Instructure Announces Fourth Quarter and Fiscal Year 2022 Financial Results

Rhea-AI Summary

Instructure Holdings reported fourth quarter GAAP revenue of $124.7 million, marking a 12.8% increase year-over-year. For the fiscal year 2022, GAAP revenue reached $475.2 million, a 17.2% growth. Despite these revenue gains, the company recorded a net loss of $34.2 million and an operating loss of $16.5 million for the year. Adjusted EBITDA was $179.6 million for 2022. Looking ahead, Instructure expects first quarter 2023 revenue between $126.5 million and $127.5 million and full-year revenue guidance of $519.4 million to $523.4 million.

Positive

• Fourth quarter revenue grew 12.8% year-over-year to $124.7 million.
• Fiscal year 2022 revenue increased 17.2% year-over-year to $475.2 million.
• Adjusted EBITDA for fiscal year 2022 was $179.6 million.

Negative

• Net loss for fiscal year 2022 was $34.2 million.
• Operating loss for fourth quarter was $3.8 million.

Fourth Quarter GAAP Revenue of $124.7 Million Grows 12.8% year over year

Fiscal Year 2022 GAAP Revenue of $475.2 Million Grows 17.2% year over year

Fiscal Year 2022 Net Loss of $34.2 Million and Adjusted EBITDA* of $179.6 Million

SALT LAKE CITY, Feb. 13, 2023 /PRNewswire/ -- Instructure Holdings, Inc. (Instructure) (NYSE: INST), the makers of the Canvas Learning Management System, today announced financial results for the fourth quarter and fiscal year ended December 31, 2022.

"Our strong fourth quarter revenue reflects the increasingly central role we play in supporting educators, students, parents, and leaders as they navigate unprecedented challenges," said Steve Daly, Instructure CEO. "As we move into 2023, we are committed to further expanding our impact on the educational landscape, solving more of the unique challenges educators face while continuing to deliver balanced growth and profitability."

Fourth Quarter Financial Highlights:

• GAAP Revenue of $124.7 million, an increase of 12.8% year over year
• Allocated Combined Receipts*, or ACR, of $124.7 million, an increase of 11.9% year over year
• Operating loss of $3.8 million, or negative 3.0% of revenue, and Non-GAAP operating income* of $46.5 million, or 37.3% of ACR*
• GAAP net loss of $5.7 million, or negative 4.6% of revenue, and Adjusted EBITDA* of $48.6 million, or 39.0% of ACR*
• Cash flow from operations of $17.0 million and Adjusted Unlevered Free Cash Flow* of $29.3 million

Full Year 2022 Financial Highlights:

• GAAP Revenue of $475.2 million, an increase of 17.2% year over year
• Allocated Combined Receipts*, or ACR, of $476.1 million, an increase of 14.8% year over year
• Operating loss of $16.5 million, or negative 3.5% of revenue, and Non-GAAP operating income* of $173.9 million, or 36.5% of ACR*
• GAAP net loss of $34.2 million, or negative 7.2% of revenue, and Adjusted EBITDA* of $179.6 million, or 37.7% of ACR*
• Cash flow from operations of $140.3 million and Adjusted Unlevered Free Cash Flow* of $173.5 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 December, we acquired LearnPlatform, the leading provider of technology that enables educators and their institutions to research, select and evaluate digital learning solutions.
    
• The University of Louisiana System selected Canvas and Impact due to improved functionality, consistency of user experience, alignment with the other state university systems, and 24/7 technical support for end users.
    
• The Charles County Public School District selected Canvas due to the power of its instructional materials, integrations and other 3rd party tools, superior scale and reliability, and best-in-class service.
  
  
• The University of Santo Tomas in the Philippines selected Canvas LMS and Canvas Studio due to ease of use, role-specific mobile experiences, broad support for outcomes, and the breadth of integratable third party tools.
    
• The City and Guilds of London Institute chose Instructure as its institutional learning technology partner for the future growth of their organization with an initial plan to deploy Canvas and plans to evaluate Credentials.
    
