Thinkific Labs: this analyst just chopped his price target

ATB Capital Markets is lowering its expectations for Thinkific Labs (Thinkific Labs Stock Quote, Chart, News, Analysts, Financials TSXV:THNC), with analyst Martin Toner trimming his price target to $3.25 from $3.75 while maintaining a “Sector Perform” rating. The revised forecast reflects a miss on gross margins, weaker long-term revenue visibility and a weaker U.S. dollar.

While Q1/25 results showed some operational improvements, Toner noted that GMV growth remains soft, and the company is still early in its strategic shift toward higher-GMV customers. As a result, he reduced 2026 revenue assumptions and trimmed gross margin estimates.

“We reduce our 2025e gross margin estimates given the 190bp miss this quarter while also reducing our 2026e and long-term revenue assumptions given the lack of visibility into longer-term ARR trends,” he said. “As a result of lower estimates and a weaker USD, we reduce our PT to $3.25 (from $3.75) and maintain our Sector Perform rating.”

Toner estimates Thinkific will generate $3.8-million in adjusted EBITDA on $73.6-million in revenue for fiscal 2025, with expectations for those figures to rise to $4.9-million and $81.2-million, respectively, in 2026.

After the markets closed on May 6, Thinkific reported first-quarter revenue of $17.8-million, up nearly 12% from the same time last year. That result matched ATB’s expectations and landed within the company’s own forecast range. Adjusted EBITDA came in slightly ahead of expectations at $0.9 million, helped by a 2% drop in operating expenses from the previous quarter.

“Management’s Q2/25 revenue guidance of $17.7mm–$18.0mm represents growth of 9%–11% and met consensus of $17.9mm,” Toner said. “On its bottom line, THNC expects adj. EBITDA margin (~5% in Q1) to remain in line with Q1 as management continues to make growth investments. Commerce revenue grew 52% y/y to $3.3mm, driven by improving payments penetration (56% vs. 36% in Q1/24), while Thinkific Plus revenue grew 27% y/y (down from 32% y/y growth last quarter). ARR growth accelerated by 50bp q/q to 6%, though saw upside from one-time factors boosting conversion rates and self-serve ARR. According to management, THNC closed larger and longer-term deals this quarter, with record new bookings. In addition, the company continues to grow profitably, which we also find encouraging.”

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