Instructure Reports First Quarter 2024 Financial Results
Total Revenue Grows 20.7% Year-over-Year to $155.5 Million
GAAP Net Loss Margin Decreases 440 Basis Points Year-over-Year to (13.6)%
Adjusted EBITDA Margin Expands 430 Basis Points Year-over-Year to 41.8%
SALT LAKE CITY, May 8, 2024 /PRNewswire/ -- Instructure Holdings, Inc. (Instructure) (NYSE: INST) today announced financial results for the first quarter ended March 31, 2024.
"Our first quarter results exceeded all guided metrics and demonstrate the durability, operational scale, and breadth of the Instructure platform," said Steve Daly, Instructure CEO. "I couldn't be more pleased with how our team is working to deliver a best-in-class experience to educators, students, and partners as we build momentum bringing Parchment into the Instructure ecosystem."
First Quarter 2024 Financial Highlights:
(All results compared to prior-year period unless otherwise noted). Given the recent completion of the acquisition of Parchment, Instructure is introducing new non-GAAP financial measures. See "Non-GAAP Financial Measures" for more information.
-- Revenue of $155.5 million, an increase of 20.7%, and Organic Constant
Currency Revenue Growth* of 6.8%
-- Subscription and Support Revenue of $144.7 million, an increase of
22.1%, and Organic Constant Currency Subscription and Support Revenue
Growth* of 7.6%
-- Net loss of $21.1 million, an increase of $9.3 million, and Net Loss
Margin of (13.6%), primarily driven by higher interest expense from the
acquisition of Parchment
-- Adjusted EBITDA* of $64.9 million, an increase of $16.6 million, and
Adjusted EBITDA Margin* of 41.8%
-- Cash flow from operations of negative $92.6 million and Adjusted
Unlevered Free Cash Flow* of negative $65.3 million
Updated Second Quarter and Full Year 2024 Guidance:
-- Second quarter 2024 guidance ranges for Revenue of $166.5 million to
$167.5 million, Non-GAAP Operating Income* of $66.0 million to $67.0
million, Adjusted EBITDA* of $67.5 million to $68.5 million, and
Non-GAAP Net Income* of $28.0 million to $29.0 million
-- Full year 2024 guidance ranges for Revenue of $656.5 million to $666.5
million, Non-GAAP Operating Income* of $265.0 million to $268.0 million,
Adjusted EBITDA* of $271.0 million to $274.0 million, Non-GAAP Net
Income* of $123.0 million to $127.0 million, and Adjusted Unlevered Free
Cash Flow* of $262.0 million to $265.0 million
*See "Non-GAAP Financial Measures" for information regarding the Company's use of non-GAAP financial measures as well as reconciliations to the most closely comparable GAAP measures in this press release for historical periods. Instructure is unable to provide guidance or a reconciliation for forward-looking non-GAAP measures because Instructure cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. This is due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including stock-based compensation and amortization of acquisition-related intangibles. Thus, Instructure is unable to present a quantitative reconciliation of non-GAAP guidance to GAAP guidance because such information is not available.
Key Financials:
(Dollars in millions)
Three months ended
March 31,
2024 2023 Year-over-Year (% or
bps)
Revenue $
155.5 $
128.8 20.7
%
Loss from Operations $
(6.1) $
(5.9) 2.8
%
Non-GAAP Operating Income* $
63.5 $
47.2 34.6
%
GAAP Net Loss $
(21.1) $
(11.9) 78.2
%
GAAP Net Loss Margin (13.6)
%
% (9.2)
-440 bps
Adjusted EBITDA* $
64.9 $
48.3 34.6
%
Adjusted EBITDA Margin* 41.8 37.5
% %
430 bps
Cash Flow from Operations $
(92.6) $
(80.9) (14.4)
%
Adjusted Unlevered Free Cash Flow* $
(65.3) $
(63.4) (3.0)
%
Remaining Performance Obligations ("RPO") $
820.4 $
703.7 16.6
%
*See "Non-GAAP Financial Measures" for information regarding the Company's use of non-GAAP financial measures as well as reconciliations to the most closely comparable GAAP measures in this press release.
