Thinkific Labs Inc

TSX:THNC

Earnings Call Transcript 2022-Q1

[Operator]

Good afternoon. My name is Sylvie, and I will be your conference operator today. I would like to welcome everyone to Thinkific's First Quarter 2022 Financial Results Conference Call. As a reminder, this conference call is being broadcast live on the Internet and recorded. [Operator Instructions]

And I would like to turn the conference call over to Janet Craig, Head of Investor Relations. Please go ahead.

[Janet Craig, executive]

Thank you, Sylvie, and good afternoon, everyone. Welcome to Thinkific's earnings call for the first quarter of 2022. Joining me today are Greg Smith, Co-Founder and CEO; and Corinne Hua, CFO. After the prepared remarks, we will open 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 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 2 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 Smith, executive]

Thank you, Janet. Hello, and welcome to our first quarter earnings conference call. Thank you for joining us. At Thinkific, we remain fanatical about our creators' businesses and continue to advance our products, platform and features to support and expand their success. In the first quarter, as we continue to execute our strategy, we also had to make some very hard decisions. As you know, in late March, we announced the reduction in our workforce that resulted in us having to say goodbye to about 20% of our staff.

During 2021, we increased our workforce significantly and could have grown into our cost structure, but we knew that wasn't the right thing to do, and we needed to increase efficiency and effectiveness and better align our workforce to focus on our growth drivers. To be clear, we made these changes with growth as our priority, and we continue to invest in sales and marketing as well as research and development, but are now doing it in a more efficient and effective manner. While restructuring wasn't easy on those that left the company or those that remained, we did our best to lead with empathy and kindness.

Going forward, we remain focused on working together as a team to deliver value for our business, our customers and our shareholders. Turning to just some of the highlights of our performance. First quarter revenue grew by 42% to $11.8 million. This was driven by Q1 ARR, annual recurring revenue, which grew 33% year-over-year to $46.4 million. ARPU, average revenue per user per month, grew by 13% to $120 per month compared to Q1 last year and grew 5% quarter-over-quarter.

Total paying customers grew year-over-year 21% to 33,300. Payments performed well in our first full quarter of results. Gross payments volume was $11.9 million, which represents a penetration rate of 11% of GMV processed during the quarter, up from 6% in Q4. Our success would not be possible if it weren't for the incredible creators on our platform.

I continue to be amazed by the creativity, originality and commitment of our creator community. The impact our creators have is tremendous and remain fanatical about supporting their success and continuing to improve our platform, add new features and launch new products. We continue to see great businesses creating learning experiences with Thinkific across a variety of verticals from crime prevention courses to painting or even the banking sector.

One creator that recently touched our hearts and underscored the impact that one person or a small business can have on others is SchudioTV. Schudio has over 80,000 participants enrolled and uses a variety of methods to work with its participants, including live events, on-demand learning as well as communities. A purpose-driven organization is focused on supporting parents and teachers for children with special educational needs or disabilities. SchudioTV offers best-in-class training for parents and educators working with these students.

Ian, one of the founders has a child who is a student with special needs, and he and his partner were finding that parents and teachers were not equipped to create success for students, both at home and at school and managing the transition between the 2. For example, transitioning back to school after summer break. For an autistic child that creates friends 1 year and finds the following year he is in a new class with none of his friends he has already made is extremely disruptive and distressing.

SchudioTV was able to address this through training for parents and teachers. Ian shared with us that what really gets us excited is hearing how valuable or life-changing our content is for parents, but also how we are changing the thinking of teachers on how to approach the way they teach and work with students with special needs.

As you know, Thinkific payments was available to all creators in the United States and Canada in early November. We are in the early stages of expanding Thinkific payments support for creators doing business in the U.K., Australia and New Zealand. We are very happy with the uptake we have seen on payments and believe it will be a short and long-term value driver for our business. It will be a significant contributor to ARPU growth this year.

This quarter, we continued to enhance our feature set and broaden our offerings across our pricing tiers, including new features for reporting and refund management that save time on business administration for our customers. As you will recall, we believe Thinkific payments can reach penetration rates similar to other SaaS players in the range of 20% to 30% of GMV in the midterm, the long-term potential being even more substantial. Each quarter, we continue to improve the customer experience and add features to help our creators succeed.

