INST Instructure Holdings Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 20, 2024

 

 

INSTRUCTURE HOLDINGS, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-40647	84-4325548
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
6330 SOUTH 3000 EAST SUITE 700
SALT LAKE CITY, Utah				84121
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 800 203-6755

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value		INST		The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

---

Item 2.02 Results of Operations and Financial Condition.

On February 20, 2024, Instructure Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2023. A copy of this press release is attached hereto as Exhibit 99.1.

 

In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press Release dated February 20, 2024
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)

 

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			Instructure Holdings, Inc.
Date:	February 20, 2024	By:	/s/ Matthew A. Kaminer
			Matthew A. Kaminer Chief Legal Officer

 

---

Exhibit 99.1

 

Instructure Reports Fourth Quarter and Full Year 2023 Results

Reports Record Full Year Revenues, Adjusted EBITDA, and Adjusted Unlevered Free Cash Flow
Expands Scale and Reach of the Instructure Platform by Acquiring Parchment, the World’s Leading Credentialing Platform

 

Salt Lake City, UT (February 20, 2024)—Instructure Holdings, Inc. (Instructure) (NYSE: INST) today announced financial results for the fourth quarter and full year ended December 31, 2023.

Full Year 2023 Highlights:
(All results compared to prior-year period unless otherwise noted)

Fourth Quarter 2023 Highlights:
(All results compared to prior-year period unless otherwise noted)

2024 Full Year Guidance:

*Non-GAAP Operating Income, Adjusted EBITDA, Non-GAAP Net Income and Adjusted Unlevered Free Cash Flow are non-GAAP measures. See "Non-GAAP Financial Measures" in the press release for information regarding the Company's use of non-GAAP financial measures as well as reconciliations to the most closely comparable GAAP measures for historical periods. Instructure is unable to provide guidance or a reconciliation for forward-looking non-GAAP measures because Instructure cannot provide a meaningful or accurate calculation or estimation of certain items without unreasonable effort. This is due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including stock-based compensation and amortization of acquisition-related intangibles. Thus, Instructure is unable to present a quantitative reconciliation of non-GAAP guidance to GAAP guidance because such information is not available.

 

 

 

 

 

 

 

---

Key Financials:
(Dollars in millions)

		Three months ended December 31,												Year ended December 31,
		2023				2022				YoY Percentage				2023				2022				YoY Percentage
Revenue		$	135.4			$	124.7				8.5	%		$	530.2			$	475.2				11.6	%
Income (loss) from Operations		$	0.2			$	(3.8	)			105.9	%		$	(3.2	)		$	(16.5	)			80.5	%
Non-GAAP Operating Income*		$	55.4			$	46.5				19.1	%		$	209.8			$	173.9				20.6	%
GAAP Net Loss		$	(5.8	)		$	(5.7	)			(0.8	)%		$	(34.1	)		$	(34.2	)			0.5	%
GAAP Net Loss Margin			(4.3	)%			(4.6	)%		30 bps					(6.4	)%			(7.2	)%		80 bps
Adjusted EBITDA*		$	56.5			$	48.6				16.1	%		$	214.2			$	179.6				19.3	%
Adjusted EBITDA Margin*			41.7	%			39.0	%		270 bps					40.4	%			37.7	%		270 bps
Cash Flow from Operations		$	36.7			$	17.0				115.9	%		$	164.0			$	140.3				16.9	%
Adjusted Unlevered Free Cash Flow*		$	51.3			$	29.3				74.8	%		$	225.5			$	173.5				29.9	%
Remaining Performance Obligations ("RPO")		$	833.5			$	760.1				9.7	%		$	833.5			$	760.1				9.7	%

 

*See “Non-GAAP Financial Measures” for information regarding the Company’s use of non-GAAP financial measures as well as reconciliations to the most closely comparable GAAP measures in this press release.

Steve Daly, Instructure CEO, said, “During the fourth quarter, we exceeded the high end of our guidance range for Revenue, Adjusted EBITDA and Adjusted Unlevered Free Cash Flow, reflecting our unrelenting focus and the strength of our model. These exceptional results were driven by our increasing competitive advantage, strong execution, and the formidable cash flow we generate and reinvest behind high-growth initiatives. We head into 2024 with meaningfully enhanced scale, a broader portfolio, and access to new buyers due to the Parchment acquisition. We have never been more excited about our ability to elevate teaching and learning and drive results for our shareholders.”

