Thinkific prices shares at $13 each for $160m IPO

Vancouver tech company specializes in online course creation

Thinkific CEO and co-founder Greg Smith | Photo: Chung Chow, BIV

Thinkific Labs Inc. is firming up its efforts to go public, revealing Thursday it will price just over 12.3 million shares at $13 each in a bid to raise $160 million.

The Vancouver-based tech company filed a preliminary prospectus last month but it remains unclear when the firm will hit the markets. 

The IPO is being underwritten by a syndicate led by BMO Capital Markets and CIBC Capital Markets. TD Securities Inc. and Canaccord Genuity Corp. are among the other underwriters.

The underwriters have the option of buying 1.8 million subordinate voting shares at $13 each, bringing in an additional $24 million.

Thinkific, best known for its platform that helps businesses and individuals create and distribute online courses, raised $22 million in venture capital last September in a funding round led by early investor Rhino Ventures — also based in Vancouver.

Thinkific’s preliminary prospectus revealed revenue has been moving at a clip the past three years, growing from US$6 million in 2018 to US$9.8 million in 2019 to US$21 million in 2020.

Meanwhile, the company increased its operating costs from US$7.4 million in 2019 to US$18.1 million the following year.

The prospectus stated that “a significant part of our business strategy and culture is to focus on long-term growth and customer success over short-term financial results” before noting that during the 2019-20 fiscal period the company went from having net income of $300,000 to incurring a net loss of $1.3 million.

User growth has increased 126% to reach 25,000 paying customers over the past year, according to the prospectus.

Average revenue per user amounted to US$105 and a total of 66 million online courses were taken by 21 million people last year.

Thinkific has free offerings, but revenue is generated by delivering additional features to course creators who typically pay between $49 and $99 a month and then charge their clients fees for the courses (Thinkific does not take a cut of those fees).

CEO Greg Smith told BIV last year course creation on Thinkific’s platform surged 200% since the outset of the pandemic.

“We might have seen one week of things being a little bit slow – but not even a concerning level of flow – and then everything completely blew up in a good way,” he said about the immediate impacts of the pandemic on Thinkific’s business.

Back in the fall, Smith said his goal was to triple the company’s headcount over 18 months by hiring 350 more tech workers to meet demand.

“We saw a bit of uncertainty in the world but also a real opportunity to double down and do even more for businesses that are unique. The interesting thing we’ve seen is so many businesses that would have otherwise potentially failed are now thriving because they’ve moved or transitioned to online education or added it as a component,” he said.