UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
The following are the unaudited results of operations of Instructure Holdings, Inc. (the “Company” or “Instructure”) as of and for the three and six months ended June 30, 2024.
Key Financials:
(Dollars in millions)
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Three months ended |
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Six months ended |
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2024 |
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2023 |
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Year-over-Year (% or bps) |
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2024 |
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2023 |
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Year-over-Year (% or bps) |
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Revenue |
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$ |
170.4 |
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$ |
131.1 |
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30.0 |
% |
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$ |
325.9 |
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$ |
259.9 |
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25.4 |
% |
Loss from Operations |
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$ |
(1.2 |
) |
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$ |
(2.1 |
) |
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(42.7 |
)% |
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$ |
(7.3 |
) |
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$ |
(8.0 |
) |
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(9.0 |
)% |
Non-GAAP Operating Income* |
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$ |
72.0 |
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$ |
50.2 |
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43.5 |
% |
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$ |
135.5 |
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$ |
97.3 |
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39.2 |
% |
GAAP Net Loss |
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$ |
(20.9 |
) |
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$ |
(11.0 |
) |
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90.9 |
% |
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$ |
(42.1 |
) |
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$ |
(22.8 |
) |
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84.3 |
% |
GAAP Net Loss Margin |
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(12.3 |
)% |
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(8.4 |
)% |
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(390) bps |
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(12.9 |
)% |
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(8.8 |
)% |
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(410) bps |
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Adjusted EBITDA* |
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$ |
73.4 |
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$ |
51.3 |
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43.2 |
% |
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$ |
138.4 |
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$ |
99.5 |
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39.0 |
% |
Adjusted EBITDA Margin* |
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43.1 |
% |
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39.1 |
% |
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400 bps |
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42.5 |
% |
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38.3 |
% |
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420 bps |
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Cash Flow from Operations |
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$ |
(8.2 |
) |
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$ |
25.1 |
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(132.5 |
)% |
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$ |
(100.7 |
) |
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$ |
(55.8 |
) |
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(80.5 |
)% |
Adjusted Unlevered Free Cash Flow* |
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$ |
25.7 |
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$ |
37.1 |
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(30.7 |
)% |
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$ |
(39.6 |
) |
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$ |
(26.3 |
) |
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(50.5 |
)% |
Remaining Performance Obligations ("RPO") |
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$ |
934.9 |
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$ |
853.6 |
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9.5 |
% |
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$ |
934.9 |
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$ |
853.6 |
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9.5 |
% |
*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 June 30, 2024, cash, cash equivalents, restricted cash, and funds held on behalf of customers were $145.2 million and total debt was $1,240.3 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 spent and debt incurred in connection with the Parchment acquisition. As of June 30, 2024, Instructure’s total leverage ratio is 4.9x (which represents Total Debt to trailing twelve month Adjusted EBITDA) and net leverage ratio is 4.3x (which represents Net Debt to trailing twelve month Adjusted EBITDA). This calculation includes twelve months of historical Instructure Adjusted EBITDA and five months of Parchment contribution to Adjusted EBITDA. Net cash used in operating activities was $8.2 million for the three months ended June 30, 2024, compared to $25.1 million net cash provided by operating activities in the prior year period. This decrease was primarily driven by higher interest expense. Adjusted Unlevered Free Cash Flow was $25.7 million for the three months ended June 30, 2024, compared to $37.1 million in the prior year period.
Transaction with KKR
Given the announcement made on July 25, 2024, regarding Instructure’s entry into a definitive agreement to be acquired by affiliates of investment funds managed by Kohlberg Kravis Roberts & Co. L.P. (“KKR”), a leading global investment firm, Instructure will not host an earnings conference call or provide financial guidance in conjunction with this report. The Company’s previously issued guidance for full year fiscal 2024 should no longer be relied upon. For further detail on quarterly performance, please refer to Instructure’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, filed today with the SEC.
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.
Instructure has updated 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, loss on extinguishment of debt, transaction costs, globalization costs, restructuring costs, technology modernization costs, other non-recurring costs, and effects of foreign currency transaction (gains) and losses that we do not believe are reflective of our ongoing operations. 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 provided by or 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 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.
