Thinkific Labs Inc. THNC-T announced its second mass layoff of the past year, as the Toronto Stock Exchange-listed software company committed to reach operating profitability by the end of 2023.
The Vancouver-based firm, which provides an online platform for entrepreneurs and businesses to create and run online courses, said it was cutting 76 employees, or 21 percent of its workforce. It affirmed its guidance for last year’s fourth-quarter revenue of around US$13.6-million and an adjusted operating loss of between US$5.1-million and US$5.7-million. The company reports year-end results on Feb. 22.
CEO and co-founder Greg Smith said in an interview the job cuts – which followed a 100-person layoff announced in late March, 2022 – are “fundamentally about achieving profitability and being responsible with our cash. We can very much make growth our absolute priority without the distraction of constant cost cutting. This is the responsible decision we’ve made.”
Thinkific was one of an unprecedented crop of 20 Canadian technology companies that went public on the TSX during a 20-month stretch earlier in the pandemic, from July, 2020 to the end of 2021. Investor demand soared for digital companies, particularly those that were set to benefit from people sheltering at home, and Thinkific attracted $1-billion for orders when it set out to raise $160-million in its spring 2021 IPO. It went public at $13 a share that April and closed up 20 percent on its first trading day, topping a $1-billion valuation.
But tech stocks began to pitch downward towards the end of 2021, partly owing to fears that rising inflation would lead to interest-rate hikes, which began last year – pulling down valuations of riskier, unprofitable early stage innovation companies. Early “COVID winners” also saw their values fall off when the initial burst of growth did not continue apace.
Thinkific stock further sold off last February after the company issued a disappointing first-quarter forecast and said it would rejig its sales and marketing strategy. After the first layoff last year, the company in September tapped ex-Groupon chief operating officer Steve Krenzer, one of its board members, to temporarily serve as president to help Thinkific sharpen its operating performance.
The company’s stock has continued to struggle, closing flat at $1.77 a share Tuesday, reflecting a broader selloff across publicly traded technology companies that have also hit valuations of their privately held peers. The company ended its third quarter with US$95-million in cash.
Job losses have mushroomed in tandem across the tech sector, picking up in recent weeks as large companies including Facebook, Amazon and Salesforce enacted sweeping cuts to brace for an expected economic slowdown and possible recession this year. Technology companies globally cut more than 154,000 workers last year and another 18,000-plus just in the first 10 days of 2023, according to job-loss tracking website layoffs.fyi.
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