Thinkific Announces Second Quarter, 2024 Financial Results
Q2 2024 Revenue of
Continued Strength in Thinkific Commerce and Thinkific Plus Which Grew at 69% and 28% Respectively
Thinkific Forecasts Revenue Growth to Accelerate Beginning in Q3
"I am pleased with our performance in the second quarter; demonstrating the continued success of our nearer-term growth drivers of Plus and Commerce." said
Second Quarter Financial Highlights
- Total revenue increased 12% to
$16.2 million , compared with the second quarter of 2023, within our guided range of$16.1 million -$16.4 million .- Commerce revenue increased 69% to
$2.2 million , compared with the second quarter of 2023, building on the success of Thinkific Payments as we benefit from growing GMV(1) and increased penetration of Thinkific Commerce. - Subscription revenue increased 7% to
$14.0 million , compared to the second quarter of 2023. - On a customer group basis (inclusive of both subscription and Commerce revenue), Thinkific Plus grew 28% to
$3.7 million and Self Serve revenue increased 8% to$12.5 million .
- Commerce revenue increased 69% to
- Gross margin remained consistent at 75% for both the second quarter of 2024 and 2023.
- Net income for the second quarter of 2024 was
$0.9 million compared to a net loss of$2.1 million for the second quarter of 2023, representing an improvement of$3.1 million . Earnings per share (basic and diluted) for the second quarter of 2024 was$0.01 compared to loss per share of$0.03 for the second quarter of 2023. - Adjusted EBITDA(1) of
$0.9 million remained positive for the fourth consecutive quarter compared to negative Adjusted EBITDA(1) of$1.2 million in the second quarter of 2023, representing an improvement of$2.1 million . - ARR(2) grew 7% to
$57.0 million in the second quarter of 2024 from$53.3 million in the second quarter of 2023, driven by strong growth in Thinkific Plus tempered by Self Serve which was relatively flat. - ARPU(2) increased 10% to
$155 per month compared with$141 per month in the second quarter of 2023 due to strong growth in Thinkific Plus and continued success of Thinkific Commerce. - Total Paying Customers(2) grew 2% to 34.9 thousand in the second quarter of 2024 compared to the same period of the prior year.
- GPV(2) processed through Thinkific Commerce increased 40% to
$43.9 million in the second quarter of 2024 compared to$31.4 million in the same period of the prior year. Penetration rate increased to 40% in the second quarter of 2024 compared to 30% in the same period of the prior year. - GMV(2) in the second quarter of 2024 was
$111.1 million , up 4% compared to the second quarter of 2023. - Cash and cash equivalents were
$48.6 million atJune 30, 2024 , representing a$38.0 million decrease from$86.6 million atDecember 31, 2023 , which related to the closing of the Substantial Issuer Bid ("SIB") to repurchase for cancellation 12,857,795 shares for a total of$36.0 million , coupled with the repurchase and cancellation of 1,218,028 shares for a total of$3.1 million under our Normal Course Issuer Bid ("NCIB").
"We had a strong close to the second quarter which saw record new customer bookings in Plus, and a significant acceleration in the adoption of Thinkific Commerce Platform at the end of the quarter." said
Second Quarter Operational Highlights
- Introduced The Leap Pro and Elite, which marks our initial steps in monetizing this product after a highly successful beta launch which has already surpassed 30,000 accounts and incorporates AI features that allow Social-First Creators to quickly start their online businesses.
- Released significant enhancements to "Digital Downloads", a feature that makes it easier for Creators to start their business by allowing them to offer a multitude of digital learning products including eBooks, PDFs and spreadsheets.
- Included a set of new APIs that enable a suite of new use cases and opportunities for customization, integration and automation.
- Added AI-powered "Thinkific Funnels" to allow customers to build and customize marketing or sales journeys and more intuitively generate revenue and nurture their audience.
-
Thinkific built SCORM (Sharable Content Object Reference Model) functionality, a set of e-learning technical standard that ensures content can be seamlessly integrated across various LMSs, making it easier to migrate toThinkific from other platforms and provides access to content editing tools to enhance student experiences.