Balance Sheet and Cash Flow
As of March 31, 2024, cash, cash equivalents, restricted cash, and funds held on behalf of customers were $89.3 million and total debt was $1,173.3 million; compared to cash, cash equivalents, and restricted cash of $344.2 million and total debt of $491.3 million as of December 31, 2023. The decrease in cash, cash equivalents, restricted cash, and funds held on behalf of customers and increase in debt since December 31, 2023, is primarily driven by cash spend and debt incurred in connection with the Parchment acquisition. As of March 31, 2024, Instructure's total leverage ratio is 5.1x (which represents Total Debt to trailing twelve month Adjusted EBITDA) and net leverage ratio is 4.7x (which represents Net Debt to trailing twelve month Adjusted EBITDA). This calculation includes twelve months of historical Instructure Adjusted EBITDA and two months of Parchment contribution to Adjusted EBITDA. We are on track for a year-end net leverage ratio of 3.4x. As of March 31, 2024, available borrowings under Instructure's revolving credit facility were $125.0 million. Net cash used in operating activities was $92.6 million for the three months ended March 31, 2024, compared to $80.9 million used in the prior year period. Adjusted Unlevered Free Cash Flow was negative $65.3 million for the three months ended March 31, 2024, compared to negative $63.4 million in the prior year period.
Second Quarter and Full Year 2024 Guidance
The following tables summarize second quarter and full year 2024 guidance.
Second Quarter 2024 Guidance
(dollars in millions) Amount Year-over-
Year
change
Revenue
$166.5 - $167.5 27.0% - 27.8%
Non-GAAP operating income*
$66.0 - $67.0 31.6% - 33.6%
Adjusted EBITDA*
$67.5 - $68.5 31.7% - 33.6%
Non-GAAP net income*
$28.0 - $29.0 0.1% - 3.7%
Full Year 2024 Guidance
(dollars in millions) Amount Year-over-
Year
change
Revenue
$656.5 - $666.5 23.8% - 25.7%
Non-GAAP operating income*
$265.0- $268.0 26.3% - 27.8%
Adjusted EBITDA*
$271.0 - $274.0 26.5% - 27.9%
Non-GAAP net income*
$123.0 - $127.0 (1.5)% - 1.7%
Adjusted Unlevered Free Cash Flow*
$262.0 - $265.0 16.2% - 17.5%
The Company's guidance ranges reflect expectations that existing macroeconomic conditions and the current foreign currency environment continue through 2024. These forward-looking statements reflect the Company's expectations as of today's date. Actual results may differ materially.
*Non-GAAP Operating Income, Adjusted EBITDA, Non-GAAP Net Income and, Adjusted Unlevered Free Cash Flow are non-GAAP measures. See "Non-GAAP Financial Measures" in the press release for information regarding the Company's use of non-GAAP financial measures as well as reconciliations to the most closely comparable GAAP measures for historical periods. Instructure is unable to provide guidance or a reconciliation for forward-looking non-GAAP measures because Instructure cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. This is due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including stock-based compensation and amortization of acquisition-related intangibles. Thus, Instructure is unable to present a quantitative reconciliation of non-GAAP guidance to GAAP guidance because such information is not available.
Conference Call Information
The Company will hold a conference call to discuss the first quarter 2024 financial results today, May 8, 2024, at 3:00 PM Mountain Time (5:00 PM Eastern Time).
Participants may access the conference call by dialing 1-888-596-4144 (U.S. and Canada) or 1-646-968-2525 (International) and using conference code 6925245 approximately ten minutes before the start of the call. A live audio webcast of the conference call will also be available on Instructure's investor relations website at https://ir.instructure.com under "Events & Presentations".
A replay will be available after the conclusion of the call on Instructure's investor relations website under "Events & Presentations" or by dialing 1-800-770-2030 (U.S. and Canada) or 1-609-800-9909 (International) and using conference code 6925245. The telephone replay will be available through Wednesday, May 15, 2024.
About Instructure
Instructure (NYSE: INST) is an education technology company dedicated to elevating student success, amplifying the power of teaching, and inspiring everyone to learn together. Today the Instructure Learning Platform supports tens of millions of educators and learners around the world. Learn more at www.instructure.com.