• Chris Ball was named Instructure's new President and Chief Operating Officer and will oversee the go-to-market strategy and customer lifecycle, including marketing, revenue operations, sales and customer experience.

Business Outlook

Based on information as of today, February 13, 2023, the Company is issuing the following financial guidance.

First Quarter Fiscal 2023:

• Revenue is expected to be in the range of $126.5 million to $127.5 million
• Non-GAAP operating income* is expected to be in the range of $45.9 million to $46.9 million
• Adjusted EBITDA* is expected to be in the range of $47.0 million to $48.0 million
• Non-GAAP net income* is expected to be in the range of $25.7 million to $26.7 million

Full Year 2023:

• Revenue is expected to be in the range of $519.4 million to $523.4 million
• Non-GAAP operating income* is expected to be in the range of $193.4 million to $197.4 million
• Adjusted EBITDA* is expected to be in the range of $198.0 million to $202.0 million
• Non-GAAP net income* is expected to be in the range of $109.2 million to $113.2 million
• Adjusted Unlevered Free Cash Flow* is expected to be in the range of $200.0 million to $204.0 million

*Non-GAAP operating income, Adjusted EBITDA, non-GAAP net income and Adjusted Unlevered Free Cash Flow are non-GAAP measures. 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 and non-GAAP net income, and net cash provided by operating activities, the most closely comparable measure with respect to Adjusted 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 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.

Effective January 1, 2022, Instructure adopted 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, Instructure will no longer present guidance for ACR because GAAP revenue and ACR will now converge. 

Conference Call Information

Instructure's management team will hold a conference call to discuss our fourth quarter and fiscal year ended December 31, 2022 results today, February 13, 2023 at 5:00 p.m. ET. The conference call can be accessed by dialing (888) 330-2384 from the United States and Canada or (240) 789-2701 internationally with conference ID 1348899. 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 (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 the 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 income as loss from operations excluding the impact of stock-based compensation, transaction costs, sponsor costs, impairment charges, 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, impairment charges, 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, impairment charges, 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 (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, 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, impairment charges, 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, impairment of leased properties, 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.

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 2023 and for the full year ending December 31, 2023, 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 the continued economic uncertainty, including record-high inflation, supply chain challenges, labor shortages, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession and reduced spending by customers; failure to continue our recent growth rates; risks associated with future stimulus packages approved by the U.S. federal government; 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 pandemics and the ongoing effects of the 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; 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 Report 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, 2022				December 31, 2021
Assets																																				(unaudited)
Current assets:
Cash and cash equivalents																																				$	185,954			$	164,928
Accounts receivable—net																																					71,428				51,607
Prepaid expenses																																					11,120				15,475
Deferred commissions																																					13,390				11,418
Other current assets																																					3,144				3,384
Total current assets																																					285,036				246,812
Property and equipment, net																																					12,380				10,792
Right-of-use assets																																					13,575				18,175
Goodwill																																					1,266,402				1,194,221
Intangible assets, net																																					542,679				629,746
Noncurrent prepaid expenses																																					871				1,553
Deferred commissions, net of current portion																																					18,781				20,105
Deferred tax assets																																					8,143				6,477
Other assets																																					5,622				5,901
Total assets																																				$	2,153,489			$	2,133,782
Liabilities and stockholders' equity
Current liabilities:
Accounts payable																																				$	18,792			$	18,324
Accrued liabilities																																					28,483				28,408
Lease liabilities																																					7,205				6,666
Long-term debt, current																																					4,013				2,763
Deferred revenue																																					275,564				240,936
Total current liabilities																																					334,057				297,097
Long-term debt, net of current portion																																					486,471				490,500
Deferred revenue, net of current portion																																					13,816				14,740
Lease liabilities, net of current portion																																					16,610				23,678
Deferred tax liabilities																																					24,702				29,851
Other long-term liabilities																																					1,706				3,531
Total liabilities																																					877,362				859,397
Stockholders' equity:
Common stock																																					1,429				1,407
Additional paid-in capital																																					1,575,600				1,539,638
Accumulated deficit																																					(300,902)				(266,660)
Total stockholders' equity																																					1,276,127				1,274,385
Total liabilities and stockholders' equity																																				$	2,153,489			$	2,133,782

