Instructure Announces Financial Results for Third Quarter Fiscal Year 2021
Instructure Holdings reported strong Q3 results for the period ending September 30, 2021, with GAAP revenue of $107.2 million, up 31% year-over-year, and Allocated Combined Receipts of $108.6 million, a 24% increase. Despite an operating loss of $5.0 million, the company achieved Non-GAAP operating income of $40.4 million (37.2% of receipts). The financial outlook for Q4 and full year 2021 remains positive with revenue guidance between $106.9 million to $107.9 million for Q4 and $401.7 million to $402.7 million for the full year.
- GAAP revenue increased by 31% year-over-year to $107.2 million.
- Non-GAAP operating income for Q3 was $40.4 million, or 37.2% of Allocated Combined Receipts.
- Cash flow from operations reached $161.2 million, highlighting strong operational performance.
- New contracts with Johns Hopkins University and Miami Dade College indicate growing adoption of Canvas.
- Operating loss of $5.0 million, representing 4.7% of revenue.
- GAAP net loss of $13.3 million may concern some investors.
SALT LAKE CITY, Nov. 8, 2021 /PRNewswire/ -- Instructure Holdings, Inc. (Instructure) (NYSE: INST), the makers of the Canvas Learning Management System, today announced financial results for the third quarter ended September 30, 2021.
"Instructure continued to deliver strong performance across the board in Q3," said Steve Daly, CEO of Instructure. "We are well-positioned at the center of the teaching and learning ecosphere, have a strong growth trajectory driven by momentum in both new logo and cross sell wins, and see considerable opportunities in front of us both domestically and internationally as we continue to execute our platform strategy. Our market opportunity is greater than ever."
"In Q3, Canvas users continued to utilize the platform at significantly higher levels than pre-pandemic levels, even after many students returned to the classroom this Fall. This strong usage further increases our confidence that we will remain the core platform for teaching and learning and a cornerstone in the digital transformation of education, regardless of whether education is delivered in an in-person, virtual, or hybrid context."
Financial Highlights:
- GAAP Revenue of
$107.2 million , an increase of31% year-over-year - Allocated Combined Receipts*, or ACR, of
$108.6 million , an increase of24% year-over-year - Operating loss of
$5.0 million , or negative4.7% of revenue, and Non-GAAP operating income* of$40.4 million , or37.2% of Allocated Combined Receipts - GAAP net loss of
$13.3 million and Adjusted EBITDA* of$41.3 million , or38.0% of Allocated Combined Receipts - Cash flow from operations of
$161.2 million and Unlevered Free Cash Flow* of$172.2 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.
Business and Operating Highlights:
- In September, Johns Hopkins University announced that it will replace Blackboard with Canvas as the university's learning management system beginning in advance of the 2022-23 academic school year. Thousands of Hopkins faculty and students shared their input as part of the decision-making process and ultimately chose Canvas for its ease of use, modern user interface, superior mobile experience, and powerful ability to integrate with third party tools.
- In September, we also added a new statewide assessment contract with Vermont. The Vermont Virtual Learning Cooperative (VTVLC) selected MasteryConnect to bolster its approach toward student assessment and help students demonstrate the mastery required for Vermont's pioneering proficiency-based graduation model. VTVLC works with Vermont public schools to offer online courses for its learners statewide, which has become increasingly important due to the COVID-19 crisis.
- In November, Miami Dade College (MDC) announced it selected Canvas as its new learning management system, moving away from Blackboard in order to better support the surge in its online education with Instructure's platform reliability. MDC was looking for a robust learning management system that offered a mobile experience to create inclusivity for adult students on the go, as well as multilingual support.
- In October, we hosted attendees from over 5,000 institutions at InstructureCon, more than 5 times pre-pandemic levels. At the conference, we introduced new commercial partnerships and several significant new features to our learning platform, including MasteryView simplified assessments and additional features for Canvas for K-5 users.
- In October, as a result of our strong growth and margin profile we refinanced
$531.0 million in outstanding debt with better terms. As part of the refinancing, we also paid down approximately$31.0 million of outstanding principal, reducing total debt outstanding to$500.0 million . As a result, we expect that our go-forward annual interest expense will be reduced by approximately$18.0 million .