Non-GAAP Financial Measures
Instructure has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). In addition to Instructure's results determined in accordance with GAAP, Instructure believes the following non-GAAP measures are useful in evaluating its operating performance and liquidity. Instructure believes that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.
Given the recent acquisition of Parchment, Instructure is introducing Organic Constant Currency Revenue Growth and Organic Constant Currency Subscription and Support Revenue Growth, which are non-GAAP financial measures that Instructure believes will assist investors comparing growth from period to period without the impact of past acquisitions or the impact of foreign currency exchange rates. Instructure is also introducing Subscription and Support non-GAAP Gross Profit and Subscription and Support non-GAAP Gross Margin to show the impacts of certain non-recurring items on subscription and support revenue. In addition, Instructure is updating the grouping of the presentation of the adjustments to Non-GAAP Operating Income, Adjusted EBITDA, Non-GAAP Net Income, Adjusted Unlevered Free Cash Flow, Non-GAAP Cost of Revenue, Non-GAAP Operating Expenses, and Non-GAAP Gross Profit to more closely conform to the Company's strategies and initiatives. These measures are not being recasted.
A reconciliation of Instructure's historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.
Non-GAAP Operating Income; Non-GAAP Operating Income Margin. We define non-GAAP operating income as loss from operations excluding the impact of stock-based compensation, transaction costs, globalization costs, restructuring costs, technology modernization costs, other non-recurring costs, and amortization of acquisition-related intangibles. We believe non-GAAP operating income is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measure, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Non-GAAP operating income margin is defined as non-GAAP operating income divided by revenue.
Adjusted EBITDA; Adjusted EBITDA Margin. EBITDA is defined as earnings before debt-related costs, including interest and loss on debt extinguishment, benefit for taxes, depreciation, and amortization. We further adjust EBITDA to exclude certain items of a significant or unusual nature, including stock-based compensation, transaction costs, globalization costs, restructuring costs, technology modernization costs, other non-recurring costs, effects of foreign currency transaction (gains) and losses, and amortization of acquisition-related intangibles. Although we exclude the amortization of acquisition-related intangibles from this non-GAAP measure, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue.
Non-GAAP Net Income. We define non-GAAP net income as net loss excluding the impact of stock-based compensation, amortization of acquisition-related intangibles, transaction costs, globalization costs, restructuring costs, technology modernization costs, other non-recurring costs, effects of foreign currency transaction (gains) and losses that we do not believe are reflective of our ongoing operations, and loss on extinguishment of debt. The tax effects of the adjustments are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction. We believe Non-GAAP net income is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measure, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Basic non-GAAP net income per common share is computed by dividing non-GAAP net income by the weighted-average number of common shares outstanding for the period. Diluted non-GAAP net income per common share is computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period.
Free Cash Flow, Unlevered Free Cash Flow and Adjusted Unlevered Free Cash Flow. We define free cash flow as net cash used in operating activities less purchases of property and equipment and intangible assets, net of proceeds from disposals of property and equipment. We define unlevered free cash flow as free cash flow adjusted for cash paid for interest on outstanding debt and cash settled stock-based compensation. We define adjusted unlevered free cash flow as unlevered free cash flow adjusted for transaction costs, globalization costs, restructuring costs, technology modernization costs, and other non-recurring costs paid in cash. We believe free cash flow, unlevered free cash flow and adjusted unlevered free cash flow facilitate period-to-period comparisons of liquidity. We consider free cash flow, unlevered free cash flow and adjusted unlevered free cash flow to be important measures because they measure the amount of cash we generate and reflect changes in working capital.
Non-GAAP Cost of Revenue and Non-GAAP Operating Expenses. We define non-GAAP cost of revenue and non-GAAP operating expenses as GAAP cost of revenue and GAAP operating expenses, respectively, excluding the impact of stock-based compensation, transaction costs, globalization costs, restructuring costs, technology modernization costs, other non-recurring costs, and amortization of acquisition-related intangibles that we do not believe are reflective of our ongoing operations. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measures, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.