Forward-Looking Statements
This report contains “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 expectations relating to the proposed merger and related transactions, 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: the risk that the proposed merger may not be completed in a timely manner or at all, which may adversely affect the Company’s business and the price of the common stock, the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement related to the proposed merger, including in circumstances requiring the Company to pay a termination fee, the ability to obtain the necessary financing arrangements set forth in the commitment letters received in connection with the proposed merger, potential litigation relating to the proposed merger that could be instituted against the parties to the merger agreement related to the proposed merger or their respective directors, managers or officers, including the effects of any outcomes related thereto, certain restrictions during the pendency of the merger that may impact the Company’s ability to pursue certain business opportunities or strategic transactions, uncertainty as to timing of completion of the proposed merger, risks that the benefits of the proposed merger are not realized when and as expected, 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 is as of the date hereof and Instructure undertakes no duty to update this information except as required by law.
INSTRUCTURE HOLDINGS, INC. |
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CONSOLIDATED BALANCE SHEETS |
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(in thousands, except per share data) |
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June 30, |
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December 31, |
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Assets |
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(unaudited) |
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Current assets: |
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Cash and cash equivalents |
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$ |
137,743 |
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$ |
341,047 |
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Funds held on behalf of customers |
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6,470 |
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|
|
— |
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Accounts receivable—net |
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223,220 |
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|
67,193 |
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Prepaid expenses |
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53,752 |
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|
|
12,082 |
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Deferred commissions |
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|
15,085 |
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|
13,705 |
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Other current assets |
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|
6,658 |
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|
|
4,797 |
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Total current assets |
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442,928 |
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438,824 |
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Property and equipment, net |
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14,905 |
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|
13,479 |
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Right-of-use assets |
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|
9,161 |
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|
9,002 |
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Goodwill |
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|
1,858,136 |
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|
1,265,316 |
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Intangible assets, net |
|
|
611,788 |
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|
399,712 |
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Noncurrent prepaid expenses |
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|
2,841 |