Balance Sheet and Cash Flow

As of December 31, 2023, cash, cash equivalents and restricted cash were $344.2 million and total debt was $491.3 million compared to cash, cash equivalents and restricted cash of $190.3 million and total debt of $496.3 million as of December 31, 2022. The increase in cash, cash equivalents and restricted cash since December 31, 2022 was driven by strong business performance and the fact that 2022 included the purchase of LearnPlatform. Instructure ended 2023 with a net leverage ratio of 0.7x Net Debt to Adjusted EBITDA. As of December 31, 2023, available borrowings under Instructure’s revolving credit facility, net of letters of credit outstanding, were $121.8 million. The Company generated cash flow from operations of $164.0 million for the twelve months ended December 31, 2023 compared to $140.3 million in the prior year period, an increase of 16.9% year-over-year. Adjusted Unlevered Free Cash Flow was $225.5 million for the twelve months ended December 31, 2023 compared to $173.5 million in the prior year period, an increase of 29.9% year-over-year.

First Quarter and Full Year 2024 Guidance

The following tables summarize first quarter and full year 2024 guidance.

		First Quarter 2024 Guidance
(dollars in millions)		Amount		Quarter-over-quarter change
Revenue		$153.8 - $154.8		19.4% - 20.1%
Non-GAAP operating income*		$55.9 - $56.9		17.8% - 19.9%
Adjusted EBITDA*		$57.3 - $58.3		18.1% - 20.2%
Non-GAAP net income*		$20.0 - $21.0		(28.3)% - (24.7)%

 

---

		Full Year 2024 Guidance
(dollars in millions)		Amount		Year-over-year  change
Revenue		$655.0 - $665.0		23.5% - 25.4%
Non-GAAP operating income*		$260.5 - $265.5		24.2% - 26.6%
Adjusted EBITDA*		$266.5 - $271.5		24.4% - 26.7%
Non-GAAP net income*		$105.5 - $110.5		(15.5)% - (11.5)%
Adjusted Unlevered Free Cash Flow*		$259.5 - $264.5		15.1% - 17.3%

 

The Company's guidance ranges reflect expectations that existing macroeconomic conditions and the current foreign currency environment continue through 2024. These forward-looking statements reflect the Company's expectations as of today's date. Actual results may differ materially.

*Instructure is unable to provide guidance or a reconciliation for forward-looking non-GAAP measures because Instructure cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. This is due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including stock-based compensation and amortization of acquisition-related intangibles. Thus, Instructure is unable to present a quantitative reconciliation of non-GAAP guidance to GAAP guidance because such information is not available.

Conference Call Information

The Company will hold a conference call to discuss the fourth quarter and full year 2023 financial results today, February 20, 2024 at 3:00 PM Mountain Time (5:00 PM Eastern Time).

Participants may access the conference call by dialing 1-888-330-2384 (U.S. and Canada) or 1-240-789-2701 (International) and using conference code 1348899 approximately ten minutes before the start of the call. A live audio webcast of the conference call will also be available on Instructure’s investor relations website at https://ir.instructure.com under “Events & Presentations”.

A replay will be available after the conclusion of the call on Instructure’s investor relations website under “Events & Presentations” or by dialing 1-800-770-2030 (U.S. and Canada) or 1-647-362-9199 (International) and using conference code 1348899. The telephone replay will be available through Tuesday, February 27, 2024.

About Instructure

Instructure (NYSE: INST) is an education technology company dedicated to elevating student success, amplifying the power of teaching, and inspiring everyone to learn together. Today the Instructure Learning Platform supports tens of millions of educators and learners around the world. Learn more at www.instructure.com.

Non-GAAP Financial Measures

Instructure has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In addition to Instructure’s results determined in accordance with GAAP, Instructure believes the following non-GAAP measures are useful in evaluating its operating performance and liquidity. Instructure believes that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.