Business Outlook
Based on information as of today, November 8, 2021, the Company is issuing the following financial guidance.
Fourth Quarter Fiscal 2021:
- Revenue is expected to be in the range of
$106.9 million to$107.9 million - Allocated Combined Receipts* is expected to be in the range of
$107.5 million to$108.5 million - Non-GAAP operating income* is expected to be in the range of
$37.5 million to$38.5 million - Adjusted EBITDA* is expected to be in the range of
$38.5 million to$39.5 million - Non-GAAP net income* is expected to be
$29.3 million to$30.3 million
Full Year 2021:
- Revenue is expected to be in the range of
$401.7 million to$402.7 million - Allocated Combined Receipts* is expected to be in the range of
$410.7 million to$411.7 million - Non-GAAP operating income* is expected to be in the range of
$140.6 million to$141.6 million - Adjusted EBITDA* is expected to be in the range of
$143.6 million to$144.6 million - Non-GAAP net income* is expected to be
$107.4 million to$108.4 million - Unlevered free cash flow* is expected to be approximately
$152.0 million
*Allocated Combined Receipts, Non-GAAP operating income, Adjusted EBITDA, non-GAAP net income, and unlevered free cash flow are non-GAAP measures. See "Non-GAAP Financial Measures" for a reconciliation of Allocated Combined Receipts to the most closely comparable GAAP measure. Instructure is unable to provide guidance, or a reconciliation, for operating loss and net loss, the most closely comparable GAAP measures with respect to non-GAAP operating income, Adjusted EBITDA, non-GAAP net income, and unlevered free cash flow 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, 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
Instructure's management team will hold a conference call to discuss our third-quarter results today, November 8, 2021 at 5:00 p.m. ET. The conference call can be accessed by dialing (833) 921-1674 from the United States and Canada or (236) 389-2674 internationally with conference ID 1531297. A live webcast and replay of the conference call can be accessed from the investor relations page of Instructure's website at ir.instructure.com. An archived replay of the webcast will be available following the conclusion of the call.
About Instructure
Instructure is an education technology company dedicated to helping everyone learn together. We amplify the power of teaching and elevate the learning process, leading to improved student outcomes. Today, Instructure supports more than 30 million educators and learners at more than 6,000 organizations around the world.
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.
Allocated Combined Receipts. We define Allocated Combined Receipts as the combined receipts of our Company and companies that we have acquired allocated to the period of service delivery. We calculate Allocated Combined Receipts 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") and Eesysoft Software International B.V. ("Eesysoft") acquisitions that we do not believe are reflective of our ongoing operations. Management uses this measure to evaluate 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.
Non-GAAP Operating Income. We define non-GAAP operating (loss) income as loss from operations excluding the impact of stock-based compensation, restructuring, transaction and sponsor related costs, amortization of acquisition-related intangibles, and the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and Certica and Eesysoft acquisitions that we do not believe are reflective of our ongoing operations. We believe non-GAAP operating (loss) 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.
Non-GAAP Net Income. We define non-GAAP net loss 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 Certica and Eesysoft acquisitions, and restructuring, transaction and sponsor related costs that we do not believe are reflective of our ongoing operations. 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 potential dilutive common stock equivalents outstanding for the period.
Adjusted EBITDA. EBITDA is defined as earnings before debt-related costs, including interest and loss on debt extinguishment, provision (benefit) for taxes, depreciation, and amortization. We further adjust EBITDA to exclude certain items of a significant or unusual nature, including stock-based compensation, restructuring, transaction and sponsor related costs, amortization of acquisition-related intangibles, and the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and Certica and Eesysoft 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.
Free Cash Flow and 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 believe free cash flow and unlevered free cash flow facilitates period-to-period comparisons of liquidity. We consider free cash flow and 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, restructuring, transaction and sponsor related costs, and amortization of acquisition-related intangibles, that we do not believe are reflective of our ongoing operations.
Non-GAAP Gross Profit. We define non-GAAP gross profit as gross profit excluding the impact of stock-based compensation, restructuring, transaction and sponsor related 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.
