Paying Customer expansion continues, crossing
34,000
Thinkific Payments adoption reaches 26% for
the quarter, recording $29.0 million
in GPV
Profitability in sight; first quarter
Adjusted EBITDA loss improves by 67% year-over-year to $3.1 million
Thinkific reports in U.S. dollars and in accordance with
IFRS
VANCOUVER, BC, May 4, 2023
/CNW/ - Thinkific Labs Inc. ("Thinkific" or the "Company") (TSX:
THNC), a leading cloud-based software platform that enables
entrepreneurs and established businesses of all sizes to create,
market, and sell digital learning products, today announced its
financial results for the quarter ended March 31, 2023.
"Thinkific has made progress on multiple fronts as a result of
our focused and steady execution, including go to market and
product development activities," said Greg
Smith, CEO of Thinkific. "Total Paying Customers grew
for the second consecutive quarter, and we saw improving Adjusted
EBITDA as reductions in our cost structure took effect.
"As we execute against our financial and operational priorities,
enabling our Creators' success remains the foundation of everything
we do," continued Mr. Smith. "This includes making it easier
for Creators to get started and earn their first dollar, providing
tools that allow them to sell more, and supporting our larger
Creators or businesses achieve success with features and support
levels that can be found on Thinkific Plus. Our recent launch of
"Branded Mobile" is a perfect example of helping Creators earn more
and have a bigger impact."
First Quarter Financial Highlights
- Revenue increased 20% to $14.1
million compared with the first quarter of 2022, driven by
year-over-year growth with Creators adopting higher-tier plans, as
well as the continued success of Thinkific Payments.
- Gross margin was 75% in the first quarter of 2023, up from 73%
in the first quarter last year, driven by revenue growth,
infrastructure efficiency and improvement of customer support.
- Net loss for the first quarter of 2023 was $7.0 million, compared to a net loss of
$12.0 million in the first quarter of
2022.
- Adjusted EBITDA(2) loss improved for the fourth
consecutive quarter. This trend is expected to continue with the
Company targeting to exit 2023 with a profitable Adjusted
EBITDA(2) run rate. Adjusted EBITDA(2) loss
of $3.1 million improved 67% or
$6.2 million over the prior year
driven by revenue growth and efficiency improvements.
- Total Paying Customers(1) grew 2% to 34.0 thousand
in the first quarter of 2023 compared to the prior year.
- ARPU(1) increased 16% to $139 per month compared with $120 in the first quarter of 2022, primarily
driven by the increasing adoption of Thinkific Payments and
businesses finding success on Thinkific Plus.
- ARR(1) grew 13% to $52.3
million from $46.4 million in
the first quarter of 2022, due to continuous improvements in
ARPU(1).
- Thinkific Payments continued to be well received by customers,
and Gross Payments Volume ("GPV")(1) was $29.0 million for the first quarter compared to
$11.9 million in the prior year, a
144% increase. GPV(1) is the total dollar value of
transactions processed using Thinkific Payments, and represented
26% of GMV(1) processed during the quarter.
GMV(1) in the first quarter was $113.3 million, which represents the highest
GMV(1) recorded to date.
- Cash and cash equivalents were $89
million at the end of the first quarter of 2023.
"We are at the beginning of a momentum shift in our business,"
said Corinne Hua, CFO of Thinkific.
"This, combined with our cash balance and path to profitability
exiting this year, puts us in a very solid position to stay focused
on our strategic priorities, to drive growth and capitalize on
opportunities as they present themselves."
First Quarter Operational Highlights
- In January, 2023, Thinkific announced its intention to achieve
a positive Adjusted EBITDA(2) run rate exiting 2023. A
significant contributor to improved quarterly Adjusted
EBITDA(2) throughout the year is the reduction in
workforce that aligns the Company's talent with key growth
initiatives, as well as reducing its expense structure combined
with a growing top-line.
