Docebo (TSX:DCBO) is a TSX tech stock that went public in late 2019. In fewer than five years, Docebo stock has returned 226% to shareholders, easily outpacing the broader index. Priced at just over $50 per share, Docebo stock is valued at a market cap of $1.6 billion and trades 55% below all-time highs. Let see if it can reach $200 and continue to deliver inflation-beating returns to shareholders.

An overview of Docebo

Founded in 2005, Docebo operates an enterprise-facing e-learning platform. In recent years, e-learning solutions have gained popularity as companies look at engaging ways to upskill their employee base. Docebo expects corporate training and learning to remain a key challenge for businesses as they focus on core operations.

Docebo initially operated an open-source model and was installed directly on customer servers. More than a decade ago, it transitioned towards a cloud-based SaaS (software-as-a-solutions) platform, which allowed it to benefit from recurring cash flow across business cycles.

Moreover, Docebo was among the first e-learning companies to integrate artificial intelligence (AI) capabilities into its products. It expects AI to transform corporate e-learning, providing the company with a competitive advantage as its clients continue to benefit from data-driven insights and improve workforce efficiencies.

Strong revenue growth

Docebo reported a total revenue of US$51.4 million in the first quarter (Q1) of 2024, an increase of 24% year over year. Subscription sales stood at US$47.9 million accounting for 93% of total sales, helping the company to surpass US$200 million in annual recurring revenue.

Docebo is now reporting consistent profits and reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of US$7.5 million, indicating a margin of 14.5%, up from just 5.3% in the year-ago period. Its free cash flow was higher at US$9.2 million, indicating a margin of almost 18%, compared to a free cash outflow of US$2.3 million last year.

Docebo ended Q1 with a customer base of 3,833, up from 3,506 last year. Its average contract value also rose from US$47,034 to US$52,492 in the last 12 months. An expanding customer base and rising customer spending should help Docebo maintain its top-line growth going forward.

Doceboâs asset-light business should help it benefit from operating leverage and expand adjusted earnings per share (EPS) from $0.11 in 2023 to $0.99 in 2024 and $1.47 in 2025.

Analysts remain bullish on DCBO stock and expect shares to close to 40% in the next 12 months.

The Foolish takeaway

For Docebo stock to surge to $200, it has to gain 300% from current levels. Bay Street forecasts Doceboâs earnings per share to expand to $1.47 per share in 2025. If we assume earnings to grow by a rate of 22% between 2025 and 2030, its EPS should increase to $5 per share by the end of the forecast period. For the tech stock to trade at $200, it would then be priced at 50 times forward earnings.

I believe that Docebo might trade close to $200 per share by the end of the current decade if its earnings growth is sustained over 25% going forward.

The post Could Docebo Stock Reach $200? appeared first on The Motley Fool Canada.