On Friday, Canaccord Genuity adjusted its price target for Docebo Inc. (NASDAQ: DCBO) shares, a cloud-based enterprise learning platform, reducing it slightly to $54.00 from the previous $55.00. Despite this change, the firm maintains a Buy rating on the company's stock.
Docebo has recently reported a robust second quarter, surpassing expectations with its third-quarter guidance and upgrading its forecast for the full year.
The company's Annual Recurring Revenue (ARR) grew by 19% year-over-year, and its revenue increased by 22%, demonstrating a positive trajectory from the reduced outlook provided in the first quarter.
The company also reported a Free Cash Flow (FCF) margin of 16%, which is close to achieving the "Rule of 40" benchmark that is often used in the software industry to assess financial performance.
Although the spending environment is currently cautious, especially among small to medium-sized businesses (SMBs), Docebo has indicated that the enterprise segment has stabilized, and larger deals are progressing, albeit with some variability in timing.
An important highlight from Docebo's performance is the approximately 30% revenue growth within its enterprise cohort, which consists of clients with an Annual Contract Value (ACV) greater than $100,000. This indicates a strong uptake of Docebo's offerings in the higher-value enterprise and government sectors.
The valuation of Docebo currently stands at approximately 4.8x calendar year 2025 estimated Enterprise Value to Sales (EV/Sales), which Canaccord Genuity views as an attractive proposition.
This valuation reflects the balance between the company's revenue growth and its profit margins. The firm's reiterated Buy rating and the updated price target are based on a 6x EV/2025 Sales multiple, which remains unchanged.
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