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|
4,182 |
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Deferred commissions, net of current portion |
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13,350 |
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13,816 |
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Deferred tax assets |
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6,564 |
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6,739 |
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Other assets |
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4,530 |
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|
6,908 |
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Total assets |
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$ |
2,964,203 |
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$ |
2,157,978 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
20,075 |
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$ |
23,589 |
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Customer fund deposits |
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6,470 |
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— |
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Accrued liabilities |
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40,470 |
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23,760 |
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Lease liabilities |
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6,076 |
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|
7,513 |
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Long-term debt, current |
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76,525 |
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4,013 |
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Deferred revenue |
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330,429 |
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291,784 |
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Total current liabilities |
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480,045 |
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350,659 |
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Long-term debt, net of current portion |
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1,140,139 |
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482,387 |
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Deferred revenue, net of current portion |
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9,574 |
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10,876 |
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Lease liabilities, net of current portion |
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10,806 |
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9,246 |
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Deferred tax liabilities |
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46,191 |
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14,420 |
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Other long-term liabilities |
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5,747 |
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4,898 |
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Total liabilities |
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1,692,502 |
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872,486 |
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Stockholders’ equity: |
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Common stock |
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1,465 |
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1,452 |
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Additional paid-in capital |
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1,647,290 |
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1,619,020 |
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Accumulated deficit |
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(377,054 |
) |
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(334,980 |
) |
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Total stockholders’ equity |
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1,271,701 |
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1,285,492 |
