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spk07: Good afternoon, my name is Sylvie and I will be your conference operator today. I would like to welcome everyone to Think and Fix's second quarter 2022 financial results conference call. As a reminder, this conference call is being broadcast live on the internet and recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, please press star then number two. And I would like to turn the conference over to Janet Craig, Head of Investor Relations. Please go ahead.
spk08: Thank you, Sylvie, and good afternoon, everyone. Welcome to Thinkific's call for the second quarter of 2022. Joining me today are Greg Smith, co-founder and CEO of and Karine Waugh, CFO. After the prepared remarks, we will open up the call to questions. During the call today, we will make forward-looking statements that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements except as required by law. You can read about these risks and uncertainties in our regulatory filings that were filed earlier today. Our commentary today will include adjusted financials measures, which are non-IFRS measures. They should be considered as a supplement to and not a substitute for IFRS measures. Reconciliations between the two can be found in our regulatory documents, which are available on our website. In addition, our commentary today will include key performance indicators that help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Such key performance indicators may be calculated in a manner different to similar key performance indicators used by other companies. I should also note, we have a slide deck that supports our remarks, available to download on the webcast interface or on our website. And finally, all dollar amounts discussed today are in U.S. dollars, unless otherwise indicated. I will now turn the call over to Greg Smith, CEO of Thinkific. Greg?
spk05: Thank you, Janet. Hello, and welcome to our second quarter earnings conference call. Thank you for joining us. In the second quarter, we continued to execute against our strategy and remain focused on our creators' success. We delivered revenue of $12.6 million, which was at the top of our guidance range, and adjusted EBITDA loss was better than expected, coming in at $7 million. Underpinning these numbers was our year-over-year growth in ARPU and total paying customers, and the continued penetration of Thinkific payments. At Thinkific, we are relentlessly focused on the key drivers that will propel our growth and profitability, including continued investment in product and technology development to meet creators' needs. strengthening our go-to-market and brand awareness, continuing to build a strong team and workplace culture, and investing our resources in areas with the strongest return while managing our cost structure. The success of our customers is at the forefront of everything we do, and we continue to be pleased with how creators are growing, and in turn, the impact they are having on their students. And their success breeds ours. In the second quarter, we surpassed an important milestone, hitting $50 million in annual recurring revenue in the quarter. When we started this business, this milestone was beyond our wildest imagination, but the growth of knowledge commerce has been tremendous, and we expect this growth and shift in society to continue. Consistent with our focus on creator success, we held our fourth annual virtual Think in Colour Summit last week. Think in Colour has become an annual event for us and features a roster of successful creators, all women of colour, sharing their insights so that others can launch and scale their own knowledge commerce business. Attendees to the summit are supported with ongoing training and coaching through a free eight-week accelerator program that we host that helps these entrepreneurs launch a new knowledge commerce business or scale an existing one to new heights. This event also exemplifies what Thinkific is all about. We believe that by democratizing access to entrepreneurship and providing a platform where anyone can use their skills and expertise to build a business is an important step in advancing diversity and inclusion. It's also an example of one way we're continuing to build brand awareness and increase our top of funnel metrics. The summit had over 20% more registrations than last year, breaking 29,000. This type of turnout and engagement shows to us there is continued demand in the market for what Thinkific offers, and we're excited to see what these creators do with the knowledge and connections they gain from Think in Colour. Ellie Diop, founder and CEO of Ellie Talks Money and Elevated Academies, was one of our featured speakers last week, sharing her inspiring business journey. Ellie is an incredible example of what is possible when you put the right tools in the hands of creators. Ellie used a $1,200 stimulus check as the launchpad to building a multi-million dollar online coaching business in one year. Almost two years in business, building her brand, her following, and her courses, Ellie realized she needed a platform that better suited her business needs and best reflected the experience she wanted her audience to have in her courses. Choosing