Partnerships With Accenture And Deloitte Will Expand Global Market Presence

Key Takeaways

• Strategic international expansion and partnerships, particularly in Europe, highlight potential revenue growth by diversifying geographic and market strategies.
  
• New product developments and pricing strategies aim to boost value, increase contract size, and tap into stable government markets for revenue stability.
  
• Delays in FedRAMP certification and regulatory uncertainties could impede Docebo's growth in the U.S. federal market, affecting revenue potential.

Catalysts

Operates as a learning management software company that provides artificial intelligence (AI)-powered learning platform in North America and internationally.

• Docebo's expansion in international markets, particularly their success with system integrators like Accenture in Europe, indicates potential for increased revenue from diversifying their geographic footprint and enhancing their go-to-market strategy beyond North America.
  
• The launch of Docebo's new pricing strategy, moving from a la carte to core bundle pricing, aims to drive higher value conversations and increase deal value. This strategy could lead to a rise in annual contract value (ACV) and improve net margins by aligning pricing more closely with perceived value and monetizing additional capabilities.
  
• The anticipation surrounding Docebo's AI authoring tool highlights its potential to reduce content production costs for customers, thereby strengthening Docebo's value proposition. This could impact revenue positively by expanding customer use cases and adoption rates.
  
• Focus on FedRAMP certification and expansion in the government sector, particularly within State, Local, Education (SLED) markets, could open up new revenue streams and mitigate the risk associated with economic cycles by tapping into stable government contracts.
  
• Enhancing partnerships with strategic players like Deloitte in the learning technology space can accelerate Docebo's enterprise cohort growth, thereby potentially increasing earnings through larger deal sizes and improved market penetration with enterprise clients.

Docebo Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Docebo's revenue will grow by 14.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 8.6% today to 17.2% in 3 years time.
• Analysts expect earnings to reach $54.7 million (and earnings per share of $1.72) by about February 2028, up from $18.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 34.6x on those 2028 earnings, down from 71.2x today. This future PE is lower than the current PE for the CA Software industry at 42.9x.
• Analysts expect the number of shares outstanding to decline by 0.38% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.67%, as per the Simply Wall St company report.

Docebo Future Earnings Per Share Growth

Risks

• The potential delays in obtaining FedRAMP certification could hinder Docebo's ability to fully capitalize on the U.S. federal market, impacting future growth and revenue potential.
  
• Changes in U.S. administration and related regulatory shifts may introduce uncertainties in the government sector, potentially affecting Docebo's revenue from government contracts.
  
• The elongated deal cycles within the enterprise market due to macroeconomic conditions could continue to impact Docebo’s cash flow and delay revenue realization.
  
• While there is optimism in new pricing strategies and partner relationships, the required shift from SMB to larger enterprise clients carries execution risks that could affect revenue growth if not managed effectively.
  
• The ongoing investigation into one of its partners, Carahsoft, by the FBI could lead to reputational or operational risks, potentially impacting sales and revenue earned through that channel.

Valuation

• The analysts have a consensus price target of CA$76.868 for Docebo based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $317.3 million, earnings will come to $54.7 million, and it would be trading on a PE ratio of 34.6x, assuming you use a discount rate of 6.7%.
  
• Given the current share price of CA$60.81, the analyst price target of CA$76.87 is 20.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.