Thinkific Labs: Buy, Sell or Hold?

ATB Capital Markets analyst Gavin Fairweather lowered his target on Thinkific Labs (Thinkific Labs Stock Quote, Chart, News, Analysts, Financials TSX:THNC) to C$2.50 from C$3.00, maintaining a “Sector Perform” rating after first-quarter results met guidance but showed flat revenue and weaker EBITDA.

“While we continue to see several avenues for upside in the stock given the current valuation, we remain on the sidelines as we look for AI product releases, improving Plus momentum and overall accelerating growth and operating leverage,” Fairweather said in his May 5 report.

Thinkific reported revenue of $18.7-million, up 4.7% year-over-year and near the low end of guidance. Subscription revenue rose 4% to $15.2-million, while commerce revenue increased 8% to $3.5-million as payments penetration improved to 64.4%. Adjusted EBITDA was negative $0.5-million, compared with positive $0.9-million a year earlier, mainly because of higher R&D spending.

Fairweather said revenue has flatlined as Thinkific’s upmarket shift continues, with Plus growth offsetting modest self-serve declines. Thinkific Plus revenue rose 12% to $5.1-million, below the company’s roughly 30% target, while self-serve revenue increased 2% to $13.6-million, helped by payments.

“Given the R&D acceleration, it appears some added costs we thought were temporary will stick longer than previously expected, taking our C26 EBITDA expectations lower,” the analyst said.

Thinkific guided second-quarter revenue of $18.2-million to $18.5-million, implying one to 2% growth and a possible sequential decline, with Adjusted EBITDA expected to remain negative.

Fairweather expects Thinkific to post Adjusted EBITDA of negative $1.2-million on revenue of $74.4-million in fiscal 2026, improving to positive $2.1-million on revenue of $77.7-million in fiscal 2027.

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