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) INST, the makers of the Canvas Learning Management System, today announced financial results for the fourth quarter and fiscal year ended December 31, 2022.

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

Fourth Quarter Financial Highlights:

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

Full Year 2022 Financial Highlights:

  • GAAP Revenue of $475.2 million, an increase of 17.2% year over year
  • Allocated Combined Receipts*, or ACR, of $476.1 million, an increase of 14.8% year over year
  • Operating loss of $16.5 million, or negative 3.5% of revenue, and Non-GAAP operating income* of $173.9 million, or 36.5% of ACR*
  • GAAP net loss of $34.2 million, or negative 7.2% of revenue, and Adjusted EBITDA* of $179.6 million, or 37.7% of ACR*
  • Cash flow from operations of $140.3 million and Adjusted Unlevered Free Cash Flow* of $173.5 million

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

Business and Operating Highlights:

  • In December, we acquired LearnPlatform, the leading provider of technology that enables educators and their institutions to research, select and evaluate digital learning solutions.

      
  • The University of Louisiana System selected Canvas and Impact due to improved functionality, consistency of user experience, alignment with the other state university systems, and 24/7 technical support for end users.

      
  • The Charles County Public School District selected Canvas due to the power of its instructional materials, integrations and other 3rd party tools, superior scale and reliability, and best-in-class service.



  • The University of Santo Tomas in the Philippines selected Canvas LMS and Canvas Studio due to ease of use, role-specific mobile experiences, broad support for outcomes, and the breadth of integratable third party tools.

      
  • The City and Guilds of London Institute chose Instructure as its institutional learning technology partner for the future growth of their organization with an initial plan to deploy Canvas and plans to evaluate Credentials.

      
  • Chris Ball was named Instructure's new President and Chief Operating Officer and will oversee the go-to-market strategy and customer lifecycle, including marketing, revenue operations, sales and customer experience.

Business Outlook

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

First Quarter Fiscal 2023:

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

Full Year 2023:

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

*Non-GAAP operating income, Adjusted EBITDA, non-GAAP net income and Adjusted Unlevered Free Cash Flow are non-GAAP measures. Instructure is unable to provide guidance, or a reconciliation, for operating loss and net loss, the most closely comparable GAAP measures with respect to non-GAAP operating income, Adjusted EBITDA and non-GAAP net income, and net cash provided by operating activities, the most closely comparable measure with respect to Adjusted Unlevered Free Cash Flow, because Instructure cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. This is due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including stock-based compensation and amortization of acquisition-related intangibles. Thus, Instructure is unable to present a quantitative reconciliation of non-GAAP guidance to GAAP guidance because such information is not available.

Effective January 1, 2022, Instructure adopted ASU No. 2021-08, Business Combinations (Topic 805), which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606). As a result, Instructure will no longer present guidance for ACR because GAAP revenue and ACR will now converge. 

Conference Call Information

Instructure's management team will hold a conference call to discuss our fourth quarter and fiscal year ended December 31, 2022 results today, February 13, 2023 at 5:00 p.m. ET. The conference call can be accessed by dialing (888) 330-2384 from the United States and Canada or (240) 789-2701 internationally with conference ID 1348899. A live webcast and replay of the conference call can be accessed from the investor relations page of Instructure's website at ir.instructure.com. An archived replay of the webcast will be available following the conclusion of the call.

About Instructure

Instructure 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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