Thinkific based on this criteria, Ellie was able to launch key courses, including her signature course, Monetize You, and include live training options. Ellie uses various social media platforms to drive engagement and awareness and utilizes Thinkific to create, monetize, and deliver her programs. Ellie has over 400,000 followers on her social media accounts. She has had 16,000 people enroll in her courses since moving to Thinkific earlier this year. and is generating millions in annual sales, not to mention the amazing impact her teaching has on the lives of her students. Ellie firmly believes anyone with an iPhone and an idea can make their dreams happen. As we're seeing our market evolve, Ellie represents a continued phenomenon, a creator who started selling her courses on a different platform, but migrated to Thinkific when she recognized that she needed a more advanced solution for her growing business. It is people like Ellie and hearing their success stories and so many like her who are just getting started that continues to fuel our desire to support creator success. And one of the ways we do this is to continue to advance our platform with new features that are designed to make it even easier for creators to start and grow a learning business. We introduced a new creator welcome flow which helps creators get started more easily than ever on Thinkific. We also automated app recommendations based on where creators are in their journey so that the apps they need are automatically recommended as they scale. We've also made it easier for Plus customers to sell B2B during the quarter, introducing a highly thought-after feature that seamlessly supports bulk selling. This means creators can sell volume licenses to their learning products. This is a huge win because it reduces the administrative burden on our creators from having to create many individual accounts and really makes their B2B sales process more effortless as well as more profitable. In July, we launched T-Commerce. T-Commerce brings together, under one brand, all the selling tools we offer creators. The selling tools within T-Commerce are powered by our robust payment processor, Thinkific Payments, which includes features like order bumps, flexible payment options like Apple Pay and Google Pay, checkout optimization, bookkeeping and tax tools, and much more. And everything's together in one central place inside your Thinkific dashboard. As we continue to execute on our strategy, we are confident about the long-term trajectory of our business. This quarter, we launched improvements to pricing, rolling out changes to our progressive growth plan to customers in mid-May. Creators that had been on variable-based pricing were transitioned to a flat fee pricing, which helps to make our pricing more predictable and transparent for these creators. We expected the initial change to be revenue accretive, which is what we saw. Our focus on strengthening our go-to-market strategy continues. We're making long-term investments in our marketing team, focusing on top of funnel channels like content and in technology solutions that make it easier to manage our go-to-market efforts. We've made significant improvements in top of funnel channels like SEO and content, where we doubled our production volume in Q2 and into Q3. We're beginning to see impact here and have even more opportunity ahead of us to continue to grow these channels. We've also seen success optimizing channels like paid ads, where we've seen a stronger return on dollars spent. The investments in products and features to help our customers succeed, as well as our initiatives in marketing, are fundamental to our short- and long-term success. Equally important is being diligent and focused on ROI and spending across the business. We made some tough decisions in Q1 to reduce our team size, and you can see the results of those actions coming through this quarter. They are also being reflected in our strong financial position with cash on hand of over $100 million. Currently, there is some uncertainty, broadly speaking, in the world. Regardless of how the macro factors play out, we are confident in our ability to grow and return to profitability. We know what we need to do, and we will continue to execute. We are investing for growth with a focus on cost structure. We are continuing to innovate to support the success of our creators. We know that entrepreneurs more than ever want to have control over their future and work at something they are passionate about. as well as have a positive impact on society by sharing their knowledge and skills. What we see with our creators is actually quite positive. Our customers continue to grow and achieve success at rates consistent with our historical trends. They continue to launch new businesses and attract and convert students to their learning products. These factors reinforce our confidence in what we are doing and the broader market. We are excited about our creators' continued success and we will continue to support them and invest in them. This in turn leads to our continued growth, both in terms of top line growth and returning to profitability. Now to speak about our current results, I'm going to turn the call over to Corrine.
