CIBCTHINKIFIC LABS, INC.
Strong Q2, Even As COVID Bump Subsides
Our Conclusion
Thinkific’s Q2 results and guidance for Q3 were largely in line with expectations. Q2 benefited from customer growth and ARPU expansion. While on track to reach its business plan, growth decelerated to pre-pandemic levels as economies opened up. The Q3 guidance implies 63% revenue growth, in line with pre-pandemic rates, and compares to our three-year forecast of 65%. Given planned go-to-market investments and full launch of integrated Thinkific Payments in 2022, we expect our forecast will be achieved. Thinkific’s shares are attractive and we believe investors should further add to positions on any weakness.
Our price target of C$20 is based on 18x our EV/F2022E Sales of $66MM as the primary valuation method. Our secondary valuation method is EV to Gross Margin and based on 25x (prior 23x) our EV/F2022E gross margin of $48MM.