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 fourth quarter of 2021 and for the full year ending December 31, 2021 the company's growth, customer demand and application adoption, the company's research and development efforts and future application releases, 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 future stimulus packages approved by the U.S. federal government; failure to continue our recent growth rates; our ability to acquire new customers and successfully retain existing customers; the effects of increased usage of, or interruptions or performance problems associated with, our learning platform; the impact on our business and prospects from the effects of the current COVID-19 pandemic; our history of losses and expectation that we will not be profitable for the foreseeable future; the impact of adverse general and industry-specific economic and market conditions; 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 initial public offering prospectus filed with the Securities and Exchange Commission (the "SEC") on July 23, 2021, and other documents filed with the SEC 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 amounts) | ||||||||
September 30, | December 31, | |||||||
Assets | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 227,487 | $ | 146,212 | ||||
Accounts receivable—net | 54,759 | 47,315 | ||||||
Prepaid expenses | 16,831 | 12,733 | ||||||
Deferred commissions | 10,193 | 6,663 | ||||||
Assets held for sale | — | 57,334 | ||||||
Other current assets | 2,913 | 3,083 | ||||||
Total current assets | 312,183 | 273,340 | ||||||
Property and equipment, net | 10,264 | 11,289 | ||||||
Right-of-use assets | 19,352 | 26,904 | ||||||
Goodwill | 1,186,676 | 1,172,395 | ||||||
Intangible assets, net | 660,030 | 755,349 | ||||||
Noncurrent prepaid expenses | 2,493 | 6,269 | ||||||
Deferred commissions, net of current portion | 18,568 | 16,434 | ||||||
Other assets | 5,724 | 6,651 | ||||||
Total assets | $ | 2,215,290 | $ | 2,268,631 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 22,271 | $ | 13,302 | ||||
Accrued liabilities | 24,529 | 23,638 | ||||||
Lease liabilities | 6,482 | 6,037 | ||||||
Long-term debt, current | 2,235 | 6,118 | ||||||
Liabilities held for sale | — | 11,834 | ||||||
Deferred revenue | 270,421 | 192,864 | ||||||
Total current liabilities | 325,938 | 253,793 | ||||||
Long-term debt, net of current portion | 514,970 | 820,925 | ||||||
Deferred revenue, net of current portion | 16,667 | 12,015 | ||||||
Lease liabilities, net of current portion | 25,479 | 30,670 | ||||||
Deferred tax liabilities | 38,347 | 58,601 | ||||||
Other long-term liabilities | 4,896 | 4,643 | ||||||
Total liabilities | 926,297 | 1,180,647 | ||||||
Stockholders' equity: | ||||||||
Common stock, par value | 1,404 | 1,262 | ||||||
Additional paid-in capital | 1,533,595 | 1,264,703 | ||||||
Accumulated deficit | (246,006) | (177,981) | ||||||
Total stockholders' equity | 1,288,993 | 1,087,984 | ||||||
Total liabilities and stockholders' equity | $ | 2,215,290 | $ | 2,268,631 | ||||
INSTRUCTURE HOLDINGS, INC. | |||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||
Three months | Three months | Nine months | Six months | Three months | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||
Revenue: | |||||||||||||||||||||
Subscription and support | $ | 96,163 | $ | 73,313 | $ | 266,774 | $ | 129,460 | $ | 65,968 | |||||||||||
Professional services and other | 11,058 | 8,459 | 27,994 | 13,682 | 5,421 | ||||||||||||||||
Total revenue | 107,221 | 81,772 | 294,768 | 143,142 | 71,389 | ||||||||||||||||
Cost of revenue: | |||||||||||||||||||||
Subscription and support | 36,528 | 35,996 | 112,575 | 69,975 | 19,699 | ||||||||||||||||
Professional services and other | 4,939 | 5,034 | 15,500 | 10,592 | 4,699 | ||||||||||||||||
