Docebo Inc.

Growth of Over 50% in Revenue and ARR: Docebo Inc. (TSX: DCBO) offers cloud-based learning platform for both internal and external enterprise learning with real time tracking of training results, optimizing time, and reducing costs associated with traditional learning methods. As on 26 May 2020, the market capitalization of the company stood at CAD710.04 million.

Quarterly Performance (For the Period Ended 31 March 2020): During the three months ended 31 March 2020, the company reported third consecutive quarter with year over year growth of over 50% in revenue and annual recurring revenue. This reflects higher average contract values and continued momentum with core mid-sized enterprise markets and divisions of larger global companies. The significant increase in revenue resulted in a growth of 79.1% in gross profit to USD10.7 million. In the same time span, the company generated net income of USD0.7 million as compared to a net loss of USD2.5 million for the comparative period in the prior year. DCBO also reported a healthy balance sheet with cash balance of USD43.2 million. Docebo is now used by 1,938 customers, an increase from 1,596 customers in the pcp.

Quarterly Financial Measures (Source: Company Reports)

What to Expect: The outbreak of COVID-19 has unfolded a higher utilization and interest of the customers in platform. DCBO expects that the current environment will have a lasting impact and hence will promote remote working behaviour, which will further underscore the importance of LMS for every enterprise. It is focusing on executing its strategy to advance the platform, and to remain responsive to the changing needs of customers and manage growth in a capital efficient manner.

Stock Recommendation: The company reported third consecutive quarter of YoY revenue and ARR growth of over 50%. The fallout of COVID-19 is promoting remote working, and thus is benefitting the company from higher utilization in its platform. DCBO expects further importance of LMS for every enterprise. Despite the global pandemic and softer market trends, the company showed financial resilience and is well capitalized to benefit from further growth opportunities. As per TSX, the stock is inclined towards its 52-week high levels, however, still holds the potential for further growth. The stock of DCBO gave a return of 50.37% in the past three months and a return of 68.43% in the last one month. Considering the current trading levels, decent returns in the past three months, financial resilience amidst the pandemic and decent long-term outlook, we recommend our investors to ‘Hold’ the stock at the closing market price of CAD 24.94 on 26 May 2020.

DCBO Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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