Digital Transformation And Remote Upskilling Will Expand Global Education Ecosystems

Key Takeaways

• Proprietary AI capabilities and integrated commerce tools position Thinkific to rapidly outpace competitors in feature innovation, revenue growth, and retention within professional education.
  
• Strategic market moves-including acquisitions, partnerships, and international expansion-set the stage for increased earnings power and resilient, diversified recurring revenue streams.
  
• A mix of digital fatigue, rising competition, increased costs, economic headwinds, and regulatory risks threatens Thinkific's growth, profitability, and long-term business stability.

Catalysts

Engages in the development, marketing, and support management of cloud-based platform in Canada, the United States, and internationally.

• Analyst consensus is that AI integration will boost user engagement and operational efficiency, but this may be understated given Thinkific's proprietary, massive dataset and fully AI-driven development culture, which could put it years ahead of competitors in launching differentiated, sticky features-accelerating both revenue and gross margin expansion faster than expected.
  
• Analysts broadly expect upmarket and Plus penetration to lift ARPU and ARR, yet Thinkific's early signs of significant price expansion and the native integration of commerce tools uniquely position it to become the core platform for high-value professional education and certification programs-potentially unlocking even larger, recurring contract values and driving durable improvements in net revenue retention.
  
• The rise of the global knowledge economy and remote upskilling push is accelerating, and Thinkific's market-leading investments in blended learning ecosystems and community-driven courseware position it as the go-to infrastructure for both solo creators and enterprise training, unlocking untapped international revenue streams and significantly increasing ARR.
  
• Thinkific's deliberate capital allocation strategy-with a robust, growing cash balance, resumed share repurchases, and a willingness to swiftly pursue tuck-in acquisitions for technical and go-to-market acceleration-could catalyze rapid inorganic growth, new cross-sell opportunities, and increased earnings power as the market consolidates.
  
• Strategic alliances with leading payments providers and a roadmap for rapid commerce feature innovation position Thinkific at the center of the digital transformation in education transactions, enabling higher take rates, expanded gross GMV penetration, and meaningfully boosting both top-line revenue growth and long-term profitability.

Thinkific Labs Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Thinkific Labs compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Thinkific Labs's revenue will grow by 9.2% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Thinkific Labs will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Thinkific Labs's profit margin will increase from 1.0% to the average CA Software industry of 11.8% in 3 years.
• If Thinkific Labs's profit margin were to converge on the industry average, you could expect earnings to reach $10.9 million (and earnings per share of $0.16) by about August 2028, up from $675.0 thousand today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 27.8x on those 2028 earnings, down from 134.3x today. This future PE is lower than the current PE for the CA Software industry at 50.6x.
• Analysts expect the number of shares outstanding to decline by 0.22% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.53%, as per the Simply Wall St company report.

Thinkific Labs Future Earnings Per Share Growth

Risks

• The eLearning market is facing mounting digital fatigue and a potential shift away from screen-based learning, threatening long-term demand for online courses and potentially leading to stagnating or declining Thinkific revenues.
  
• Thinkific is experiencing increased customer churn, especially among smaller self-serve customers as it transitions upmarket, resulting in a temporary or prolonged drag on ARR growth, net revenue retention, and overall earnings stability.
  
• Intense and rising competition in online course creation is leading to higher customer acquisition costs and marketing spend, while commoditization of core tools risks downward pricing pressure, both of which could depress long-term net margins and profitability.
  
• Widening economic inequality and stagnating disposable incomes could limit the willingness of individuals and small businesses to pay for online education services, which would constrain Thinkific's total addressable market and cap recurring revenue growth.
  
• Growing regulatory scrutiny around data privacy and security, particularly for SaaS providers handling educational and commerce data, could drive materially higher compliance and operational costs, impacting net margins and exposing the company to legal or reputational risks.

Valuation

• The assumed bullish price target for Thinkific Labs is CA$5.01, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Thinkific Labs's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$5.01, and the most bearish reporting a price target of just CA$2.5.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $92.0 million, earnings will come to $10.9 million, and it would be trading on a PE ratio of 27.8x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of CA$1.84, the bullish analyst price target of CA$5.01 is 63.2% 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.