Total cost of revenue | 41,467 | 41,030 | 128,075 | 80,567 | 24,398 | ||||||||||||||||
Gross profit | 65,754 | 40,742 | 166,693 | 62,575 | 46,991 | ||||||||||||||||
Operating expenses: | |||||||||||||||||||||
Sales and marketing | 40,553 | 40,100 | 120,858 | 84,034 | 27,010 | ||||||||||||||||
Research and development | 15,823 | 14,619 | 47,191 | 36,736 | 19,273 | ||||||||||||||||
General and administrative | 14,396 | 13,092 | 38,943 | 47,533 | 17,295 | ||||||||||||||||
Impairment on held-for-sale goodwill | — | 29,612 | — | 29,612 | — | ||||||||||||||||
Impairment on disposal group | — | 3,389 | 1,218 | 3,389 | — | ||||||||||||||||
Total operating expenses | 70,772 | 100,812 | 208,210 | 201,304 | 63,578 | ||||||||||||||||
Loss from operations | (5,018) | (60,070) | (41,517) | (138,729) | (16,587) | ||||||||||||||||
Other income (expense): | |||||||||||||||||||||
Interest income | — | 5 | 13 | 40 | 313 | ||||||||||||||||
Interest expense | (11,251) | (16,357) | (44,178) | (34,449) | (8) | ||||||||||||||||
Other income (expense) | (1,623) | 187 | (2,365) | 603 | (5,738) | ||||||||||||||||
Total other income (expense), net | (12,874) | (16,165) | (46,530) | (33,806) | (5,433) | ||||||||||||||||
Loss before income taxes | (17,892) | (76,235) | (88,047) | (172,535) | (22,020) | ||||||||||||||||
Income tax benefit (expense) | 4,631 | 16,062 | 20,022 | 35,788 | (183) | ||||||||||||||||
Net loss and comprehensive loss | $ | (13,261) | $ | (60,173) | $ | (68,025) | $ | (136,747) | $ | (22,203) | |||||||||||
Net loss per common share, basic and diluted | $ | (0.10) | $ | (0.48) | $ | (0.52) | $ | (1.08) | $ | (0.58) | |||||||||||
Weighted average common shares used in computing basic and diluted net loss per common share | 136,647 | 126,240 | 129,643 | 126,240 | 38,369 | ||||||||||||||||
INSTRUCTURE HOLDINGS, INC. | |||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Successor | Successor | Predecessor | |||||||||||||||||||
Three months | Three months | Nine months | Six months | Three months | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||
Operating activities: | |||||||||||||||||||||
Net loss | $ | (13,261) | $ | (60,173) | $ | (68,025) | $ | (136,747) | $ | (22,203) | |||||||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||||||||
Depreciation of property and equipment | 910 | 1,329 | 2,728 | 2,427 | 2,982 | ||||||||||||||||
Amortization of intangible assets | 33,591 | 32,619 | 100,319 | 65,602 | 2,620 | ||||||||||||||||
Amortization of deferred financing costs | 740 | 487 | 1,958 | 1,018 | — | ||||||||||||||||
Impairment on disposal group | — | 3,389 | 1,218 | 3,389 | — | ||||||||||||||||
Impairment on held-for-sale goodwill | — | 29,612 | — | 29,612 | — | ||||||||||||||||
Stock-based compensation | 6,709 | 2,616 | 11,532 | 3,116 | 7,109 | ||||||||||||||||
Deferred income taxes | (4,852) | (16,159) | (20,254) | (36,062) | — | ||||||||||||||||
Other | 160 | 654 | 1,565 | 1,381 | 1,959 | ||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||||
Accounts receivable, net | 89,213 | 73,414 | (7,700) | (23,179) | 11,903 | ||||||||||||||||
Prepaid expenses and other assets | 7,050 | 11,548 | 80 | 21,383 | (25,121) | ||||||||||||||||
Deferred commissions | (3,221) | (11,218) | (5,596) | (19,010) | 1,469 | ||||||||||||||||
Right-of-use assets | 1,172 | 1,600 | 7,552 | 5,294 | 4,509 | ||||||||||||||||
Accounts payable and accrued liabilities | 8,829 | (7,975) | 8,634 | (11,796) | 2,187 | ||||||||||||||||
Deferred revenue | 36,412 | 39,694 | 80,470 | 131,855 | (36,983) | ||||||||||||||||
Lease liabilities | (1,696) | (1,245) | (4,746) | (338) | (7,489) | ||||||||||||||||
Other liabilities | (573) | 93 | (919) | 4,015 | — | ||||||||||||||||
Net cash provided by (used in) operating activities | 161,183 | 100,285 | 108,816 | 41,960 | (57,058) | ||||||||||||||||