The importance of this continued innovation and responsiveness to our creators cannot be understated. And we believe this innovation and creator-centric approach is what drives our success, both now and in the future. Making it easier for creators to get started is foundational to their success. This past quarter, we made it easier for creators to do just that with tools that allow faster website builds, launching and managing live events as well as a faster onboarding experience.

We also continue to lead the way in helping creators sell more. Improvements to our platform in the first quarter include new subscription tools, helping more creators build sustainable subscription-based business models as well as further improvements to order bump and to our high-performing checkout.

On top of that, we delivered enhancements to Thinkific payments to simplify administration so creators can focus on creating and selling learning products. And we made important improvements to our security features, a key area of focus for our larger customers, including multifactor authentication. We are calibrating our pricing strategy to ensure we align our success with that of our creators.

This is tied to the constant innovation to help our creators businesses and ensures they are supported with the price point and feature set that best supports their stage of business. This move is an important decision for us, allowing to price for value and is revenue-accretive. We continue to see signs that our market is growing, whether we're looking at the rise of entrepreneurship, the growing knowledge economy, the increase in creators building and monetizing audiences as well as in people's desire to engage and learn online.

Looking at our evolving go-to-market strategy, we are encouraged by the early traction we are seeing. We're leaning into top-of-funnel awareness strategies, which will provide a better reach for us at a lower cost. We have become more efficient in our paid ads channel and are improving the integration between our product development efforts and our go-to-market outreach. Our sales and marketing strategy focuses on supporting creators on their journey from becoming problem aware, solution aware and then evaluating and finally choosing Thinkific.

Bringing this all together, we are pricing for value and being revenue accretive, evolving our go-to-market strategy and capturing higher quality customers, and we have restructured for efficiency, effectiveness and a focus on growth. These decisions all serve to move our business forward with long-term sustainable growth as the objective.

In the near term, we have a number of levers to drive revenue, whether it's upgrades to higher tier plans, new Plus subscriptions and, of course, Thinkific payments as well as adding new customers. Our decision to adjust pricing will create downward pressure on the number of paying customers, but also improve ARPU, and we're confident in this decision as it will drive revenue growth and aligns our success with that of our customers.

Before I hand the call over to Corinne, I wanted to note that last week marked the anniversary of our first year as a public company. It's been an exhilarating, inspiring and very special time in Thinkific's evolution. During this year, we have accomplished much as a team, and we are excited about what is ahead. Our successes could not have been done without our dedicated thinkers, our team. Their relentless focus on excellence, teamwork and results not only for our business but also for our customers has made this happen and we're having fun doing it.

Now to speak about our current results, I'm going to turn the call over to you, Corinne.

[Corinne Hua, executive]

Thanks, Greg. It was another strong quarter with performance in line with our expectations. We continue to grow our customer base, expand our ARPU and the initial adoption of Thinkific Payments has been robust.

First quarter revenue was up 42% compared to 2021, landing at $11.8 million. This was driven by growth across all our key performance indicators. And of course, our investment over the past year and customer success, research and development, sales and marketing, all contributed to this top line growth.

First quarter ARR was $46.4 million, growing 33% year-over-year based on our growing customer count and the continued expansion of Thinkific Plus. We're also seeing existing customers upgrade to higher tier plans. Average revenue per user per month increased 13% year-over-year to $120 per month, a significant year-over-year increase in this metric and up $6 over Q4 2021.

We're consistently seeing increases to ARPU from creators upgrading to higher paid plans as they experience success in the platform. We're also seeing larger deals from Thinkific Plus customers.

As a reminder, Plus is our highest tier plan ideal for scaling and larger businesses. We continue to see Plus becoming the platform of choice for larger businesses looking to add education to their business offering and for existing customers who are scaling to new levels of success. We remain excited about the potential for ARPU expansion in 2022, and we expect to see continued upgrading to higher paid price plans, larger deal sizes, somethings that's a Plus and greater adoption of Thinkific Payments to drive further ARPU growth.

We ended the first quarter of 2022 with 33,300 paying customers, an increase of 21% from the first quarter of 2021. This is a reflection of the largest growing market we see in front of us and our solid position within the market. This growth is on top of the exponential increase we saw during the pandemic. While 21% growth in paying customers is significant, we do believe that growth will accelerate as our new marketing strategies take hold and the market continues to grow.

