March 11, 2021 Earnings Update
DOCEBO, INC.
A Step Change In ARR With Record New Customer Wins
Our Conclusion
Docebo posted solid Q4 results, at the top end of its pre-announced range.
Annual Recurring Revenue (ARR) growth accelerated both Q/Q and Y/Y,
with no signs of a post-COVID slowdown. Looking forward, we expect ARR
to continue to grow +50% Y/Y as the company benefits from a full year of
recent contract wins, the ramp up its new OEM partner, and growth from
customer expansion – with Cisco the most recent marquee customer to
expand its use of Docebo. We retain our Outperformer rating on Docebo,
with our price target going to $83 (prior $98) as we value the company in line
with Canadian SaaS peers.
Key Points
FQ4/20 Results: Docebo reported revenue of $18.8 million, at the upper end
of a pre-announced range of $18.3 million - $18.8 million (consensus $18.3
million) and EBITDA of $0.5 million (consensus breakeven). Gross margins
in the quarter were 84.1%.
Net Dollar Retention Rate Up Y/Y: Docebo provided its annual net dollar
retention rate, which was 108%, up from 105% last year. We view this
increase in net retention as positive given the pandemic and the fact that
Docebo has been churning out smaller, low-value customers. We believe the
improvement in net dollar retention can be attributed to better crosssell/upsell at existing customers and better internal processes on customer
management and churn that were implemented in late 2019.
OEMs A Significant Opportunity: We see OEMs as a significant
opportunity for Docebo, with Ceridian currently contributing the majority of
OEM revenue but the company recently integrating U.K. HCM provider MHR.
MHR started ramping up in late 2020. We see the potential for additional
HCM partners to be added and see additional opportunities with other OEM
partnerships, including ERP and CRM providers.
NASDAQ Listing Provides Opportunities: During the quarter, Docebo
completed its initial public offering on the NASDAQ for net proceeds of $155
million. We view the U.S. IPO as improving name recognition in the U.S.
among customers and investors as well as providing more comprehensive
compensation plans. We expect Docebo to use the proceeds to continue to
invest in the business, with the company developing both content creation
and analytics offerings. We expect that Docebo may also look at selective
acquisitions to expand its LMS offering or enter additional markets.
Changes To Our Model: We have increased our revenue growth
expectations post Q4, and are expecting 51% revenue growth in 2021 and
41% growth in 2022. We have also reduced our EBITDA expectations slightly
given NASDAQ listing fees and are expecting a negative 1% EBITDA
margins in 2021 and breakeven in 2022.