ATB “cautiously optimistic” about Thinkific Labs

ATB Capital Markets analyst Martin Toner maintained his “Sector Perform” rating and $3.00 price target on Thinkific Labs (Thinkific Labs Stock Quote, Chart, News, Analysts, Financials TSX:THNC) following the company’s third-quarter 2025 results, saying he remains cautious until evidence of a “growth and margin inflection” becomes more visible.

In a Nov. 12 update, Toner said Thinkific’s Q3 results were largely in line, with revenue of US$18.6-million, up 7.6% year over year and slightly ahead of consensus at US$18.2-million. Adjusted EBITDA of US$1.1-million beat the consensus estimate of US$0.9-million, while gross margin of 72.9% fell short of expectations and declined about 300 basis points year over year.

“We are cautiously optimistic around a growth re-ignition as a result of these initiatives, but we think THNC remains a ‘show-me story,’” Toner said.

Vancouver-based Thinkific provides a software platform that allows creators and businesses to build, sell, and manage online courses, communities, and memberships.

The company’s subscription revenue rose 5% year over year to US$15.1-million, while its Commerce segment, which allows creators to process payments directly through the Thinkific platform, grew 23% to US$3.4-million. Gross payment volume processed through Thinkific Payments climbed to US$70.2-million, a 33% increase year over year, representing 61% penetration, up from 59% in the prior quarter.

Toner said the performance “slightly beat revenue expectations but came up short on gross margins,” noting that Thinkific has been repositioning its offerings toward larger and more successful creator and enterprise customers. Annual recurring revenue grew 5% in the quarter, down from 6% growth previously, while incremental ARR totalled US$0.4-million.

Adjusted EBITDA remained positive for the ninth consecutive quarter, which Toner described as a constructive sign of cost discipline. Operating expenses fell sequentially to US$13.8-million from US$14.1-million, even as revenue rose 5%.

“We like that THNC remains profitable as it shifts its opex spend towards attracting its target customer cohorts; management believes that over time, this strategy will help drive higher GMV growth, an acceleration in commerce revenue, and more efficient opex spend for the company,” Toner said.

Thinkific guided for Q4/25 revenue between US$18.4-million and US$18.7-million, implying about 6% year-over-year growth at the midpoint, with continued positive Adjusted EBITDA. Toner said management’s focus remains on moving upmarket, targeting customers “more likely to succeed” on the platform and to generate higher average revenue per user.

To support this, Thinkific continues to expand features designed to increase ARPU and adoption of Thinkific Commerce. It recently rolled out an AI Teaching Assistant and plans to add additional AI-driven tools in 2026 as part of a 12–16 month product roadmap focused on community building, B2B selling, and advanced commerce functionality.

Toner said the initiatives should strengthen Thinkific’s position in the creator economy, but noted that growth in gross merchandise volume remains muted at 3.5% year over year, albeit improving from prior quarters. He said a clear re-acceleration in core revenue momentum remains central to rebuilding investor confidence.

Thinkific ended the quarter with US$51.7-million in cash and no debt, generating US$0.6-million in free cash flow, which Toner said provides flexibility to invest while maintaining profitability.

Following the results, Toner lowered his full-year fiscal 2026 revenue forecast from US$79.8-million to US$77.9-million, reflecting slower subscription growth and modest margin pressure, and reduced his 2026 Adjusted EBITDA estimate from US$4.5-million to US$3.8-million.

He now expects Thinkific to generate US$3.7-million in Adjusted EBITDA on US$73.3-million in revenue in fiscal 2025, improving to US$3.8-million on US$77.9-million in 2026.

Toner’s $3.00 price target is based on ATB’s discounted cash flow valuation, which applies a 15.2% discount rate and 3% terminal growth rate, implying a 6.1x EV/EBITDA multiple and a 1.1x EV/revenue multiple.