Reports Record Full Year Revenues, Adjusted EBITDA, and Adjusted Unlevered Free Cash Flow
Expands Scale and Reach of the Instructure Platform by Acquiring Parchment, the World’s Leading Credentialing Platform
SALT LAKE CITY, Feb. 20, 2024 /PRNewswire/ — Instructure Holdings, Inc. (Instructure) (NYSE: INST) today announced financial results for the fourth quarter and full year ended December 31, 2023.
Full Year 2023 Highlights:
(All results compared to prior-year period unless otherwise noted)
Record Revenues of $530.2 million, an increase of 11.6%Net loss of $34.1 million, a slight improvement over prior yearRecord Adjusted EBITDA* of $214.2 million, an increase of 19.3%, and Adjusted EBITDA Margin* of 40.4%Cash flow from operations of $164.0 million, an increase of 16.9% and Adjusted Unlevered Free Cash Flow* of $225.5 million, an increase of 29.9%
Fourth Quarter 2023 Highlights:
(All results compared to prior-year period unless otherwise noted)
Revenues of $135.4 million, an increase of 8.5%Net loss of $5.8 million, comparable to prior yearAdjusted EBITDA* of $56.5 million, an increase of 16.1%, and Adjusted EBITDA Margin* of 41.7%Cash flow from operations of $36.7 million, an increase of over 100%, and Adjusted Unlevered Free Cash Flow* of $51.3 million, an increase of 74.8%
2024 Full Year Guidance:
Full year 2024 guidance ranges for Revenue of $655.0 million to $665.0 million, Non-GAAP Operating Income* of $260.5 million to $265.5 million, Adjusted EBITDA* of $266.5 million to $271.5 million, Non-GAAP Net Income* of $105.5 million to $110.5 million and Adjusted Unlevered Free Cash Flow* of $259.5 million to $264.5 million
*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 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
December 31,
Year ended
December 31,
2023
2022
YoY
Percentage
2023
2022
YoY
Percentage
Revenue
$
135.4
$
124.7
8.5
%
$
530.2
$
475.2
11.6
%
Income (loss) from Operations
$
0.2
$
(3.8)
105.9
%
$
(3.2)
$
(16.5)
80.5
%
Non-GAAP Operating Income*
$
55.4
$
46.5
19.1
%
$
209.8
$
173.9
20.6
%
GAAP Net Loss
$
(5.8)
$
(5.7)
(0.8)
%
$
(34.1)
$
(34.2)
0.5
%
GAAP Net Loss Margin
(4.3)
%
(4.6)
%
30 bps
(6.4)
%
(7.2)
%
80 bps
Adjusted EBITDA*
$
56.5
$
48.6
16.1
%
$
214.2
$
179.6
19.3
%
Adjusted EBITDA Margin*
41.7
%
39.0
%
270 bps
40.4
%
37.7
%
270 bps
Cash Flow from Operations
$
36.7
$
17.0
115.9
%
$
164.0
$
140.3
16.9
%
Adjusted Unlevered Free Cash Flow*
$
51.3
$
29.3
74.8
%
$
225.5
$
173.5
29.9
%
Remaining Performance Obligations (“RPO”)
$
833.5
$
760.1
9.7
%
$
833.5
$
760.1
9.7
%
*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.
Steve Daly, Instructure CEO, said, “During the fourth quarter, we exceeded the high end of our guidance range for Revenue, Adjusted EBITDA and Adjusted Unlevered Free Cash Flow, reflecting our unrelenting focus and the strength of our model. These exceptional results were driven by our increasing competitive advantage, strong execution, and the formidable cash flow we generate and reinvest behind high-growth initiatives. We head into 2024 with meaningfully enhanced scale, a broader portfolio, and access to new buyers due to the Parchment acquisition. We have never been more excited about our ability to elevate teaching and learning and drive results for our shareholders.”