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Total liabilities and stockholders’ equity |
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$ |
2,964,203 |
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$ |
2,157,978 |
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INSTRUCTURE HOLDINGS, INC. |
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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
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(in thousands, except per share data) |
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Three months ended |
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Six months ended |
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2024 |
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2023 |
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2024 |
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2023 |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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Revenue: |
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||||
Subscription and support |
|
$ |
157,569 |
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$ |
118,569 |
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$ |
302,226 |
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$ |
237,049 |
|
Professional services and other |
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|
12,875 |
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|
12,501 |
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23,673 |
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|
22,864 |
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Total revenue |
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170,444 |
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|
131,070 |
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|
|
325,899 |
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|
259,913 |
|
Cost of revenue: |
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|
|
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|
|
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||||
Subscription and support |
|
|
49,427 |
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|
38,377 |
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|
95,739 |
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|
77,187 |
|
Professional services and other |
|
|
9,013 |
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|
6,912 |
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|
17,054 |
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|
|
13,934 |
|
Total cost of revenue |
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|
58,440 |
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|
45,289 |
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|
112,793 |
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|
91,121 |
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Gross profit |
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112,004 |
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|
85,781 |
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|
213,106 |
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|
168,792 |
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Operating expenses: |
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Sales and marketing |
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60,970 |
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52,159 |
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|
120,226 |
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|
103,009 |
|
Research and development |
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31,240 |
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|
21,482 |
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|
58,776 |
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|
45,184 |
|
General and administrative |
|
|
20,985 |
|
|
|
14,218 |
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|
41,375 |
|
|
|
28,591 |
|
Total operating expenses |
|
|
113,195 |
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|
|
87,859 |
|
|
|
220,377 |
|
|
|
176,784 |
|
Loss from operations |
|
|
(1,191 |
) |
|
|
(2,078 |
) |
|
|
(7,271 |
) |
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|
(7,992 |
) |
Other income (expense): |
