Thinkific Labs Inc.

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.

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?

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.