In the short-term, however, as Greg mentioned, there will be some downward pressure on new paying customers as we're implementing new pricing strategies that are revenue accretive, but may impact customer retention. In its first full quarter of our launch in the U.S. and Canada, Thinkific Payments continues to be relative by creators.

Gross payments value or GPV, which is the total value of GMV processed using Thinkific Payments was $11.9 million for the quarter. Sales represented a penetration rate of 11% of the $108 million of GMV processed during the first quarter of 2022.

Moving now to our P&L. As mentioned earlier, our revenue grew 42% year-over-year to $11.8 million. Gross margin for the first quarter of the year was 73% compared with 80% last year as we continue to invest through most of Q1 and building capacity and tools to build best-in-class customer support.

Later this year, we expect gross margin in our subscription business to return to 80% and see a mid-20% gross margin in our Thinkific Payments revenue. The result in gross margin will therefore be impacted by the revenue mix of the 2. In the first quarter of 2022, we spent $21.6 million on operating costs across sales and marketing, research and development, general and administrative expenses and restructuring charges.

We have invested heavily in R&D over the past year, almost doubling our headcount year-over-year. This is reflected in an increased year-over-year R&D spend of about $5 million. We will continue to build this team in the coming quarter to deliver on our product road map.

Within sales and marketing, we spoke last quarter about changes we are making to address the evolving market. This quarter, sales and marketing spend came in about $1 million lower than we had originally forecasted, and our team was able to achieve some efficiencies and our paid ad spend while still hitting the top end of our revenue guidance.

For the quarter, sales and marketing increased $3.1 million relative to the first quarter of 2021. G&A spend was up $3.2 million compared to Q1 last year, with increased expenses reflecting our growing team to support our expanding operations, along with the expenses related to public company costs, which we didn't incur in the prior year. G&A expenses continue to be a focus to ensure we are sized and staffed appropriately.

And lastly, the restructuring costs incurred during the quarter totaled $2.3 million, net of stock-based compensation expense reversal. Looking ahead, we expect spending to come down as a percentage of revenue across the board as we move forward with a leaner, more focused team to the balance of 2022. Some departments will have a gradual return to growing expenses in the second half of the year as we continue to invest in expanding our platform.

Taken together, these investments resulted in adjusted EBITDA loss for the quarter of $9.3 million compared to a loss of $0.5 million a year ago. This was better than we expected and reflected in our Q1 outlook, largely driven by the efficiencies that our sales and marketing team was able to execute during the quarter.

You'll find a summary of the calculations of our adjusted EBITDA in our press release, MD&A and investor presentation on our website. Our expectations for the second quarter of 2022 are revenue in the range of $12.4 million to $12.6 million, representing year-over-year growth of approximately 37% and adjusted EBITDA loss in the range of $7.7 million to $8.3 million.

Thinkific expects continued growth in revenue in the second quarter of 2022 driven largely by ARPU growth as well as new paying customers, the adoption of Thinkific payments, revised pricing strategies and customers moving up pricing tiers will all contribute to ARPU growth. Our adjusted EBITDA outlook is driven by increased efficiency within the broader Thinkific team because of our workforce reduction.

In 2022 and beyond, Thinkific believes its growth will also be fueled by our large and growing TAM, broadening and deepening our ecosystem, the launch of new features and functionality, the increased adoption of Thinkific payments and increased effectiveness in our sales and marketing.

And to wrap up the call, I will turn it back over to Greg.

[Greg Smith, executive]

Thank you, Corinne. Before we open the call up for questions, I wanted to close on a few key points. We made hard but necessary decisions in Q1, which illustrates the discipline of our management team as well as our ability to make decisions and execute quickly.

With our product-led strategy, our differentiated platform and our ability to engage, help and convert creators, I am confident in our ability to capture the market opportunity we have in front of us.

A strong management team, exceptional thinkers and creators that continue to show all of us what is possible, they can be very confident about the long-term trajectory of this business.

I'll now turn the call back over to Sylvie, our operator, for questions.

[Operator]

[Operator Instructions] And your first question will be from Thanos Moschopoulos at BMO Capital.

[Thanos Moschopoulos, analyst]

Greg, can you expand a little bit in terms of just some of the early signs you alluded to in terms of the changes you make to our sales and marketing strategy and what you're seeing on that front?