A reconciliation of Instructure’s historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

---

ACR. We define ACR as the combined receipts of our Company and companies that we have acquired allocated to the period of service delivery. We calculate ACR as the sum of (i) revenue and (ii) the impact of fair value adjustments to acquired unearned revenue related to Thoma Bravo’s acquisition of Instructure (the “Take-Private Transaction”) and the Certica Holdings, LLC (“Certica”), Eesysoft Software International B.V. (which was rebranded to “Impact by Instructure” or “Impact” subsequent to acquisition), and Kimono LLC (which was rebranded to “Elevate Data Sync” subsequent to acquisition) acquisitions where we do not believe such adjustments are reflective of our ongoing operations. Management uses this measure to evaluate the organic growth of the business period over period, as if the Company had operated as a single entity and excluding the impact of acquisitions or adjustments due to purchase accounting. Effective January 1, 2022, Instructure adopted Accounting Standard Update ("ASU") No. 2021-08, Business Combinations (Topic 805), which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606). As a result, GAAP revenue and ACR have converged.

Non-GAAP Operating Income. We define non-GAAP operating income as income/(loss) from operations excluding the impact of stock-based compensation, transaction costs, sponsor costs, other non-recurring costs, amortization of acquisition-related intangibles, and the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions that we do not believe are reflective of our ongoing operations. We believe non-GAAP operating income is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measure, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

Non-GAAP Net Income. We define non-GAAP net income as net loss excluding the impact of stock-based compensation, amortization of acquisition-related intangibles, the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions, transaction costs, sponsor costs, other non-recurring costs, and effects of foreign currency transaction (gains) and losses that we do not believe are reflective of our ongoing operations. The tax effects of the adjustments are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction. We believe Non-GAAP net income is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measure, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Basic non-GAAP net income per common share attributable to common stockholders is computed by dividing non-GAAP net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted non-GAAP net income per common share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period.

Adjusted EBITDA; Adjusted EBITDA Margin. EBITDA is defined as earnings before debt-related costs, including interest and loss on debt extinguishment, benefit for taxes, depreciation, and amortization. We further adjust EBITDA to exclude certain items of a significant or unusual nature, including stock-based compensation, transaction costs, sponsor costs, other non-recurring costs, effects of foreign currency transaction (gains) and losses, amortization of acquisition-related intangibles, and the impact of fair value adjustments to acquired unearned revenue relating to the Take-Private Transaction and the Certica, Impact, and Elevate Data Sync acquisitions. Although we exclude the amortization of acquisition-related intangibles from this non-GAAP measure, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by ACR.

---

Free Cash Flow, Unlevered Free Cash Flow and Adjusted Unlevered Free Cash Flow. We define free cash flow as net cash provided by operating activities less purchases of property and equipment and intangible assets, net of proceeds from disposals of property and equipment. We define unlevered free cash flow as free cash flow adjusted for cash paid for interest on outstanding debt and cash settled stock-based compensation. We define adjusted unlevered free cash flow as unlevered free cash flow adjusted for transaction costs, sponsor costs, impaired leases, and other non-recurring costs paid in cash. We believe free cash flow, unlevered free cash flow and adjusted unlevered free cash flow facilitate period-to-period comparisons of liquidity. We consider free cash flow, unlevered free cash flow and adjusted unlevered free cash flow to be important measures because they measure the amount of cash we generate and reflect changes in working capital.

Non-GAAP Cost of Revenue and Non-GAAP Operating Expenses. We define non-GAAP cost of revenue and non-GAAP operating expenses as GAAP cost of revenue and GAAP operating expenses, respectively, excluding the impact of stock-based compensation, transaction costs, sponsor costs, other non-recurring costs, and amortization of acquisition-related intangibles that we do not believe are reflective of our ongoing operations. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measures, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

Non-GAAP Gross Profit; Non-GAAP Gross Profit Margin. We define non-GAAP gross profit as gross profit excluding the impact of stock-based compensation, transaction costs, other non-recurring costs, amortization of acquisition-related intangibles, and fair value adjustments to deferred revenue in connection with purchase accounting that we do not believe are reflective of our ongoing operations. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measure, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Non-GAAP Gross Profit Margin is defined as Non-GAAP gross profit divided by ACR.

Net Debt. We define net debt as total outstanding term debt, less cash, cash equivalents and restricted cash. Management uses this supplemental non-GAAP measure to evaluate the Company’s leverage.