Investing activities: | |||||||||||||||||||||
Purchases of property and equipment | (1,193) | (807) | (2,800) | (858) | (732) | ||||||||||||||||
Proceeds from sale of property and equipment | 16 | 38 | 40 | 67 | 19 | ||||||||||||||||
Proceeds from sale of Bridge | — | — | 46,018 | — | — | ||||||||||||||||
Business acquisitions, net of cash received | (856) | — | (16,886) | (1,904,064) | — | ||||||||||||||||
Maturities of marketable securities | — | — | — | — | 15,584 | ||||||||||||||||
Net cash provided by (used in) investing activities | (2,033) | (769) | 26,372 | (1,904,855) | 14,871 | ||||||||||||||||
Financing activities: | |||||||||||||||||||||
IPO proceeds, net of offering costs paid of | 259,604 | — | 259,604 | — | — | ||||||||||||||||
Proceeds from issuance of common stock from employee equity plans | — | — | — | — | 1,067 | ||||||||||||||||
Shares repurchased for tax withholdings on vesting of restricted stock units | (1,318) | — | (1,318) | — | (1,413) | ||||||||||||||||
Proceeds from issuance of term debt, net of discount | — | — | — | 763,276 | — | ||||||||||||||||
Proceeds from contributions from stockholders | — | 9,182 | — | 1,257,327 | — | ||||||||||||||||
Distributions to stockholders | (7) | — | (930) | — | — | ||||||||||||||||
Repayments of long-term debt | (256,348) | (1,937) | (307,882) | (3,875) | — | ||||||||||||||||
Term Loan prepayment premium | (3,827) | — | (3,827) | — | — | ||||||||||||||||
Net cash provided (used in) by financing activities | (1,896) | 7,245 | (54,353) | 2,016,728 | (346) | ||||||||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 157,254 | 106,761 | 80,835 | 153,833 | (42,533) | ||||||||||||||||
Cash, cash equivalents, and restricted cash, beginning of period | 74,534 | 105,775 | 150,953 | 58,703 | 101,236 | ||||||||||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | 231,788 | $ | 212,536 | $ | 231,788 | $ | 212,536 | $ | 58,703 | |||||||||||
Supplemental cash flow disclosure: | |||||||||||||||||||||
Cash paid for taxes | $ | 153 | $ | 109 | $ | 556 | $ | 257 | $ | 32 | |||||||||||
Interest paid | $ | 10,553 | $ | 15,869 | $ | 42,302 | $ | 33,258 | $ | — | |||||||||||
Non-cash investing and financing activities: | |||||||||||||||||||||
Capital expenditures incurred but not yet paid | $ | 62 | $ | 20 | $ | 62 | $ | 20 | $ | 79 | |||||||||||
RECONCILIATIONS OF NON-GAAP MEASURES TO GAAP MEASURES
INSTRUCTURE HOLDINGS, INC. | |||||||||||||||||||||
RECONCILIATION OF NON-GAAP ALLOCATED COMBINED RECEIPTS | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||
Three months | Three months | Nine months | Six months | Three months | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||
Revenue | $ | 107,221 | $ | 81,772 | $ | 294,768 | $ | 143,142 | $ | 71,389 | |||||||||||
Fair value adjustments to deferred revenue in connection with purchase accounting | 1,379 | 6,150 | 8,471 | 19,589 | — | ||||||||||||||||
Allocated Combined Receipts | $ | 108,600 | $ | 87,922 | $ | 303,239 | $ | 162,731 | $ | 71,389 | |||||||||||
INSTRUCTURE HOLDINGS, INC. | |||||||||||||||||||||
RECONCILIATION OF NON-GAAP OPERATING INCOME | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||
Three months | Three months | Nine months | Six months | Three months | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||
Loss from operations | $ | (5,018) | $ | (60,070) | $ | (41,517) | $ | (138,729) | $ | (16,587) | |||||||||||
Stock-based compensation | 8,379 | 6,722 | 17,722 | 40,550 | 7,109 | ||||||||||||||||
Restructuring, transaction and sponsor related costs | 2,031 | 40,064 | 18,042 | 50,317 | 8,360 | ||||||||||||||||
Amortization of acquisition-related intangibles | 33,590 | 32,617 | 100,312 | 65,597 | 2,586 | ||||||||||||||||