 

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,
		2022				2021				2022				2021
		(unaudited)				(unaudited)				(unaudited)
Revenue:
Subscription and support		$	114,537			$	101,007			$	430,661			$	367,781
Professional services and other			10,189				9,586				44,533				37,580
Total revenue			124,726				110,593				475,194				405,361
Cost of revenue:
Subscription and support			38,127				36,348				146,546				148,923
Professional services and other			6,685				5,442				25,748				20,942
Total cost of revenue			44,812				41,790				172,294				169,865
Gross profit			79,914				68,803				302,900				235,496
Operating expenses:
Sales and marketing			46,801				41,686				181,744				162,544
Research and development			20,723				16,580				77,189				63,771
General and administrative			16,170				15,968				60,447				54,911
Impairment on disposal group			—				—				—				1,218
Total operating expenses			83,694				74,234				319,380				282,444
Loss from operations			(3,780)				(5,431)				(16,480)				(46,948)
Other income (expense):
Interest income			1,313				16				1,679				29
Interest expense			(8,258)				(6,182)				(24,595)				(50,360)
Other expense			3,989				(330)				(2,978)				(2,695)
Loss on extinguishment of debt			—				(22,424)				—				(22,424)
Total other income (expense), net			(2,956)				(28,920)				(25,894)				(75,450)
Loss before income taxes			(6,736)				(34,351)				(42,374)				(122,398)
Income tax benefit			1,013				13,697				8,132				33,719
Net loss and comprehensive loss		$	(5,723)			$	(20,654)			$	(34,242)			$	(88,679)
Net loss per common share, basic and diluted		$	(0.04)			$	(0.15)			$	(0.24)			$	(0.67)
Weighted-average common shares used in computing basic and diluted net loss per common share			142,643				140,531				141,815				132,387

 

INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
		(unaudited)				(unaudited)				(unaudited)
Operating Activities:
Net loss		$	(5,723)			$	(20,654)			$	(34,242)			$	(88,679)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment			1,346				985				4,491				3,713
Amortization of intangible assets			34,522				33,684				136,717				134,003
Amortization of deferred financing costs			297				477				1,178				2,435
Impairment on disposal group			—				—				—				1,218
Loss on extinguishment of debt			—				22,424				—				22,424
Stock-based compensation			8,915				6,540				33,585				18,072
Deferred income taxes			(158)				(16,231)				(10,222)				(36,485)
Other			(3,042)				120				3,669				1,685
Changes in assets and liabilities:
Accounts receivable, net			1,903				3,386				(18,454)				(4,314)
Prepaid expenses and other assets			16,881				2,014				5,940				2,094
Deferred commissions			685				(2,762)				(648)				(8,358)
Right-of-use assets			1,250				1,177				4,888				8,729
Accounts payable and accrued liabilities			168				(596)				(2,227)				8,038
Deferred revenue			(38,383)				(31,927)				24,238				48,543
Lease liabilities			(1,474)				(1,617)				(6,817)				(6,363)
Other liabilities			(184)				(693)				(1,825)				(1,612)
Net cash provided by (used in) operating activities			17,003				(3,673)				140,271				105,143
Investing Activities:
Purchases of property and equipment			(1,342)				(1,459)				(6,321)				(4,259)
Proceeds from sale of property and equipment			2				13				43				53
Proceeds from sale of Bridge			—				—				—				46,018
Business acquisitions, net of cash acquired			(89,529)				(9,698)				(109,013)				(26,584)
Net cash provided by (used in) investing activities			(90,869)				(11,144)				(115,291)				15,228
Financing Activities:
IPO proceeds, net of offering costs paid of $5,719			—				(350)				—				259,254
Proceeds from issuance of common stock from employee equity plans			—				—				7,327				—
Shares repurchased for tax withholdings on vesting of restricted stock units			(1,939)				(250)				(5,272)				(1,568)
Proceeds from issuance of term debt, net of discount			—				493,090				—				493,090
Distributions to stockholders			—				—				—				(930)
Repayments of long-term debt			(1,250)				(531,305)				(3,750)				(839,187)
Term Loan prepayment premium			—				(8,066)				—				(11,893)
Payments of financing costs			(19)				(937)				(19)				(937)
Net cash used in financing activities			(3,208)				(47,818)				(1,714)				(102,171)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			3,897				—				(2,153)				—
Net increase in cash, cash equivalents and restricted cash			(73,177)				(62,635)				21,113				18,200
Cash, cash equivalents and restricted cash, beginning of period			263,443				231,788				169,153				150,953
Cash, cash equivalents and restricted cash, end of period		$	190,266			$	169,153			$	190,266			$	169,153
Supplemental cash flow disclosure:
Cash paid for taxes		$	68			$	90			$	3,102			$	646
Interest paid		$	8,123			$	5,756			$	18,073			$	48,058
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid		$	67			$	83			$	67			$	83