Non-GAAP Gross Profit; Non-GAAP Gross Profit Margin. We define non-GAAP gross profit as gross profit excluding the impact of stock-based compensation, transaction costs, globalization costs, restructuring costs, technology modernization costs, and amortization of acquisition-related intangibles. Non-GAAP Gross Profit Margin is defined as Non-GAAP gross profit divided by revenue.
Subscription and Support Non-GAAP Gross Profit; Subscription and Support Non-GAAP Gross Profit Margin. We define subscription and support Non-GAAP gross profit as subscription and support gross profit excluding the impact of stock-based compensation, transaction costs, globalization costs, restructuring costs, technology modernization costs, and amortization of acquisition-related intangibles. Subscription and support non-GAAP gross profit margin is defined as subscription and support non-GAAP gross profit divided by subscription and support revenue.
Net Debt; Net Leverage Ratio. We define net debt as total outstanding term debt, less cash, cash equivalents, restricted cash, and funds held on behalf of customers. Management uses this supplemental non-GAAP measure to evaluate the Company's leverage. Net leverage ratio is computed by dividing net debt by adjusted EBITDA.
Organic Constant Currency Revenue Growth. We define organic constant currency revenue growth as revenue growth excluding the impact of revenue from the acquisitions completed within each respective period and the impacts of foreign currency exchange rates by converting the current period's revenue in local currency to U.S. dollars using foreign currency exchange rates for the same period of the prior year.
Organic Constant Currency Subscription and Support Revenue Growth. We define organic constant currency subscription and support revenue growth as subscription and support revenue growth excluding the impact of subscription and support revenue from the acquisitions completed within each respective period and the impacts of foreign currency exchange rates by converting the current period's revenue in local currency to U.S. dollars using foreign currency exchange rates for the same period of the prior year.
Forward-Looking Statements
This press release contains, and statements made during the above referenced conference call will contain, "forward-looking" statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's financial guidance for the second quarter of 2024 and for the full year ending December 31, 2024, the Company's growth, customer demand and application adoption, the Company's research and development efforts and future application releases, the Company's business strategy, statements about artificial intelligence and the Company's expectations regarding future revenue, expenses, cash flows and net income or loss.
These statements are not guarantees of future performance, but are based on management's expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: risks associated with the continued economic uncertainty, including persistent inflation, labor shortages, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession, reduced spending by customers and geopolitical instability; failure to continue our recent growth rates; the effects of increased usage of, or interruptions or performance problems associated with, our learning platform; the impact on our business and prospects from health pandemics and epidemics; our history of losses and expectation that we will not be profitable for the foreseeable future; or ability to acquire new customers and successfully retain existing customers; failure of the markets for our applications to develop at anticipated rates; failure to manage our growth effectively; and changes in the spending policies or budget priorities for government funding of Higher Education and K-12 institutions.
These and other important risk factors are described more fully in the Company's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other documents filed with the Securities and Exchange Commission and could cause actual results to vary from expectations. All information provided in this press release and in the conference call is as of the date hereof and Instructure undertakes no duty to update this information except as required by law.
INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
March 31, December 31,
2024 2023
Assets (unaudited)
Current assets:
Cash and cash equivalents $
83,015 $
341,047
Funds held on behalf of customers 5,286
Accounts receivable-net 52,273 67,193
Prepaid expenses 68,592 12,082
Deferred commissions 12,764 13,705
Other current assets 4,207 4,797
Total current assets 226,137 438,824
Property and equipment, net 14,084 13,479
Right-of-use assets 10,021 9,002
Goodwill 1,858,136 1,265,316
Intangible assets, net 654,686 399,712
Noncurrent prepaid expenses 3,241 4,182
Deferred commissions, net of current portion 12,865 13,816
Deferred tax assets 6,842 6,739
Other assets 5,467 6,908
Total assets $
2,791,479 $
2,157,978
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $
12,773 $
23,589
Customer fund deposits 5,286
Accrued liabilities 33,576 23,760
Lease liabilities 6,837 7,513
Long-term debt, current 6,615 4,013
Deferred revenue 223,175 291,784
Total current liabilities 288,262 350,659
Long-term debt, net of current portion 1,142,090 482,387
Deferred revenue, net of current portion 11,825 10,876
Lease liabilities, net of current portion 11,795 9,246
Deferred tax liabilities 53,246 14,420
Other long-term liabilities 5,686 4,898
Total liabilities 1,512,904 872,486
Stockholders' equity:
Common stock 1,459 1,452
Additional paid-in capital 1,633,221 1,619,020
Accumulated deficit (356,105) (334,980)
Total stockholders' equity 1,278,575 1,285,492
Total liabilities and stockholders' equity $
2,791,479 $
2,157,978
INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
Three months ended
March 31,
2024 2023
(unaudited) (unaudited)
Revenue:
Subscription and support $
144,657 $
118,480
Professional services and other 10,798 10,363
Total revenue 155,455 128,843
Cost of revenue:
Subscription and support 46,312 38,810
Professional services and other 8,041 7,022
Total cost of revenue 54,353 45,832
Gross profit 101,102 83,011
Operating expenses:
Sales and marketing 59,256 50,850
Research and development 27,536 23,702
General and administrative 20,390 14,373
Total operating expenses 107,182 88,925
Loss from operations (6,080) (5,914)
Other income (expense):
Interest income 2,508 1,341
Interest expense (22,596) (9,485)
Other income (expense) (1,835) 76
Loss on extinguishment of debt (189)
Total other income (expense), net (22,112) (8,068)
Loss before income tax benefit (28,192) (13,982)
Income tax benefit 7,067 2,125
Net loss and comprehensive loss $
(21,125) $
(11,857)
Net loss per common share, basic and diluted $
(0.15) $
(0.08)
Weighted-average common shares used in computing basic and diluted net loss per common share 145,455 143,112
INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended
March 31,
2024 2023
(unaudited) (unaudited)
Operating Activities:
Net loss $
(21,125) $
(11,857)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment 1,343 1,203
Amortization of intangible assets 43,326 35,749
Amortization of deferred financing costs 1,026 294
Stock-based compensation 12,445 9,635
Deferred income taxes (7,851) (3,059)
Right-of-use assets (644) 991
Other 1,307 181
Changes in assets and liabilities:
Accounts receivable, net 24,349 7,629
Prepaid expenses and other assets (52,461) (39,557)
Deferred commissions 1,892 944
Accounts payable and accrued liabilities (10,446) (7,177)
Deferred revenue (85,138) (73,658)
Lease liabilities 1,443 (1,912)
Other liabilities (2,019) (324)
Net cash used in operating activities (92,553) (80,918)
Investing Activities:
Purchases of property and equipment (1,881) (1,327)
Proceeds from sale of property and equipment 8 6
Business acquisitions, net of cash acquired (821,739)
Net cash used in investing activities (823,612) (1,321)
Financing Activities:
Proceeds from issuance of common stock from employee equity plans 3,228 3,295
Shares repurchased for tax withholdings on vesting of restricted stock units (1,568) (1,279)
Proceeds from issuance of term debt, net of discount 664,319
Repayments of long-term debt (2,993) (1,250)
Changes in customer fund deposits (795)
Net cash provided by financing activities 662,191 766
Foreign currency impacts on cash, cash equivalents, restricted cash, and funds held on behalf of (979) 301
customers
Net decrease in cash, cash equivalents, restricted cash, and funds held on behalf of customers (254,953) (81,172)
Cash, cash equivalents, restricted cash, and funds held on behalf of customers, beginning of period 344,208 190,266
Cash, cash equivalents, restricted cash, and funds held on behalf of customers, end of period $
89,255 $
109,094
Supplemental cash flow disclosure:
Cash paid for taxes $
1,015 $
181
Interest paid $
15,446 $
8,096
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid $
231 $
186
The following provides a reconciliation of cash, cash equivalents, restricted cash, and funds held on behalf of customers to the amounts reported on the consolidated balance sheets. Restricted cash has been disclosed in Other assets as it is associated with letters of credit obtained to secure office space from our various lease agreements and other contractual cash collateral arrangements.
INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
As of March 31,
2024 2023
Cash and cash equivalents $
83,015 $
104,758
Restricted cash 954 4,336
Funds held on behalf of customers 5,286
Total cash, cash equivalents, restricted cash, and funds held on behalf of customers $
89,255 $
109,094
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME
(in thousands)
(unaudited)
Three months ended
March 31,
2024 2023
Loss from operations $
(6,080) $
(5,914)
Stock-based compensation 12,445 10,010
Transaction costs(1) 5,615 3,836
Globalization costs(2) 890 9
Restructuring costs(3) 4,930 3,227
Technology modernization costs(4) 2,266 215
Other non-recurring costs(5) 102 56
Amortization of acquisition-related intangibles 43,326 35,748
Non-GAAP operating income $
63,494 $
47,187
GAAP operating margin (3.9) (4.6)
% %
Non-GAAP operating margin 40.8 36.6
% %
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
Three months ended
March 31,
2024 2023
Net loss $
(21,125) $
(11,857)
Interest on outstanding debt and loss on debt extinguishment 22,785 9,485
Income tax benefit (7,067) (2,125)
Depreciation 1,343 1,203
Amortization 2
Stock-based compensation 12,445 10,010
Transaction costs(1) 5,615 3,836
Globalization costs(2) 890 9
Restructuring costs(3) 4,930 3,328
Technology modernization costs(4) 2,266 215
Other non-recurring costs(5) 102 56
Effects of foreign currency transaction (gains) and losses 1,832 (351)
Amortization of acquisition-related intangibles 43,326 35,748
Interest income (2,398) (1,301)
Adjusted EBITDA $
64,944 $
48,258
Net loss margin (13.6) (9.2)
%
%
Adjusted EBITDA margin 41.8 37.5
% %
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
Three months ended
March 31,
2024 2023
Net loss $
(21,125) $
(11,857)
Stock-based compensation 12,445 10,010
Amortization of acquisition-related intangibles 43,326 35,748
Loss on extinguishment of debt 189
Transaction costs(1) 5,615 3,836
Globalization costs(2) 890 9
Restructuring costs(3) 4,930 3,328
Technology modernization costs(4) 2,266 215
Other non-recurring costs(5) 102 56
Effects of foreign currency transaction (gains) and losses 1,832 (351)
Tax effects of adjustments(6) (17,794) (13,118)
Non-GAAP net income $
32,676 $
27,876
Non-GAAP net income per common share, basic $
0.22 $
0.19
Non-GAAP net income per common share, diluted $
0.22 $
0.19
Weighted average common shares used in computing basic Non-GAAP net income per common 145,455 143,112
share
Weighted average common shares used in computing diluted Non-GAAP net income per 146,173 144,765
common share
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP GROSS PROFIT
(in thousands)
(unaudited)
Three months ended
March 31,
2024 2023
Gross profit $
101,102 $
83,011
Stock-based compensation 1,209 793
Transaction costs(1) 172 180
Globalization costs(2) 240
Restructuring costs(3) 918 224
Technology modernization costs(4) 1,254 115
Amortization of acquisition-related intangibles 17,838 16,073
Non-GAAP gross profit $
122,733 $
100,396
GAAP gross margin 65.0 64.4
% %
Non-GAAP gross margin 79.0 77.9
% %
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP SUBSCRIPTION AND SUPPORT GROSS PROFIT
(in thousands)
(unaudited)
Three months ended
March 31,
2024 2023