spk06: Thanks, Greg. I'm pleased to share that we had another strong quarter with revenue growth at the top of our expectations. We continue to drive revenue growth through an expansion of ARPU, and we were very effective in cost management while still investing for growth, resulting in an improved EBITDA loss. Second quarter revenue came in at $12.6 million, an increase of 38% compared to the prior year. This was driven by both expansion of ARPU and higher total paying customer count compared to last year. We hit a major milestone in the quarter with ARR eclipsing the $50 million mark, landing at $50.3 million for the quarter, an increase of 32% year over year. During the past year, we continued to attract new creators to our platform and found many upgrades to higher paid plans. We also introduced a new pricing strategy in the second quarter that was focused on aligning the value we create with the prices we charge. Average revenue per user was up 18% year over year at $126 per month, compared to $107 in the same quarter last year. Consistent growth in ARPU over the past several quarters has been driven largely by creators upgrading to higher paid plans as they experience success on the platform. We've also seen deal size and volume of deals in our Thinkific Plus business increase year-over-year. Plus is our highest-tier plan, ideal for scaling and larger businesses, like AliDial's business Greg mentioned earlier. As we deliver product features, like the bulk selling feature we introduced this quarter, we are positioning Plus as the platform of choice for businesses looking to add education to their business offerings and for existing customers who are scaling to new levels. The introduction and continued success of think of it payments also contributed to this growth. Another factor in ARPU growth was our new pricing strategy, as Greg discussed. This initiative contributed to some of the increases in ARPU in Q2 and will continue to contribute as we expect to see a full quarter of benefit from this change in Q3. We expect ARPU to continue to drive our revenue growth in 2022. We ended the second quarter with 33,300 paying customers, an increase of 14% compared to last year, but flat quarter over quarter. This was in line with our expectations for the quarter given some of the changes we've made, including the pricing strategy we've spoken about. In the near term, we won't expect substantive change in our total paying customer count as we remain cautious on our outlook due to the noise in the macroeconomic environment and as our go-to-market improvements take time to deliver. Thinkific Payments continues to be well received by creators. Gross Payments Volume, or GPV, which is the total value of GMV processed using Thinkific Payments, was $14.3 million for the quarter. This represented a penetration rate of 15% of the $98 million in GMV processed during the second quarter. Moving now to our P&L, as Greg mentioned earlier, our revenue grew 38% year-over-year to $12.6 million. Gross margin at 76% was flat year over year but increased 300 basis points compared to the first quarter of 2022. We continue to deliver exceptional customer support and were able to realize efficiencies we had hoped for when we made our decision to do a restructuring in late Q1. On the expense side, we saw strong improvements compared to Q1 with expenses substantially lower. However, compared to the second quarter of 2021, expenses were 5.3 million higher. Cost management efforts were even better than we initially forecasted for the quarter. R&D costs were 12.6 million higher than last year, but down 0.8 million compared to the first quarter, and we continue to invest in a disciplined manner in R&D as we deliver on our product-led growth strategy. Sales and marketing costs were up 2 million compared to last year at this time, and up slightly quarter over quarter, due to the restructuring within the company. We continue to see efficiencies in our paid ad spend and are investing in new tools on top of funnel marketing channels that are intended to deliver strong returns in the future. On the G&A front, we saw the most significant cost reductions down by $1.2 million compared to the prior quarter. However, compared to the second quarter of 2021, costs are up $0.8 million. we expect to see G&A costs continue to come down slightly or hold relatively consistent in future periods. Together, our actions delivered adjusted EBITDA loss for the quarter of $7 million compared to a loss of $9.3 million in the first quarter and $4 million in the second quarter of 2021. Looking forward, we expect to see continued improvements in our adjusted EBITDA as a percentage of revenue as we remain focused on disciplined investments. This was for the second quarter in a row significantly better than our outlook, as our team focused on driving efficiency and ensuring we were making thoughtful, ROI-driven investment decisions. The results of our disciplined investments and prudent spending is that we ended the quarter with a strong financial position with cash on hand of $105 million. You'll find a summary table for the calculations of adjusted EBITDA in our press release, MD&A, and investor presentation on our website. Looking ahead, our expectations for this third quarter of 2022 are revenue of $13.1 to $13.3 million, representing year-over-year growth of 32% to 34%, and adjusted EBITDA loss in the range of $6.4 million to $7 million. Thinkific expects continued growth in revenue in the third quarter of 2022, driven largely by RPO expansions as well as new paying customers. Customer upgrades to higher pricing plans New Thinkific Plus customers, higher penetration of Thinkific payments, and our revised pricing strategy all contribute to our pre-growth. Our revenue forecast is intentionally conservative. Given the current macro environment, we are confident in this outlook. Our adjusted EBITDA outlook is driven by a continued drive for efficiency across the company and a continued focus on disciplined investment. And to wrap up the call, I will turn it back over to Greg.