 

RECONCILIATIONS OF NON-GAAP MEASURES TO GAAP MEASURES
INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP ALLOCATED COMBINED RECEIPTS
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
Revenue		$	124,726			$	110,593			$	475,194			$	405,361
Fair value adjustments to deferred revenue in connection with purchase accounting			13				851				868				9,322
Allocated combined receipts		$	124,739			$	111,444			$	476,062			$	414,683

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP SUBSCRIPTION AND SUPPORT ALLOCATED COMBINED RECEIPTS
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
Subscription and support revenue		$	114,537			$	101,007			$	430,661			$	367,781
Fair value adjustments to deferred revenue in connection with purchase accounting			13				849				867				9,095
Subscription and support allocated combined receipts		$	114,550			$	101,856			$	431,528			$	376,876

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
Loss from operations		$	(3,780)			$	(5,431)			$	(16,480)			$	(46,948)
Stock-based compensation			10,856				8,063				39,779				25,785
Transaction costs(1)			4,206				2,701				9,123				9,090
Sponsor costs(2)			66				27				517				414
Impairment charges(3)			—				—				—				8,116
Other non-recurring costs(4)			630				794				3,365				3,944
Amortization of acquisition-related intangibles			34,520				33,682				136,710				133,994
Fair value adjustments to deferred revenue in connection with purchase accounting			13				851				868				9,322
Non-GAAP operating income		$	46,511			$	40,687			$	173,882			$	143,717

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
Net loss		$	(5,723)			$	(20,654)			$	(34,242)			$	(88,679)
Interest on outstanding debt and loss on debt extinguishment			8,257				28,605				24,591				72,775
Benefit for taxes			(1,013)				(13,697)				(8,132)				(33,719)
Depreciation			1,346				985				4,491				3,713
Amortization			2				2				7				7
Stock-based compensation			10,856				8,063				39,779				25,785
Transaction costs(1)			4,206				2,701				9,123				9,090
Sponsor costs(2)			66				27				517				414
Impairment charges(3)			—				—				—				8,116
Other non-recurring costs(4)			630				794				3,365				3,944
Effects of foreign currency transaction (gains) and losses			(4,536)				306				2,514				1,916
Amortization of acquisition-related intangibles			34,520				33,682				136,710				133,994
Fair value adjustments to deferred revenue in connection with purchase accounting			13				851				868				9,322
Adjusted EBITDA		$	48,624			$	41,665			$	179,591			$	146,678
Net loss margin			(4.6)	%			(18.7)	%			(7.2)	%			(21.9)	%
Adjusted EBITDA margin			39.0	%			37.4	%			37.7	%			35.4	%

 

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,
		2022				2021				2022				2021
Net cash provided by (used in) operating activities		$	17,003			$	(3,673)			$	140,271			$	105,143
Purchases of property and equipment			(1,342)				(1,459)				(6,321)				(4,259)
Proceeds from disposals of property and equipment			2				13				43				53
Free cash flow		$	15,663			$	(5,119)			$	133,993			$	100,937
Cash paid for interest on outstanding debt			8,123				5,756				18,073				48,058
Cash settled stock-based compensation			1,941				1,522				6,194				7,616
Unlevered free cash flow		$	25,727			$	2,159			$	158,260			$	156,611
Transaction costs(1)			2,215				1,003				9,474				7,444
Sponsor costs(2)			33				42				378				335
Impaired leases			609				—				2,074				7
Other non-recurring costs(5)			761				839				3,359				4,299
Adjusted unlevered free cash flow		$	29,345			$	4,043			$	173,545			$	168,696

