Thinkific Labs Earnings Call Highlights AI Pivot

Thinkific Labs, Inc. ((TSE:THNC)) has held its Q1 earnings call. Read on for the main highlights of the call.

Thinkific Labs’ latest earnings call struck a cautiously optimistic tone, blending solid revenue growth and visible traction in higher-value segments with near-term profitability pressure. Management framed the quarter as a deliberate transition phase, prioritizing AI innovation and an upmarket push even as margins tighten and guidance for the next period remains muted.

Solid Top-Line Performance

Thinkific reported Q1 revenue of $18.7 million, up 5% year over year, with annual recurring revenue reaching $61.3 million. ARR grew 2% from a year ago and added $0.3 million sequentially, while ARPU rose 4% to $175, underscoring stronger monetization despite modest overall subscription expansion.

Plus Segment Momentum and Upmarket Traction

The Plus segment was a standout, growing 12% to $5.1 million and crossing the $5 million mark for the first time. Management highlighted better upgrade activity, stronger retention and early success with larger customers, including a notable win with a large online real estate marketplace.

Commerce and GPV Growth

Commerce revenue surpassed $3.5 million for the first time as gross payment volume climbed to $75.7 million, up 16% year over year and 3% sequentially. Commerce penetration rose to 64% of GMV from 56% a year ago, signaling deeper monetization of transactions even as the overall take rate edged down.

AI Product Launch and Strategic Positioning

A central theme was the launch of Thinker, an agentic AI product trained on customer and Thinkific data that drew positive early feedback. Management positioned Thinker for outcome-based monetization and said company-wide AI adoption is already accelerating R&D velocity and enabling faster product iteration.

Product Roadmap Progress and New Capabilities

The upcoming learner hub, due to launch in May, will bring agents, communities and courses into a unified experience aimed at boosting engagement. Recent mobile and community enhancements have resonated with customers, while HIPAA alignment work helped secure a rapidly expanding client and opened doors to healthcare-adjacent markets.

Healthy Cash Position

Thinkific closed the quarter with $49.4 million in cash and equivalents, down modestly from $50.7 million at year-end. The decline was driven by small operating cash usage, share repurchases under its NCIB program and tax remittances, leaving the company with ample liquidity to fund its strategic bets.

Adjusted EBITDA Loss and Near-Term Profit Pressure

The company posted an adjusted EBITDA loss of about $0.5 million in Q1 and signaled more pressure ahead. Management expects Q2 adjusted EBITDA to land between a 2% and 5% loss margin, reflecting continued investment and some one-time costs as the business pivots toward AI and larger customers.

Rising Operating Expenses Driven by AI Investments

Total operating expenses rose to $15.3 million, up roughly $2 million both year over year and sequentially, with R&D the main driver. R&D spending climbed to $7.1 million from $4.9 million a year ago, largely due to AI-related investments, expanded technical talent and temporary consulting support.

Gross Margin Compression

Gross margin came in at 72%, about two points lower than a year ago and unchanged from the prior quarter, as mix shifted toward commerce. While this commerce-heavy mix weighs on reported margin, management framed it as a tradeoff for higher dollar growth in payment and transaction-based revenue.

Slowing Self-Serve and Subdued Subscription Growth

Growth in the self-serve segment slowed to roughly 2%, and management described overall subscription growth as subdued. The company has deliberately cut acquisition spend on lower-tier creators as it pivots upmarket, trading near-term volume for higher-value customers with larger contract potential.

Soft Near-Term Guidance and Seasonal Volatility

Q2 revenue is guided to a range of $18.2 million to $18.5 million, implying about 1% year-over-year growth at the midpoint and a slight sequential decline. Management flagged expected seasonal softness and quarter-to-quarter volatility in commerce as key headwinds, tempering near-term topline expectations.

AI Consumption Cost and Pricing Uncertainty

Early adoption of Thinker is encouraging but still measured as customers weigh token-based consumption costs and usage patterns. Thinkific expects token usage and associated costs to rise and plans to lean on outcome-based pricing models to balance customer value with the economics of scaling AI.

Guidance and Forward-Looking Outlook

Looking ahead, Thinkific expects Q2 to reflect stable Plus momentum but only modest revenue growth and a small adjusted EBITDA loss as a percentage of sales. Management reiterated that elevated AI and R&D spending, along with one-time transition costs and commerce seasonality, will pressure margins in the near term while setting up potential longer-term upside.

Thinkific’s earnings call painted a picture of a company willingly trading short-term margin and subscription growth for strategic positioning in AI, commerce and enterprise-like customers. Investors will now watch whether Plus momentum, expanding commerce monetization and the Thinker rollout can offset softer guidance and translate this transitional phase into durable, profitable growth.