Forward-Looking Statements

This press release contains, and statements made during the above referenced conference call will contain, “forward-looking” statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company’s financial guidance for the first quarter of 2024 and for the full year ending December 31, 2024, the Company’s growth, customer demand and application adoption, the Company’s research and development efforts and future application releases, the Company’s business strategy and the Company’s expectations regarding future revenue, expenses, cash flows and net income or loss.

These statements are not guarantees of future performance, but are based on management’s expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: risks associated with the continued economic uncertainty, including persistent inflation, labor shortages, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession, reduced spending by customers and geopolitical instability; failure to continue our recent growth rates; the effects of increased usage of, or interruptions or performance problems associated with, our learning platform; the impact on our business and prospects from health pandemics and epidemics; our history of losses and expectation that we will not be profitable for the foreseeable future; or ability to acquire new customers and successfully retain existing customers; failure of the markets for our applications to develop at anticipated rates; failure to manage our growth effectively; and changes in the spending policies or budget priorities for government funding of Higher Education and K-12 institutions.

---

These and other important risk factors are described more fully in the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other documents filed with the Securities and Exchange Commission and could cause actual results to vary from expectations. All information provided in this press release and in the conference call is as of the date hereof and Instructure undertakes no duty to update this information except as required by law.

 

INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
		December 31, 2023				December 31, 2022
Assets		(unaudited)
Current assets:
Cash and cash equivalents		$	341,047			$	185,954
Accounts receivable—net			67,193				71,428
Prepaid expenses			12,082				11,120
Deferred commissions			13,705				13,390
Other current assets			4,797				3,144
Total current assets			438,824				285,036
Property and equipment, net			13,479				12,380
Right-of-use assets			9,002				13,575
Goodwill			1,265,316				1,266,402
Intangible assets, net			399,712				542,679
Noncurrent prepaid expenses			4,182				871
Deferred commissions, net of current portion			13,816				18,781
Deferred tax assets			6,739				8,143
Other assets			6,908				5,622
Total assets		$	2,157,978			$	2,153,489
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	23,589			$	18,792
Accrued liabilities			23,760				28,483
Lease liabilities			7,513				7,205
Long-term debt, current			4,013				4,013
Deferred revenue			291,784				275,564
Total current liabilities			350,659				334,057
Long-term debt, net of current portion			482,387				486,471
Deferred revenue, net of current portion			10,876				13,816
Lease liabilities, net of current portion			9,246				16,610
Deferred tax liabilities			14,420				24,702
Other long-term liabilities			4,898				1,706
Total liabilities			872,486				877,362
Stockholders’ equity:
Common stock			1,452				1,429
Additional paid-in capital			1,619,020				1,575,600
Accumulated deficit			(334,980	)			(300,902	)
Total stockholders’ equity			1,285,492				1,276,127
Total liabilities and stockholders’ equity		$	2,157,978			$	2,153,489

 

 

---

INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
		(unaudited)				(unaudited)				(unaudited)
Revenue:
Subscription and support		$	125,357			$	114,537			$	485,516			$	430,661
Professional services and other			10,019				10,189				44,694				44,533
Total revenue			135,376				124,726				530,210				475,194
Cost of revenue:
Subscription and support			41,167				38,127				158,699				146,546
Professional services and other			6,600				6,685				27,616				25,748
Total cost of revenue			47,767				44,812				186,315				172,294
Gross profit			87,609				79,914				343,895				302,900
Operating expenses:
Sales and marketing			47,947				46,801				197,690				181,744
Research and development			22,290				20,723				88,162				77,189
General and administrative			17,148				16,170				61,261				60,447
Total operating expenses			87,385				83,694				347,113				319,380
Income (loss) from operations			224				(3,780	)			(3,218	)			(16,480	)
Other income (expense):
Interest income			2,717				1,313				5,738				1,679
Interest expense			(11,382	)			(8,258	)			(42,024	)			(24,595	)
Other income (expense)			3,133				3,989				1,168				(2,978	)
Total other income (expense), net			(5,532	)			(2,956	)			(35,118	)			(25,894	)
Loss before income tax benefit (expense)			(5,308	)			(6,736	)			(38,336	)			(42,374	)
Income tax benefit (expense)			(459	)			1,013				4,258				8,132
Net loss and comprehensive loss		$	(5,767	)		$	(5,723	)		$	(34,078	)		$	(34,242	)
Net loss per common share, basic and diluted		$	(0.04	)		$	(0.04	)		$	(0.24	)		$	(0.24	)
Weighted-average common shares used in computing basic and diluted net loss per common share			144,868				142,643				143,968				141,815

