Docebo (DCBO) Reports
Shares of Docebo (DCBO) opened lower this morning after the company delivered a Q1 beat after the close yesterday but lowered full-year guidance. During this earnings season we’ve seen a pattern emerge where if a company doesn’t deliver a clean beat, shares get pounded. In a lot of cases those stocks have begun to come back (when the story isn’t totally wiped out) and I think this will be the case with DCBO, so keeping at buy.
The fly in the ointment impacting guidance is (1) a significant customer (nine-year relationship with +$1 million in annualized recurring revenue) loss due to M&A (acquirer has its own LMS system), (2) a little softness in the small- and mid-sized customer segment (enterprise and government space still strong) and (3) foreign exchange fluctuations.
Aside from these headwinds, things are still looking good with Docebo. One of the big attractions here is that Docebo is delivering profitable growth and significant FCF. Nothing on that front is changing.
We’ll adapt Morgan Stanley’s view that this is a “speed bump” and that the big-picture investment thesis holds.
Details.
Revenue grew 24% to $51.4 million ($300,000 beat) while EPS of $0.23 grew from $0.09 in the year-ago quarter and beat by $0.06. Free Cash Flow (FCF) of $9.2 million beat by about $2 million. Annualized Recurring Revenue (ARR) in Q1 was up 22% to $201 million but was about $3 million shy of expectations (partly from the lost customer).
Turning to guidance, revenue is now seen up 14.5% to 18.5% versus consensus of 22%. On this morning’s conference call (8:00 a.m.ET) management said the reduction is allocated roughly one-third each to the lost customer, macro/SMB and foreign exchange. Despite the revenue outlook, EBITDA margin guidance is steady at about 15%, implying a 6% improvement over last year. Buy the dip. BUY
Copyright © 2024. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.