- Thinkific released its Digital Learning Trends Report,
highlighting top industry trends that include: the shifting tide
from creator entertainers to creator educators; the emergence of
microlearning as a solution for life-on-the-go; the rise of
community-first digital learning; and the diversification of income
streams offering financial security in uncertain economic
times.
- Thinkific was named one of BC's Top Small & Medium
Employers for the fourth consecutive year by "Canada's Top 100 Employers". Factors that
supported the ranking included the formal hybrid model, open
vacation policy, and the encouragement of ongoing employee
development through in-house programs such as formal mentoring,
leadership development and tuition subsidies.
Subsequent to Quarter End
- Announced new Thinkific Payments features, at Stripe's Annual
Conference, including upcoming products that will make checkouts
faster and will help Creators sell higher ticket education by
providing Creators with Buy Now, Pay Later credit options.
- Launched "Thinkific Analytics": This new dashboard provides
insights to Creators helping them earn more, and provide more
impactful learning experiences. The analytics tool offers superior
performance and usability, with the new dashboard including data on
enrollments, orders, revenue, and course engagement.
- Launched mobile app solutions that enable Creators to reach
their audience anywhere, anytime.
-
- "Thinkific Mobile" is a dedicated Thinkific app that makes
course content and communities more easily available to students on
the device they use the most.
- "Branded Mobile" is a fully customizable mobile app development
solution for Creators who want their own brand, on their own app. A
full-service experience built for them by Thinkific, "Branded
Mobile" is a solution that provides Creators with their own
customizable app for their online courses and communities - all
under the Creator's own brand. This enables Creators to deliver
incredible educational and community experiences that meet their
students exactly where and when they want to learn.
Outlook
Thinkific expects to exit 2023 with a profitable Adjusted
EBITDA(2) run rate, benefiting from both top-line
growth, and a continued reduction in its cost structure.
For the second quarter of 2023, the Company expects:
- Revenue of $14.1 million -
$14.3 million; and
- Adjusted EBITDA(2) loss in the range of $2.0 million to $2.6
million.
Actual results may differ materially from Thinkific's financial
outlook as a result of, among other things, the factors described
under "Forward-Looking Statements" below.
(1) Key Performance
Indicators. See definition in "Key Performance Indicators".
(2) Non-IFRS measure. See "Non-IFRS Measures" and the
reconciliation to the most directly comparable IFRS
measure.
|
Quarterly Conference Call and Webcast Information
A conference call will be held at 2:30 PM
PT (5:30 PM ET) on May 4,
2023 to discuss Thinkific's fourth quarter financial and
operational results. To participate in the call, please dial
1.888.664.6383 (US/Canada
toll-free) or 1.416.764.8650 (International/Toronto). For those unable to participate, a
replay will be available from 4:30 PM
PT (7:30 PM ET) on May 4,
2023 by dialing 1.888.390.0541 (US/Canada toll-free) or 1.416.764.8677
(International/Toronto). The
passcode is 582823#. The replay will expire at 8:59 PM PT (11:59 PM
ET) on May 11, 2023. The
conference call will also be available via webcast on the Investor
Relations section of Thinkific's website at
investors.thinkific.com/events-and-presentations.
Thinkific's audited consolidated financial statements and
accompanying notes, and Management's Discussion and Analysis for
the year ended December 31, 2022 are
available on the Company's website at www.thinkific.com and on
SEDAR at www.sedar.com.
About Thinkific
Thinkific (TSX:THNC) makes it simple for entrepreneurs and
established businesses of any size to scale and generate revenue by
teaching what they know. Our platform gives businesses everything
they need to build, market, and sell digital courses and other
learning products, and to run their business seamlessly under their
own brand, on their own site. Thinkific's 50,000+ active creators
earn hundreds of millions of dollars in direct course sales while
teaching tens of millions of students. Thinkific is headquartered
in Vancouver, Canada, with a
distributed team.
