Today's News

Thinkific's paying customer expansion continues, crossing 34,000

Thinkific Payments adoption reaches 26% for the quarter, recording $29.0 million in GPV

Company says profitability in sight; first quarter Adjusted EBITDA loss improves by 67% year-over-year to $3.1 million

Vancouver, BC, May 25, 2023--(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 digital learning products, today announced its financial results for the quarter ended March 31, 2023.

Thinkific reports in U.S. dollars and in accordance with IFRS.

Greg Smith, Co-Founder and CEO, Thinkific

"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(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.

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.

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.

THINKIFIC LABS INC.
Condensed Interim Consolidated Statements of Financial Position (unaudited)
(expressed in U.S. dollars)

THINKIFIC LABS INC.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (unaudited)
(expressed in U.S. dollars)

THINKIFIC LABS INC.
Condensed Interim Consolidated Statements of Cash Flows (unaudited)
(expressed in U.S. dollars)

Reconciliation from IFRS to Non-IFRS Measures (unaudited)
(expressed in thousands of U.S. dollars)