Balance Sheet and Cash Flow
As of December 31, 2023, cash, cash equivalents and restricted cash were $344.2 million and total debt was $491.3 million compared to cash, cash equivalents and restricted cash of $190.3 million and total debt of $496.3 million as of December 31, 2022. The increase in cash, cash equivalents and restricted cash since December 31, 2022 was driven by strong business performance and the fact that 2022 included the purchase of LearnPlatform. Instructure ended 2023 with a net leverage ratio of 0.7x Net Debt to Adjusted EBITDA. As of December 31, 2023, available borrowings under Instructure’s revolving credit facility, net of letters of credit outstanding, were $121.8 million. The Company generated cash flow from operations of $164.0 million for the twelve months ended December 31, 2023 compared to $140.3 million in the prior year period, an increase of 16.9% year-over-year. Adjusted Unlevered Free Cash Flow was $225.5 million for the twelve months ended December 31, 2023 compared to $173.5 million in the prior year period, an increase of 29.9% year-over-year.
First Quarter and Full Year 2024 Guidance
The following tables summarize first quarter and full year 2024 guidance.
First Quarter 2024 Guidance
(dollars in millions)
Amount
Quarter-over-quarter
change
Revenue
$153.8 – $154.8
19.4% – 20.1%
Non-GAAP operating income*
$55.9 – $56.9
17.8% – 19.9%
Adjusted EBITDA*
$57.3 – $58.3
18.1% – 20.2%
Non-GAAP net income*
$20.0 – $21.0
(28.3)% – (24.7)%
Full Year 2024 Guidance
(dollars in millions)
Amount
Year-over-year
change
Revenue
$655.0 – $665.0
23.5% – 25.4%
Non-GAAP operating income*
$260.5 – $265.5
24.2% – 26.6%
Adjusted EBITDA*
$266.5 – $271.5
24.4% – 26.7%
Non-GAAP net income*
$105.5 – $110.5
(15.5)% – (11.5)%
Adjusted Unlevered Free Cash Flow*
$259.5 – $264.5
15.1% – 17.3%
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.
*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 fourth quarter and full year 2023 financial results today, February 20, 2024 at 3:00 PM Mountain Time (5:00 PM Eastern Time).
Participants may access the conference call by dialing 1-888-330-2384 (U.S. and Canada) or 1-240-789-2701 (International) and using conference code 1348899 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 1-647-362-9199 (International) and using conference code 1348899. The telephone replay will be available through Tuesday, February 27, 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.
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.
ACR. We define ACR as the combined receipts of our Company and companies that we have acquired allocated to the period of service delivery. We calculate ACR as the sum of (i) revenue and (ii) the impact of fair value adjustments to acquired unearned revenue related to Thoma Bravo’s acquisition of Instructure (the “Take-Private Transaction”) and the Certica Holdings, LLC (“Certica”), Eesysoft Software International B.V. (which was rebranded to “Impact by Instructure” or “Impact” subsequent to acquisition), and Kimono LLC (which was rebranded to “Elevate Data Sync” subsequent to acquisition) acquisitions where we do not believe such adjustments are reflective of our ongoing operations. Management uses this measure to evaluate the organic growth of the business period over period, as if the Company had operated as a single entity and excluding the impact of acquisitions or adjustments due to purchase accounting. Effective January 1, 2022, Instructure adopted Accounting Standard Update (“ASU”) No. 2021-08, Business Combinations (Topic 805), which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606). As a result, GAAP revenue and ACR have converged.
Non-GAAP Operating Income. We define non-GAAP operating income as income/(loss) from operations excluding the impact of stock-based compensation, transaction costs, sponsor costs, other non-recurring costs, amortization of acquisition-related intangibles, and the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions that we do not believe are reflective of our ongoing operations. 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 Net Income. We define non-GAAP net income as net loss excluding the impact of stock-based compensation, amortization of acquisition-related intangibles, the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions, transaction costs, sponsor 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 attributable to common stockholders is computed by dividing non-GAAP net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted non-GAAP net income per common share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period.
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, sponsor costs, other non-recurring costs, effects of foreign currency transaction (gains) and losses, amortization of acquisition-related intangibles, and the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions. 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 ACR.