Subsequent to Quarter End
- On
July 3, 2024 , the Company implemented a gateway fee on third-party payment providers as a means to begin the conversation of introducing customers to Thinkific Commerce. The fee also covers the cost of third-party integrations to continue providing customers with a choice.
The Company's CEO does not intend to continue his automated plan for selling shares that commenced in
Outlook
For the third quarter of 2024, the Company expects revenue of
Actual results may differ materially from
(1) Non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure.
(2) Key Performance Indicators. See definition in "Key Performance Indicators".
Quarterly Conference Call and Webcast Information
A conference call will be held at
About
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
"Adjusted EBITDA" is defined as net loss excluding taxes, interest, depreciation and amortization (or EBITDA), as adjusted for stock-based compensation, foreign exchange (gain) loss, finance income, restructuring costs, and (gain) loss on disposal of property and equipment. 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
"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 customers, 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 customers in monetizing their learning products and of our Thinkific Payments offering. It is also a positive growth driver of revenue, which is derived from payment processing fees. Revenue earned from Thinkific Payments is included in our commerce revenue.
Forward-Looking Statements
This press release includes forward-looking statements and forward–looking information within the meaning of applicable securities laws in
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 customers (as defined in our AIF) and to continue to expand our customers' use of our platform; our ability to acquire new customers; 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 2023 Annual Information Form, which is available under our profile on SEDAR+ at www.sedarplus.ca, 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.
Condensed Interim Consolidated Statements of Financial Position (unaudited)
(expressed in thousands of
|
|
|
|
$ |
$ |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
48,565 |
86,611 |
Trade and other receivables |
4,908 |
4,097 |
Prepaid expenses and other assets |
3,929 |
3,174 |
Contract acquisition assets |
601 |
528 |
Lease receivable |
78 |
165 |
Derivative asset |
— |
570 |
Total current assets |
58,081 |
95,145 |
|
|
|
Property and equipment |
765 |
853 |
Lease right-of-use assets |
617 |
812 |
Contract acquisition assets |
889 |
875 |
Intangible assets |
144 |
110 |
Total assets |
60,496 |
97,795 |
|
|
|
Liabilities and shareholders' equity |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities |
7,314 |
5,294 |
Lease liabilities |
496 |
555 |
Deferred revenue |
10,581 |
9,529 |
Total current liabilities |
18,391 |
15,378 |
|
|
|
Lease liabilities |
237 |
477 |
Total liabilities |
18,628 |
15,855 |
|
|
|
Shareholders' equity |
|
|
Share capital |
109,372 |
147,739 |
Contributed surplus |
7,704 |
8,667 |
Accumulated other comprehensive income |
(71) |
532 |
Accumulated deficit |
(75,137) |
(74,998) |
Total shareholders' equity |
41,868 |
81,940 |
Total liabilities and shareholders' equity |
60,496 |
97,795 |
|
|
|
Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)
(expressed in thousands of
|
Three months ended June |
Six months ended June |
||
|
2024 |
2023 |
2024 |
2023 |
|
$ |
$ |
$ |
$ |
Revenue |
16,211 |
14,436 |
32,175 |
28,529 |
Cost of revenue |
4,006 |
3,638 |
8,094 |
7,127 |
Gross profit |
12,205 |
10,798 |
24,081 |
21,402 |
|
|
|
|
|
Operating expenses |
|
|
|
|
Sales and marketing |
4,890 |
5,505 |
9,878 |
11,030 |
Research and development |
4,335 |
4,930 |
8,979 |
10,183 |
