(DCBO-T) C$49.41
Resuming Coverage Following Equity Offering Event
We are resuming coverage following the equity offering. Docebo issued 500,000 shares from treasury for gross proceeds of C$25mm. Intercap and members of the management team have sold 1,000,000 shares in aggregate for gross proceeds of C$50mm.
Impact: NEUTRAL
Minimal impact from the equity offering. Intercap sold ~800k shares, CEO Claudio Erba sold ~110k, and CRO Alessio Artuffo sold 90k shares at C$50.00 per share. We estimate that Intercap has sold only ~5% of its shares, and now owns ~58% of the total outstanding shares and total voting power. Moreover, we estimate that Mr. Erba sold ~7% of his shares, and now owns ~5% of the total outstanding shares and total voting power. As part of the offering, Mr. Erba has also agreed to extend the lock-up period on his remaining shares by an additional 12 months to October 8, 2023. Similarly, Mr. Artuffo has extended his lock-up period by 6-months. The deal increases the common shares outstanding by only 2.1%.
Bolsters its balance sheet to support growth initiatives. We estimate the company will have ~$60.4mm of net cash at the end of Q3/F20. Given the uncertain economic environment, we believe the capital raise was prudent. Docebo now has even more flexibility to continue accelerating its growth initiatives. We expect the company to continue expanding its S&M and R&D teams to accelerate customer wins and product enhancements. We believe that these investments will support the company’s growth in North America and also strengthen its footprint in EMEA. Docebo has not completed any acquisitions since the IPO; however, we believe that the company also has the flexibility to pursue tuck-in acquisitions that would bring new technologies to its product portfolio, although we do not believe anything is imminent.
TD Investment Conclusion
We maintain our BUY rating and C$60.00 target price. We remain confident on Docebo's runway for growth. We believe that the company will continue to benefit from the remote work environment, win large customers, and register strong KPIs.