press release.

For the upcoming Q2, Agostino is forecasting revenue of $36.2 million for a 41.1 per cent year-over-year organic growth rate, which would be below Docebo’s longer-term track record of over 50 per cent organic growth, the analyst noted. EBITDA is expected to land at negative $904,000.

“Our forecast is supported by an Average Contract Value (ACV) of $45.7K, up 21.5 per cent year-over-year supported by growing outbound activity and by new client wins that in Q1 delivered an ACV of >$100K in the Enterprise segment, with an ending customer count of 3,106 (up 25.0 per cent year-over-year), which includes an estimated 159 new clients,” Agostino wrote.

“The addition of new sales partners/expanding OEM relationships, pick-up in recovering verticals (e.g. travel and hospitality) as economies re-open, steady demand, growing in-bound interest, expanding geographical presence (Germany/Australia) and new modules support our projections/Key Performance Indicators,” he said.

Agostino said Docebo’s balance sheet remains strong, estimating net cash at the Q2 end of $195.6 million, leaving the company well-positioned to be active in M&A to strengthen its market share, with Agostino noting the recent Skillslive acquisition in January as an example.

Docebo was an early winner over the pandemic as the market took to online learning platforms during lockdowns and work- and learn-from-home environments. The stock went from about C$17 to start 2020 to as high as C$117 by September 2021 before starting to pull back. Currently, DCBO is trading around the C$40 mark. At press time, Agostino’s C$75.00 target represented a projected one-year return of 86.1 per cent.

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