spk05: Thank you, Corrine. Before we open up the call for questions, I wanted to close on a few key points. Despite the uncertainty in the world today, we continue to see consistent and positive trends in the success of our creators. We continue to innovate on behalf of our creators, delivering a constantly improving product suite to support creator success, helping them launch and grow their businesses. We will continue to do this through disciplined spending for maximum ROI. I'll now turn the call back over to Sylvie, our operator, for questions.
spk07: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, please press star followed by two. And if you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you do have a question. And your first question will be from Thanos Machopoulos at BMO Capital. Please go ahead.
spk03: Hi, this is Steven on for Thanos. So my first question is about the flattish quarter over quarter customer growth. How much of this is a factor of lower gross ads versus higher churn?
spk05: Yeah, great question. Appreciate that. So as we had flagged on the last call, we expected to see this customer count be either flat or down this quarter. So it was actually impressed with the team and what we were able to deliver there in terms of total customer count. Some of that we had flagged at the last call was an expected impact of pricing. The impact of pricing and churn in any way related to pricing was pretty minimal, which is a positive signal for us in terms of willingness to pay from customers and the reception of the pricing changes. So we saw something consistent in terms of the overall number. And then to get more direct for your question, We're not seeing, there is a slight uptick in churn this quarter, possibly in part related to the pricing, but only a slight one, but fairly consistent with prior periods and prior years at a similar time. So really it is, it's us just seeing that flat line in terms of customer from prior quarter to this quarter. And looking ahead, I would expect we see probably something similar in the next quarter, given the place we're at in the year in terms of seasonality. and the trends we're seeing in customer acquisitions.
spk03: Okay. Now, that sounds good. Now, with the increase in ARPU growth, I expect that some of that would be from the increase in pricing you introduced halfway through the quarter. Can you sort of break down how much of it is from increased upgrades versus how much of it is from the change in the pricing plans?
spk06: Hi, Stephen. It's Karine here. I'd love to take that question. The ARPU growth this quarter was strong, and we expect it to continue into the future. Pricing being one of the levers that we saw, when we look year over year, the growth rate was just like marginally impacted by pricing. But on a quarter-over-quarter basis, it was maybe a little bit more, but not significant, still less than half of the overall growth that we saw.
spk03: Okay. And a final question, just on the sales and marketing expenses. quarter over quarter, whereas R&D and G&A, which were also presumably restructured, they were down. So were there any one-time costs in that increase? And do you see this as kind of a baseline going forward, or were there one-time investments that won't be repeated?
spk06: One of the changes that we saw in the restructuring was how we were allocating costs between departments. And so we did, as part of the restructuring, move some costs that had previously been in other, like R&D or G&A, into sales and marketing. So some of the increase in the quarter actually had to do with how we were bucketing things overall. Because the impact that we had from the RIF was across the board. And then we did do some restructuring that kind of changed the magnet of the costs in each bucket. And we would expect this to be a good place to look at for going forward as we continue with this cost structure.
spk03: Okay, that's helpful. I'll pass the line now. Thank you.
spk08: Thanks, Stephen. And Sylvie Mae, the next caller, please.
spk07: Next question will be from Todd Copeland at CIBC.
spk09: Good evening, everyone. Just wondering if you could give us an update on the retooled go-to-market and what are the milestones and your expectations for that in terms of impact to new customers in the second half of the year? Thanks a lot.
spk05: Thanks, Todd. Yeah, positive trends in terms of what we're seeing in early signs from the team. We are building definitely for the long term there. And given macro environment, a little bit reluctant to predict exactly how that's going to play out over the future, or at least when it will play out. But seeing a lot of positive trends, building the team in a positive way, putting in place a number of sort of fundamental tracking and software solutions there that will be really helpful in building up go-to-market in the future. In terms of how that looks going forward, a little reluctant to predict exact customer counts given the macro factors, continuing to be conservative, especially when I look at the seasonality for our industry and the return of things like summer travel, maybe at a heightened rate this year in particular. especially coming out of the pandemic. So don't expect a substantive change either way in customer count in Q3. But with the positive trends we're seeing in our go-to-market, I think that we've laid a base there, a plateau to build upon from there. As we've mentioned, we're focused on driving growth through ARPU through this year and continue to make those go-to-market improvements, which I think will play out as the macro factors settle.