Subscription and support gross profit $
98,345 $
79,670
Stock-based compensation 565 379
Transaction costs(1) 128 160
Restructuring costs(3) 534 19
Technology modernization costs(4) 1,178 115
Amortization of acquisition-related intangibles 17,838 16,073
Non-GAAP subscription and support gross profit $
118,588 $
96,416
GAAP subscription and support gross margin 68.0 67.2
%
%
Non-GAAP subscription and support gross margin 82.0 81.4
%
%
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF FREE CASH FLOW, UNLEVERED FREE CASH FLOW & ADJUSTED UNLEVERED FREE CASH FLOW
(in thousands)
(unaudited)
Three months ended
March 31,
2024 2023
Net cash used in operating activities $
(92,553) $
(80,918)
Purchases of property and equipment (1,881) (1,327)
Proceeds from disposals of property and equipment 8 6
Free cash flow $
(94,426) $
(82,239)
Cash paid for interest on outstanding debt 15,446 8,096
Cash settled stock-based compensation 374
Unlevered free cash flow $
(78,980) $
(73,769)
Transaction costs(7) 7,215 6,759
Globalization costs(7) 1,526 9
Restructuring costs(7) 2,852 3,309
Technology modernization costs(7) 1,985 185
Other non-recurring costs(7) 85 63
Adjusted unlevered free cash flow $
(65,317) $
(63,444)
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NET DEBT
(in thousands)
(unaudited)
March 31, December 31, December 31,
2024 2023 2024 E
Long-term principal, current $
11,972 $
5,000 $
11,972
Long-term principal, net of current portion 1,161,285 486,250 1,152,306
Cash, cash equivalents, restricted cash, and funds held on behalf of customers (89,255) (344,208) (245,814)
Net debt $
1,084,002 $
147,042 $
918,464
Gross leverage ratio 5.1 2.3 4.3
Net leverage ratio 4.7 0.7 3.4
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF TRAILING TWELVE MONTHS NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
Three months Three months Three months Three months
ended ended ended ended
March 31, December 31 September 30, June 30,
2024 2023 2023 2023
Net loss $
(21,125) $
(5,767) $
(5,481) $
(10,973)
Interest on outstanding debt and loss on debt extinguishment 22,785 11,382 10,868 10,287
Income tax (benefit) expense (7,067) 459 (1,920) (672)
Depreciation 1,343 1,305 1,186 1,092
Stock-based compensation 12,445 10,575 11,755 11,856
Transaction costs(1) 5,615 5,857 3,502 2,317
Globalization costs(2) 890 54 381 83
Restructuring costs(3) 4,930 2,085 541 1,520
Technology modernization costs(4) 2,266 817 543 695
Other non-recurring costs(5) 102 34 31 24
Effects of foreign currency transaction (gains) and losses 1,832 (3,343) 2,420 (397)
Amortization of acquisition-related intangibles 43,326 35,731 35,744 35,744
Interest income (2,398) (2,716) (1,346) (316)
Adjusted EBITDA $
64,944 $
56,473 $
58,224 $
51,260
INSTRUCTURE HOLDINGS, INC.
ORGANIC CONSTANT CURRENCY SUBSCRIPTION AND SUPPORT REVENUE GROWTH
(unaudited)
Three months ended
March 31,
2024 2023
Reported subscription and support revenue growth 22.1 14.5
% %
Inorganic subscription and support revenue growth(8) (14.6) (3.5)
% %
Organic subscription and support revenue growth 7.5 11.0
% %
Impact from foreign currency exchange(9) 0.1 0.7
% %
Organic constant currency subscription and support revenue growth 7.6 11.7
% %
INSTRUCTURE HOLDINGS, INC.