[Greg Smith, executive]

So as we've talked about, we saw a shift on prior calls and talked a little bit about the change in the market in the second half of 2021 and that shift away from the same level of urgency we've seen in 2020 amongst the customer base and people entering the funnel being a little earlier in their journey but still seeing a large and growing market there. So we've tailored our approach to fit that shift in the market. And so what we're leaning into is leaning into more top-of-funnel content-based marketing, which is the bigger reach, lower-cost marketing nurturing through the funnel, so helping people convert through the funnel.

And then on the product side, making it easier for people to get started with improvements to ease of use on the website building tool. And also seeing improvements. So some of the early indications that this is working really is that we're seeing early improvements in our ad spend in terms of the efficiency there. So that's a good early indication and tends to be the channel that we see perform better, faster when we make changes to it.

Some very early indications on the top of funnel and content-based approach as well, but that one takes longer definitely to see the long-term impacts of it and then consistency through customer success metrics and conversion rates in the funnel. So those are positive signs. It's still -- it is early in the shift in the go-to-market, but it is the earliest signs where we're seeing some positive results in terms of the changes we're making there.

[Thanos Moschopoulos, analyst]

Okay. And can you expand on the new pricing strategy you alluded to, just looking at the website, it seems like it hasn't rolled out yet. So any comment in terms of timing or in terms of how you're tweaking the pricing would be helpful.

[Greg Smith, executive]

Yes, for sure. So we did send a note out to customers last week or last month that it was coming in May. And so I believe it's May '18 to '19 that they actually changes start to happen or affect customer accounts. And so we do expect a minor improvement in average revenue per user there. It should be -- as we mentioned, there should be some downward pressure as you do when you see when you make changes on that to say retention, but we expect it to be accretive to revenue. And yes, that comes out later part of this month.

Although the impacts of that will take time. I don't expect to see every impact of a positive and negative hit right on that day. It is something that because of the way people react to pricing changes that takes a little bit -- it will take a few months to play out what the full impacts of that are. And really, the shift here is that this aligns -- is working in the direction of better aligning our success with our highest-quality customers, those who are getting the most out of the platform and aligning our success with their success while also maintaining that balance between free and easy to start at the low end so that people who are just getting started still have a friendly platform to join, evaluate, try out and get moving on.

[Thanos Moschopoulos, analyst]

And can you comment on churn trends, I mean, were they relatively consistent versus last quarter and you're seeing on that front?

[Greg Smith, executive]

Yes. No major variations there, slight actual slight uptick, but very, very slight in churn, but not something that sort of deviates from the overall long-run positive trend that we've seen. And yes, overall, seeing the same trend we've seen over the last number of years on churn, which is overall positive there. And -- but again, I think we do expect over the next quarter or so that we will see an uptick on or a downtick on the retention side just because of some of the intentional choices we're making around things like pricing that would be revenue accretive but negatively impactful on paying customer count.

[Operator]

Next question is from Todd Coupland at CIBC.

[Thomas Ingham, analyst]

Have you made public the percent increase in the pricing of the platform?

[Greg Smith, executive]

Yes, I can share and talk about that. I mean it has been sent out to tens of thousands of or a number of -- a large number of customers that are on it. So we have a grow plus -- I probably shouldn't get into all the specifics here because I might get a few of the specific nuances depending on the individual customer, but we have a pro plan and a growth plan, the growth plan had a scaling metric that brings people up that is an optional add-on to the pro plan, and we've moved that growth plan to a fixed fee. The specifics will kind of depend on the customer. There is the option for people to drop the growth plan and just move to the pro plan. There's the option for them to keep it. For some customers, it may actually be a reduction in price, but we do expect overall the change to be accretive to revenue and to ARPU?

[Thomas Ingham, analyst]

Okay. And when you think about churn through this, like would you still expect net of that churn to have customer additions as you implement this in Q2?

[Greg Smith, executive]

Yes, that the expectation there was that there is some downward pressure. We're obviously still adding customers every quarter in terms of with our marketing efforts, how that actually plays out next quarter, not entirely clear on the total customer count just because the reaction to the pricing is something that we can't predict perfectly. But we do expect to continue to be adding customers from the marketing channel, losing some from the pricing change and overall, the combination of those to be revenue accretive but the exact impact on total customer count, I couldn't predict.