spk09: Thank you. And then my follow-up is GMV, I think, was down year on year. Just wondering how you're reading that and how would you expect that to trend in the third quarter? Thank you.
spk05: Yeah, so GMV in particular, we're looking at less and less as a key metric. Unlike purely e-commerce or physical goods businesses with Thinkific, GMV only really captures a portion of the success of our customers and the value we create for them. While the GMV report is down, when I step back and look across the metrics of overall success for our creators, we actually see positive trends consistent with historical years. Within GMV, a select few of our top earners have seen declines, but some of that has even been just how they're processing their payments not being tracked within our GMV. So another sign that it's really not a great metric for us in terms of overall success. And actually, when we look across our middle class of creators and those starting new businesses, we're seeing a continued rise in GMV for them. Plus, when we look at the number of customers our creators are able to attract and convert into their learning products on Thinkific, we see trends consistent with prior years. So that area really gives me confidence in the value we're delivering for our creators, the success they're having, even given the macro conditions.
spk09: Great. Thanks for the call. I appreciate it.
spk08: Thanks. Thanks. Thanks, Todd.
spk07: Sylvie, next caller, please. Certainly. Next question will be from Richard C. at National Bank Financial.
spk01: hi this is i'm here calling in for richard um just wanted to ask about the opex structure so you guys have brought it down considerably um just how much revenue growth could you support with the current cost structure like would you be able to double revenue while keeping it roughly the same or how should we think about that hello that's uh it's an interesting question i think what we're focused on from an opex perspective is investing for growth and so
spk06: we are probably able to do a fair bit with our cost structure. We're not looking to make any significant changes, but we do, while focused on returning to profitability, want to be able to have the flexibility to invest when we see areas of strong return. And so there may be opportunities as things come to a settling of the macroeconomic factors that may see us investing in different areas that may slightly move the structure one way or the other. But Generally speaking, we're looking to reduce our adjacency, but the loss of the percentage of revenue going forward while continuing to see our top line grow. And so probably a kind of opportunity. We've got a team that we're very excited to work with every day and able to do big things. And so a big part of what moves the top line has probably a lot to do with macroeconomic factors more than how we're investing. But at the same time, I don't want to minimize the opportunity for us to grow or to put out the message that we're not going to invest and we find areas to do that because we want to be able to do exactly that. Does that answer your question?
spk01: Yeah, I think it does. Yeah, thanks so much for answering that. I'll pass it on.
spk07: Okay, thank you. And Sylvie, next caller, please. Just a quick reminder, if you do have a question, please press star followed by one. And your next question will be from Martin Toner at ATB Capital Markets.
spk04: Good afternoon. Thanks for taking my question. Congrats on a nice result.
spk05: Thanks, Martin. Welcome.
spk04: So the restructuring was a little bit ago. I guess it's around like four-ish months ago now. Can you talk a little bit about the impact the restructuring has had on the culture, positive and negative?
spk05: Certainly. Yeah, certainly had an impact on culture and team. And to some extent, obviously, when you do something like that, there is a negative impact. I think that a few things I can share is the way that we went about it was, I think, it was a not fun thing done well. Our team that executed it did an exceptional job of it. We did everything we could to take care of people on all sides. and in all scenarios. And I think that was well received and seen well by the team, both those departing and those staying. It certainly does create a bit of a shell shock. I think we're moving through that. We've done a lot of things to talk to the team and address any of the issues that came up and are making some big improvements. Also improvements that led us to that state. So we're still in that state of continuous improvement and have more work to do. But I think we're through the worst of the say team culture impact and now moving in the right direction.
spk04: That's fantastic. And have, have you seen other measures of efficiency that show that like this cost structure might be like this structure might be better?
