ARPU(1) rises 12%
year-over-year to $141 per month,
driving Revenue to $14.4 million for
the second quarter
Closing in on profitability: Adjusted
EBITDA(2) improves 83% year-over-year to a
$1.2 million loss
Thinkific
Payments adoption reaches 30% for the quarter, recording
$31.4 million in
GPV(1), a 120% year-over-year increase
Thinkific reports in U.S. dollars and in
accordance with IFRS
VANCOUVER, BC, Aug 1, 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 June
30, 2023.
"Significant improvement in our Adjusted EBITDA(2),
continued success of Thinkific Payments, and increasing customer
count were again key themes this quarter," said Greg Smith, CEO of Thinkific. "As we execute
against our financial and operational priorities, enabling our
Creators' success remains the foundation of everything we do. 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 customers achieve success on Thinkific
Plus."
"Our continued innovation in our commerce tools, including our
Sales Tax Solution and Buy Now, Pay Later; our customizable Branded
Mobile; and the introduction of AI tools - just to name a few -
create an environment for customers to achieve their dreams,"
concluded Mr. Smith.
Second Quarter Financial Highlights
- Revenue increased 14% to $14.4
million compared with the second quarter of 2022, driven
by ARPU(1). The increase in ARPU(1) was
the result of the increasing adoption of Thinkific Payments,
customers finding success on Thinkific Plus, as well as expansion
revenue from features like our mobile apps.
- Gross margin was 75% in the second quarter of 2023, slightly
lower than the 76% recorded for the second quarter last year,
driven by the increase in Thinkific Payments revenue and
non-recurring customer support costs.
- Net loss for the second quarter of 2023 was $2.1 million, compared to a net loss of
$10.1 million in the second quarter
of 2022, a 79% improvement.
- Adjusted EBITDA(2) loss improved for the fifth
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 $1.2 million improved 83% or
$5.8 million over the prior year
driven by revenue growth and efficiency improvements.
- Total Paying Customers(1) grew 3% to 34.3 thousand
in the second quarter of 2023 compared to the prior year.
- ARPU(1) increased 12% to $141 per month compared with $126 per month in the second quarter of
2022.
- ARR(1) grew 6% to $53.3
million from $50.3 million in
the second quarter of 2022, due to improvement in
ARPU(1) and customer count.
- Thinkific Payments continued to be well received by customers,
and Gross Payments Volume ("GPV")(1) was $31.4 million for the second quarter compared to
$14.3 million in the prior year, a
120% increase. GPV(1) is the total dollar value of
transactions processed using Thinkific Payments, and represented
30% of GMV(1) processed during the quarter.
GMV(1) in the second quarter was $106 million.
- Cash and cash equivalents were $85
million at the end of the second quarter of 2023.
"We continue to advance our business objectives, including
closing in on our profitability target," said Corinne Hua, CFO of Thinkific. "At the same
time, we are executing against our strategic priorities, delivering
to our Creators valuable product features that support their
success, including making it easy to get started, helping them earn
more, and providing advanced tools and security for businesses on
Thinkific Plus. It is product and technology features like
these that put us in a very solid position to drive customer
success and top-line growth."
Second Quarter Operational Highlights
- Launched "AI for Creators Report 2023", a comprehensive guide
that explores the intersection of AI and creativity, and provides
insights on how to craft effective AI prompts, using AI to
streamline workflows and automate tasks, and gain insights into the
various AI tools available for Creators.
- Introduced "Thinkific Analytics": New dashboards provide
valuable insights to Creators helping them earn more, and help them
provide more impactful learning experiences. The analytics tool
offers superior performance and usability, including data on
enrollments, orders, revenue, and course engagement.
- Completed the localization of pricing across the United Kingdom and European Union which
removes a barrier to new Creators getting started in these
territories.
- Obtained SOC2 Type 1 cybersecurity compliance certification
through the successful completion of the Service Organization
Control (SOC) 2 Type 1 audit with no findings. Maintaining a robust
security and data privacy system are essential features for
Thinkific's larger customers.
- 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.