 

 

---

INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
		(unaudited)				(unaudited)				(unaudited)
Operating Activities:
Net loss		$	(5,767	)		$	(5,723	)		$	(34,078	)		$	(34,242	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment			1,305				1,346				4,786				4,491
Amortization of intangible assets			35,730				34,522				142,967				136,717
Amortization of deferred financing costs			298				297				1,187				1,178
Stock-based compensation			10,551				8,915				43,537				33,585
Deferred income taxes			1				(158	)			(7,792	)			(10,222	)
Other			(2,448	)			(3,042	)			658				3,669
Changes in assets and liabilities:
Accounts receivable, net			25,250				1,903				2,653				(18,454	)
Prepaid expenses and other assets			6,698				16,881				(8,552	)			5,940
Deferred commissions			1,754				685				4,650				(648	)
Right-of-use assets			1,225				1,250				4,573				4,888
Accounts payable and accrued liabilities			7,576				168				11				(2,227	)
Deferred revenue			(44,444	)			(38,383	)			13,280				24,238
Lease liabilities			(1,686	)			(1,474	)			(7,056	)			(6,817	)
Other liabilities			672				(184	)			3,192				(1,825	)
Net cash provided by operating activities			36,715				17,003				164,016				140,271
Investing Activities:
Purchases of property and equipment			(1,232	)			(1,342	)			(5,940	)			(6,321	)
Proceeds from sale of property and equipment			8				2				50				43
Business acquisitions, net of cash acquired			—				(89,529	)			—				(109,013	)
Net cash used in investing activities			(1,224	)			(90,869	)			(5,890	)			(115,291	)
Financing Activities:
Proceeds from issuance of common stock from employee equity plans			—				—				6,017				7,327
Shares repurchased for tax withholdings on vesting of restricted stock units			(1,682	)			(1,939	)			(6,630	)			(5,272	)
Repayments of long-term debt			(1,250	)			(1,250	)			(5,000	)			(3,750	)
Payments of financing costs			—				(19	)			(84	)			(19	)
Net cash used in financing activities			(2,932	)			(3,208	)			(5,697	)			(1,714	)
Foreign currency impacts on cash, cash equivalents and restricted cash			3,012				3,897				1,513				(2,153	)
Net increase (decrease) in cash, cash equivalents and restricted cash			35,571				(73,177	)			153,942				21,113
Cash, cash equivalents and restricted cash, beginning of period			308,637				263,443				190,266				169,153
Cash, cash equivalents and restricted cash, end of period		$	344,208			$	190,266			$	344,208			$	190,266
Supplemental cash flow disclosure:
Cash paid for taxes		$	98			$	68			$	2,755			$	3,102
Interest paid		$	10,975			$	8,123			$	42,430			$	18,073
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid		$	2			$	67			$	2			$	67

 

 

 

---

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP ALLOCATED COMBINED RECEIPTS
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Revenue		$	135,376			$	124,726			$	530,210			$	475,194
Fair value adjustments to deferred revenue in connection with purchase accounting			—				13				—				868
Allocated combined receipts		$	135,376			$	124,739			$	530,210			$	476,062

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Income (loss) from operations		$	224			$	(3,780	)		$	(3,218	)		$	(16,480	)
Stock-based compensation			10,575				10,856				44,196				39,779
Transaction costs(1)			5,857				4,206				15,512				9,123
Sponsor costs(2)			34				66				147				517
Other non-recurring costs(3)			2,956				630				10,162				3,365
Amortization of acquisition-related intangibles			35,731				34,520				142,965				136,710
Fair value adjustments to deferred revenue in connection with purchase accounting			—				13				—				868
Non-GAAP operating income		$	55,377			$	46,511			$	209,764			$	173,882
GAAP operating margin			0.2	%			(3.0	)%			(0.6	)%			(3.5	)%
Non-GAAP operating margin			40.9	%			37.3	%			39.6	%			36.5	%