spk05: Yeah, I think we're seeing some early signs that, well, one, obviously the decline or the improving EBITDA is a good sign that we've taken a step in the right direction. And as Karina pointed out, where we continue to and plan to continue to improving EBITDA quarter over quarter as we go forward. So that's going to be a constant forecast of continuing to improve our costs. And if costs do move up at a slower rate, then revenue does move up. and still looking for savings throughout our cost structure there. And so that does naturally create some efficiencies. And then as well within individual pockets and areas, I think we've seen efficiencies in terms of how we support our customers, in terms of how we're going to market, and also in terms of how we're building products. So we are seeing some signs across the board of becoming more efficient, doing more with less. And that's been positive, I think, both within the team and in terms of what we can deliver for our customers. That's great. Thanks, Greg.
spk04: And is there anything you can share that can help us assess the extent to which you're winning your fair share or more than your fair share of creators?
spk05: Yeah, in terms of overall market share, it's a little bit harder for us because I don't think there's no player in the space that represents a significant portion of the market share. And so we look mostly just at how we're doing week over week, month over month. So I don't have a great metric to sort of say whether we're winning our fair share, other than that we've seen that what we are winning come to a plateau. From the peak of the pandemic, the number of customers coming in has come down, as we've talked about in the past. And I think we've reached a plateau there, which is a new base to build from, which is quite positive for us. and shows both some signs in terms of macro factors just possibly starting to settle, although I think we're still in a transition phase here, but also the hard work of our go-to-market team.
spk04: Great, thanks for that, Greg. And then last one for me, and building on the question earlier about changes to your go-to-market strategy, can you tell us anything about conversion rates? You talked about how It was going to take longer. Any signs that you're making progress converting new creators into paying creators?
spk05: Conversion rates staying relatively consistent, but getting more efficient in terms of acquiring the leads to be converted. So overall conversion of those relatively consistent. It is a little bit of a messy mess. Patrick, in that we can quickly and easily generate a large number of new leads that are low quality or lower quality that may bring a conversion rate down. Or we can cut back on spend, have number of leads drop a little bit, increase conversion rates, have higher quality leads. So we are we're trying to push on both levers in terms of bringing in more leads, keeping them higher quality and driving up conversion rates. and doing that in a way that is efficient with spend. I think one of the things we could point to there that's more substantive is just we're getting more and more efficient with our ad spend in terms of bringing the dollars down and converting the same number of customers there.
spk04: Okay. Thanks, Greg. That's it for me. Again, congrats on this progress. Thanks, Martin.
spk08: Thank you. And Sylvie, next caller, please. Thank you.
spk07: from Robert Young at Cataccord. Please go ahead, Robert. Your line is open. Mr. Young?
spk00: Sorry, I was on mute. Maybe just a finer point on Martin's last question there. I think one of your objectives was to move people through the funnel. I think you're having a, it was conversions at the very top end. Are you seeing improvements in that objective, if I have that correct?
spk05: Yeah, so we, as I shared, I think we're seeing improvements there, but to give a specific conversion metric and how it's moved is a bit more difficult because it varies based on the total number of leads. We've seen changes in both the total number of leads and then, but holding fairly consistent with the actual rate at which they're converting. So it looks like we are trending positively in terms of getting better at how we're converting people. And then the other work we've done recently, which is still, we still need to let the data play out and see how it works is as we mentioned in the, in the call today was the new welcome flow, which is helpful, not just at the initial point of conversion, but in onboarding people to the product, getting them set up, having them see early success with that. it can be something that they encounter after they've converted through to paid, or it can be something they encounter before they convert through to paid. And so if they're encountering it before they convert through to paid, as it pushes them towards success and helps them launch something faster, that can help with the conversion rates as well. So it's a continued area of investment. It's a harder metric to move for us, for sure. And we tend to see it stay fairly consistent, but it's definitely an area we're continuing to invest in.
spk00: Okay, okay. So I guess it's still early to really get a definitive decision on whether you're headed in the right direction there in the summer. Would seasonality prevent you from getting further data to support a decision whether this is the correct direction to head, or would it be something that would fall later in the year?