Fair value adjustments to deferred revenue in connection with purchase accounting | 1,379 | 6,150 | 8,471 | 19,589 | — | ||||||||||||||||
Non-GAAP operating income | $ | 40,361 | $ | 25,483 | $ | 103,030 | $ | 37,324 | $ | 1,468 | |||||||||||
INSTRUCTURE HOLDINGS, INC. | |||||||||||||||||||||
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||
Three months | Three months | Nine months | Six months | Three months | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||
Net loss | $ | (13,261) | $ | (60,173) | $ | (68,025) | $ | (136,747) | $ | (22,203) | |||||||||||
Interest on outstanding debt and loss on debt extinguishment | 11,247 | 16,357 | 44,170 | 34,449 | — | ||||||||||||||||
Provision (benefit) for taxes | (4,631) | (16,062) | (20,022) | (35,788) | 183 | ||||||||||||||||
Depreciation | 911 | 1,329 | 2,728 | 2,426 | 2,982 | ||||||||||||||||
Amortization | 2 | 2 | 5 | 5 | 35 | ||||||||||||||||
Stock-based compensation | 8,379 | 6,722 | 17,722 | 40,550 | 7,109 | ||||||||||||||||
Restructuring, transaction and sponsor related costs | 3,641 | 39,446 | 19,652 | 49,699 | 14,117 | ||||||||||||||||
Amortization of acquisition-related intangibles | 33,590 | 32,617 | 100,312 | 65,597 | 2,586 | ||||||||||||||||
Fair value adjustments to deferred revenue in connection with purchase accounting | 1,379 | 6,150 | 8,471 | 19,589 | — | ||||||||||||||||
Adjusted EBITDA | $ | 41,257 | $ | 26,388 | $ | 105,013 | $ | 39,780 | $ | 4,809 | |||||||||||
INSTRUCTURE HOLDINGS, INC. | |||||||||||||||||||||
RECONCILIATION OF FREE CASH FLOW & UNLEVERED FREE CASH FLOW | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||
Three months | Three months | Nine months | Six months | Three months | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||
Net cash provided by (used in) operating activities | $ | 161,183 | $ | 100,285 | $ | 108,816 | $ | 41,960 | $ | (57,058) | |||||||||||
Purchases of property and equipment | (1,193) | (807) | (2,800) | (858) | (732) | ||||||||||||||||
Proceeds from disposals of property and equipment | 16 | 38 | 40 | 67 | 19 | ||||||||||||||||
Free cash flow | $ | 160,006 | $ | 99,516 | $ | 106,056 | $ | 41,169 | $ | (57,771) | |||||||||||
Cash paid for interest on outstanding debt | 10,553 | 17,060 | 42,302 | 34,449 | — | ||||||||||||||||
Cash settled stock-based compensation | 1,651 | 4,105 | 6,094 | 37,434 | — | ||||||||||||||||
Unlevered free cash flow | $ | 172,210 | $ | 120,681 | $ | 154,452 | $ | 113,052 | $ | (57,771) | |||||||||||
INSTRUCTURE HOLDINGS, INC. | |||||||||||||||||||||
RECONCILIATION OF NON-GAAP NET INCOME | |||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||
Three months | Three months | Nine months | Six months | Three months | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||
Net loss | $ | (13,261) | $ | (60,173) | $ | (68,025) | $ | (136,747) | $ | (22,203) | |||||||||||
Stock-based compensation | 8,379 | 6,722 | 17,722 | 40,550 | 7,109 | ||||||||||||||||
Amortization of acquisition-related intangibles | 33,590 | 32,617 | 100,312 | 65,597 | 2,586 | ||||||||||||||||
Fair value adjustments to deferred revenue in connection with purchase accounting | 1,379 | 6,150 | 8,471 | 19,589 | — | ||||||||||||||||
Restructuring, transaction and sponsor related costs | 3,641 | 39,446 | 19,652 | 49,699 | 14,117 | ||||||||||||||||
Non-GAAP net income | $ | 33,728 | $ | 24,762 | $ | 78,132 | $ | 38,688 | $ | 1,609 | |||||||||||
Non-GAAP net income per common share, basic | $ | 0.25 | $ | 0.20 | $ | 0.60 | $ | 0.31 | $ | 0.04 | |||||||||||
Non-GAAP net income per common share, diluted | $ | 0.24 | $ | 0.20 | $ | 0.60 | $ | 0.31 | $ | 0.04 | |||||||||||
Weighted average common shares used in computing basic Non-GAAP net income per common share | 136,647 | 126,240 | 129,643 | 126,240 | 38,369 | ||||||||||||||||