For more information, please visit www.thinkific.com.
Non-IFRS Measures
The information presented within this press release includes
"Adjusted EBITDA" and certain industry metrics. The "Adjusted
EBITDA" is not a recognized measure under International Financial
Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board, does not have a standardized meaning
prescribed by IFRS, and is therefore unlikely to be comparable to
similar measures presented by other companies. Rather, this measure
is provided as additional information to complement those IFRS
measures by providing further understanding of our results of
operations from management's perspective. Accordingly, it should
not be considered in isolation nor as a substitute for analysis of
our financial information reported under IFRS. We also use certain
industry metrics: "Annual Recurring Revenue", "Paying Customers",
"Average Revenue per User", "Gross Merchandise Volume" and "Gross
Payments Volume". These industry metrics are unaudited and are not
directly derived from our financial statements. The non-IFRS
measure and industry metrics are used to provide investors with
supplemental measures of our operating performance and thus
highlight trends in our core business that may not otherwise be
apparent when relying solely on IFRS measures. We also believe that
securities analysts, investors and other interested parties
frequently use non-IFRS measures and industry metrics in the
evaluation of issuers. Our management also uses the non-IFRS
measure and industry metrics in order to facilitate operating
performance comparisons from period to period, to prepare annual
operating budgets and forecasts and to determine components of
management compensation.
"Adjusted EBITDA" is defined as net income (loss) excluding
taxes, interest, depreciation and amortization (or EBITDA), as
adjusted for stock-based compensation, foreign exchange loss
(gain), net finance (income) expense, and restructuring costs.
Adjusted EBITDA does not have a standardized meaning under IFRS and
is not a measure of operating income, operating performance or
liquidity presented in accordance with IFRS, and is subject to
important limitations.
Please refer to "Reconciliation to IFRS from Non-IFRS measures"
in this press release for more information.
Key Performance Indicators
We monitor the following industry metrics to help us evaluate
our business, measure our performance, identify trends affecting
our business, formulate business plans and make strategic
decisions: "Annual Recurring Revenue" or "ARR", "Average Revenue
per User" or "ARPU", "Gross Merchandise Volume" or "GMV",
"Paying Customers" and "Gross Payments Volume" or "GPV". Our key
performance indicators may be calculated in a manner different than
similar key performance indicators used by other companies.
"Paying Customers" is the count of unique Thinkific
subscribers on paid plans as of period end, excluding all trial and
free customers, and including both monthly and annual
subscribers.
"ARPU" is the average monthly
Revenue per Paying Customer in the quarter. ARPU is calculated by
taking the average Revenue for each month in the quarter and
dividing this by the average number of Paying Customers for the
same quarter.
"ARR" is the annual value of all
current Paying Customer subscriptions at the end of the period,
with the number of Paying Customers multiplied by 12 times the
average monthly subscription plan fee in effect on the last day of
that period.
"GMV" is the total dollar value of
all transactions of course sales, membership subscriptions, or
other products or services by our Creators, facilitated through our
platform during the period, net of refunds. GMV does not include
transactions for course sales, membership subscriptions, or other
products or services processed by APIs or certain apps where the
Company does not record the transaction value.
"GPV" is the total dollar value of
transactions processed using Thinkific Payments in the period, net
of refunds and inclusive of sales taxes where applicable. GPV does
not represent revenue earned by us. We believe that growth in GPV
is an indicator of success of our Creators in monetizing their
learning products and of our Thinkific Payments offering and is a
positive growth driver of revenue and ARPU.
Forward-Looking Statements
This press release includes forward-looking statements and
forward–looking information within the meaning of applicable
securities laws in Canada.
Forward-looking statements and information may relate to our future
financial outlook and anticipated events or results and may include
information regarding our financial position, business strategy,
growth strategies, addressable markets, budgets, operations,
financial results, taxes, dividend policy, plans and objectives.
