Expands Instructure's market-leading teaching
and learning platform by providing learners with a lifelong record
of their journey
SALT
LAKE CITY, Oct. 30, 2023 /PRNewswire/ -- Instructure
Holdings, Inc. (Instructure) (NYSE: INST), the leading learning
platform and maker of Canvas, announced today it has signed a
definitive agreement to acquire Parchment. Parchment has more than
15,000 customers and has exchanged more than 165 million
credentials over two decades. With this transaction, Instructure
will add the world's largest academic credentialing platform
and network to the Instructure Learning Platform. This acquisition
is expected to significantly expand Instructure's existing customer
base and unlock exciting new growth opportunities.
"This acquisition represents an important next step for
Instructure to serve all learners, beginning in K-12 and continuing
throughout their lifelong learning journey," said Steve Daly, CEO of Instructure. "By adding
Parchment to the Instructure Learning Platform, we will provide a
verifiable and comprehensive digital passport of achievement
records and outcomes for learners. Together we expand
the Instructure platform for existing customers, welcome new
Parchment customers and open new pathways for growth with multiple
new solution categories."
Canvas has earned the trust of thousands of institutions across
the globe to support the learning experience of their students in
degree and non-degree programs. With the proposed acquisition of
Parchment, Instructure expands its institutional
relationships, broadens its platform footprint and opens an
estimated $2 billion in Total
Addressable Market (TAM) across a number of high-growth categories
only serviceable through the combination of two market and
category-leading providers.
Parchment's Award and Digitary platforms allow schools and
universities to securely issue transcripts, diplomas, certificates,
verifications, comprehensive learner records, and other credential
formats digitally. Parchment's Pathways platform reduces the
friction in student mobility. For secondary students enrolling
concurrently in college, college students enrolling across
institutions and any learner seeking credit for learning they have
done throughout their educational journey, Parchment makes the
transition and transfer seamless.
Increasingly, learning happens through "non-traditional"
channels, and Instructure believes this is a key strategic area of
growth. With Parchment, Instructure expects the platform to provide
a set of solutions that connect learners, institutions, and
employers across a learner's journey – from the first search for a
course or program to employment. Instructure customers will be able
to navigate skill mastery, transfer credits, provide proof of prior
learning and much more.
"We're thrilled to join Instructure, the world's leading
learning platform that's dedicated to amplifying the power of
teaching and learning," said Matthew
Pittinsky, Ph.D., CEO of Parchment. "Parchment's mission is
to help turn credentials into opportunities. With this combination,
we will dramatically expand the credential to include rich data and
more evidence of skills and learning. The seamless experience we
envision for learners will provide easier, more equitable access to
the educational and employment opportunities they seek as they
build their lifelong record of learning."
Terms of the Transaction
The transaction is valued at
approximately $835 million. Including
a tax benefit resulting from the transaction, the net purchase
price is approximately $795 million,
or approximately 16 times Parchment's expected 2024 Adjusted EBITDA
inclusive of anticipated run-rate cost synergies.
Parchment is expected to contribute approximately $115 million of revenue in 2024.
Instructure is expected to benefit from Parchment's highly
stable and recurring revenue, with strong gross retention metrics
in the mid-to-high 90s.
Instructure plans to finance the transaction with cash on hand
and incremental debt under its existing credit facility.
The transaction is expected to close in the first quarter of
2024, subject to regulatory approval and customary closing
conditions.
J.P. Morgan Securities LLC acted as financial advisor and
Kirkland & Ellis LLP as legal advisor to Instructure. Macquarie
Capital acted as lead financial advisor, Robert W. Baird & Co.
also acted as financial advisor and Latham & Watkins LLP acted
as legal advisor to Parchment.
Conference Call Information
Instructure's management
team will discuss the Parchment transaction as part of its earnings
call for the third quarter ended September
30, 2023 today, October 30,
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.
About Parchment
Parchment believes credentials
matter in the lifelong journey of a learner. Offering the most
comprehensive academic credential management platform and network,
Parchment helps learners, academic institutions and employers
request, verify and share transcripts, diplomas, and other
credentials in simple and secure ways. The Parchment platform has
helped millions of learners, over 13,000 districts, university
registrar offices, institutions in five additional countries
outside of the US through Digitary by Parchment, state education
agencies, and receivers (including university admissions offices,
background check companies, employers, college application
services, Online Program Managers, and certification and licensing
boards) exchange transcripts, diplomas, certificates, comprehensive
learner records and other credentials globally.
Forward-Looking Statements
This press release, and
statements made during the above referenced conference call,
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 consummation,
expectations and benefits of the pending acquisition of Parchment,
anticipated TAM following the transaction, anticipated 2024
Adjusted EBITDA of Parchment, anticipated revenue contribution of
Parchment, the combined company's growth, customer demand and
application adoption, and business strategy.
These statements are not guarantees of future performance, but
are based on management's expectations as of the date of this press
release and assumptions that are inherently subject to
uncertainties, risks and changes in circumstances that are
difficult to predict. Forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements to be materially
different from any future results, performance or achievements.
Important factors that could cause actual results to differ
materially from those expressed or implied by these forward-looking
statements include the following: the ability of the parties to
consummate the proposed transaction and the possibility that
various closing conditions for the proposed transaction may not be
satisfied or waived, and the ability to realize the benefits
expected from the proposed transactions; the impact of the
announcement and potential closing of the transaction on our and
Parchment's business, employees and suppliers, and on our investors
and common stock; risks associated with the continued economic
uncertainty, including high inflation, labor shortages, high
interest rates, foreign currency exchange volatility, and reduced
spending by customers; failure to continue our recent growth rates;
the impact of the Israel-Hamas war on the macroeconomic and
geopolitical environment and on our business; 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;
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.
Non-GAAP Financial Information
This press release
contains expected Adjusted EBITDA of Parchment, which is a
financial measure that has not been prepared in accordance with
United States Generally Accepted Accounting Principles ("U.S.
GAAP"). Non-GAAP financial measures should not be considered in
isolation or as a substitute for the relevant U.S. GAAP measures.
Because not all companies use identical calculations, our
presentation of Non-GAAP measures may not be comparable to other
similarly titled measures of other companies. We are unable to
provide a reconciliation of expected Parchment Adjusted EBITDA
because we are unable to quantify certain amounts that would be
required to be included without unreasonable efforts. In
addition, Instructure believes such reconciliation would imply a
degree of precision that could be misleading to investors.
The non-GAAP financial measure disclosed by Instructure in this
press release should not be considered a substitute for, or
superior to, financial measures prepared in accordance with U.S.
GAAP, and the financial results prepared in accordance with U.S.
GAAP and reconciliations from these results should be carefully
evaluated.
Media Contact:
Brian
Watkins
Corporate Communications
Instructure
(801) 658-7525
brian.watkins@instructure.com
Investor Contact:
David
Banks
Investor Relations
Instructure
(262) 825-8388
david.banks@instructure.com
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SOURCE Instructure Holdings, Inc.