spk05: The summer factor, I think, is an overall volume thing that we see a little bit of seasonality here. and I think it would be slightly accelerated just based on macro uncertainty and some of the return to travel in July and August. So I think it'll be fall where we really, I hope, get to see some of the returns through our go-to-market settle in. But part of that, too, depends on the prediction of macro factors, which I'm a little reluctant to do.
spk00: Got it. Okay, that's really helpful. In the press release, there was just a line in there that said that some of the changes enable the growth strategy but also ensure a return to profitability. And so I was curious, some of the prepared comments, you're suggesting that maybe the EBITDA margin might improve with revenue growth. But is there any kind of a long-term plan to improve profitability? And what did that look like? that statement mean? What does profitability mean to Thinkific? Is there a point at which you might be able to return deposits of EBITDA similar to prior to the IPO or is that not part of the plan currently?
spk06: That is exactly part of the plan. We are focused on growth but efficient growth and you know, really focusing on like investing for, you know, positive return. And part of that is, but they're returning or lowering as a percentage of revenue, specifically taking us back to a path to profitability, no commitment on dates for when we get expect to be there. And as I mentioned, you know, in the previous call, we are trying to maintain some flexibility as we find places to invest for return, but very much focused on a return to profitability in the future.
spk00: Okay, great. Last question for me would be just on the, uh, the GPV penetration. It seemed to me better than I would have expected. I think you originally said the target was 20% to 30% of GMV, and you're at, I think, 15%. So how are you relative to where you thought? Is this driven by the expansion? I think you said you're going to go to Australia, UK, New Zealand. Is there another international expansion we've been thinking about? And what are the targets relative to to your performance relative to the targets? I'll pass the line.
spk06: That's a great question, and you are exactly right. We are ahead of where we thought we would be and expect that we're in great shape to hit that 20% to 30% target and feeling quite confident about that. The opportunity internationally isn't as much of a focus as we are focused on converting current customers who are using Stripe and PayPal over to significant payments. That doesn't mean there isn't an opportunity. In the UK, it's now readily available or UK, Australia, New Zealand, like it's still in a pilot in Australia, New Zealand, fully available in the UK, you know, part of our focus, but that's not going to drive the rest of the growth. Today, there's kind of two factors that come into this that you and I have spoken about before. One is the adoption of new customers who monetize for the first time using significant payments. And we're seeing that to be quite strong around 70%. And that really drives our long-term growth of the penetration of GMV. And then the other piece is the migrating of current customers. And that will take some time. But we are adding great features that will continue to accelerate this. I'm really excited about that.
spk00: All right. That's great. Thanks for your patience with my questions. I'll pass the line.
spk08: Great. Thanks, Rob. And next caller, please.
spk07: We'll be Max Barron at Cormark. Please go ahead.
spk10: Hi. Thanks. I just have one question relating to the price adjustments that you guys did. So it's good to hear that you had a pretty good reception on the price adjustments you did recently. And is that changing your perspective on any future price adjustments? And how are you looking at pricing for the remainder of the year?
spk05: Yeah, it was positive to see. And I think it was positive for a lot of customers in terms of the transparency and improvements it added even for them and really aligning a lot of the value we've created with the price and the plan that they're on. I think in terms of looking forward, no immediate change inbound. I think any healthy SaaS company continues to iterate and improve on pricing. And we want to ensure we meet the needs of our customers with the features and plans they need with the stage and of their business. But we don't have an immediate launch of something imminent here. But we do continue to evaluate and experiment, always have. So every quarter we're looking at and experimenting and making small tweaks and changes within how we look at our pricing. But it's just a continuous evolution of improvement, as I would expect with any healthy SaaS company.
spk02: Got it. Thanks. That's all I had. I'll pass the line.
spk07: Thank you. At this time, we have no further questions, so I will turn the call back over to Mr. Smith for closing comments.
spk05: Thank you very much. I appreciate everyone's questions today. and if there's one thing to close on I think it's as I closed earlier is just despite all the uncertainty in the world it is really positive and encouraging for us to see the success of our creators they consistently are delivering in terms of creating new businesses launching them finding and converting their own customers into their learning products and having a positive impact them in a trend that is consistent with what we've seen in prior years so Quite encouraging for us. And again, thank you all for attending.
spk07: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines. Enjoy the rest of your day.
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