The S&P 500 index has entered bull market territory and has surged 26% from 52-week lows. In recent months, tech stocks part of the artificial intelligence, or AI, space have experienced a stellar comeback. Research reports expect the total addressable market for AI to surpass US$2 trillion by the end of the decade, providing companies with enough room to drive revenue growth over time.
Here is one such tech stock you should keep on your watchlist to benefit from outsized gains in the upcoming bull market.
Docebo stock is trading 57% below all-time highs
Shares of Docebo (TSX:DCBO) are down 57% from all-time highs, despite surging 11.5% year to date. Valued at a market cap of $1.64 billion, Docebo stock has more than tripled in market value since its IPO (initial public offering) in mid-2019.
Founded in 2005, Docebo aims to disrupt the corporate e-learning segment. In recent years, e-learning solutions are part of a company’s core strategy due to the work-from-home trend and the introduction of several tools across business verticals.
Docebo expects to meet this rising demand, as corporate training remains an important challenge for enterprises. The company first launched its platform as an open-source model, which could be installed on corporate servers directly. But in 2012, it shifted to a cloud-based SaaS (software-as-a-service) platform model, allowing Docebo to benefit from predictable cash flows across business cycles.
It was among the first organizations to integrate AI with e-learning to transform the corporate digital learning segment. Docebo primarily aims to equip its clients with AI-powered, data-driven insights, which will enhance a learner’s overall experience and improve the skillsets of workforces effectively.
Is Docebo stock a buy or sell?
Docebo has increased its revenue from US$41.4 million in 2019 to US$143 million in 2022, indicating a compound annual growth rate of 51%. While still unprofitable, Docebo should benefit from economies of scale, as the company continues to reinvest in expansion.
For instance, it ended 2022 with gross margins of over 80%, allowing Docebo to report an operating loss of US$6.92 million compared to a loss of US$13 million in 2021.
In the first quarter (Q1) of 2023, it reported a net income of US$3.2 million, or US$0.10 per share, compared to a loss of US$1.8 million, or $0.05 per share.
Subscription sales account for 94% of total revenue. Moreover, in Q1 of 2023, its annual recurring revenue stood at US$165 million, an increase of 28% year over year.
Docebo ended the March quarter with 3,506 customers, up from 2,947 customers in Q1 of 2022. Its average contract value has increased from US$43,875 to US$47,034 in this period, which indicates an increase in customer spending.
Its notable wins in Q1 include a large European-based transportation and logistics solutions company with a presence in 16 countries. Vimeo, which is one of the most widely used video experience platforms globally, also chose Docebo for the professional development of employees.
Analysts expect Docebo to end 2024 with $294 million in sales and adjusted earnings of $0.65 per share. So, DCBO stock is priced at 5.6 times forward sales and 77 times forward earnings, which is steep. But analysts remain bullish and expect shares to surge almost 40% in the next 12 months.