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||||
Interest income |
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|
509 |
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|
|
320 |
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|
3,017 |
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|
1,661 |
|
Interest expense |
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|
(26,413 |
) |
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|
(10,289 |
) |
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(49,009 |
) |
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(19,774 |
) |
Other income (expense) |
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|
(518 |
) |
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|
402 |
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|
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(2,353 |
) |
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|
478 |
|
Loss on extinguishment of debt |
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— |
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— |
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(189 |
) |
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— |
|
Total other income (expense), net |
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(26,422 |
) |
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|
(9,567 |
) |
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|
(48,534 |
) |
|
|
(17,635 |
) |
Loss before income tax benefit |
|
|
(27,613 |
) |
|
|
(11,645 |
) |
|
|
(55,805 |
) |
|
|
(25,627 |
) |
Income tax benefit |
|
|
6,664 |
|
|
|
672 |
|
|
|
13,731 |
|
|
|
2,797 |
|
Net loss and comprehensive loss |
|
$ |
(20,949 |
) |
|
$ |
(10,973 |
) |
|
$ |
(42,074 |
) |
|
$ |
(22,830 |
) |
Net loss per common share, basic and diluted |
|
$ |
(0.14 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.16 |
) |
Weighted-average common shares used in computing basic and diluted net loss per common share |
|
|
146,107 |
|
|
|
143,647 |
|
|
|
145,781 |
|
|
|
143,381 |
|
INSTRUCTURE HOLDINGS, INC. |
|
|||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|||||||||||||||
(in thousands) |
|
|||||||||||||||
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
|
|
||||
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
(20,949 |
) |
|
$ |
(10,973 |
) |
|
$ |
(42,074 |
) |
|
$ |
(22,830 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation of property and equipment |
|
|
1,399 |
|
|
|
1,092 |
|
|
|
2,742 |
|
|
|
2,295 |
|
Amortization of intangible assets |
|
|
42,898 |
|
|
|
35,744 |
|
|
|
86,224 |
|
|
|
71,493 |
|
Amortization of deferred financing costs |
|
|
1,426 |
|
|
|
295 |
|
|
|
2,452 |
|
|
|
589 |
|
Stock-based compensation |
|
|
15,552 |
|
|
|
11,676 |
|
|
|
27,997 |
|
|
|
21,311 |
|
Deferred income taxes |
|
|
(6,777 |
) |
|
|
(1,347 |
) |
|
|
(14,628 |
) |
|
|
(4,406 |
) |
Right-of-use assets |
|
|
860 |
|
|
|
1,312 |
|
|
|
216 |
|
|
|
2,303 |
|
Other |
|
|
768 |
|
|
|
(82 |
) |
|
|
2,127 |
|
|
|
184 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable, net |
|
|
(171,532 |
) |
|
|
(144,963 |
) |
|
|
(147,183 |
) |
|
|
(137,334 |
) |
Prepaid expenses and other assets |
|
|
13,679 |
|
|
|
12,877 |
|
|
|
(38,782 |
) |
|
|
(26,680 |
) |
Deferred commissions |
|
|
(2,806 |
) |
|
|
878 |
|
|
|
(914 |
) |
|
|
1,822 |
|
Accounts payable and accrued liabilities |
|
|
14,008 |
|
|
|
5,459 |
|
|
|
3,562 |
|
|
|
(1,718 |
) |
Deferred revenue |
|
|
105,003 |
|
|
|
115,016 |
|
|
|
19,865 |
|
|
|
41,358 |
|
Lease liabilities |
|
|
(1,750 |
) |
|
|
(1,839 |
) |
|
|
(307 |
) |
|
|
(3,751 |
) |
Other liabilities |
|
|
61 |
|
|
|
(72 |
) |
|
|
(1,958 |
) |
|
|
(396 |
) |
Net cash provided by (used in) operating activities |
|
|
(8,160 |
) |
|
|
25,073 |
|
|
|
(100,661 |
) |
|
|
(55,760 |
) |
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases of property and equipment |
|
|
(1,865 |
) |
|
|
(1,573 |
) |
|
|
(3,746 |
) |
|
|
(2,900 |
) |
Proceeds from sale of property and equipment |
|
|
14 |
|
|
|
29 |
|
|
|
22 |
|
|
|
35 |
|
Business acquisitions, net of cash acquired |
|
|
— |
|
|
|
— |
|
|
|
(821,739 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(1,851 |
) |
|
|
(1,544 |
) |
|
|
(825,463 |
) |
|
|
(2,865 |
) |
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 |
|
|
(1,682 |
) |
|
|
(1,709 |
