Should you sell your Thinkific Labs stock?

ATB Capital Markets analyst Gavin Fairweather says Thinkific Labs (Thinkific Labs Stock Quote, Chart, News, Analysts, Financials TSX:THNC) is showing early signs of better Plus execution and margin improvement, but he wants more evidence before becoming more constructive.

In an Aug. 6 update, Fairweather maintained his “Sector Perform” rating on Thinkific and lowered his target to $2.25 from $2.50. His target is based on eight times calendar 2027 EBITDA.

“While consolidated growth and margins remain far from optimized, we are seeing early signs of underlying revenue strengthening and margin improvement which if maintained can drive a more meaningful financial inflection, in time,” Fairweather said.

Thinkific reported Q2 revenue of $18.6-million, up 2.8% year-over-year and ahead of both Fairweather’s $18.5-million estimate and guidance of $18.2-million to $18.5-million.

Subscription revenue rose 2.5% to $15.2-million, while Commerce revenue increased 4.0% to $3.4-million. Adjusted EBITDA was $273,000, ahead of Fairweather’s forecast for a $660,000 loss and guidance for a 2% to 5% EBITDA burn.

Plus revenue grew 14% year-over-year to $5.3-million, helped by better sales productivity, higher win rates and recent platform improvements, including HIPAA compliance, accessibility, collateral management and certification features.

Fairweather estimates Plus ARR rose about 5% sequentially, with 30 to 35 new logos and stronger retention. Q2 wins included a Top 25 U.S. bank and Ironman.

Self-serve revenue fell 1% year-over-year as churn and a shift in marketing spend toward Plus weighed on results. Management’s goal is to keep self-serve flat to modestly down, helped by pricing, packaging and more targeted marketing.

For Q3, Thinkific guided for revenue of $18.6-million to $18.9-million and Adjusted EBITDA margin of 2% to 5%.

Fairweather said Plus momentum and cost controls could support revenue growth of 5% to 7% in calendar 2027 if execution continues. He also expects profitability to improve as one-time AI investments fade and efficiencies appear across R&D, onboarding and customer service.

“We are encouraged by building Plus momentum, the accelerating pace of R&D and improved profitability,” Fairweather said.

But the analyst said one quarter is too early to call a trend, and self-serve churn remains a risk to the expected financial inflection.

Fairweather expects Thinkific to generate Adjusted EBITDA of $1.6-million on revenue of $75.1-million in fiscal 2026, improving to Adjusted EBITDA of $5.9-million on revenue of $78.0-million in fiscal 2027.

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