[Thomas Ingham, analyst]

Okay. And then I think you had said with the updated go-to-market, bringing along those longer decisions, I guess, is a way to abbreviate what happened. That you're really not going to see the benefits of this updated go-to-market probably for a few quarters. Is that still the right way to think about that?

[Greg Smith, executive]

That's correct. Yes. Yes.

[Thomas Ingham, analyst]

Okay. And then as more economies open up and we're seeing trends toward services from online purchases playing out in the market. Is there still more post-pandemic, I guess, dynamics to work through in the online learning market? Are you seeing anything along those lines that would be helpful in understanding your business as economies open up.

[Greg Smith, executive]

Yes. I hesitate to get my crystal ball out for all things future on the state of the world. But the overall impact to us that we've seen so far and what we're looking at our data is we continue to see improvements in a lot of the engagement metrics, both -- let's speak specifically to what I think you're getting out on the consumption. So the customer of our customer, the consumption of courses, and we're seeing positive indications there in terms of enrollments and engagement and learning products. And so really seeing that there still is growing demand there on that side, the consumption of our customers' products.

[Operator]

Next question will be from Richard Tse at National Bank.

[Richard Tse, analyst]

I just had a few questions. One on sort of capital allocation. No doubt you've been very responsible in terms of taking some of the initiatives you've had to become more efficient. So you do have a considerable amount of cash on the balance sheet. The stock has been under pressure. Like is there a chance here that you can sort of go out and maybe buy back some of your stock, what are your thoughts on that? Is that something that's sort of been in discussion or maybe just don't give us some bit of color there?

[Greg Smith, executive]

No immediate plans to do anything in that realm. We've got good growth drivers, I think we can invest in. And so our focus really both from a mind share headspace perspective of management leadership in the company and also financially is really on how we drive growth for the company.

[Richard Tse, analyst]

Okay. And then in regards to sort of the price changes, can you maybe give us a bit of color in terms of how you came to that decision in terms of making these changes? I understand what's happening there. But what was the genesis of that? And like what did you do to sort of specifically make the change that you're making today?

[Greg Smith, executive]

Yes, we really see pricing iteration to be a continuous improvement process for us that involves continuously adding value for our customers as we iterate on pricing and packaging and ensuring really what some of the ethos behind it is ensuring that our customers are on the price plan and have the feature set that is best for their business. And so that's part of the mentality behind doing that. And that means keeping open that lower end for the people who are just getting started, making sure they have a place to land and grow from, but also aligning our success with that of our customers.

And so looking at the -- really where we made the change was on that growth plan, and that really is a feature set for people who are already successful, they have volume and they're looking for additional feature set. And we've been adding features and functionality to that plan to give people more functionality. And so now it's just making sure that we've initially setting a fixed price there on that one to capture the right amount of value to support the value we continue to add to that plan. But again, I think for us, pricing is a continuous improvement process.

[Richard Tse, analyst]

Okay. And then R&D, I think in your prepared comments, it sounded to me that that's still a pretty considerable focus in terms of the investments to come. Like it seems like the platform is actually quite robust as it is. You've got payments, sort of you have this sort of app store, what pieces are you missing and that you need to sort of continue such kind of a lean in on R&D here?

[Greg Smith, executive]

Yes. It's less so that we are missing a core functionality and much more that we sit at this very favorable position of being essentially that core operating system, that central piece of software for our customers' businesses. We're the piece that they connect to any other tools that they use, the place they sign into every day to see how their business is doing to engage with their learners and students to build and then deliver the products they're creating.

And so what that gives us is that central data point to see what else are they using? What are they wanting to use, what are they paying for even with other solutions? And so that creates opportunity for us to solve big problems for them that could be revenue accretive both to them but also to our business. So because we sit at that center point, it's more about adding as opposed to filling really big gaps.

And so one of the challenges I think we saw recently was on the communities front and seeing that more people were looking to even a number of years ago, moved some of their private communities away from Facebook and moving them to their own website under their own brand. And so we launched the communities product, which adds considerable value to our customers to be able to have their own private hosted communities delivered through Thinkific. So it was not necessarily something people were identifying as a big gap in what we serve, but it certainly added a lot of value for them.

[Operator]

Next question will be from Robert Young at Canaccord.