) |
|
|
(3,250 |
) |
|
|
(2,988 |
) |
Proceeds from issuance of term debt, net of discount |
|
|
(427 |
) |
|
|
— |
|
|
|
663,892 |
|
|
|
— |
|
Repayments of long-term debt |
|
|
(2,993 |
) |
|
|
(1,250 |
) |
|
|
(5,986 |
) |
|
|
(2,500 |
) |
Advances from revolving credit facility |
|
|
70,000 |
|
|
|
— |
|
|
|
70,000 |
|
|
|
— |
|
Payments for financing costs |
|
|
— |
|
|
|
(84 |
) |
|
|
— |
|
|
|
(84 |
) |
Changes in customer fund deposits |
|
|
1,184 |
|
|
|
— |
|
|
|
389 |
|
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
66,082 |
|
|
|
(3,043 |
) |
|
|
728,273 |
|
|
|
(2,277 |
) |
Foreign currency impacts on cash, cash equivalents, restricted cash, and funds held on behalf of customers |
|
|
(159 |
) |
|
|
241 |
|
|
|
(1,190 |
) |
|
|
457 |
|
Net increase (decrease) in cash, cash equivalents, restricted cash, and funds held on behalf of customers |
|
|
55,912 |
|
|
|
20,727 |
|
|
|
(199,041 |
) |
|
|
(60,445 |
) |
Cash, cash equivalents, restricted cash, and funds held on behalf of customers, beginning of period |
|
|
89,255 |
|
|
|
109,094 |
|
|
|
344,208 |
|
|
|
190,266 |
|
Cash, cash equivalents, restricted cash, and funds held on behalf of customers, end of period |
|
$ |
145,167 |
|
|
$ |
129,821 |
|
|
$ |
145,167 |
|
|
$ |
129,821 |
|
Supplemental cash flow disclosure: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash paid for taxes |
|
$ |
2,033 |
|
|
$ |
1,638 |
|
|
$ |
3,048 |
|
|
$ |
1,819 |
|
Cash paid for interest on outstanding debt |
|
$ |
24,678 |
|
|
$ |
9,578 |
|
|
$ |
40,124 |
|
|
$ |
17,674 |
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures incurred but not yet paid |
|
$ |
43 |
|
|
$ |
138 |
|
|
$ |
43 |
|
|
$ |
138 |
|
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 June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash and cash equivalents |
|
$ |
137,743 |
|
|
$ |
126,003 |
|
Restricted cash |
|
|
954 |
|
|
|
3,818 |
|
Funds held on behalf of customers |
|
|
6,470 |
|
|
|
— |
|
Total cash, cash equivalents, restricted cash, and funds held on behalf of customers |
|
$ |
145,167 |
|
|
$ |
129,821 |
|
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
INSTRUCTURE HOLDINGS, INC. |
|
|||||||||||||||
RECONCILIATION OF NON-GAAP OPERATING INCOME |
|
|||||||||||||||
(in thousands) |
|
|||||||||||||||
(unaudited) |
|
|||||||||||||||
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Loss from operations |
|
$ |
(1,191 |
) |
|
$ |
(2,078 |
) |
|
$ |
(7,271 |
) |
|
$ |
(7,992 |
) |
Stock-based compensation |
|
|
15,552 |
|
|
|
11,856 |
|
|
|
27,997 |
|
|
|
21,866 |
|
Transaction costs(1) |
|
|
6,264 |
|
|
|
2,317 |
|
|
|
11,879 |
|
|
|
6,153 |
|
Globalization costs(2) |
|
|
3,481 |
|
|
|
83 |
|
|
|
4,371 |
|
|
|
92 |
|
Restructuring costs(3) |
|
|
2,724 |
|
|
|
1,514 |
|
|
|
7,654 |
|
|
|
4,741 |
|
Technology modernization costs(4) |
|
|
2,246 |
|
|
|
695 |
|
|
|
4,512 |
|
|
|
910 |
|
Other non-recurring costs(5) |
|
|
22 |
|
|
|
24 |
|
|
|
124 |
|
|
|
80 |
|
Amortization of acquisition-related intangibles |
|
|
42,898 |
|
|
|
35,744 |
|
|
|
86,224 |
|
|
|
71,492 |
|
Non-GAAP operating income |
|
$ |
71,996 |
|
|
$ |
50,155 |
|
|
$ |
135,490 |
|
|
$ |
97,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP operating margin |
|
|
(0.7 |
)% |
|
|
(1.6 |
)% |
|
|
(2.2 |
)% |
|
|
(3.1 |
)% |
Non-GAAP operating margin |
|
|
42.2 |
% |
|
|
38.3 |
% |
|
|
41.6 |
% |
|
|
37.5 |
% |
INSTRUCTURE HOLDINGS, INC. |
|
|||||||||||||||
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA |
|
|||||||||||||||
(in thousands) |
|
|||||||||||||||
(unaudited) |
|
|||||||||||||||
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net loss |
|
$ |
(20,949 |
) |
|
$ |
(10,973 |
) |
|
$ |
(42,074 |
) |
|
$ |
(22,830 |
) |
Interest on outstanding debt and loss on debt extinguishment |
|
|
26,495 |
|
|
|
10,287 |
|
|
|
49,280 |
|
|
|
19,772 |
|
Income tax benefit |
|
|
(6,664 |
) |
|
|
(672 |
) |
|
|
(13,731 |
) |
|
|
(2,797 |
) |
Depreciation |
|
|
1,399 |
|
|
|
1,092 |
|
|
|
2,742 |
|
|
|
2,295 |
|
Amortization |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Stock-based compensation |
|
|
15,552 |
|
|
|
11,856 |
|
|
|
27,997 |
|
|
|
21,866 |
|
Transaction costs(1) |
|
|
6,264 |
|
|
|
2,317 |
|
|
|
11,879 |
|
|
|
6,153 |
|
Globalization costs(2) |
|
|
3,481 |
|
|
|
83 |
|
|
|
4,371 |
|
|
|
92 |
|
Restructuring costs(3) |
|
|
2,724 |