Weighted average common shares used in computing diluted Non-GAAP net income per common share | 138,182 | 126,240 | 130,166 | 126,240 | 38,369 | ||||||||||||||||
INSTRUCTURE HOLDINGS, INC. | |||||||||||||||||||||
RECONCILIATION OF NON-GAAP GROSS PROFIT | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||
Three months | Three months | Nine months | Six months | Three months | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2020 | |||||||||||||||||
Gross profit | $ | 65,754 | $ | 40,742 | $ | 166,693 | $ | 62,575 | $ | 46,991 | |||||||||||
Stock-based compensation | 580 | 555 | 1,262 | 1,116 | 586 | ||||||||||||||||
Restructuring, transaction and sponsor related costs | 187 | 70 | 2,991 | 2,912 | 66 | ||||||||||||||||
Amortization of acquisition-related intangibles | 15,582 | 15,000 | 46,412 | 30,167 | 1,293 | ||||||||||||||||
Fair value adjustments to deferred revenue in connection with purchase accounting | 1,379 | 6,150 | 8,471 | 19,589 | - | ||||||||||||||||
Non-GAAP gross profit | $ | 83,482 | $ | 62,517 | $ | 225,829 | $ | 116,359 | $ | 48,936 | |||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP COST OF REVENUE | ||||||||||||||||||||
Three Months Ended September 30, 2021 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Cost of Revenue | ||||||||||||||||||||
Subscription and support | $ | 36,528 | (257) | (159) | (15,582) | $ | 20,530 | |||||||||||||
Professional services and other | 4,939 | (323) | (28) | — | 4,588 | |||||||||||||||
Total cost of revenue | $ | 41,467 | (580) | (187) | (15,582) | $ | 25,118 | |||||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP COST OF REVENUE | ||||||||||||||||||||
Nine Months Ended September 30, 2021 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Cost of Revenue | ||||||||||||||||||||
Subscription and support | $ | 112,575 | (652) | (2,108) | (46,412) | $ | 63,403 | |||||||||||||
Professional services and other | 15,500 | (610) | (883) | — | 14,007 | |||||||||||||||
Total cost of revenue | $ | 128,075 | (1,262) | (2,991) | (46,412) | $ | 77,410 | |||||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP COST OF REVENUE | ||||||||||||||||||||
Three Months Ended September 30, 2020 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Cost of Revenue | ||||||||||||||||||||
Subscription and support | $ | 35,996 | (333) | — | (15,000) | $ | 20,663 | |||||||||||||
Professional services and other | 5,034 | (222) | (70) | — | 4,742 | |||||||||||||||
Total cost of revenue | $ | 41,030 | (555) | (70) | (15,000) | $ | 25,405 | |||||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP COST OF REVENUE | ||||||||||||||||||||
Six Months Ended September 30, 2020 (Successor) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Cost of Revenue | ||||||||||||||||||||
Subscription and support | $ | 69,975 | (653) | (2,056) | (30,167) | $ | 37,099 | |||||||||||||
Professional services and other | 10,592 | (463) | (856) | — | 9,273 | |||||||||||||||
Total cost of revenue | $ | 80,567 | (1,116) | (2,912) | (30,167) | $ | 46,372 | |||||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP COST OF REVENUE | ||||||||||||||||||||
Three Months Ended March 31, 2020 (Predecessor) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Cost of Revenue | ||||||||||||||||||||
Subscription and support | $ | 19,699 | (301) | — | (1,293) | $ | 18,105 | |||||||||||||
Professional services and other | 4,699 | (285) | (66) | — | 4,348 | |||||||||||||||
Total cost of revenue | $ | 24,398 | (586) | (66) | (1,293) | $ | 22,453 | |||||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP OPERATING EXPENSES | ||||||||||||||||||||
Three Months Ended September 30, 2021 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 40,553 | (2,139) | (99) | (18,008) | $ | 20,307 | |||||||||||||
Research and development | 15,823 | (2,292) | (226) | — | 13,305 | |||||||||||||||
