Today's News

Annual revenue up 81% to $38.1 million, with ARR growth of 43% to $43.8 million
Thinkific Payments represents 6% of GMV for the quarter, having launched in early November

Vancouver, BC, February 28, 2022--(T-Net)--Thinkific Labs Inc. (TSX: THNC), a leading cloud-based software platform that enables entrepreneurs and established businesses of all sizes to create, market, and sell online learning products, today announced its financial results for the quarter and year ended December 31, 2021.

Greg Smith, Co-Founder and CEO, Thinkific

"Thinkific continues to execute against its business strategy, including product-led growth and innovation," said Greg Smith, Co-Founder and CEO. "In 2021, we launched the Thinkific App Store, Thinkific Payments, as well as continued to deliver on our promise to Creators, helping them build the businesses of their dreams. This, coupled with growth across all of our key performance indicators, underscores the engagement and connectivity we have with our Creators throughout the knowledge economy.

"The opportunity in front of us is large and growing, and we are well positioned to distinguish ourselves through innovative solutions for our Creators, to maximize their business success," concluded Mr. Smith.

Fourth Quarter Financial Highlights

"The launch of Thinkific Payments was an important milestone in our business," said Corinne Hua, CFO of Thinkific. "Not only do we continue to support our Creators by enabling them to spend less time on administration to focus on teaching, our Thinkific Payments customers can also use Order Bumps to upsell and cross sell customers within Performance Checkout, aligning our success with that of our Creators.

"As we look forward, we expect launches of future products will improve Creator adoption, grow our ARPU, and solidify Thinkific as the Platform of choice for the Knowledge Economy," concluded Ms. Hua.

• Total Paying Customers grew 32% to 32.3 thousand in Q4'21.
• ARPU increased 9%, to $114 compared with $105 in Q4'20, driven by the movement of existing customers to higher paid plans, new Thinkific Plus customers, and adoption of Thinkific Payments.
• ARR grew 43% to $43.8 million from $30.7 million in Q4'20, as we continued to attract new Creators to our Platform, and existing Creators upgraded to higher tier plans.
• GMV grew by 22% compared to Q4'20, expanding to $105 million, largely driven by the success of our customers selling learning products on our platform.
• The launch of Thinkific Payments in early November was well received. Gross Payments Value(1), which is the total value of GMV processed using Thinkific Payments, for the quarter was $6.4 million. This represented 6% of GMV processed during the quarter.
• Revenue increased 49% to $10.8 million compared with Q4'20, driven by the continued growth in total Paying Customers, and increasing ARPU.
• Gross Margin of 74% was down from 79% in Q4'20, primarily due to additional employee-related support costs to enhance the success of our customers, and to support the Q1'22 expansion of live chat to all Freemium customers in their first 30 days.
• Net loss for the quarter was $9.4 million, compared to a net loss of $0.4 million in Q4'20. The increase in net loss reflects an increase in expenditures across the Company to support our growth strategy.
• Adjusted EBITDA loss of $8.7 million was driven primarily by the competitive hiring market, and investments in Sales & Marketing (S&M) and Research & Development (R&D), as we continued to invest in building our platform, increasing awareness in the market, and building the team to deliver on our growth objectives.

Fourth Quarter Operational Highlights

• Completed rollout of Thinkific Payments to all Creators across the U.S. and Canada. Thinkific Payments, which was built to help our Creators sell more, and spend less time on administration, saw a strong adoption rate among new Creators. We saw 6% of GMV being processed through Thinkific Payments in the fourth quarter and expect this number to reach 10% in Q1 2021.
• Delivered significant advancements to support Thinkific Payments customers' efforts to sell more with the launch of Performance Checkout and Order Bumps.
• Saw strong gains by Creators as they embraced Black Friday and Cyber Monday to drive unprecedented enrollments. Creators saw the number of people who enrolled in their courses and learning products nearly double compared to the same period last year.

Fiscal Year 2021 Financial Highlights

• Total Paying Customers grew by 32% to 32.3 thousand. Growth was driven by the strength of the Thinkific Platform and user experience, growing brand awareness and increasing awareness of the Knowledge Economy as a way to build and extend existing businesses.
• ARPU grew by 9% to $114, driven by movement of existing customers to higher paid plans and new Thinkific Plus customers.
• ARR grew by 43% to $43.8 million, driven by growth in Paying Customers and higher ARPU.
• GMV grew 50% year over year, largely driven by the success of our customers selling learning products on our platform in 2021.
• Revenue increased 81% to $38.1 million, driven by growth in total Paying Customers and an expansion in ARPU.
• Gross margin of 77% was down from 79%, primarily on increased employee-related costs to support our growing customer base, including the roll out of live chat to all Paying Customers, and the expansion of our support offering to drive customer success.
• Net loss of $26.4 million compared to prior year loss of $1.3 million reflects rising expenses as we execute the Company's growth strategy.
• Adjusted EBITDA loss of $19.5 million compared to prior year loss of $0.4 million was driven primarily by increased investments in R&D, S&M and headcount increases across the organization, as we executed the business' growth plan.