|
|
|
1,520 |
|
|
|
7,654 |
|
|
|
4,848 |
|
Technology modernization costs(4) |
|
|
2,246 |
|
|
|
695 |
|
|
|
4,512 |
|
|
|
910 |
|
Other non-recurring costs(5) |
|
|
22 |
|
|
|
24 |
|
|
|
124 |
|
|
|
80 |
|
Effects of foreign currency transaction (gains) and losses |
|
|
515 |
|
|
|
(397 |
) |
|
|
2,347 |
|
|
|
(748 |
) |
Amortization of acquisition-related intangibles |
|
|
42,898 |
|
|
|
35,744 |
|
|
|
86,224 |
|
|
|
71,492 |
|
Interest income |
|
|
(563 |
) |
|
|
(316 |
) |
|
|
(2,962 |
) |
|
|
(1,617 |
) |
Adjusted EBITDA |
|
$ |
73,420 |
|
|
$ |
51,260 |
|
|
$ |
138,363 |
|
|
$ |
99,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss margin |
|
|
(12.3 |
)% |
|
|
(8.4 |
)% |
|
|
(12.9 |
)% |
|
|
(8.8 |
)% |
Adjusted EBITDA margin |
|
|
43.1 |
% |
|
|
39.1 |
% |
|
|
42.5 |
% |
|
|
38.3 |
% |
INSTRUCTURE HOLDINGS, INC. |
|
|||||||||||||||
RECONCILIATION OF NON-GAAP NET INCOME |
|
|||||||||||||||
(in thousands, except per share data) |
|
|||||||||||||||
(unaudited) |
|
|||||||||||||||
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net loss |
|
$ |
(20,949 |
) |
|
$ |
(10,973 |
) |
|
$ |
(42,074 |
) |
|
$ |
(22,830 |
) |
Stock-based compensation |
|
|
15,552 |
|
|
|
11,856 |
|
|
|
27,997 |
|
|
|
21,866 |
|
Amortization of acquisition-related intangibles |
|
|
42,898 |
|
|
|
35,744 |
|
|
|
86,224 |
|
|
|
71,492 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
189 |
|
|
|
— |
|
Transaction costs(1) |
|
|
6,264 |
|
|
|
2,317 |
|
|
|
11,879 |
|
|
|
6,153 |
|
Globalization costs(2) |
|
|
3,481 |
|
|
|
83 |
|
|
|
4,371 |
|
|
|
92 |
|
Restructuring costs(3) |
|
|
2,724 |
|
|
|
1,520 |
|
|
|
7,654 |
|
|
|
4,848 |
|
Technology modernization costs(4) |
|
|
2,246 |
|
|
|
695 |
|
|
|
4,512 |
|
|
|
910 |
|
Other non-recurring costs(5) |
|
|
22 |
|
|
|
24 |
|
|
|
124 |
|
|
|
80 |
|
Effects of foreign currency transaction (gains) and losses |
|
|
515 |
|
|
|
(397 |
) |
|
|
2,347 |
|
|
|
(748 |
) |
Tax effects of adjustments(6) |
|
|
(18,309 |
) |
|
|
(12,895 |
) |
|
|
(36,103 |
) |
|
|
(26,013 |
) |
Non-GAAP net income |
|
$ |
34,444 |
|
|
$ |
27,974 |
|
|
$ |
67,120 |
|
|
$ |
55,850 |
|
Non-GAAP net income per common share, basic |
|
$ |
0.24 |
|
|
$ |
0.19 |
|
|
$ |
0.46 |
|
|
$ |
0.39 |
|
Non-GAAP net income per common share, diluted |
|
$ |
0.23 |
|
|
$ |
0.19 |
|
|
$ |
0.46 |
|
|
$ |
0.39 |
|
Weighted average common shares used in computing basic Non-GAAP net income per common share |
|
|
146,107 |
|
|
|
143,647 |
|
|
|
145,781 |
|
|
|
143,381 |
|
Weighted average common shares used in computing diluted Non-GAAP net income per common share |
|
|
146,656 |
|
|
|
145,150 |
|
|
|
146,461 |
|
|
|
144,979 |
|
INSTRUCTURE HOLDINGS, INC. |
|
|||||||||||||||
RECONCILIATION OF NON-GAAP GROSS PROFIT |
|
|||||||||||||||
(in thousands) |
|
|||||||||||||||
(unaudited) |
|
|||||||||||||||
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Gross profit |
|
$ |
112,004 |
|
|
$ |
85,781 |
|
|
$ |
213,106 |
|
|
$ |
168,792 |
|
Stock-based compensation |
|
|
1,735 |
|
|
|
1,096 |
|
|
|
2,944 |
|
|
|
1,889 |
|
Transaction costs(1) |
|
|
264 |
|
|
|
495 |
|
|
|
436 |
|
|
|
675 |
|
Globalization costs(2) |
|
|
1,027 |
|
|
|
— |
|
|
|
1,267 |
|
|
|
— |
|
Restructuring costs(3) |
|
|
372 |
|
|
|
17 |
|
|
|
1,290 |
|
|
|
241 |
|
Technology modernization costs(4) |
|
|
1,096 |
|
|
|
491 |
|
|
|
2,350 |
|
|
|
606 |
|
Amortization of acquisition-related intangibles |
|
|
18,625 |
|
|
|
16,265 |
|
|
|
36,463 |
|
|
|
32,338 |
|
Non-GAAP gross profit |
|
$ |
135,123 |
|
|
$ |
104,145 |
|
|
$ |
257,856 |
|
|
$ |
204,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP gross margin |
|
|
65.7 |
% |
|
|
65.4 |
% |
|
|
65.4 |
% |
|
|
64.9 |
% |
Non-GAAP gross margin |
|
|
79.3 |
% |
|
|
79.5 |
% |
|
|
79.1 |
% |
|
|
78.7 |
% |
INSTRUCTURE HOLDINGS, INC. |
|
|||||||||||||||
RECONCILIATION OF NON-GAAP SUBSCRIPTION AND SUPPORT GROSS PROFIT |
|
|||||||||||||||
(in thousands) |
|
|||||||||||||||
(unaudited) |
|
|||||||||||||||
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Subscription and support gross profit |
|
$ |
108,142 |
|
|
$ |
80,192 |
|
|
$ |
206,487 |
|
|
$ |
159,862 |
|
Stock-based compensation |
|
|
792 |
|
|
|
474 |
|
|
|
1,357 |
|
|
|
853 |
|
Transaction costs(1) |
|
|
195 |
|
|
|
487 |
|
|
|
323 |
|
|
|
647 |
|
Globalization costs(2) |
|
|
675 |
|
|
|
— |
|
|
|
675 |
|
|
|
— |
