Thinkific Labs Inc. (TSX:THNC) has the potential to “sustain a 70% plus revenue compound annual growth rate over the next three years,” says one analyst
Capital Ideas Media | July 9, 2021 | SmallCapPower: COVID-19 lockdowns have added fuel to an online learning industry that was already growing like wildfire. In fact, Global Market Insights estimates the e-learning market will expand at a compound annual growth rate (CAGR) of more than 21%, exceeding US$1 trillion by 2027.
(Originally published on Capital Ideas Media on May 25, 2021)
This is a big reason why some analysts are so upbeat on newly-listed Canadian company Thinkific Labs Inc. (TSX:THNC).
Thinkific provides software solutions that help entrepreneurs and larger businesses create, market, and sell online courses. The Company, meanwhile, has already tasted success by attracting 24,600 paying customers at the end of 2020, a 126% year-over-year increase.
During its most-recently reported quarter (Q1 2021), Thinkific saw its revenue surge 152% to US$8.3 million.
And, with total gross proceeds of C$184 million raised during its late April Initial Public Offering (IPO), CIBC World Markets analyst Todd Coupland believes the Company “is investing to drive further growth to scale its business,” which he expects will lead to revenue growth of 67% annually over the next three years.
“Its durable business model and highly efficient go-to-market generate predictable and recurring revenue, raising confidence in our conservative forecast,” Mr. Coupland noted.
With this investment in growth, however, Thinkific recorded a first-quarter net loss of US$1.0 million after losing US$1.29 million during Fiscal 2020.
Yet, the CIBC World Markets analyst thinks education and the rise of the creator economy are powerful secular trends that “support a multi-year outlook of high-double-digit growth for Thinkific.”
Taking it one step further, BMO Nesbitt Burns analyst Thanos Moschopoulos called Thinkific, essentially, “a Shopify for creating and selling courses online.”
“Shopify has empowered entrepreneurs and small- to-medium-sized businesses to launch and operate their own e-commerce businesses, without requiring them to have any programming ability and while freeing them from having to sell through a middleman such as Amazon,” he said.
“Similarly, Thinkific allows its customers to deliver and monetize online courses, through an easy-to-use platform that can assist them in finding and retaining an audience, while also allowing them to retain full control of their business, branding and content.”
Mr. Moschopoulos also thinks it’s possible for Thinkific to sustain a 70% plus revenue compound annual growth rate over the next three years, pointing to “its competitive position in a large potential total addressable market, which makes it one of the fastest-growing publicly-traded SaaS companies.”
The analyst added that the launch of its Payments offering will allow it to “more directly profit from its customers’ success and should further support its strong unit economics.”
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