 

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,
		2022				2021				2022				2021
Net loss		$	(5,723)			$	(20,654)			$	(34,242)			$	(88,679)
Stock-based compensation			10,856				8,063				39,779				25,785
Amortization of acquisition-related intangibles			34,520				33,682				136,710				133,994
Fair value adjustments to deferred revenue in connection with purchase accounting			13				851				868				9,322
Loss on extinguishment of debt			—				22,424				—				22,424
Transaction costs(1)			4,206				2,701				9,123				9,090
Sponsor costs(2)			66				27				517				414
Impairment charges(3)			—				—				—				8,116
Other non-recurring costs(4)			630				794				3,365				3,944
Effects of foreign currency transaction (gains) and losses			(4,536)				306				2,514				1,916
Tax effects of adjustments(6)			(11,652)				(17,184)				(47,989)				(53,665)
Non-GAAP net income		$	28,380			$	31,010			$	110,645			$	72,661
Non-GAAP net income per common share, basic		$	0.20			$	0.22			$	0.78			$	0.55
Non-GAAP net income per common share, diluted		$	0.20			$	0.22			$	0.77			$	0.54
Weighted average common shares used in computing basic Non-GAAP net income per common share			142,643				140,531				141,815				132,387
Weighted average common shares used in computing diluted Non-GAAP net income per common share			144,261				142,870				143,440				133,487

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP GROSS PROFIT
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
Gross profit		$	79,914			$	68,803			$	302,900			$	235,496
Stock-based compensation			833				596				3,090				1,858
Transaction costs(1)			—				—				226				—
Impairment of leased properties			—				—				—				2,768
Other non-recurring costs			5				54				69				277
Amortization of acquisition-related intangibles			15,952				15,648				63,386				62,060
Fair value adjustments to deferred revenue in connection with purchase accounting			13				851				868				9,322
Non-GAAP gross profit		$	96,717			$	85,952			$	370,539			$	311,781
GAAP gross margin			64.1	%			62.2	%			63.7	%			58.1	%
Non-GAAP gross margin			77.5	%			77.1	%			77.8	%			75.2	%

 

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				Impairment charges				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
Three Months Ended December 31, 2021
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction Costs				Impairment charges				Other non- recurring costs				Amortization of acquired intangibles				Non-GAAP
Cost of Revenue:
Subscription and support		$	36,348			$	(247)			$	—			$	—			$	(24)			$	(15,648)			$	20,429
Professional services and other			5,442				(349)				—				—				(30)				—				5,063
Total cost of revenue		$	41,790			$	(596)			$	—			$	—			$	(54)			$	(15,648)			$	25,492

 

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				Impairment charges				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 COST OF REVENUE
Year Ended December 31, 2021
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction Costs				Impairment charges				Other non- recurring costs				Amortization of acquired intangibles				Non-GAAP
Cost of Revenue:
Subscription and support		$	148,923			$	(899)			$	—			$	(1,918)			$	(214)			$	(62,060)			$	83,832
Professional services and other			20,942				(959)				—				(850)				(63)				—				19,070
Total cost of revenue		$	169,865			$	(1,858)			$	—			$	(2,768)			$	(277)			$	(62,060)			$	102,902

 

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				Impairment charges				Other non- recurring costs				Amortization of acquired intangibles				Non- GAAP				GAAP % of revenue				Non- GAAP % of ACR
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
Three Months Ended December 31, 2021
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction costs				Sponsor costs				Impairment charges				Other non- recurring costs				Amortization of acquired intangibles				Non- GAAP				GAAP % of revenue				Non- GAAP % of ACR
Operating expenses:
Sales and marketing		$	41,686			$	(2,122)			$	(38)			$	—			$	—			$	(82)			$	(18,034)			$	21,410				37.7	%			19.2	%
Research and development			16,580				(2,047)				(702)				(18)				—				(417)				—				13,396				15.0	%			12.0	%
General and administrative			15,968				(3,298)				(1,961)				(9)				—				(241)				—				10,459				14.4	%			9.4	%
Total operating expenses		$	74,234			$	(7,467)			$	(2,701)			$	(27)			$	—			$	(740)			$	(18,034)			$	45,265				67.1	%			40.6	%