|
Restructuring costs(3) |
|
|
230 |
|
|
|
11 |
|
|
|
764 |
|
|
|
30 |
|
Technology modernization costs(4) |
|
|
1,094 |
|
|
|
491 |
|
|
|
2,272 |
|
|
|
606 |
|
Amortization of acquisition-related intangibles |
|
|
18,625 |
|
|
|
16,265 |
|
|
|
36,463 |
|
|
|
32,338 |
|
Non-GAAP subscription and support gross profit |
|
$ |
129,753 |
|
|
$ |
97,920 |
|
|
$ |
248,341 |
|
|
$ |
194,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP subscription and support gross margin |
|
|
68.6 |
% |
|
|
67.6 |
% |
|
|
68.3 |
% |
|
|
67.4 |
% |
Non-GAAP subscription and support gross margin |
|
|
82.3 |
% |
|
|
82.6 |
% |
|
|
82.2 |
% |
|
|
82.0 |
% |
INSTRUCTURE HOLDINGS, INC. |
|
|||||||||||||||
RECONCILIATION OF FREE CASH FLOW, UNLEVERED FREE CASH FLOW & ADJUSTED UNLEVERED FREE CASH FLOW |
|
|||||||||||||||
(in thousands) |
|
|||||||||||||||
(unaudited) |
|
|||||||||||||||
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net cash provided by (used in) operating activities |
|
$ |
(8,160 |
) |
|
$ |
25,073 |
|
|
$ |
(100,661 |
) |
|
$ |
(55,760 |
) |
Purchases of property and equipment |
|
|
(1,865 |
) |
|
|
(1,573 |
) |
|
|
(3,746 |
) |
|
|
(2,900 |
) |
Proceeds from disposals of property and equipment |
|
|
14 |
|
|
|
29 |
|
|
|
22 |
|
|
|
35 |
|
Free cash flow |
|
$ |
(10,011 |
) |
|
$ |
23,529 |
|
|
$ |
(104,385 |
) |
|
$ |
(58,625 |
) |
Cash paid for interest on outstanding debt |
|
|
24,678 |
|
|
|
9,578 |
|
|
|
40,124 |
|
|
|
17,674 |
|
Cash settled stock-based compensation |
|
|
— |
|
|
|
183 |
|
|
|
— |
|
|
|
557 |
|
Unlevered free cash flow |
|
$ |
14,667 |
|
|
$ |
33,290 |
|
|
$ |
(64,261 |
) |
|
$ |
(40,394 |
) |
Transaction costs(7) |
|
|
3,098 |
|
|
|
1,611 |
|
|
|
10,313 |
|
|
|
8,370 |
|
Globalization costs(7) |
|
|
3,415 |
|
|
|
83 |
|
|
|
4,941 |
|
|
|
92 |
|
Restructuring costs(7) |
|
|
3,809 |
|
|
|
2,000 |
|
|
|
6,661 |
|
|
|
5,309 |
|
Technology modernization costs(7) |
|
|
662 |
|
|
|
46 |
|
|
|
2,647 |
|
|
|
231 |
|
Other non-recurring costs(7) |
|
|
33 |
|
|
|
32 |
|
|
|
118 |
|
|
|
95 |
|
Adjusted unlevered free cash flow |
|
$ |
25,684 |
|
|
$ |
37,062 |
|
|
$ |
(39,581 |
) |
|
$ |
(26,297 |
) |
INSTRUCTURE HOLDINGS, INC. |
|
|||||||
RECONCILIATION OF NET DEBT |
|
|||||||
(in thousands) |
|
|||||||
(unaudited) |
|
|||||||
|
|
June 30, |
|
|
December 31, |
|
||
Long-term principal, current |
|
$ |
11,972 |
|
|
$ |
5,000 |
|
Long-term principal, net of current portion |
|
|
1,158,292 |
|
|
|
486,250 |
|
Borrowings under revolving credit facility |
|
|
70,000 |
|
|
|
— |
|
Cash, cash equivalents, restricted cash, and funds held on behalf of customers |
|
|
(145,167 |
) |
|
|
(344,208 |
) |
Net debt |
|
$ |
1,095,097 |
|
|
$ |
147,042 |
|
|
|
|
|
|
|
|
||
Gross leverage ratio |
|
|
4.9 |
|
|
|
2.3 |
|
Net leverage ratio |
|
|
4.3 |
|
|
|
0.7 |
|
INSTRUCTURE HOLDINGS, INC. |
|
|||||||||||||||
RECONCILIATION OF TRAILING TWELVE MONTHS NON-GAAP ADJUSTED EBITDA |
|
|||||||||||||||
(in thousands) |
|
|||||||||||||||
(unaudited) |
|
|||||||||||||||
|
|
Three months ended |
|
|
Three months ended |
|
|
Three months ended |
|
|
Three months ended |
|
||||
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2023 |
|
||||
Net loss |
|
$ |
(20,949 |
) |
|
$ |
(21,125 |
) |
|
$ |
(5,767 |
) |
|
$ |
(5,481 |
) |
Interest on outstanding debt and loss on debt extinguishment |
|
|
26,495 |
|
|
|
22,785 |
|
|
|
11,382 |
|
|
|
10,868 |
|
Income tax (benefit) expense |
|
|
(6,664 |
) |
|
|
(7,067 |
) |
|
|
459 |
|
|
|
(1,920 |
) |
Depreciation |
|
|
1,399 |
|
|
|
1,343 |
|
|
|
1,305 |
|
|
|
1,186 |
|
Stock-based compensation |
|
|
15,552 |
|
|
|
12,445 |
|
|
|
10,575 |
|
|
|
11,755 |
|
Transaction costs(1) |
|
|
6,264 |
|
|
|
5,615 |
|
|
|
5,857 |
|
|
|
3,502 |
|
Globalization costs(2) |
|
|
3,481 |
|
|
|
890 |
|
|
|
54 |
|
|
|
381 |
|
Restructuring costs(3) |
|
|
2,724 |
|
|
|
4,930 |
|
|
|
2,085 |
|
|
|
541 |
|
Technology modernization costs(4) |
|
|
2,246 |
|
|
|
2,266 |
|
|
|
817 |
|
|
|
543 |
|
Other non-recurring costs(5) |
|
|
22 |
|
|
|
102 |
|
|
|
34 |
|
|
|
31 |
|
Effects of foreign currency transaction (gains) and losses |
|
|
515 |
|
|
|
1,832 |
|
|
|
(3,343 |
) |
|
|
2,420 |
|
Amortization of acquisition-related intangibles |
|
|
42,898 |
|
|
|
43,326 |
|
|
|
35,731 |
|
|
|
35,744 |
|
Interest income |
|
|
(563 |
) |
|
|
(2,398 |
) |
|
|
(2,716 |
) |
|
|
(1,346 < |