Thinkific Labs Inc.

Good afternoon. My name is JP and I will be your conference operator today. I would like to welcome everyone to Thinkific's second quarter 2023 financial results conference call. As a reminder, this conference call is being broadcast live on the internet and recorded. All lights 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 the number one in your telephone keypad. If you would like to withdraw your questions, please press R2. Thank you. I would now like to turn the conference call over to Janet Craig, Head of Investor Relations. Please go ahead.

Thank you, JP, and good afternoon, everyone. Welcome to Thinkific's earnings call for the second quarter of 2023. Joining me today are Greg Smith, Co-Founder and CEO, and Corinne Waugh, CFO. After the prepared remarks, we'll open up the call to questions. During the call today, we will discuss our business outlook and make forward-looking statements that are based on assumptions and therefore subject to risks and certainties that could cause actual results different materially from those projected. These comments are based on our predictions and expectations as of today. We undertake no obligations to update these statements except as required by law. You can read about these risks and certainties in our regulatory filings that were filed earlier today. Our commentary today will include adjusted financial 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'll now turn the call over to Greg Smith, CEO of Thinkific. Greg?

Thank you, Janet. Hello, and welcome to our earnings call. Thank you for joining us. In the second quarter, we continued to execute against our strategy and remain focused on helping creators succeed. We delivered revenue of $14.4 million, which was above the top end of our guidance range. Adjusted EBITDA was also better than what we guided to, improving to a loss of $1.2 million. Other notable results included total paying customers, which were 34,300, the third consecutive quarter of customer growth. Thinkific Payments continues to perform well with a penetration rate of 30%, and GPV, that's the amount of payments processed on Thinkific Payments, of $31.4 million. Our achievements reflect the clear priorities we have for this year. As always, we are maniacally focused on helping our creators succeed. We do this by making it easier for them to get started and make their first sale, helping creators sell and earn more to grow their businesses, and continuing to drive success with larger customers on Thinkific+. Our creator story this quarter is a great example of how Thinkific makes it easier for creators to get started and earn more with Thinkific. The team recently spoke with Halisi and Rick, the remarkable founding couple behind our Black Utopia. They are an incredible example of how well our platform is able to provide the resources and infrastructure to empower new creators to build and scale amazing new businesses. Halisi and Rick joined Thinkific in May 2022, Starting on the free version of the platform and growing from there, they quickly became members of our Thinkific Accelerator program, an education program run by Thinkific on Thinkific that provides all the tools, methods, coaching, and a peer group to help creators launch and build their business much faster. After launching their course, Beyond the Bling, designed to help those in the Black community aged 45 to 65 achieve financial freedom, they saw a return on their initial investment in just the first week of sales. Through building an engaged audience on YouTube and taking advantage of a mailing list from a previous profession, Halisi and Rick were able to quickly monetize their audience, enabling them to experience life-changing success as online teachers. Not only has Beyond the Bling very quickly become a powerful tool for helping their growing audience achieve financial freedom, they've been able to retire 10 years ahead of schedule and grew their net worth to a million dollars, now living in the sunny paradise of Portugal. This is a great example of the success of the Thinkific Accelerator program and helping creators launch quickly and achieve new levels of success in their business. We believe early stage creators present an enormous opportunity for future growth, and we remain keenly focused on providing the very best tools and support that they need to get their business started and help them grow and thrive. And this is where a new product we are officially launching in September comes in. To give you a bit of a sneak peek, The Leap, is a product that will help creator educators that are in a similar position to that of Halisi and Rick when they got started. These creators may post on YouTube, TikTok, or Instagram, and they have a following, but they're finding it challenging to find ways to monetize their knowledge, or perhaps it's daunting for them to build a course. That's where the leap comes in. Fueled by AI, we support creators building their knowledge into a digital product in minutes. This builds on the concepts of micro-learning and the growth of learning on micro-content platforms like TikTok, accelerating the trend towards everything mobile and micro-learning. Learning on demand where you want it and consumable nuggets. The leap provides tools to help creators in building mini-courses, growing their email list, planning their digital products, monetizing their audience, including on TikTok, and driving engagement via creator group chats. These are just some of the ways we'll be supporting the creators through the leap. Up until now, The Leap has used blog content, social media, and other resources to support creators. But we saw an opportunity to allow them to get started and achieve results more rapidly. Creators are able to get started in minutes or hours, not days or weeks. The Leap is currently in beta testing, but officially launching in mid-September. You can check it out at theleap.co. For making it easier for creators to get started, we also wanted to ensure they are able to sell more and spend less time on administrative functions. That's where Thinkific Commerce comes in. Thinkific Commerce is a growing suite of tools built on top of our hugely successful Thinkific Payments platform. It is designed to help customers on Thinkific sell more and more easily manage and measure their business. We continue to bring new features to market with growing a suite of integrated business management and payment solutions. Most recently, we launched Buy Now, Pay Later, powered by Stripe and offered through Affirm, Klarna, and Afterpay. Buy Now, Pay Later allows creators to sell higher priced products while providing their students with more flexible payment options. Buy Now, Pay Later transactions on Thinkific were 40% larger than average during an ongoing beta program, evidence that Buy Now, Pay Later helps creators sell higher priced products and increase their ability to sell and earn more. Localized pricing is an addition that makes it easier for creators on our platforms. In both the UK and EU, we have introduced pricing and local currency rather than US dollars, removing a barrier for new creators to get started in these countries. And we didn't stop there. We've also launched Thinkific Analytics, which includes a suite of new dashboards that provide valuable insights to creators, helping them earn more and provide more impactful learning experiences. The analytics tool offers superior performance and usability, including data on enrollments, orders, revenue, and course engagements. Early in Q2, we launched our mobile apps. The reception has been strong, and as a result, we are broadening Branded Mobile, our customizable solution, to be available as an add-on for all of our paying customers. Some of the reasons creators are choosing the Branded Mobile solution include incremental revenue via in-app purchases, acquisition of new students via the App Store and the Play Store, brand and reputation building through a customizable look and feel, and of course, improved student engagement in both courses and communities via the mobile experience. Customer success as well as product and technology innovation are key, but as a business, we must also ensure that we are run efficiently and ultimately profitably. And we are doing this without losing focus on the importance of continued innovation, which includes working with AI to empower more creators, as well as our recent launch of our mobile apps, which I just mentioned. To sum it up, we're pleased with the progress we have made in our key metrics, the successful launch of mobile, along with continued advancements in our core platform and payments offerings. We're excited to launch The Leap and believe it solves a key barrier for new creators. We are executing on the path we laid out for ourselves late last year and are encouraged by the progress to date. Over the past several quarters, we have reduced our expense run rate, increased our revenue per employee, and improved marketing efficiency. We look forward to the sustained, consistent execution of our plan to deliver both growth and profit. Now, to speak about our current results in more detail, I'm going to turn the call over to Corrine.