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Net loss		$	(5,767	)		$	(5,723	)		$	(34,078	)		$	(34,242	)
Interest on outstanding debt			11,382				8,257				42,022				24,591
Income tax (benefit) expense			459				(1,013	)			(4,258	)			(8,132	)
Depreciation			1,305				1,346				4,786				4,491
Amortization			—				2				2				7
Stock-based compensation			10,575				10,856				44,196				39,779
Transaction costs(1)			5,857				4,206				15,512				9,123
Sponsor costs(2)			34				66				147				517
Other non-recurring costs(4)			2,956				630				10,269				3,365
Effects of foreign currency transaction (gains) and losses			(3,343	)			(4,536	)			(1,671	)			2,514
Amortization of acquisition-related intangibles			35,731				34,520				142,965				136,710
Interest income			(2,716	)			—				(5,679	)			—
Fair value adjustments to deferred revenue in connection with purchase accounting			—				13				—				868
Adjusted EBITDA		$	56,473			$	48,624			$	214,213			$	179,591
Net loss margin			(4.3	)%			(4.6	)%			(6.4	)%			(7.2	)%
Adjusted EBITDA margin			41.7	%			39.0	%			40.4	%			37.7	%

 

 

---

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF FREE CASH FLOW, UNLEVERED FREE CASH FLOW & ADJUSTED UNLEVERED FREE CASH FLOW
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Net cash provided by operating activities		$	36,715			$	17,003			$	164,016			$	140,271
Purchases of property and equipment			(1,232	)			(1,342	)			(5,940	)			(6,321	)
Proceeds from disposals of property and equipment			8				2				50				43
Free cash flow		$	35,491			$	15,663			$	158,126			$	133,993
Cash paid for interest on outstanding debt			10,975				8,123				42,430				18,073
Cash settled stock-based compensation			24				1,941				662				6,194
Unlevered free cash flow		$	46,490			$	25,727			$	201,218			$	158,260
Transaction costs(1)			2,300				2,215				12,174				9,474
Sponsor costs(2)			34				33				169				378
Impaired leases			390				609				1,486				2,074
Other non-recurring costs(5)			2,079				761				10,442				3,359
Adjusted unlevered free cash flow		$	51,293			$	29,345			$	225,489			$	173,545

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Net loss		$	(5,767	)		$	(5,723	)		$	(34,078	)		$	(34,242	)
Stock-based compensation			10,575				10,856				44,196				39,779
Amortization of acquisition-related intangibles			35,731				34,520				142,965				136,710
Fair value adjustments to deferred revenue in connection with purchase accounting			—				13				—				868
Transaction costs(1)			5,857				4,206				15,512				9,123
Sponsor costs(2)			34				66				147				517
Other non-recurring costs(4)			2,956				630				10,269				3,365
Effects of foreign currency transaction (gains) and losses			(3,343	)			(4,536	)			(1,671	)			2,514
Tax effects of adjustments(6)			(12,811	)			(11,652	)			(52,504	)			(47,989	)
Non-GAAP net income		$	33,232			$	28,380			$	124,836			$	110,645
Non-GAAP net income per common share, basic		$	0.23			$	0.20			$	0.87			$	0.78
Non-GAAP net income per common share, diluted		$	0.23			$	0.20			$	0.86			$	0.77
Weighted average common shares used in computing basic Non-GAAP net income per common share			144,868				142,643				143,968				141,815
Weighted average common shares used in computing diluted Non-GAAP net income per common share			146,176				144,261				145,616				143,440

 

 

---

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP GROSS PROFIT
(in thousands)
(unaudited)
		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Gross profit		$	87,609			$	79,914			$	343,895			$	302,900
Stock-based compensation			1,042				833				3,993				3,090
Transaction costs(1)			132				—				1,143				226
Other non-recurring costs(7)			635				5				1,909				69
Amortization of acquisition-related intangibles			16,265				15,952				64,868				63,386
Fair value adjustments to deferred revenue in connection with purchase accounting			—				13				—				868
Non-GAAP gross profit		$	105,683			$	96,717			$	415,808			$	370,539
GAAP gross margin			64.7	%			64.1	%			64.9	%			63.7	%
Non-GAAP gross margin			78.1	%			77.5	%			78.4	%			77.8	%