Particularly, information regarding our expectations of future
results, performance, achievements, prospects or opportunities or
the markets in which we operate is forward-looking information. In
some cases, forward-looking information can be identified by the
use of forward-looking terminology such as "plans", "targets",
"trends", "directional indicator", "indicator", "future success",
"expects", "is expected", "opportunity", "budget", "scheduled",
"estimates", "outlook", "forecasts", "projection", "scalability",
"trajectory", "prospects", "strategy", "intends", "anticipates",
"adoption", "believes", or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"would", "might" or, "will", "occur" or "be achieved", and similar
words, or the negative of these terms and similar terminology. In
addition, any statements that refer to expectations, intentions,
projections or other characterizations of future events or
circumstances contain forward-looking information. Statements
containing forward-looking information are not historical facts but
instead represent management's expectations, estimates and
projections regarding future events or circumstances.
Forward-looking statements in this press release include, but are
not limited to statements regarding our financial position,
management's ability to effectively invest, increase business
efficiencies necessary to build and maintain a sustainable cost
structure; business strategy, budgets, operations, investments,
financial results, expected improvements to, and achieving
breakeven Adjusted EBITDA, plans and objectives around growth and
profitability; industry trends; growth in our industry; our growth
rates and growth strategies; addressable markets for our solutions;
customer acquisition improvements; advances in and expansion of our
offered platform service; the development, success and
effectiveness of new products, features, and services;
effectiveness of our marketing efforts; expectations regarding our
revenue and the revenue generation potential of our platform and
other products; and Thinkific's commitment towards strong corporate
governance, the expected benefits from the collective experience of
the company's board directors, their experience and skill set as a
member of the board of directors and the expected benefits that
board directors may bring to position the Company for greater
success and value creation in the future.
Forward-looking statements and information are based on our
opinions, estimates and assumptions that, while considered by the
Company to be appropriate and reasonable as of the date of this
press release, are subject to known and unknown risks,
uncertainties, and other factors that may cause the actual results,
level of activity, performance or achievements to be materially
different from those expressed or implied by such forward-looking
information, including, but not limited to, the Company's ability
to execute on its growth strategies; the impact of changing
conditions in the global e-learning market in which the Company
operates; the Company's ability to keep pace with technological and
marketplace changes including, but not limited to the ethical,
legal and regulatory implications in the advancement and potential
use of artificial intelligence; fluctuations in currency exchange
rates and volatility in financial markets; changes in attitudes,
financial condition and demand of our target market; developments
and changes in applicable laws and regulations; and such other
factors discussed in greater detail under the "Risk Factors"
section of our Annual Information Form ("AIF").
Forward-looking statements and information are necessarily based
upon estimates and assumptions, which are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the Company's control and
many of which, regarding future business decisions, are subject to
change. Assumptions or factors underlying the Company's
expectations regarding forward-looking statements or information
contained in this press release include, among others: our ability
to continue investing in infrastructure to support our growth and
brand recognition; our ability to continue maintaining, innovating,
improving and enhancing our technological infrastructure and
functionality, performance, reliability, design, security and
scalability of our Platform (as defined in our AIF); our ability to
maintain existing relationships with Creators (as defined in our
AIF) and to continue to expand our Creators' use of our platform;
our ability to acquire new Creators; our ability to maintain
existing material relationships on similar terms with service
providers, suppliers, partners and other third parties; our ability
to build our market share and enter new markets and industry
verticals; the continued development, rollout, integration and
success of new products, features, and services; our ability to
retain key personnel; our ability to maintain and expand geographic
scope; our ability to execute on our expansion and growth plans;
our ability to obtain and maintain existing financing on acceptable
terms; currency exchange and interest rates; the impact of
competition; the changes and trends in our industry or the global
economy; and the changes in laws, rules, regulations, and global
standards. The foregoing list of assumptions cannot be considered
exhaustive.