Subsequent to Quarter End
- Announced, as part of Thinkific Payments growing suite of
integrated business management and payment solutions, Buy Now, Pay
Later (BNPL) credit options. Working with Stripe, a global
financial infrastructure platform, and providers Affirm, Klarna and
Afterpay, Thinkific's BNPL functionality allows Creators to sell
higher-priced products, and provide their students with more
flexible payment options.
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 third quarter of 2023, the Company expects:
- Revenue of $14.5 million -
$14.7 million; and
- Adjusted EBITDA(2) loss in the range of $0.6 million to $1.2
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
August 1, 2023 to discuss Thinkific's
second 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 August 1, 2023 by
dialing 1.888.390.0541 (US/Canada
toll-free) or 1.416.764.8677 (International/Toronto). The passcode is 458338#. The replay
will expire at 8:59 PM PT
(11:59 PM ET) on August 8, 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 unaudited consolidated financial statements and
accompanying notes, and Management's Discussion and Analysis for
the three months ended June 30, 2023
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 Creator Educators 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 learning products -
from courses to communities - 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, membership and community 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 including product-led growth strategy
through the introduction of additional features to support the
success of our Creators; addressable markets for our solutions;
customer acquisition improvements; the achievement of advances in
and expansion of our offered platform service (defined as
"Thinkific Platform" and "Our Platform" in the 2022 Annual
Information Form); the roll-out, development and success of new
products, features, and services; the 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; and our competitive
position in our industry.
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 and increasing competition 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 Cash Flows
(unaudited)
(expressed in U.S. dollars)
|
June 30,
2023
|
December
31,
2022
|
|
$
|
$
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
84,670,539
|
93,846,091
|
Trade and other
receivables
|
3,747,197
|
2,712,671
|
Prepaid expenses and
other assets
|
4,867,277
|
1,797,108
|
Contract acquisition
assets
|
422,970
|
322,643
|
Total current
assets
|
93,707,983
|
98,678,513
|
|
|
|
Property and
equipment
|
1,166,272
|
1,507,600
|
Lease right-of-use
assets
|
1,240,513
|
2,005,835
|
Contract acquisition
assets
|
781,908
|
660,185
|
Intangible
assets
|
113,902
|
118,275
|
Total
assets
|
97,010,578
|
102,970,408
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
Current
liabilities
|
|
|
Accounts payable and
accrued liabilities
|
4,924,092
|
4,927,349
|
Lease
liabilities
|
545,794
|
443,928
|
Deferred
revenue
|
9,406,462
|
8,238,516
|
Total current
liabilities
|
14,876,348
|
13,609,793
|
|
|
|
Lease
liabilities
|
756,502
|
1,512,180
|
Total
liabilities
|
15,632,850
|
15,121,973
|
|
|
|
Shareholders'
equity
|
|
|
Share
capital
|
147,275,946
|
146,179,189
|
Contributed
surplus
|
8,507,203
|
6,925,869
|
Accumulated other
comprehensive loss
|
(38,113)
|
(38,113)
|
Accumulated
deficit
|
(74,367,308)
|
(65,218,510)
|
Total shareholders'
equity
|
81,377,728
|
87,848,435
|
Total liabilities
and shareholders' equity
|
97,010,578
|
102,970,408
|
|
|
|
|
Three months ended
June
30,
|
Six months ended
June
30,
|
|
2023
|
2022
|
2023
|
2022
|
|
$
|
$
|
$
|
$
|
Revenue
|
14,436,206
|