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NET DEBT
(in thousands)
(unaudited)
		December 31, 2023				December 31, 2022
Long-term principal, current		$	5,000			$	5,000
Long-term principal, net of current portion			486,250				491,250
Cash, cash equivalents and restricted cash			(344,208	)			(190,266	)
Net debt		$	147,042			$	305,984

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Three Months Ended December 31, 2023
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction Costs				Other non-recurring costs				Amortization of acquired intangibles				Non-GAAP
Cost of Revenue:
Subscription and support		$	41,167			$	(463	)		$	(132	)		$	(497	)		$	(16,265	)		$	23,810
Professional services and other			6,600				(579	)			—				(138	)			—				5,883
Total cost of revenue		$	47,767			$	(1,042	)		$	(132	)		$	(635	)		$	(16,265	)		$	29,693

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Three Months Ended December 31, 2022
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction Costs				Other non-recurring costs				Amortization of acquired intangibles				Non-GAAP
Cost of Revenue:
Subscription and support		$	38,127			$	(383	)		$	—			$	(5	)		$	(15,952	)		$	21,787
Professional services and other			6,685				(450	)			—				—				—				6,235
Total cost of revenue		$	44,812			$	(833	)		$	—			$	(5	)		$	(15,952	)		$	28,022

 

 

---

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Year Ended December 31, 2023
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction Costs				Other non-recurring costs				Amortization of acquired intangibles				Non-GAAP
Cost of Revenue:
Subscription and support		$	158,699			$	(1,775	)		$	(1,116	)		$	(1,563	)		$	(64,868	)		$	89,377
Professional services and other			27,616				(2,218	)			(27	)			(346	)			—				25,025
Total cost of revenue		$	186,315			$	(3,993	)		$	(1,143	)		$	(1,909	)		$	(64,868	)		$	114,402

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Year Ended December 31, 2022
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction Costs				Other non-recurring costs				Amortization of acquired intangibles				Non-GAAP
Cost of Revenue:
Subscription and support		$	146,546			$	(1,348	)		$	(135	)		$	(33	)		$	(63,386	)		$	81,644
Professional services and other			25,748				(1,742	)			(91	)			(36	)			—				23,879
Total cost of revenue		$	172,294			$	(3,090	)		$	(226	)		$	(69	)		$	(63,386	)		$	105,523

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Three Months Ended December 31, 2023
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction costs				Sponsor costs				Other non-recurring costs				Amortization of acquired intangibles				Non-GAAP				GAAP % of revenue				Non-GAAP % of Revenue
Operating expenses:
Sales and marketing		$	47,947			$	(2,829	)		$	(170	)		$	—			$	(835	)		$	(19,462	)		$	24,651				35.4	%			18.2	%
Research and development			22,290				(3,887	)			(1,502	)			—				(268	)			(4	)			16,629				16.5	%			12.3	%
General and administrative			17,148				(2,817	)			(4,053	)			(34	)			(1,218	)			—				9,026				12.7	%			6.7	%
Total operating expenses		$	87,385			$	(9,533	)		$	(5,725	)		$	(34	)		$	(2,321	)		$	(19,466	)		$	50,306				64.6	%			37.2	%

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Three Months Ended December 31, 2022
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction costs				Sponsor costs				Other non-recurring costs				Amortization of acquired intangibles				Non-GAAP				GAAP % of revenue				Non-GAAP % of Revenue
Operating expenses:
Sales and marketing		$	46,801			$	(2,888	)		$	(1,129	)		$	—			$	(76	)		$	(18,568	)		$	24,140				37.5	%			19.4	%
Research and development			20,723				(3,206	)			(1,170	)			—				(9	)			—				16,338				16.6	%			13.1	%
General and administrative			16,170				(3,929	)			(1,911	)			(66	)			(536	)			—				9,728				13.0	%			7.8	%
Total operating expenses		$	83,694			$	(10,023	)		$	(4,210	)		$	(66	)		$	(621	)		$	(18,568	)		$	50,206				67.1	%			40.3	%

 

 

