Strong Second Quarter 2021 Financial Results Revenue of $9.1 Million, with ARR Growth of 81% to $38.1 Million
Continuing to execute against strategy to be the platform of choice for Course Creators by broadening feature set and product offerings, including the Thinkific App Store
Thinkific reports in U.S. dollars and in accordance with IFRS
VANCOUVER, BC, Aug. 10, 2021 /PRNewswire/ - 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 online courses, today announced its financial results for the three and six months ended June 30, 2021.
"By delivering growth across all our key metrics in the second quarter, including an increase of over 80% in ARR, and 68% in Paying Customers, we continue to execute against our strategy," said Greg Smith, Co-Founder and CEO of Thinkific. "I am particularly pleased with this strong performance and outlook given the evolving behaviours of people as we see restrictions related to COVID lift.
"We believe the growth of Thinkific and our industry is in its early innings. Our large and growing addressable market combined with the strength of our platform as the core operating system for Course Creators continues to drive confidence in our significant long-term growth opportunities," continued Mr. Smith. "The introduction of the Thinkific App Store and Thinkific Payments enhance the functionality available to Course Creators to help their businesses succeed, as well as drive our growth through the expansion of Paying Customers and ARPU."
| US $ (unless otherwise noted) | Second Quarter
2021 | Second Quarter
2020 | %
Change |
| Paying Customers (1) | 29.2 thousand | 17.4 thousand | 68 | % |
| Average Revenue Per User ("ARPU") (2) | $ | 107 | $ | 100 | 7 | % |
| Annual Recurring Revenue ("ARR") (3) | $ | 38.1 | million | $ | 21.1 | million | 81 | % |
| Gross Merchandise Volume ("GMV") (4) | $ | 102.5 | million | $ | 69.1 | million | 48 | % |
| Revenue | $ | 9.1 | million | $ | 4.5 | million | 101 | % |
| Gross margin | 76% | 77% | (1) | % |
| Adjusted EBITDA (5) | $ | (4.0) | million | $ | (0.3) | million | 1412 | % |
| Net loss | $ | (5.3) | million | $ | (0.4) | million | 1276 | % |
| (1) | "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. |
| (2) | "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. |
| (3) | "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. |
| (4) | "GMV" is the total dollar value of all transactions of course sales, membership subscriptions, or other products or services by Course 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. |
| (5) | Non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure. |
"Our second quarter results underscore the strength of our business," stated Corinne Hua, CFO of Thinkific. "Consistent with our outlook, we continue to increase investments in scaling our business, building our brand in the marketplace and delivering a market leading platform for Course Creators. We believe this will fuel our future growth, and enable us to achieve our mission to make it simple for entrepreneurs and established businesses to scale and generate revenue by teaching what they know."
Second Quarter Financial Highlights
- Paying Customers grew by 68% to 29,200 compared to the second quarter of 2020. We believe that the growth is driven by the strength of the Thinkific platform and user experience, growing brand awareness, and increasing popularity of online learning.
- ARPU increased by 7% to $107 per month, compared to the second quarter of 2020, primarily due to subscription plan upgrades from existing Paying Customers, as well as some new Paying Customers choosing to subscribe to higher-tier plans.
- ARR grew by 81% to $38.1 million year-over-year, benefiting from ARPU and Paying Customers growth.
- GMV expanded by 48% to $102.5 million year-over-year.
- Revenue was $9.1 million, an increase of 101% compared to the second quarter of 2020, primarily due to an increase in the number of new Paying Customers, as well as subscription plan upgrades.
- Gross margin of 76% remained relatively stable compared to the second quarter of 2020.
- Adjusted EBITDA loss was $4.0 million and net loss was $5.3 million, driven by increased investments across all areas of the business, as we scale to support business growth and build the Thinkific brand in the marketplace.
- Completed a successful initial public offering on April 27, followed by the exercise of the over-allotment on May 5, with total gross proceeds of CAD $184.0 million. Thinkific issued 14,156,500 Subordinate Voting Shares at a price of CAD $13.00 per share. As at June 30, 2021, the Company's issued and outstanding share capital consisted of 76,705,247 shares.
Second Quarter Operational Highlights
- Launched the Thinkific App Store on May 4 as a marketplace to support Course Creators, enabling powerful features and greater customization. The Thinkific App Store connects developers, who can create and sell custom applications, to Course Creators, who are looking to further optimize functionality beyond Thinkific's core platform. Initial response from Course Creators to this new offering has been consistent with conversion rates seen in other SaaS platform marketplaces.
- Ranked #2 on the 2021 list of Best Workplaces™ in Canada (100-999 employees). The annual list is compiled by the Great Place to Work® Institute, a global authority on workplace culture.
- Named as a finalist in the BC Tech Association's 2021 Technology Impact Awards (TIAs) for "Company of the Year – Scale". The winners are expected to be announced in the fourth quarter of 2021.
- Launched improvements to Thinkific product including: analytics and reporting; our student communities; enhancements to make it easier to build your own website around your Learning Products; our trust engineering teams delivered performance improvements to make Thinkific faster for all Course Creators and students; as well as continuous improvements to the Thinkific App Store, API gateway and developer documentation to better help partners build apps.
Highlights Subsequent to the Second Quarter
- Initiated the rollout of Thinkific Payments in July, strengthening Thinkific's product offering and simplifying business management for Course Creators. As anticipated, Thinkific Payments is expected to contribute to revenue growth in 2022.
- Third Annual 'Think in Color' Summit, held on July 27-28, attracted thousands of entrepreneurs and SMB 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.
- Launched in-app live chat - an additional support channel to provide customers with instant access to help when and where they need it.
- Thinkific has been nominated in Canadian HR Reporter's Best Places to Work. Results are expected to be released in October 2021.
Outlook
Thinkific's business performance accelerated materially over the last two years, partly due to the industry's rapid evolution and driven by changes in demographics, working ideologies, and technology. These changes are propelling the shift towards digital consumption, including online learning, and have further been accelerated by the COVID-19 pandemic. While pandemic behaviours are currently evolving, we remain optimistic for the long-term.
We believe we are just getting started, and will continue to invest in our product, our people, and our platform, with the long-term in mind. Thinkific anticipates revenue and adjusted EBITDA to be in the following range for the third quarter of 2021:
- Revenue in the range of $9.6 - $9.8 million, representing year-over-year growth of 60% to 63%.
- Adjusted EBITDA loss in the range of $7.6 - $8.2 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.
Quarterly Conference Call and Webcast Information
A conference call will be held at 2:00 PM PT (5:00 PM ET) on August 10, 2021 to discuss Thinkific's second quarter financial results. To participate in the call, please dial 1.888.664.6383 (US/Canada toll-free) or 1.416.764.8650 (International). For those unable to participate, playback will be available commencing at 4:00 PM PT (7:00 PM ET) on August 10, 2021 by dialing 416.764.8677 or toll free 1.888.390.0541. The passcode is 265523#. The replay will expire at 8:59 pm PT (11:59 pm ET) on August 17, 2021. 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 condensed interim consolidated financial statements and accompanying notes, and Management's Discussion and Analysis for the three and six months ended June 30, 2021 are available on the Company's website at www.thinkific.com and on SEDAR at www.sedar.com.