Thinkific Labs is still undervalued, National Bank says

After a second quarter that was largely inline with the street’s expectations, National Bank Financial analyst Richard Tse remains bullish on Thinkific Labs (Thinkific Labs Stock Quote, Chart, News, Analysts, Financials TSX:THNC).

On August 1, Thinkific Labs reported its Q2, 2023 results. The company lost $2.14-million on revenue of $14.4-million, a topline that was up 14 per cent over the same period last year.

“Significant improvement in our adjusted EBITDA, continued success of Thinkific Payments and increasing customer count were again key themes this quarter,” CEO Greg Smith said. “As we execute against our financial and operational priorities, enabling our creators’ success remains the foundation of everything we do. This includes making it easier for creators to get started and earn their first dollar, providing tools that allow them to sell more, and supporting our larger customers achieve success on Thinkific Plus. Our continued innovation in our commerce tools, including our sales tax solution and buy now, pay later; our customizable branded mobile; and the introduction of AI tools — just to name a few — create an environment for customers to achieve their dreams.”

Tse says THNC is making steady strides.

“Thinkific remains uniquely positioned in its course creator/learning market with a notable growth runway that’s fuelled by ARPU drivers –like Thinkific Payments, its App Store and separately an expanded Partnership Network. At 0.6x EV/S on F23E, the risk-to-reward profile continues to look attractive. ”

Vancouver-based Thinkific creates cloud-based software that allows entrepreneurs and businesses to create, market and sell online courses.

In a research update to clients August 1, Tse maintained his “Outperform” rating and $3.00 price target on Thinkific Labs, implying a return of 50 per cent at the time of publication.

Tse thinks Thinkific will post an Adjusted EBITDA loss of $5.4-million on revenue of $58.7-million in fiscal 2023. He expects those numbers will improve to EBITDA of $1.3-million on a topline of $67.0-million the following year.