If any of these risks or uncertainties materialize, or if the
opinions, estimates or assumptions underlying the forward-looking
information prove incorrect, actual results or future events might
vary materially from those anticipated in the forward-looking
information provided herein. The opinions, estimates or assumptions
referred to above are described in greater detail in "Summary of
Factors Affecting our Performance" and in the "Risk Factors"
section of our 2022 Annual Information Form, which is available
under our profile on SEDAR at www.sedar.com, should be considered
carefully by prospective investors. Although we have attempted to
identify important risk factors that could cause actual results to
differ materially from those contained in forward-looking
information, there may be other risk factors not presently known to
us or that we presently believe are not material, that could also
cause actual results or future events to differ materially from
those expressed in such forward-looking information. There can be
no assurance that such information will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such information. No forward-looking statement is a
guarantee of future results. Accordingly, you should not place
undue reliance on forward-looking information, which speaks only as
of the date made. The forward-looking information contained in this
press release represents our expectations as of the date specified
herein, and are subject to change after such date. However, we
disclaim any intention or obligation or undertaking to update or
revise any forward-looking information whether as a result of new
information, future events or otherwise, except as required under
applicable securities laws.
All of the forward-looking information contained in this press
release is expressly qualified by the foregoing cautionary
statements. Readers are cautioned that any such forward-looking
information should not be used for purposes other than for which it
is disclosed.
THINKIFIC LABS INC.
Condensed Interim Consolidated Statements of Financial Position
(unaudited)
(expressed in U.S. dollars)
|
March 31,
2023
|
December 31,
2022
|
|
$
|
$
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
88,765,936
|
93,846,091
|
Trade and other
receivables
|
2,883,961
|
2,712,671
|
Prepaid expenses and
other assets
|
1,723,645
|
1,797,108
|
Contract acquisition
assets
|
373,975
|
322,643
|
Total current
assets
|
93,747,517
|
98,678,513
|
|
|
|
Property and
equipment
|
1,382,473
|
1,507,600
|
Lease right-of-use
assets
|
1,372,974
|
2,005,835
|
Contract acquisition
assets
|
729,585
|
660,185
|
Intangible
assets
|
116,088
|
118,275
|
Total
assets
|
97,348,637
|
102,970,408
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
Current
liabilities
|
|
|
Accounts payable and
accrued liabilities
|
5,454,539
|
4,927,349
|
Lease
liabilities
|
530,244
|
443,928
|
Deferred
revenue
|
8,872,781
|
8,238,516
|
Total current
liabilities
|
14,857,564
|
13,609,793
|
|
|
|
Lease
liabilities
|
882,383
|
1,512,180
|
Total
liabilities
|
15,739,947
|
15,121,973
|
|
|
|
Shareholders'
equity
|
|
|
Share
capital
|
146,653,227
|
146,179,189
|
Contributed
surplus
|
7,219,207
|
6,925,869
|
Accumulated other
comprehensive loss
|
(38,113)
|
(38,113)
|
Accumulated
deficit
|
(72,225,631)
|
(65,218,510)
|
Total shareholders'
equity
|
81,608,690
|
87,848,435
|
Total liabilities
and shareholders' equity
|
97,348,637
|
102,970,408
|
|
|
|
THINKIFIC LABS INC.