Free Cash Flow, Unlevered Free Cash Flow and Adjusted Unlevered Free Cash Flow. We define free cash flow as net cash provided by 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, sponsor costs, impaired leases, 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, sponsor 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, other non-recurring costs, amortization of acquisition-related intangibles, and fair value adjustments to deferred revenue in connection with purchase accounting that we do not believe are reflective of our ongoing operations. 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 Gross Profit Margin is defined as Non-GAAP gross profit divided by ACR.
Net Debt. We define net debt as total outstanding term debt, less cash, cash equivalents and restricted cash. Management uses this supplemental non-GAAP measure to evaluate the Company’s leverage.
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 first 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 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)
December 31,
2023
December 31,
2022
Assets
(unaudited)
Current assets:
Cash and cash equivalents
$
341,047
$
185,954
Accounts receivable—net
67,193
71,428
Prepaid expenses
12,082
11,120
Deferred commissions
13,705
13,390
Other current assets
4,797
3,144
Total current assets
438,824
285,036
Property and equipment, net
13,479
12,380
Right-of-use assets
9,002
13,575
Goodwill
1,265,316
1,266,402
Intangible assets, net
399,712
542,679
Noncurrent prepaid expenses
4,182
871
Deferred commissions, net of current portion
13,816
18,781
Deferred tax assets
6,739
8,143
Other assets
6,908
5,622
Total assets
$
2,157,978
$
2,153,489
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
23,589
$
18,792
Accrued liabilities
23,760
28,483
Lease liabilities
7,513
7,205
Long-term debt, current
4,013
4,013
Deferred revenue
291,784
275,564
Total current liabilities
350,659
334,057
Long-term debt, net of current portion
482,387
486,471
Deferred revenue, net of current portion
10,876
13,816
Lease liabilities, net of current portion
9,246
16,610
Deferred tax liabilities
14,420
24,702
Other long-term liabilities
4,898
1,706
Total liabilities
872,486
877,362
Stockholders’ equity:
Common stock
1,452
1,429
Additional paid-in capital
1,619,020
1,575,600
Accumulated deficit
(334,980)
(300,902)
Total stockholders’ equity
1,285,492
1,276,127
Total liabilities and stockholders’ equity
$
2,157,978
$
2,153,489
INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
Revenue:
Subscription and support
$
125,357
$
114,537
$
485,516
$
430,661
Professional services and other
10,019
10,189
44,694
44,533
Total revenue
135,376
124,726
530,210
475,194
Cost of revenue:
Subscription and support
41,167
38,127
158,699
146,546
Professional services and other
6,600
6,685
27,616
25,748
Total cost of revenue
47,767
44,812
186,315
172,294
Gross profit
87,609
79,914
343,895
302,900
Operating expenses:
Sales and marketing
47,947
46,801
197,690
181,744
Research and development
22,290
20,723
88,162
77,189
General and administrative
17,148
16,170
61,261
60,447
Total operating expenses
87,385
83,694
347,113
319,380
Income (loss) from operations
224
(3,780)
(3,218)
(16,480)
Other income (expense):
Interest income
2,717
1,313
5,738
1,679
Interest expense
(11,382)
(8,258)
(42,024)
(24,595)
Other income (expense)
3,133
3,989
1,168
(2,978)
Total other income (expense), net
(5,532)
(2,956)
(35,118)
(25,894)
Loss before income tax benefit (expense)
(5,308)
(6,736)
(38,336)
(42,374)
Income tax benefit (expense)
(459)
1,013
4,258
8,132
Net loss and comprehensive loss
$
