Shares of Docebo Inc. (NASDAQ: DCBO) plummeted 5.03% in Friday's trading session, despite the company reporting better-than-expected third-quarter results. The sharp decline came as Needham analysts cut their target price for the stock, highlighting potential concerns about the company's growth trajectory.
Docebo, a leading AI-powered learning platform provider, announced its Q3 2025 financial results before the market opened on Friday. The company reported adjusted earnings per share of $0.34, surpassing the analyst consensus estimate of $0.33. Additionally, quarterly sales reached $61.622 million, exceeding the expected $60.939 million and representing an 11.16% increase from the same period last year.
Despite these seemingly positive results, investors appeared to focus on other aspects of the report and external factors: 1. Slowing growth: While Docebo's subscription revenue grew by 10% year-over-year, this marks a deceleration from previous quarters, potentially raising concerns about the company's ability to maintain high growth rates. 2. Margin pressure: Although Adjusted EBITDA improved to $12.4 million from $8.7 million last year, the company's gross profit margin slightly decreased to 80.3% from 81.1% in the comparative period. 3. Needham's target price cut: Shortly after the earnings release, Needham analysts reduced their price target for Docebo from $42 to $38, suggesting a more conservative outlook on the company's valuation.
The market's negative reaction to Docebo's earnings report underscores the high expectations placed on growth stocks in the current economic environment. While the company continues to show progress with steady revenue growth and improved profitability, investors may be looking for more robust signs of acceleration to justify the stock's valuation.
As Docebo navigates the evolving e-learning landscape, the company's ability to maintain its growth momentum and expand its market share will be crucial in regaining investor confidence and reversing the stock's downward trend.