[Robert Young, analyst]

I was hoping you could talk a little more about the cost of acquisition being lower. I think you said that you had better added efficiency, but you're also targeting customers earlier in the funnel and so those 2 things seem at odds are you targeting a different type of customer, higher value customer, more towards like the Plus customer? Is there anything there to understand maybe a bit better?

[Corinne Hua, executive]

Long-term, we expect improvements to our CAC as we continue to go after both customers at the self-serve side as well as Plus. We've seen some improvement as we talked about the efficiencies in our paid ads. So it's not really a change in the customer that we're going after so much as just how we're spending our dollars to make sure it's providing an efficient return. There are some short-term impacts that you're going to see with the noise from the restructuring. But overall, we're going to see long-term a positive pack returning to out to more or to continuously improving CAC.

[Robert Young, analyst]

Okay. So that's something you think you've got some durability and cost of acquisition should be better going forward, okay.

[Corinne Hua, executive]

Is a great example of that, that we've been able to lean into this last quarter.

[Robert Young, analyst]

Okay. And then the ARPU growth this quarter was pretty strong. I think you said 11% adoption in payments. So it strikes me is that the ARPU grew more this quarter than last quarter, but you grew the adoption a little bit lower. I was wondering, so what is -- what would it be the balance of that? Is it something beyond payments, obviously or am I just understanding that incorrectly?

[Corinne Hua, executive]

There was a continuous growth in payments you saw really strong because it came out in November. And so obviously, a really big uptick rate from the beginning because there was some good demand for at the beginning. We expect there to be continued growth. I see also upside there. But this quarter, we also saw improvements from customers using higher tier plans, including [Technical difficulty] as well as people just differently upgrading within our [Technical difficulty], so continuously across the business some good growth.

[Robert Young, analyst]

Okay. Okay. So which of the 3 things that you highlighted, the upgrade to the higher paid plans, the Thinkific Plus and the adoption of payments, like which would have been the biggest factor there?

[Corinne Hua, executive]

The upgrades that Plus is probably the largest driver for us in Q1. However, I don't want to minimize the fact that all 3 of them contributed positively, and we expect that to continue as we go into Q2.

[Robert Young, analyst]

Okay. Is there anything in Q1 that seasonally benefits the Plus side of the business?

[Corinne Hua, executive]

No, nothing seasonal at this point, just continued success, I would say, in that side of the business.

[Robert Young, analyst]

Okay. And then maybe one more seasonality question, just the GMV. I would think that Q1 normally sees a seasonal decline. It was up a little bit quarter-to-quarter. And so is that typical or maybe you can just talk about seasonality on GMV no pass line.

[Greg Smith, executive]

Yes. So GMV has, I think, increasingly become something that we don't focus on the aggregate amount as much just because there are so many factors that affect it from an individual creators campaigns and they're running to some of that seasonality. We did see some growth in GMV, you've been cycling over the strong Q1 we had a year ago.

But obviously, there's a variety of factors that impact it. So it's probably the metric that we have the least control and visibility over. So what we're also looking at is things like the growth in the success of our customer across other metrics like enrollments or the engagement they have in their programs, and those things are continuing to grow as well.

And then the big piece we're very focused on now, obviously, is the GPV gross payments volume at that $11.9 million and 11% of the GMV. So I wouldn't say we saw strong seasonality factors in Q1 there on the GMV to be more specific to your question.

[Operator]

Next question will be from Martin Toner at ATB Capital.

[Martin Toner, analyst]

Have you implemented price increases before and what was the impact on customer count?

[Greg Smith, executive]

We have done price changes in the past, but they're all sort of quite different because -- so this one is on one specific plan, so it only affects a portion of the customer base. So it is harder to just correlate exactly based on prior changes, what those would be. We've made changes in the past on the Plus side and not seeing negative impacts on customer account, but those are -- tend to be a different nature of customer with a higher level of their own revenues and ability to pay. This is a little bit more in that middle range of customers. And we haven't made one, sort of, of this nature. In the past, we've made it where we've kind of added a new plan or a new mechanism of pricing. So this is a bit of a different shift. So it's harder for us to just tie to a specific number of change in customers in the past.

[Martin Toner, analyst]

And if you are given that you're kind of targeting successful, you're targeting a plan that's mostly comprised of successful traders and you're trying to align yourself to their success. The churn shouldn't be that bad, right?