General and administrative |
3,060 |
3,957 |
6,841 |
8,410 |
Restructuring |
— |
— |
— |
3,186 |
Total operating expenses |
12,285 |
14,392 |
25,698 |
32,809 |
|
|
|
|
|
Operating loss |
(80) |
(3,594) |
(1,617) |
(11,407) |
|
|
|
|
|
Other income |
|
|
|
|
Finance income |
1,106 |
947 |
2,010 |
1,638 |
Foreign exchange (loss) gain |
(96) |
505 |
(532) |
620 |
Total other income |
1,010 |
1,452 |
1,478 |
2,258 |
|
|
|
|
|
Net income (loss) |
930 |
(2,142) |
(139) |
(9,149) |
|
|
|
|
|
Other comprehensive income |
|
|
|
|
Unrealized loss on derivatives |
(106) |
— |
(603) |
— |
|
|
|
|
|
Total comprehensive loss |
824 |
(2,142) |
(742) |
(9,149) |
|
|
|
|
|
Weighted average number of common shares outstanding - basic |
79,618,425 |
80,652,067 |
80,342,751 |
79,908,862 |
Weighted average number of common shares outstanding - diluted |
81,149,250 |
80,652,067 |
80,342,751 |
79,908,862 |
|
|
|
|
|
Earnings (loss) per share |
|
|
|
|
Basic and diluted |
$ 0.01 |
$ (0.03) |
$ (0.00) |
$ (0.11) |
Condensed Interim Consolidated Statements of Cash Flows (unaudited)
(expressed in thousands of
|
|
Six months ended
|
|
|
|
2024 |
2023 |
|
|
$ |
$ |
Cash from (used in): |
|
|
|
Operating activities |
|
|
|
Net loss |
|
(139) |
(9,149) |
Items not affecting cash and cash equivalents: |
|
|
|
Depreciation and amortization |
|
671 |
697 |
Stock-based compensation |
|
2,060 |
2,726 |
Unrealized foreign exchange loss (gain) |
|
528 |
(632) |
Finance income |
|
(2,010) |
(1,638) |
Interest received |
|
2,369 |
973 |
Changes in non-cash working capital: |
|
|
|
Trade and other receivables |
|
(972) |
(284) |
Prepaid expenses and other assets |
|
(775) |
(3,089) |
Contract acquisition assets |
|
(353) |
(401) |
Accounts payable and accrued liabilities |
|
828 |
(287) |
Deferred revenue |
|
1,052 |
1,168 |
Cash from (used in) operating activities |
|
3,259 |
(9,916) |
|
|
|
|
Investing activities |
|
|
|
Proceeds on disposal of property and equipment |
|
77 |
62 |
Investment in property and equipment |
|
(193) |
(3) |
Investment in intangible assets |
|
(40) |
— |
Cash (used in) from investing activities |
|
(156) |
59 |
|
|
|
|
Financing activities |
|
|
|
Operating lease payments |
|
(285) |
(246) |
Payments received on net investment in finance lease |
|
65 |
— |
Exercise of stock options |
|
67 |
208 |
Tax remittances on stock based compensation |
|
(1,942) |
— |
Shares repurchased for cancellation under normal course issuer bid |
|
(3,147) |
— |
Shares repurchased for cancellation under substantial issuer bid |
|
(35,339) |
— |
Cash used in financing activities |
|
(40,581) |
(38) |
|
|
|
|
Effect of exchange rate fluctuations on cash and cash equivalents held |
|
(568) |
720 |
Decrease in cash and cash equivalents |
|
(38,046) |
(9,175) |
Cash and cash equivalents, beginning of period |
|
86,611 |
93,846 |
Cash and cash equivalents, end of period |
|
48,565 |
84,671 |
|
|
|
|
Non-cash transactions: |
|
|
|
Taxes accrued on share repurchases included in accounts payable and accrued liabilities |
|
762 |
— |
Condensed Interim Consolidated Statements of Cash Flows (unaudited)
(expressed in thousands of
Reconciliation from IFRS to Non-IFRS Measures (unaudited)
(expressed in thousands of
|
Three months ended
|
Six months ended
|
||
|
2024 $ |
2023 $ |
2024 $ |
2023 $ |
|
(In thousands of |
|||
Net income (loss) |
930 |
(2,142) |
(139) |
(9,149) |
Stock-based compensation |
615 |
2,021 |
2,060 |
2,726 |
Depreciation and amortization |
339 |
354 |
671 |
697 |
Foreign exchange loss (gain) |
96 |
(505) |
532 |
(620) |
Finance income |
(1,106) |
(947) |
(2,010) |
(1,638) |
Restructuring costs(1) |
— |
— |
— |
3,681 |
Adjusted EBITDA |
874 |
(1,219) |
1,114 |
(4,303) |
(1) |
Represents employee compensation for severance amounts for Company wide restructuring in the first quarter of 2023. |
SOURCE