Condensed Interim Consolidated Statements of Loss and
Comprehensive Loss (unaudited)
(expressed in U.S. dollars)
|
Three months
ended
March 31 ,
|
|
2023
|
2022
|
|
$
|
$
|
Revenue
|
14,092,875
|
11,785,132
|
Cost of
revenue
|
3,488,492
|
3,152,640
|
Gross
profit
|
10,604,383
|
8,632,492
|
|
|
|
Operating
expenses
|
|
|
Sales and
marketing
|
5,525,301
|
6,189,902
|
Research and
development
|
5,252,352
|
7,949,699
|
General and
administrative
|
4,453,510
|
5,157,838
|
Restructuring
|
3,185,966
|
2,287,885
|
Total operating
expenses
|
18,417,129
|
21,585,324
|
|
|
|
Operating
loss
|
(7,812,746)
|
(12,952,832)
|
|
|
|
Other income
(expenses)
|
|
|
Foreign exchange gain
(loss)
|
115,188
|
891,959
|
Finance income
(expense)
|
690,437
|
73,964
|
Total other income
(expenses)
|
805,625
|
965,923
|
Net loss and
comprehensive loss
|
|
|
|
(7,007,121)
|
(11,986,909)
|
|
|
|
Weighted average number
of
common shares
outstanding -
basic and
diluted
|
79,157,399
|
77,296,722
|
|
|
|
Loss per
share
|
|
|
Basic and
diluted
|
$
(0.09)
|
$
(0.16)
|
THINKIFIC LABS INC.
Condensed Interim Consolidated Statements of Cash Flows
(unaudited)
(expressed in U.S. dollars)
|
|
Years
ended
December
31,
|
|
|
2023
|
2022
|
|
|
$
|
$
|
Cash from (used
in):
|
|
|
|
Operating
activities
|
|
|
|
Net loss
|
|
(7,007,121)
|
(11,986,909)
|
Items not affecting
cash and cash equivalents:
|
|
|
|
Depreciation and
amortization
|
|
342,862
|
274,637
|
Stock-based
compensation
|
|
704,424
|
521,742
|
Unrealized foreign
exchange loss
|
|
(118,537)
|
(884,918)
|
Finance
expense
|
|
23,283
|
6,735
|
|
|
|
|
Changes in non-cash
working capital:
|
|
|
|
Trade and other
receivables
|
|
(171,290)
|
65,471
|
Prepaid expenses and
other assets
|
|
63,987
|
379,053
|
Contract acquisition
assets
|
|
(205,326)
|
(235,661)
|
Accounts payable and
accrued liabilities
|
|
389,986
|
482,378
|
Deferred
revenue
|
|
634,265
|
311,471
|
Cash used in
operating activities
|
|
(5,343,467)
|
(11,066,001)
|
|
|
|
|
Investing
activities
|
|
|
|
Investment in property
and equipment
|
|
(3,075)
|
(637,547)
|
Investment in
intangible assets
|
|
—
|
(11,986)
|
Cash used in
investing activities
|
|
(3,075)
|
(649,533)
|
|
|
|
|
Financing
activities
|
|
|
|
Operating lease
payments
|
|
(101,610)
|
(132,744)
|
Exercise of stock
options
|
|
200,156
|
40,402
|
Cash from (used in)
financing activities
|
|
98,546
|
(92,342)
|
|
|
|
|
Effect of foreign
exchange on cash and cash equivalents
|
|
167,841
|
857,121
|
(Decrease) increase in
cash and cash equivalents
|
|
(5,080,155)
|
(10,950,755)
|
Cash and cash
equivalents, beginning of period
|
|
93,846,091
|
126,054,833
|
Cash and cash
equivalents, end of period
|
|
88,765,936
|
115,104,078
|
Reconciliation from IFRS to Non-IFRS Measures
(unaudited)
(expressed in thousands of U.S. dollars)
|
Three months
ended
March
31,
|
|
2023
$
|
2022
$
|
Net loss and
comprehensive loss
|
(7,007)
|
(11,987)
|
Stock-based
compensation
|
704
|
522
|
Depreciation and
amortization
|
343
|
275
|
Foreign exchange (gain)
loss
|
(115)
|
(892)
|
Finance
income
|
(690)
|
(74)
|
Restructuring costs
(1)
|
3,681
|
2,875
|
Adjusted
EBITDA
|
(3,085)
|
(9,281)
|
(1)
Represents employee compensation for severance amounts for
Company wide restructurings in the first quarters of 2023 and
2022
|
SOURCE Thinkific Labs Inc.