Faith And Flourishing AI Platform Will Become Core Infrastructure For A Vast Underserved Ecosystem

Catalysts

About Gloo Holdings

Gloo Holdings operates a technology platform that connects churches, nonprofits and Network Capability Providers across the faith and flourishing ecosystem through infrastructure, AI, marketing and donor engagement services.

What are the underlying business or industry changes driving this perspective?

• The faith and flourishing ecosystem Gloo serves is large, fragmented and historically underserved by modern technology. Gloo 360, along with other platform offerings, is positioned to become core infrastructure for more organizations, which directly supports subscription and services revenue.
• Values aligned AI, including the XRI Global acquisition and tools like the Flourishing AI Christian Benchmark and the planned biblically aligned AI with YouVersion, is aimed at a growing need for trusted AI in faith based contexts. This can support higher value enterprise contracts and premium pricing, helping earnings and net margins.
• The flywheel between churches, frontline organizations and Network Capability Providers, reinforced by acquisitions such as Masterworks, Igniter, Midwestern and Westfall Gold, is increasing cross sell and up sell opportunities across advertising, fundraising and consulting. This can support multi product customer spend and overall revenue growth.
• Growing interest from developers, shown by more than 700 participants in the Gloo AI Hackathon, and the effort to build a broader developer community on the platform, creates potential for more third party applications and use cases on Gloo. This can expand ecosystem usage and drive higher platform and marketplace revenue over time.
• Management focus on integrating acquisitions with clear cost discipline, synergy realization and a stated goal of positive adjusted EBITDA in Q4 2026, combined with a stronger balance sheet after the IPO and debt conversion, is aimed at improving operating leverage. This can support better net margins and earnings quality.

Assumptions

This narrative explores a more optimistic perspective on Gloo Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Gloo Holdings's revenue will grow by 82.8% annually over the next 3 years.
• The bullish analysts are not forecasting that Gloo Holdings will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Gloo Holdings's profit margin will increase from -268.8% to the average US Software industry of 12.7% in 3 years.
• If Gloo Holdings's profit margin were to converge on the industry average, you could expect earnings to reach $52.6 million (and earnings per share of $0.54) by about January 2029, up from $-181.5 million today.
• 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 41.4x on those 2029 earnings, up from -2.8x today. This future PE is greater than the current PE for the US Software industry at 30.8x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.42%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The business model leans heavily on acquisitions across the faith and flourishing ecosystem, and management is already assuming about $40 million of 2026 revenue from incremental deals. If the long term pipeline of targets becomes less attractive, integration proves harder than planned, or acquired brands fail to produce the revenue and cost synergies management is targeting, the contribution from acquired units could fall short and weigh on revenue growth and earnings.
• Gloo is investing aggressively in Gloo 360 and values aligned AI, yet the ecosystem it serves is described as decades behind in technology and highly fragmented. Over the longer term, adoption of next generation AI and infrastructure by churches and nonprofits could be slower or lumpier than expected. This could affect subscription uptake, reduce visibility on the $1 million plus enterprise contracts, and limit improvement in net margins.
• The company is currently loss making on both an adjusted EBITDA and non GAAP net income basis, with cost of revenue at 76% in the quarter and an adjusted EBITDA loss of $19.2 million. Management is targeting positive adjusted EBITDA in Q4 2026 and talks about cost discipline and synergy realization. However, if operating expenses, integration costs, or AI infrastructure spending stay higher for longer, the path to profitability could be delayed and pressure overall earnings.
• The long term thesis assumes Gloo becomes trusted infrastructure for a very large faith focused market, yet this ecosystem is exposed to donor sentiment and seasonality, with management already calling out slower December and January and timing shifts at Masterworks. If donor trends weaken over time or major ministries and nonprofits tighten marketing and fundraising budgets, that would directly affect advertising, donor engagement services, and consulting revenue, and could also compress net margins.
• Gloo’s model depends on a two sided flywheel between churches and Network Capability Providers, with cross sell and up sell between units like Masterworks, Westfall Gold, Midwestern, and Gloo 360. Over the longer term, if competitors offer similar AI and marketing solutions, or if key partners and large customers choose to build in house platforms instead of relying on Gloo, the network effects management is counting on could be weaker than planned. This would limit multi product customer spend and dampen revenue growth and earnings potential.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Gloo Holdings is $17.0, which represents up to two standard deviations above the consensus price target of $13.0. This valuation is based on what can be assumed as the expectations of Gloo Holdings'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 $17.0, and the most bearish reporting a price target of just $10.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $412.3 million, earnings will come to $52.6 million, and it would be trading on a PE ratio of 41.4x, assuming you use a discount rate of 9.4%.
  
• Given the current share price of $6.46, the analyst price target of $17.0 is 62.0% 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.