Thinkific claims increased losses reflect rising expenses, competitive job market
The EdTech company Thinkific Labs Inc. filed its fourth quarter and annual results, announcing annual revenue up by 81 percent to $38.1 million compared to $21.1 million the year before.
At the same time, losses grew within the startup. Thinkific posted a net loss of $26.4 million compared to the previous year when it showed a loss of $1.3 million. The company said the increased losses reflected rising expenses as it executes on its growth strategy.
Thinkific’s fourth quarter numbers reflected the company’s year in miniature. Thinkific posted revenues of $10.8 million, an increase of 49 percent compared to the fourth quarter of 2020.
But again, the gap widened in terms of losses. The net loss for the quarter was $9.4 million compared with $0.4 million in the same quarter previously.
“The opportunity in front of us is large and growing, and we are well positioned to distinguish ourselves through innovative solutions for our creators, to maximize their business success.”
– Greg Smith
Despite the growing losses, Greg Smith, Thinkific’s co-founder and CEO, maintained a positive outlook.
“The opportunity in front of us is large and growing, and we are well positioned to distinguish ourselves through innovative solutions for our creators, to maximize their business success,” declared Smith.
However, shareholders are less than convinced. From a 52-week high of $19.47, the company’s stock has plummeted to $4.25 at time of publication
Thinkific is one of a number of tech companies that delivered strong IPOs last year, and then subsequently faded. “Stocks whose initial public offerings were heavily oversubscribed as a result of ravenous investor appetite earlier in the year are now struggling to find shareholder support,” The Globe and Mail reported in late December, citing Thinkific as one of the companies whose stock has shown lackluster performance.
Thinkific said its fourth quarter adjusted EBITDA loss of $8.7 million came largely because of a competitive hiring market and investments in sales and marketing, and research and development as it continued to invest in building its platform and team.
Fourth quarter highlights for the EdTech company include completing its rollout of Thinkific Payments to all of its “creators” across the United States and Canada; and improving the payments platform. Thinkific Payments is designed to give course creators tools that help them sell more, and spend more time teaching and growing their business, according to the company.
Over the course of 2021, the company said it launched the Thinkific App Store as well as the Thinkific Plus Portal. The latter enables Plus customers to manage multiple sites in one dashboard, and provides a new site page interface to help creators with the better management of their Thinkific websites.
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Thinkific also beefed up its executive team last year with the appointment of Henk Campher to the position of chief marketing officer, and Chris McGuire as the chief technology officer. Both Campher and Mcquire are alumni of Hootsuite.
Campher served as Hootsuite’s vice president of corporate marketing for almost two years where he led the company’s global marketing strategy, brand awareness, social media, and campaign strategies.
McGuire worked as the director of software development at Hootsuite from October 2015 to 2016.
For the year ahead, Thinkific forecasted revenue of $11.6 to $11.8 million, which would represent year-over-year growth of 40 to 42 percent. It predicts an adjusted EBITDA loss in the range of $10.2 to $10.8 million in 2022 and beyond.
The company opined it would drive its growth by deepening its ecosystem, through the launch of new products, and through the increased adoption of Thinkific Payments.
Thinkific filed a preliminary and final short form base shelf prospectus in the fall of 2021 that would offer up to $300 million of Thinkific’s shares and other financial instruments. The company said the shelf prospectus will give it the flexibility to take advantage of financing opportunities at its discretion when market conditions are favourable.
The company went public on the Toronto Stock Exchange in April 2021, raising more than $160 million in gross proceeds. It exercised an over-allocation option that was part of Thinkific’s offering a month later, boosting its IPO to $184 million.
Founded in 2012 by Smith, COO Miranda Lievers, CTO Matt Payne and chief strategy officer Matt Smith, Thinkific’s offering is a cloud-based software designed to help entrepreneurs and businesses launch, grow, and diversify their businesses.