(5,767)
$
(5,723)
$
(34,078)
$
(34,242)
Net loss per common share, basic and diluted
$
(0.04)
$
(0.04)
$
(0.24)
$
(0.24)
Weighted-average common shares used in computing basic and diluted net
loss per common share
144,868
142,643
143,968
141,815
INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
Operating Activities:
Net loss
$
(5,767)
$
(5,723)
$
(34,078)
$
(34,242)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation of property and equipment
1,305
1,346
4,786
4,491
Amortization of intangible assets
35,730
34,522
142,967
136,717
Amortization of deferred financing costs
298
297
1,187
1,178
Stock-based compensation
10,551
8,915
43,537
33,585
Deferred income taxes
1
(158)
(7,792)
(10,222)
Other
(2,448)
(3,042)
658
3,669
Changes in assets and liabilities:
Accounts receivable, net
25,250
1,903
2,653
(18,454)
Prepaid expenses and other assets
6,698
16,881
(8,552)
5,940
Deferred commissions
1,754
685
4,650
(648)
Right-of-use assets
1,225
1,250
4,573
4,888
Accounts payable and accrued liabilities
7,576
168
11
(2,227)
Deferred revenue
(44,444)
(38,383)
13,280
24,238
Lease liabilities
(1,686)
(1,474)
(7,056)
(6,817)
Other liabilities
672
(184)
3,192
(1,825)
Net cash provided by operating activities
36,715
17,003
164,016
140,271
Investing Activities:
Purchases of property and equipment
(1,232)
(1,342)
(5,940)
(6,321)
Proceeds from sale of property and equipment
8
2
50
43
Business acquisitions, net of cash acquired
—
(89,529)
—
(109,013)
Net cash used in investing activities
(1,224)
(90,869)
(5,890)
(115,291)
Financing Activities:
Proceeds from issuance of common stock from employee equity plans
—
—
6,017
7,327
Shares repurchased for tax withholdings on vesting of restricted stock units
(1,682)
(1,939)
(6,630)
(5,272)
Repayments of long-term debt
(1,250)
(1,250)
(5,000)
(3,750)
Payments of financing costs
—
(19)
(84)
(19)
Net cash used in financing activities
(2,932)
(3,208)
(5,697)
(1,714)
Foreign currency impacts on cash, cash equivalents and restricted cash
3,012
3,897
1,513
(2,153)
Net increase (decrease) in cash, cash equivalents and restricted cash
35,571
(73,177)
153,942
21,113
Cash, cash equivalents and restricted cash, beginning of period
308,637
263,443
190,266
169,153
Cash, cash equivalents and restricted cash, end of period
$
344,208
$
190,266
$
344,208
$
190,266
Supplemental cash flow disclosure:
Cash paid for taxes
$
98
$
68
$
2,755
$
3,102
Interest paid
$
10,975
$
8,123
$
42,430
$
18,073
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid
$
2
$
67
$
2
$
67
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP ALLOCATED COMBINED RECEIPTS
(in thousands)
(unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Revenue
$
135,376
$
124,726
$
530,210
$
475,194
Fair value adjustments to deferred revenue in connection with purchase
accounting
—
13
—
868
Allocated combined receipts
$
135,376
$
124,739
$
530,210
$
476,062
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME
(in thousands)
(unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Income (loss) from operations
$
224
$
(3,780)
$
(3,218)
$
(16,480)
Stock-based compensation
10,575
10,856
44,196
39,779
Transaction costs(1)
5,857
4,206
15,512
9,123
Sponsor costs(2)
34
66
147
517
Other non-recurring costs(3)
2,956
630
10,162
3,365
Amortization of acquisition-related intangibles
35,731
34,520
142,965
136,710
Fair value adjustments to deferred revenue in connection with
purchase accounting
—
13
—
868
Non-GAAP operating income
$
55,377
$
46,511
$
209,764
$
173,882
GAAP operating margin
0.2
%
(3.0)
%
(0.6)
%
(3.5)
%
Non-GAAP operating margin
40.9
%
37.3
%
39.6
%
36.5
%