---

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Year Ended December, 2023
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction costs				Sponsor costs				Other non-recurring costs				Amortization of acquired intangibles				Non-GAAP				GAAP % of revenue				Non-GAAP % of Revenue
Operating expenses:
Sales and marketing		$	197,690			$	(11,971	)		$	(2,119	)		$	—			$	(2,646	)		$	(78,080	)		$	102,874				37.3	%			19.4	%
Research and development			88,162				(14,333	)			(5,511	)			—				(2,986	)			(17	)			65,315				16.6	%			12.3	%
General and administrative			61,261				(13,899	)			(6,739	)			(147	)			(2,621	)			—				37,855				11.6	%			7.1	%
Total operating expenses		$	347,113			$	(40,203	)		$	(14,369	)		$	(147	)		$	(8,253	)		$	(78,097	)		$	206,044				65.5	%			38.8	%

 

 

INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Year Ended December, 2022
(in thousands)
(unaudited)
		GAAP				Stock-based compensation expense				Transaction costs				Sponsor costs				Other non-recurring costs				Amortization of acquired intangibles				Non-GAAP				GAAP % of revenue				Non-GAAP % of Revenue
Operating expenses:
Sales and marketing		$	181,744			$	(11,050	)		$	(1,302	)		$	—			$	(705	)		$	(73,324	)		$	95,363				38.2	%			20.0	%
Research and development			77,189				(11,467	)			(3,025	)			—				(929	)			—				61,768				16.2	%			13.0	%
General and administrative			60,447				(14,172	)			(4,568	)			(518	)			(1,663	)			—				39,526				12.7	%			8.3	%
Total operating expenses		$	319,380			$	(36,689	)		$	(8,895	)		$	(518	)		$	(3,297	)		$	(73,324	)		$	196,657				67.1	%			41.3	%

 

FOOTNOTES

(1) Represents expenses incurred with third parties as part of the Company’s merger and acquisition activity, including due diligence, closing and post-closing integration activities.

 

(2) Represents expenses incurred for services provided by Thoma Bravo and their affiliates.

 

(3) Includes other non-recurring costs as follows (in thousands):		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Contract modification fees			479				—				1,507				230
Employee severance			881				195				3,469				744
Workforce realignment costs			1,351				267				3,521				1,388
Other insignificant non-recurring costs			245				168				1,665				1,003
Total other non-recurring costs		$	2,956			$	630			$	10,162			$	3,365

 

(4) Includes other non-recurring costs as follows (in thousands):		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Loss on exit of leased properties			—				—				107				—
Contract modification fees			479				—				1,507				230
Employee severance			881				195				3,469				744
Workforce realignment costs			1,351				267				3,521				1,388
Other insignificant non-recurring costs			245				168				1,665				1,003
Total other non-recurring costs		$	2,956			$	630			$	10,269			$	3,365

 

---

 

(5) Includes other non-recurring costs paid in cash as follows (in thousands):		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Employee severance		$	626			$	234			$	3,044			$	744
Workforce realignment costs			1,152				344				3,245				980
Contract modification fees			—				—				2,613				186
Other insignificant non-recurring costs			301				183				1,540				1,449
Total other non-recurring costs paid in cash		$	2,079			$	761			$	10,442			$	3,359

 

(6) During the fourth quarter of 2022, we revised the methodology for calculating Non-GAAP Net Income. The table above includes the tax effects of the adjustments calculated by using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction.

 

(7) Includes other non-recurring costs as follows (in thousands):		Three months ended December 31,								Year ended December 31,
		2023				2022				2023				2022
Contract modification fees			480				—				1,508				—
Employee severance			27				5				261				65
Workforce realignment costs			19				—				31				—
Other insignificant non-recurring costs			109				—				109				4
Total other non-recurring costs		$	635			$	5			$	1,909			$	69

 

For More Information:

Media Relations:
Brian Watkins
Corporate Communications
Instructure
(801) 610-9722
brian.watkins@instructure.com

Investor Relations:
April Scee
Managing Director
ICR, Inc.
(917) 497-8992
april.scee@icrinc.com

---

v3.24.0.1

Document And Entity Information	Feb. 20, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 20, 2024
Entity Registrant Name	INSTRUCTURE HOLDINGS, INC.
Entity Central Index Key	0001841804
Entity Emerging Growth Company	false
Entity File Number	001-40647
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	84-4325548
Entity Address, Address Line One	6330 SOUTH 3000 EAST
Entity Address, Address Line Two	SUITE 700
Entity Address, City or Town	SALT LAKE CITY
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84121
City Area Code	800
Local Phone Number	203-6755
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	INST
Security Exchange Name	NYSE

---