EX-99.1 2 inst-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

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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, UT (May 8, 2024)—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,
2024

 

 

December 31,
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 customers

 

 

(979

)

 

 

301

 

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 share

 

 

145,455

 

 

 

143,112

 

Weighted average common shares used in computing diluted Non-GAAP net income per common share

 

 

146,173

 

 

 

144,765

 

 

 

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,
2024

 

 

December 31,
2023

 

 

December 31,
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 ended
March 31,

 

 

Three months ended
December 31

 

 

Three months ended
September 30,

 

 

Three months ended
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 compensation expense

 

 

Transaction Costs

 

 

Globalization costs

 

 

Restructuring costs

 

 

Technology Modernization costs

 

 

Amortization of acquired intangibles

 

 

Non-GAAP

 

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 compensation expense

 

 

Transaction Costs

 

 

Globalization costs

 

 

Restructuring costs

 

 

Technology Modernization costs

 

 

Amortization of acquired 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 compensation expense

 

 

Transaction costs

 

 

Globalization costs

 

 

Restructuring costs

 

 

Technology Modernization costs

 

 

Other non-recurring costs

 

 

Amortization of acquired intangibles

 

 

Non-GAAP

 

 

GAAP % of revenue

 

 

Non-GAAP % of 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 compensation expense

 

 

Transaction costs

 

 

Globalization costs

 

 

Restructuring costs

 

 

Technology Modernization costs

 

 

Other non-recurring costs

 

 

Amortization of acquired intangibles

 

 

Non-GAAP

 

 

GAAP % of revenue

 

 

Non-GAAP % of 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.

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