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Net loss
$
(5,767)
$
(5,723)
$
(34,078)
$
(34,242)
Interest on outstanding debt
11,382
8,257
42,022
24,591
Income tax (benefit) expense
459
(1,013)
(4,258)
(8,132)
Depreciation
1,305
1,346
4,786
4,491
Amortization
—
2
2
7
Stock-based compensation
10,575
10,856
44,196
39,779
Transaction costs(1)
5,857
4,206
15,512
9,123
Sponsor costs(2)
34
66
147
517
Other non-recurring costs(4)
2,956
630
10,269
3,365
Effects of foreign currency transaction (gains) and losses
(3,343)
(4,536)
(1,671)
2,514
Amortization of acquisition-related intangibles
35,731
34,520
142,965
136,710
Interest income
(2,716)
—
(5,679)
—
Fair value adjustments to deferred revenue in connection with purchase
accounting
—
13
—
868
Adjusted EBITDA
$
56,473
$
48,624
$
214,213
$
179,591
Net loss margin
(4.3)
%
(4.6)
%
(6.4)
%
(7.2)
%
Adjusted EBITDA margin
41.7
%
39.0
%
40.4
%
37.7
%
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF FREE CASH FLOW, UNLEVERED FREE CASH FLOW & ADJUSTED UNLEVERED FREE CASH FLOW
(in thousands)
(unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Net cash provided by operating activities
$
36,715
$
17,003
$
164,016
$
140,271
Purchases of property and equipment
(1,232)
(1,342)
(5,940)
(6,321)
Proceeds from disposals of property and equipment
8
2
50
43
Free cash flow
$
35,491
$
15,663
$
158,126
$
133,993
Cash paid for interest on outstanding debt
10,975
8,123
42,430
18,073
Cash settled stock-based compensation
24
1,941
662
6,194
Unlevered free cash flow
$
46,490
$
25,727
$
201,218
$
158,260
Transaction costs(1)
2,300
2,215
12,174
9,474
Sponsor costs(2)
34
33
169
378
Impaired leases
390
609
1,486
2,074
Other non-recurring costs(5)
2,079
761
10,442
3,359
Adjusted unlevered free cash flow
$
51,293
$
29,345
$
225,489
$
173,545
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Net loss
$
(5,767)
$
(5,723)
$
(34,078)
$
(34,242)
Stock-based compensation
10,575
10,856
44,196
39,779
Amortization of acquisition-related intangibles
35,731
34,520
142,965
136,710
Fair value adjustments to deferred revenue in connection with purchase
accounting
—
13
—
868
Transaction costs(1)
5,857
4,206
15,512
9,123
Sponsor costs(2)
34
66
147
517
Other non-recurring costs(4)
2,956
630
10,269
3,365
Effects of foreign currency transaction (gains) and losses
(3,343)
(4,536)
(1,671)
2,514
Tax effects of adjustments(6)
(12,811)
(11,652)
(52,504)
(47,989)
Non-GAAP net income
$
33,232
$
28,380
$
124,836
$
110,645
Non-GAAP net income per common share, basic
$
0.23
$
0.20
$
0.87
$
0.78
Non-GAAP net income per common share, diluted
$
0.23
$
0.20
$
0.86
$
0.77
Weighted average common shares used in computing basic Non-GAAP
net income per common share
144,868
142,643
143,968
141,815
Weighted average common shares used in computing diluted Non-
GAAP net income per common share
146,176
144,261
145,616
143,440
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP GROSS PROFIT
(in thousands)
(unaudited)
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Gross profit
$
87,609
$
79,914
$
343,895
$
302,900
Stock-based compensation
1,042
833
3,993
3,090
Transaction costs(1)
132
—
1,143
226
Other non-recurring costs(7)
635
5
1,909
69
Amortization of acquisition-related intangibles
16,265
15,952
64,868
63,386
Fair value adjustments to deferred revenue in connection with
purchase accounting
—
13
—
868
Non-GAAP gross profit
$
105,683
$
96,717
$
415,808
$
370,539
GAAP gross margin
64.7
%
64.1
%
64.9
%
63.7
%
Non-GAAP gross margin
78.1
%
77.5
%
78.4
%
77.8
%
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NET DEBT
(in thousands)
(unaudited)
