13.02.2023 22:05:00

Instructure Announces Fourth Quarter and Fiscal Year 2022 Financial Results

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.

Instructure official logo (PRNewsFoto/Instructure)

"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

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/instructure-announces-fourth-quarter-and-fiscal-year-2022-financial-results-301745527.html

SOURCE Instructure Holdings, Inc.

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