12,619,987
|
28,529,081
|
24,405,119
|
Cost of
revenue
|
3,638,061
|
2,991,716
|
7,126,553
|
6,144,356
|
Gross
profit
|
10,798,145
|
9,628,271
|
21,402,528
|
18,260,763
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Sales and
marketing
|
5,505,108
|
6,513,131
|
11,030,409
|
12,703,033
|
Research and
development
|
4,930,457
|
7,128,260
|
10,182,809
|
15,077,959
|
General and
administrative
|
3,956,716
|
3,942,481
|
8,410,226
|
9,100,319
|
Restructuring
|
—
|
—
|
3,185,966
|
2,287,885
|
Total operating
expenses
|
14,392,281
|
17,583,872
|
32,809,410
|
39,169,196
|
|
|
|
|
|
Operating
loss
|
(3,594,136)
|
(7,955,601)
|
(11,406,882)
|
(20,908,433)
|
|
|
|
|
|
Other income
(expenses)
|
|
|
|
|
Foreign exchange gain
(loss)
|
505,273
|
(2,408,017)
|
620,461
|
(1,516,058)
|
Finance income
(expense)
|
947,186
|
252,914
|
1,637,623
|
326,878
|
Total other income
(expenses)
|
1,452,459
|
(2,155,103)
|
2,258,084
|
(1,189,180)
|
Net loss and
comprehensive loss
|
|
|
|
|
|
(2,141,677)
|
(10,110,704)
|
(9,148,798)
|
(22,097,613)
|
|
|
|
|
|
Weighted average number
of
common shares
outstanding -
basic and
diluted
|
80,652,067
|
78,396,508
|
79,908,862
|
77,849,653
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
Basic and
diluted
|
$
(0.03)
|
$
(0.13)
|
$
(0.11)
|
$
(0.28)
|
|
|
Six months
ended
June
30,
|
|
|
2023
|
2022
|
|
|
$
|
$
|
Cash from (used
in):
|
|
|
|
Operating
activities
|
|
|
|
Net loss
|
|
(9,148,798)
|
(22,097,613)
|
Items not affecting
cash and cash equivalents:
|
|
|
|
Depreciation and
amortization
|
|
696,708
|
551,166
|
Stock-based
compensation
|
|
2,725,605
|
1,166,701
|
Unrealized foreign
exchange loss
|
|
(632,056)
|
1,553,736
|
Finance
expense
|
|
74,051
|
42,926
|
|
|
|
|
Changes in non-cash
working capital:
|
|
|
|
Trade and other
receivables
|
|
(1,034,526)
|
(723,151)
|
Prepaid expenses and
other assets
|
|
(3,089,121)
|
(577,708)
|
Contract acquisition
assets
|
|
(401,307)
|
(372,499)
|
Accounts payable and
accrued liabilities
|
|
(274,777)
|
926,289
|
Deferred
revenue
|
|
1,167,946
|
1,574,412
|
Cash used in
operating activities
|
|
(9,916,275)
|
(17,955,741)
|
|
|
|
|
Investing
activities
|
|
|
|
Disposal of computer
equipment
|
|
61,960
|
—
|
Investment in property
and equipment
|
|
(3,075)
|
(1,110,398)
|
Investment in
intangible assets
|
|
—
|
(11,986)
|
Cash from (used in)
investing activities
|
|
58,885
|
(1,122,384)
|
|
|
|
|
Financing
activities
|
|
|
|
Operating lease
payments
|
|
(245,434)
|
(266,017)
|
Exercise of stock
options
|
|
207,602
|
240,332
|
Cash used in
financing activities
|
|
(37,832)
|
(25,685)
|
|
|
|
|
Effect of foreign
exchange on cash and cash equivalents
|
|
719,670
|
(1,644,131)
|
Decrease in cash and
cash equivalents
|
|
(9,175,552)
|
(20,747,941)
|
Cash and cash
equivalents, beginning of period
|
|
93,846,091
|
126,054,833
|
Cash and cash
equivalents, end of period
|
|
84,670,539
|
105,306,892
|
Reconciliation from IFRS to Non-IFRS Measures
(unaudited)
(expressed in thousands of U.S. dollars)
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2023
$
|
2022
$
|
2023
$
|
2022
$
|
|
(In thousands of
U.S. dollars)
|
Net loss and
comprehensive loss
|
(2,142)
|
(10,111)
|
(9,149)
|
(22,098)
|
Stock-based
compensation
|
2,021
|
645
|
2,726
|
1,167
|
Depreciation and
amortization
|
354
|
277
|
697
|
551
|
Foreign exchange (gain)
loss
|
(505)
|
2,408
|
(620)
|
1,516
|
Finance
income
|
(947)
|
(253)
|
(1,638)
|
(327)
|
Restructuring costs
(1)
|
—
|
—
|
3,681
|
2,875
|
Adjusted
EBITDA
|
(1,219)
|
(7,034)
|
(4,304)
|
(16,316)
|
(1)
|
Represents employee
compensation for severance amounts for Company wide restructurings
in the first quarters of 2023 and 2022.
|
SOURCE Thinkific Labs Inc.