December 31,
2023
December 31,
2022
Long-term principal, current
$
5,000
$
5,000
Long-term principal, net of current portion
486,250
491,250
Cash, cash equivalents and restricted cash
(344,208)
(190,266)
Net debt
$
147,042
$
305,984
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Three Months Ended December 31, 2023
(in thousands)
(unaudited)
GAAP
Stock-based
compensation
expense
Transaction
Costs
Other non-
recurring costs
Amortization
of acquired
intangibles
Non-GAAP
Cost of Revenue:
Subscription and support
$
41,167
$
(463)
$
(132)
$
(497)
$
(16,265)
$
23,810
Professional services and other
6,600
(579)
—
(138)
—
5,883
Total cost of revenue
$
47,767
$
(1,042)
$
(132)
$
(635)
$
(16,265)
$
29,693
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Three Months Ended December 31, 2022
(in thousands)
(unaudited)
GAAP
Stock-based
compensation
expense
Transaction
Costs
Other non-
recurring costs
Amortization
of acquired
intangibles
Non-GAAP
Cost of Revenue:
Subscription and support
$
38,127
$
(383)
$
—
$
(5)
$
(15,952)
$
21,787
Professional services and other
6,685
(450)
—
—
—
6,235
Total cost of revenue
$
44,812
$
(833)
$
—
$
(5)
$
(15,952)
$
28,022
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Year Ended December 31, 2023
(in thousands)
(unaudited)
GAAP
Stock-based
compensation
expense
Transaction
Costs
Other non-
recurring costs
Amortization
of acquired
intangibles
Non-GAAP
Cost of Revenue:
Subscription and support
$
158,699
$
(1,775)
$
(1,116)
$
(1,563)
$
(64,868)
$
89,377
Professional services and other
27,616
(2,218)
(27)
(346)
—
25,025
Total cost of revenue
$
186,315
$
(3,993)
$
(1,143)
$
(1,909)
$
(64,868)
$
114,402
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Year Ended December 31, 2022
(in thousands)
(unaudited)
GAAP
Stock-based
compensation
expense
Transaction
Costs
Other non-
recurring costs
Amortization
of acquired
intangibles
Non-GAAP
Cost of Revenue:
Subscription and support
$
146,546
$
(1,348)
$
(135)
$
(33)
$
(63,386)
$
81,644
Professional services and other
25,748
(1,742)
(91)
(36)
—
23,879
Total cost of revenue
$
172,294
$
(3,090)
$
(226)
$
(69)
$
(63,386)
$
105,523
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Three Months Ended December 31, 2023
(in thousands)
(unaudited)
GAAP
Stock-based
compensation
expense
Transaction
costs
Sponsor
costs
Other
non-
recurring
costs
Amortization
of acquired
intangibles
Non-
GAAP
GAAP %
of
revenue
Non-
GAAP %
of
Revenue
Operating expenses:
Sales and marketing
$
47,947
$
(2,829)
$
(170)
$
—
$
(835)
$
(19,462)
$
24,651
35.4
%
18.2
%
Research and development
22,290
(3,887)
(1,502)
—
(268)
(4)
16,629
16.5
%
12.3
%
General and administrative
17,148
(2,817)
(4,053)
(34)
(1,218)
—
9,026
12.7
%
6.7
%
Total operating expenses
$
87,385
$
(9,533)
$
(5,725)
$
(34)
$
(2,321)
$
(19,466)
$
50,306
64.6
%
37.2
%
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Three Months Ended December 31, 2022
(in thousands)
(unaudited)
GAAP
Stock-based
compensation
expense
Transaction
costs
Sponsor
costs
Other
non-
recurring
costs
Amortization
of acquired
intangibles
Non-
GAAP
GAAP %
of
revenue
Non-
GAAP %
of
Revenue
Operating expenses:
Sales and marketing
$
46,801
$
(2,888)
$
(1,129)
$
—
$
(76)
$
(18,568)
$
24,140
37.5
%
19.4
%
Research and development
20,723
(3,206)
(1,170)
—
(9)
—
16,338
16.6
%
13.1
%
General and administrative
16,170
(3,929)
(1,911)
(66)
(536)
—
9,728
13.0
%
7.8
%
Total operating expenses
$
83,694
$
(10,023)
$
(4,210)
$
(66)
$
(621)
$
(18,568)
$
50,206
67.1
%
40.3
%
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Year Ended December, 2023
(in thousands)