General and administrative | 14,396 | (3,368) | (1,519) | — | 9,509 | |||||||||||||||
Total operating expenses | $ | 70,772 | (7,799) | (1,844) | (18,008) | $ | 43,121 | |||||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP OPERATING EXPENSES | ||||||||||||||||||||
Nine Months Ended September 30, 2021 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 120,858 | (4,814) | (2,551) | (53,900) | $ | 59,593 | |||||||||||||
Research and development | 47,191 | (4,896) | (2,904) | — | 39,391 | |||||||||||||||
General and administrative | 38,943 | (6,750) | (8,378) | — | 23,815 | |||||||||||||||
Impairment on disposal group | 1,218 | — | (1,218) | — | — | |||||||||||||||
Total operating expenses | $ | 208,210 | (16,460) | (15,051) | (53,900) | $ | 122,799 | |||||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP OPERATING EXPENSES | ||||||||||||||||||||
Three Months Ended September 30, 2020 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 40,100 | (1,843) | (1,420) | (17,617) | $ | 19,220 | |||||||||||||
Research and development | 14,619 | (2,149) | (1,017) | — | 11,453 | |||||||||||||||
General and administrative | 13,092 | (2,175) | (4,556) | — | 6,361 | |||||||||||||||
Impairment on held-for-sale goodwill | 29,612 | — | (29,612) | — | — | |||||||||||||||
Impairment on disposal group | 3,389 | — | (3,389) | — | — | |||||||||||||||
Total operating expenses | $ | 100,812 | $ | (6,167) | $ | (39,994) | $ | (17,617) | $ | 37,034 | ||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP OPERATING EXPENSES | ||||||||||||||||||||
Six Months Ended September 30, 2020 (Successor) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 84,034 | (5,435) | (3,706) | (35,430) | $ | 39,463 | |||||||||||||
Research and development | 36,736 | (7,193) | (3,581) | — | 25,962 | |||||||||||||||
General and administrative | 47,533 | (26,806) | (7,117) | — | 13,610 | |||||||||||||||
Impairment on held-for-sale goodwill | 29,612 | — | (29,612) | — | — | |||||||||||||||
Impairment on disposal group | 3,389 | — | (3,389) | — | — | |||||||||||||||
Total operating expenses | $ | 201,304 | $ | (39,434) | $ | (47,405) | $ | (35,430) | $ | 79,035 | ||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP OPERATING EXPENSES | ||||||||||||||||||||
Three Months Ended March 31, 2020 (Predecessor) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
GAAP | Stock-based compensation expense | Restructuring, transaction and sponsor related costs | Amortization of acquired intangibles | Non-GAAP | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | $ | 27,010 | (1,977) | (556) | (1,293) | $ | 23,184 | |||||||||||||
Research and development | 19,273 | (1,874) | (1,273) | — | 16,126 | |||||||||||||||
General and administrative | 17,295 | (2,672) | (6,465) | — | 8,158 | |||||||||||||||
Total operating expenses | $ | 63,578 | (6,523) | (8,294) | (1,293) | $ | 47,468 | |||||||||||||
INSTRUCTURE HOLDINGS, INC. | ||||||||||||||||
RECONCILIATION OF NON-GAAP ALLOCATED COMBINED RECEIPTS GUIDANCE | ||||||||||||||||
(in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ending | Full Year Ending | |||||||||||||||
2021 | 2021 | 2021 | 2021 | |||||||||||||
LOW | HIGH | LOW | HIGH | |||||||||||||
Revenue | $ | 106,900 | $ | 107,900 | $ | 401,700 | $ | 402,700 | ||||||||
Fair value adjustments to deferred revenue in connection with purchase accounting | 600 | 600 | 9,000 | 9,000 | ||||||||||||
Allocated Combined Receipts | $ | 107,500 | $ | 108,500 | $ | 410,700 | $ | 411,700 | ||||||||
For More Information:
Media Relations:
Cory Edwards
Vice President, Corporate Communications
Instructure
(801) 869-5258
cory@instructure.com
Investor Relations:
April Scee
Managing Director
ICR, Inc.
(917) 497-8992
april.scee@icrinc.com
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SOURCE Instructure Holdings, Inc.
