Results: Thinkific Labs Inc. Confounded Analyst Expectations With A Surprise Profit

It's been a pretty great week for Thinkific Labs Inc. (TSE:THNC) shareholders, with its shares surging 13% to CA$2.70 in the week since its latest quarterly results. It looks like a credible result overall - although revenues of US$18m were what the analysts expected, Thinkific Labs surprised by delivering a statutory profit of US$0.01 per share, instead of the previously forecast loss. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the most recent consensus for Thinkific Labs from six analysts is for revenues of US$73.1m in 2025. If met, it would imply a modest 6.3% increase on its revenue over the past 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$0.022 per share in 2025. Before this latest report, the consensus had been expecting revenues of US$72.9m and US$0.037 per share in losses. Although the revenue estimates have not really changed Thinkific Labs'future looks a little different to the past, with a very promising decrease in the loss per share forecasts in particular.

See our latest analysis for Thinkific Labs

The average price target held steady at CA$4.06, seeming to indicate that business is performing in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Thinkific Labs, with the most bullish analyst valuing it at CA$5.52 and the most bearish at CA$3.26 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Thinkific Labs' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.5% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 14% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Thinkific Labs.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Thinkific Labs' revenue is expected to perform worse than the wider industry. The consensus price target held steady at CA$4.06, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Thinkific Labs going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Thinkific Labs that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.