ORGANIC CONSTANT CURRENCY REVENUE GROWTH
(unaudited)
Three months ended
March 31,
2024 2023
Reported revenue growth 20.7 13.6
% %
Inorganic revenue growth(8) (14.0) (3.6)
% %
Organic revenue growth 6.7 10.0
% %
Impact from foreign currency exchange(9) 0.1 0.7
% %
Organic constant currency revenue growth 6.8 10.7
% %
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Three Months Ended March 31, 2024
(in thousands)
(unaudited)
GAAP Stock-based Transaction Globalization Restructuring Technology Amortization Non-GAAP
compensation Costs costs costs Modernization of acquired
expense costs intangibles
Cost of Revenue:
Subscription and support $
46,312 $
(565) $
(128)
$ $
(534) $
(1,178) $
(17,838) $
26,069
Professional services and other 8,041 (644) (44) (240) (384) (76) 6,653
Total cost of revenue $
54,353 $
(1,209) $
(172) $
(240) $
(918) $
(1,254) $
(17,838) $
32,722
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Three Months Ended March 31, 2023
(in thousands)
(unaudited)
GAAP Stock-based Transaction Globalization Restructuring Technology Amortization
compensation Costs costs costs Modernization of acquired
expense costs intangibles Non-GAAP
Cost of Revenue:
Subscription and support $
38,810 $
(379) $
(160)
$ $
(19) $
(115) $
(16,073) $
22,064
Professional services and other 7,022 (414) (20) (205) 6,383
Total cost of revenue $
45,832 $
(793) $
(180)
$ $
(224) $
(115) $
(16,073) $
28,447
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Three Months Ended March 31, 2024
(in thousands)
(unaudited)
GAAP Stock-based Transaction Globalization Restructuring Technology Other Amortization Non-GAAP GAAP % Non-
compensation costs costs costs Modernization non- of acquired of GAAP %
expense costs recurring intangibles revenue of
costs Revenue
Operating expenses:
Sales and marketing $
59,256 $
(3,114) $
(741) $
(190) $
(1,333)
$
$ $
(25,483) $
28,395 38.1 18.3
% %
Research and development 27,536 (3,840) (1,149) (143) (1,079) (675) (4) 20,646 17.7 13.3
% %
General and administrative 20,390 (4,282) (3,553) (317) (1,600) (337) (102) 10,199 13.1 6.6
% %
Total operating expenses $
107,182 $
(11,236) $
(5,443) $
(650) $
(4,012) $
(1,012) $
(102) $
(25,487) $
59,240 68.9 38.2
% %
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Three Months Ended March 31, 2023
(in thousands)
(unaudited)
GAAP Stock-based Transaction Globalization Restructuring Technology Other Amortization Non-GAAP GAAP % Non-
compensation costs costs costs Modernization non- of acquired of GAAP %
expense costs recurring intangibles revenue of
costs Revenue
Operating expenses:
Sales and marketing $
50,850 $
(2,528) $
(628)
$ $
(1,131)
$
$ $
(19,670) $
26,893 39.5 20.9
% %
Research and development 23,702 (3,174) (2,241) (9) (1,289) (31) 2 (5) 16,955 18.4 13.2
% %
General and administrative 14,373 (3,515) (787) (583) (69) (58) 9,361 11.2 7.3
% %
Total operating expenses $
88,925 $
(9,217) $
(3,656) $
(9) $
(3,003) $
(100) $
(56) $
(19,675) $
53,209 69.1 41.4
% %
FOOTNOTES
(1) Represents expenses incurred with third parties as part of the Company's merger and acquisition activity, including due
diligence, closing and post-closing integration activities.
(2) Represents one-time expenses incurred in the Company's recent efforts to develop and mobilize a global workforce to better
support its broadening customer base and expanding international operations.
(3) Consists of restructuring-related costs, including executive recruiting, severance charges, and other workforce realignment
costs. In addition to lease termination costs and disposal of fixed asset charges related to its real estate consolidation
efforts. The Company continues to execute a remote-first strategy, closing offices, inclusive of those acquired in merger and
acquisition efforts, and reducing office space globally. Beginning in 2023, the Company began restructuring its executive team.
(4) Includes costs that are one-time in nature related to technology modernization to allow the Company's customers and users to
have a more cohesive experience on its learning platform as a result of the various technologies acquired from historical
acquisitions.
(5)
Represents expenses incurred for services provided by Thoma Bravo and their affiliates.
(6) The table above includes the tax effects of the adjustments calculated by using the statutory tax rate, taking into
consideration the nature of the item and the relevant taxing jurisdiction.
(7) Represents the cash impacts of transaction costs, globalization costs, restructuring costs, technology modernization costs, and
other non-recurring costs, as previously defined above.
(8)
Represents revenue growth from newly acquired businesses in the relevant period.
(9)
Represents the impact to revenue from foreign currency exchange rates.
For More Information:
Media Relations:
Brian Watkins
Corporate Communications
Instructure
(801) 610-9722
brian.watkins@instructure.com
Investor Relations:
Matthew Wells
SVP of Investor Relations
Instructure
investors@instructure.com
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SOURCE Instructure Holdings, Inc.