(unaudited)
GAAP
Stock-based
compensation
expense
Transaction
costs
Sponsor
costs
Other
non-
recurring
costs
Amortization
of acquired
intangibles
Non-
GAAP
GAAP %
of
revenue
Non-
GAAP %
of
Revenue
Operating expenses:
Sales and marketing
$
197,690
$
(11,971)
$
(2,119)
$
—
$
(2,646)
$
(78,080)
$
102,874
37.3
%
19.4
%
Research and development
88,162
(14,333)
(5,511)
—
(2,986)
(17)
65,315
16.6
%
12.3
%
General and administrative
61,261
(13,899)
(6,739)
(147)
(2,621)
—
37,855
11.6
%
7.1
%
Total operating expenses
$
347,113
$
(40,203)
$
(14,369)
$
(147)
$
(8,253)
$
(78,097)
$
206,044
65.5
%
38.8
%
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Year Ended December, 2022
(in thousands)
(unaudited)
GAAP
Stock-based
compensation
expense
Transaction
costs
Sponsor
costs
Other
non-
recurring
costs
Amortization
of acquired
intangibles
Non-
GAAP
GAAP %
of
revenue
Non-
GAAP %
of
Revenue
Operating expenses:
Sales and marketing
$
181,744
$
(11,050)
$
(1,302)
$
—
$
(705)
$
(73,324)
$
95,363
38.2
%
20.0
%
Research and development
77,189
(11,467)
(3,025)
—
(929)
—
61,768
16.2
%
13.0
%
General and administrative
60,447
(14,172)
(4,568)
(518)
(1,663)
—
39,526
12.7
%
8.3
%
Total operating expenses
$
319,380
$
(36,689)
$
(8,895)
$
(518)
$
(3,297)
$
(73,324)
$
196,657
67.1
%
41.3
%
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 expenses incurred for services provided by Thoma Bravo and their affiliates.
(3) Includes other non-recurring costs as follows (in thousands):
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Contract modification fees
479
—
1,507
230
Employee severance
881
195
3,469
744
Workforce realignment costs
1,351
267
3,521
1,388
Other insignificant non-recurring costs
245
168
1,665
1,003
Total other non-recurring costs
$
2,956
$
630
$
10,162
$
3,365
(4) Includes other non-recurring costs as follows (in thousands):
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Loss on exit of leased properties
—
—
107
—
Contract modification fees
479
—
1,507
230
Employee severance
881
195
3,469
744
Workforce realignment costs
1,351
267
3,521
1,388
Other insignificant non-recurring costs
245
168
1,665
1,003
Total other non-recurring costs
$
2,956
$
630
$
10,269
$
3,365
(5) Includes other non-recurring costs paid in cash as follows (in thousands):
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Employee severance
$
626
$
234
$
3,044
$
744
Workforce realignment costs
1,152
344
3,245
980
Contract modification fees
—
—
2,613
186
Other insignificant non-recurring costs
301
183
1,540
1,449
Total other non-recurring costs paid in cash
$
2,079
$
761
$
10,442
$
3,359
(6) During the fourth quarter of 2022, we revised the methodology for calculating Non-GAAP Net Income. 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) Includes other non-recurring costs as follows (in thousands):
Three months ended
December 31,
Year ended
December 31,
2023
2022
2023
2022
Contract modification fees
480
—
1,508
—
Employee severance
27
5
261
65
Workforce realignment costs
19
—
31
—
Other insignificant non-recurring costs
109
—
109
4
Total other non-recurring costs
$
635
$
5
$
1,909
$
69
For More Information:
Media Relations:
Brian Watkins
Corporate Communications
Instructure
(801) 610-9722
brian.watkins@instructure.com
Investor Relations:
April Scee
Managing Director
ICR, Inc.
(917) 497-8992
april.scee@icrinc.com
View original content to download multimedia:https://www.prnewswire.com/news-releases/instructure-reports-fourth-quarter-and-full-year-2023-results-302066547.html
SOURCE Instructure Holdings, Inc.
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