[Greg Smith, executive]

Yes. I mean you may see people who are on that plan but don't need the features on it, drop down to the level below it or take a break and come back when they've got a level of success where they want to continue paying. So I think part of it is even just flagging for people who aren't seeing their own personal level of success today that it might be a time to drop to a lower price point. So it's -- for the ones who are successful, no, I wouldn't expect to see much change on that.

[Martin Toner, analyst]

Great. And can you talk a little bit about payments. You talked in the past about how the value -- improving the value proposition by offering payment is kind of part of a virtuous cycle that should help the entire business overall. Are you starting to see any evidence of that happening?

[Corinne Hua, executive]

We are seeing great success for our customers on our payments platform and a lot of that has to do with the selling features that we offer. And so when we talk about it actually helping the whole platform, a lot of it has to do with once we have a customer leveraging our payments platform, we are then able to have other things like high-performing checkout or order bumps or how we're able to leverage the point in which they hit the checkout within the learner's experience. And so there's just kind of like no shortage of opportunities once we have control of that checkout moment, and so we are quite excited about what's possible. And some of that speaks to Greg was talking about earlier about our R&D investments and us continuing to find ways for us to solve bigger problems for our creators and helping them learn more on our platform.

[Operator]

[Operator Instructions] And your next question will be from Gavin Fairweather at Cormark.

[Gavin Fairweather, analyst]

Just on the pricing, how common would it be per creator to start on your Pro + Growth plan versus basic or Pro?

[Greg Smith, executive]

I'm going to have to look, I thought I don't have in front of me. I'll have to look at that one and check and get back on that one in terms of actually starting on that plan. We do see people jump to any one of our plans. So people come in often on free but sometimes immediately select a pay plan, sometimes select a trial. We do run trial campaigns more and more now, and so people will come in and trial a campaign that -- or a trial, a plan that may include that growth plan, which would mean that then when they come off of the trial that they are starting right away on that plan because they wanted some of the feature set that was on it. So there are some people definitely who are starting right at that price point, but I don't have right in front of me the number that are actually starting on that plan.

[Gavin Fairweather, analyst]

I mean I thought kind of intuitively like maybe more would start at Basic or Pro. And then so kind of thinking through your growth additions, maybe they're not as impacted in the second half as your sales machine is kind of fine-tuned there?

[Greg Smith, executive]

Yes. And you're right in that actually the most popular starting point for people is that Pro Plan.

[Gavin Fairweather, analyst]

Okay. And then maybe just on operating expenses, if I'm kind of doing the math here, the guidance implies kind of $17 million in cash OpEx for Q2. How should we be thinking about kind of growth off of that base kind of post restructuring, given inflation and any kind of strategic investments you'd like to make?

[Corinne Hua, executive]

We are focused very much on executing on our plan in front of us. And so looking at how do we best leverage our investments to get a good return. We're only looking to give guidance at this point up to Q2 and not much beyond that, but we do see continued opportunities for us to invest in our growing market, lots of opportunities for us to continue to find ways to lead the market and provide solutions that creators are looking for but not looking to spend anything in areas that are dramatically outside of our current product set and quite excited what we're building from that perspective and continuously feel as our current plans are well funded and so we're in good shape going forward.

[Gavin Fairweather, analyst]

Okay. Great. And then I think in the past couple of quarters, you've kind of helped us out to understand the amount of payments in the guide. Can you help us out on that front for Q2?

[Corinne Hua, executive]

We're not looking to continue to share, like what are we looking at a penetration of GMV for think payments specifically. As we get a more material number, we plan to share that on our financial statements, a separate line item, kind of like breaking out the gross margin as well. But at this point, just trying to kind of stay focused on our revenue numbers, we've seen good adoption of Thinkific Payments, expect that to continue, but not looking to provide a specific guidance number on that right now.

[Operator]

And at this time, we have no further questions. I would like to turn the call back over to Mr. Smith.

[Greg Smith, executive]

Thank you, Sylvie. Thank you, everyone, for attending. Thank you for the great questions. Really appreciate it. And just I'll share that very excited about some of the things we have coming in the future on our R&D road map and some of the features we're building and we'll be delivering later this year for our customers to help grow their success. Thanks again, everyone, for coming, and look forward to chatting with you again next quarter.

[Operator]

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.