Full Year 2021 Operational Highlights

• Executed on our strategy to be the platform of choice for Creators by broadening our feature set and product offerings, including:
• Completed rollout of Thinkific Payments to all Creators across the U.S. and Canada. Thinkific Payments, built to help our Creators sell more and spend less time on administration, saw a growing adoption rate among new Creators.
• Delivered significant advancements to help Thinkific Payments customers sell more with the launch of Performance Checkout and Order Bumps.
• Launched the Thinkific Plus Portal, which enables Plus Customers to manage multiple sites in one dashboard; provides a new site page interface to make it easier for Creators to manage pages in their Thinkific websites; and upgraded core technologies.

• Strengthened our partner ecosystem through major initiatives including:
• The Thinkific App Store launched in May 2021, and includes apps that solve tangible course creator needs, particularly in the Learning Experience and Selling & Conversion categories, as well as apps from well-known brands such as Zoom, Google Analytics, Mailchimp and ActiveCampaign. The Thinkific App Store allows Partners, such as agencies and developers, to create apps that extend our Platform's capabilities, increasing the value and functionality for our Creators, and attracting new Creators to Thinkific.

• Continued to grow our brand awareness and attract new customers through our sales and marketing investments, which included:
• 20,000 entrepreneurs registered for Amplify 2021, our free online conference focused on supporting the success of Thinkific's Creators.
• Third Annual 'Think in Color' Summit, held in July, attracted thousands of entrepreneurs and small and medium business participants. A speaker lineup of 100% people of color delivered personal insights on all aspects of creating, marketing, and scaling online courses and digital product-based businesses.
• Saw strong gains by Creators as they embraced Black Friday and Cyber Monday to drive unprecedented enrollments. Creators saw the number of people who enrolled in their courses and learning products nearly double compared to the same period last year.

• Increased the strength and depth of the executive team and were recognized for our strong culture and commitment to building an exceptional team at Thinkific:
• Strategic appointments of Henk Campher as Chief Marketing Officer, and Chris McGuire as Chief Technology Officer.
• Ranked #2 on the 2021 List of Best Workplaces (100-999 employees) by the Great Place to Work® Institute, recognizing Thinkific's commitment to its people, who have seen them show incredible resilience and innovation while demonstrating core values like 'Succeed Together', 'Learn and Grow', and 'Strive for Equality'.

• Successfully completed the initial public offering on the Toronto Stock Exchange in April 2021. Becoming a public company marked a new level of growth for Thinkific, expanding brand awareness and access to capital needed to accelerate product innovation to help businesses build, grow and thrive in knowledge commerce.

Highlights Subsequent to Year End

• Continue to strengthen the Board with the appointment of Steve Krenzer to the Board of Directors.
• Enhancements designed to help our Thinkific Payments customers sell more were introduced to all Thinkific Payments customers in the first quarter and include Order Bumps, Subscription and Installment Options, and a Coupons feature. Following the successful launch of Thinkific Payments in North America, we introduced a private release to customers in the UK, Australia and New Zealand.
• Amplify 2022, Thinkific's annual virtual event that brings together top creator minds in knowledge commerce, was held in January. This year's event generated significant buzz across the knowledge commerce industry, with over 25,000 digital creators registered. The event drove considerable engagement with the Thinkific platform, with double the uptake of Amplify 2022's core promotional offer compared to 2021.

Outlook

Thinkific is at the centre of the knowledge economy, and gives businesses everything they need to build, market, and sell online courses and other learning products, and to run their business seamlessly under their own brand, on their own site.

In 2021, Thinkific achieved growth across all our KPIs, driven by the continued adoption of its platform, and customers finding success with their learning products.

Our expectations for the first quarter of 2022 are:

• revenue of $11.6 - $11.8 million, representing year-over-year growth of 40% - 42%
• adjusted EBITDA loss in the range of $10.2 million to $10.8 million.

In 2022 and beyond, Thinkific believes its growth will also be fueled by:

• our large and growing TAM,
• broadening and deepening our ecosystem,
• the launch of new products,
• increasing adoption of Thinkific Payments, as well as
• increased effectiveness in sales and marketing.

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.

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 online 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 earned 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 and growing team.

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 Value". 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 gain (loss), net finance expense, and transaction-related expenses. 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 Value" 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 GMV processed through Thinkific Payments.