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Year Ended December 31, 2022
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction costs				Sponsor costs				Impairment charges				Other non- recurring costs				Amortization of acquired intangibles				Non- GAAP				GAAP % of revenue				Non- GAAP % of ACR
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	%

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Year Ended December 31, 2021
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction costs				Sponsor costs				Impairment charges				Other non- recurring costs				Amortization of acquired intangibles				Non- GAAP				GAAP % of revenue				Non- GAAP % of ACR
Operating expenses:
Sales and marketing		$	162,544			$	(6,936)			$	(237)			$	—			$	(2,042)			$	(392)			$	(71,934)			$	81,003				40.1	%			19.5	%
Research and development			63,771				(6,943)				(1,675)				(66)				(1,355)				(945)				—				52,787				15.7	%			12.7	%
General and administrative			54,911				(10,048)				(7,178)				(348)				(733)				(2,330)				—				34,274				13.5	%			8.3	%
Impairment on disposal group			1,218				—				—				—				(1,218)				—				—				—				0.3	%			—
Total operating expenses		$	282,444			$	(23,927)			$	(9,090)			$	(414)			$	(5,348)			$	(3,667)			$	(71,934)			$	168,064				69.6	%			40.5	%

 

 

FOOTNOTES
(1) Represents expenses incurred with third parties as part of the Company's merger and acquisition activity, including due diligence, closing and post-close integration activities.
(2) Represents expenses incurred for services provided by Thoma Bravo and their affiliates.
(3) Includes impairment charges as follows (in thousands):		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
Impairment on Bridge disposal group		$	—			$	—			$	—			$	1,218
Impairment of leased properties			—				—				—				6,898
Total impairment charges		$	—			$	—			$	—			$	8,116
(4) Includes other non-recurring costs as follows (in thousands):		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
Professional services related to sale of Bridge		$	—			$	—			$	—			$	1,185
Loss on exit of leased properties			—				—				—				66
Contract modification fees			—				—				230				9
Employee severance			195				574				744				1,761
Workforce realignment costs			267				—				1,388				—
Other insignificant non-recurring costs			168				220				1,003				923
Total other non-recurring costs		$	630			$	794			$	3,365			$	3,944
(5) Includes other non-recurring costs paid in cash as follows (in thousands):		Three months ended December 31,								Year ended December 31,
		2022				2021				2022				2021
Employee severance		$	234			$	569			$	744			$	1,941
Workforce realignment costs			344				—				980				153
Contract modification fees			—				—				186				—
Professional services related to sale of Bridge			—				—				—				1,208
Other insignificant non-recurring costs			183				270				1,449				997
Total other non-recurring costs paid in cash		$	761			$	839			$	3,359			$	4,299

(6) During the fourth quarter of 2022, we revised the methodology for calculating Non-GAAP Net Income (see Non-GAAP Financial Measures above for details). 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.

 

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

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SOURCE Instructure Holdings, Inc.

FAQ

What was Instructure's revenue for the fourth quarter of 2022?

Instructure reported fourth quarter revenue of $124.7 million, up 12.8% year-over-year.

What is Instructure's guidance for first quarter fiscal 2023?

Instructure expects first quarter fiscal 2023 revenue to be between $126.5 million and $127.5 million.

What was Instructure's net loss for the fiscal year 2022?

Instructure recorded a net loss of $34.2 million for fiscal year 2022.

What is the expected revenue range for Instructure in full year 2023?

For full year 2023, Instructure expects revenue to be between $519.4 million and $523.4 million.

What was Instructure's Adjusted EBITDA for fiscal year 2022?

Instructure's Adjusted EBITDA for fiscal year 2022 was $179.6 million.