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Instructure Announces First Quarter 2023 Financial Results
Press Releases

Instructure Announces First Quarter 2023 Financial Results

First Quarter GAAP Revenue of $128.8 Million Grows 13.6% Year Over Year

SALT LAKE CITY, May 1, 2023 /PRNewswire/ — Instructure Holdings, Inc. (Instructure) (NYSE: INST), the makers of the Canvas Learning Management System, today announced financial results for the first quarter ended March 31, 2023.

“In the first quarter of 2023, we achieved outstanding results with $128.8 million in revenue, a 13.6% year-over-year increase and another Rule of 50 quarterly performance,” said Steve Daly, Instructure CEO. “Our dedication to customer satisfaction, efficient market strategy, and innovative platform has allowed us to adapt and thrive even in a difficult macroeconomic backdrop. Looking ahead, we will continue to lead innovation in the EdTech sector while maintaining a healthy balance between growth and profitability.”

Financial Highlights:

  • GAAP Revenue of $128.8 million, an increase of 13.6% year over year
  • Allocated Combined Receipts*, or ACR, of $128.8 million, an increase of 13.1% year over year
  • Operating loss of $5.9 million, or negative 4.6% of revenue, and Non-GAAP operating income* of $47.2 million, or 36.6% of ACR*
  • GAAP net loss of $11.9 million, or negative 9.2% of revenue, and Adjusted EBITDA* of $48.3 million, or 37.5% of ACR*
  • Cash flow from operations of negative $80.9 million and Adjusted Unlevered Free Cash Flow* of negative $63.4 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:

  • The University of MassachusettsAmherst selected Canvas based on a desire for a common experience for all of their students and faculty, whether they were engaged in a traditional, in-person, online or non-traditional education.



  • Sioux Falls School District selected Canvas LMS, Canvas Studio, and the full suite of Mastery products due to our comprehensive solution, customization capabilities, and our ability to migrate their district benchmark data to Mastery Connect.



  • The Dutch Institute for Public Safety (NIPV) selected Canvas due to our proven track record of integrating Canvas into customers’ existing enterprise architecture, coupled with our experience in both higher education and continuing education.

Business Outlook

Based on information as of today, May 1, 2023, the Company is issuing the following financial guidance.

Second Quarter Fiscal 2023:

  • Revenue is expected to be in the range of $128.5 million to $129.5 million
  • Non-GAAP operating income* is expected to be in the range of $47.3 million to $48.3 million
  • Adjusted EBITDA* is expected to be in the range of $48.5 million to $49.5 million
  • Non-GAAP net income* is expected to be in the range of $26.0 million to $27.0 million

Full Year 2023:

  • Revenue is expected to be in the range of $521.3 million to $525.3 million
  • Non-GAAP operating income* is expected to be in the range of $194.8 million to $198.8 million
  • Adjusted EBITDA* is expected to be in the range of $199.4 million to $203.4 million
  • Non-GAAP net income* is expected to be in the range of $110.9 million to $114.9 million
  • Adjusted Unlevered Free Cash Flow* is expected to be in the range of $202.5 million to $206.5 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 used in 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 have now converged.

Conference Call Information

Instructure’s management team will hold a conference call to discuss our first quarter ended March 31, 2023 results today, May 1, 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 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, 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 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 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, 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.

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 second 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)

 



March 31,

2023



December 31,

2022



Assets


(unaudited)






Current assets:








Cash and cash equivalents


$

104,758



$

185,954



Accounts receivable—net



63,505




71,428



Prepaid expenses



44,427




11,120



Deferred commissions



14,482




13,390



Other current assets



2,782




3,144



Total current assets



229,954




285,036



Property and equipment, net



12,249




12,380



Right-of-use assets



12,584




13,575



Goodwill



1,266,402




1,266,402



Intangible assets, net



506,930




542,679



Noncurrent prepaid expenses



7,427




871



Deferred commissions, net of current portion



16,745




18,781



Deferred tax assets



7,925




8,143



Other assets



5,654




5,622



Total assets


$

2,065,870



$

2,153,489



Liabilities and stockholders’ equity








Current liabilities:








Accounts payable


$

13,765



$

18,792



Accrued liabilities



26,213




28,483



Lease liabilities



7,099




7,205



Long-term debt, current



4,013




4,013



Deferred revenue



203,231




275,564



Total current liabilities



254,321




334,057



Long-term debt, net of current portion



485,468




486,471



Deferred revenue, net of current portion



12,491




13,816



Lease liabilities, net of current portion



14,804




16,610



Deferred tax liabilities



21,425




24,702



Other long-term liabilities



1,382




1,706



Total liabilities



789,891




877,362



Stockholders’ equity:








Common stock



1,435




1,429



Additional paid-in capital



1,587,303




1,575,600



Accumulated deficit



(312,759)




(300,902)



Total stockholders’ equity



1,275,979




1,276,127



Total liabilities and stockholders’ equity                                                                                  


$

2,065,870



$

2,153,489



 

INSTRUCTURE HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


(in thousands, except per share data)

 




Three months

ended March 31,




2023



2022




(unaudited)


Revenue:







Subscription and support


$

118,480



$

103,492


Professional services and other



10,363




9,970


Total revenue



128,843




113,462


Cost of revenue:







Subscription and support



38,810




35,546


Professional services and other



7,022




5,465


Total cost of revenue



45,832




41,011


Gross profit



83,011




72,451


Operating expenses:







Sales and marketing



50,850




43,321


Research and development



23,702




17,201


General and administrative



14,373




15,616


Total operating expenses



88,925




76,138


Loss from operations



(5,914)




(3,687)


Other income (expense):







Interest income



1,341




36


Interest expense



(9,485)




(4,553)


Other income



76




306


Total other income (expense), net



(8,068)




(4,211)


Loss before income taxes



(13,982)




(7,898)


Income tax benefit



2,125




2,353


Net loss and comprehensive loss


$

(11,857)



$

(5,545)


Net loss per common share, basic and diluted


$

(0.08)



$

(0.04)


Weighted-average common shares used in computing basic and diluted net loss per common share



143,112




140,952


 

INSTRUCTURE HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)

 




Three months

ended March 31,




2023



2022




(unaudited)


Operating Activities:







Net loss


$

(11,857)



$

(5,545)


Adjustments to reconcile net loss to net cash provided by (used in) operating activities:







Depreciation of property and equipment



1,203




1,004


Amortization of intangible assets



35,749




33,741


Amortization of deferred financing costs



294




294


Stock-based compensation



9,635




7,813


Deferred income taxes



(3,059)




(3,411)


Other



181




(360)


Changes in assets and liabilities:







Accounts receivable, net



7,629




14,779


Prepaid expenses and other assets



(39,557)




(34,733)


Deferred commissions



944




304


Right-of-use assets



991




1,197


Accounts payable and accrued liabilities



(7,177)




(11,746)


Deferred revenue



(73,658)




(66,701)


Lease liabilities



(1,912)




(1,468)


Other liabilities



(324)




(1,113)


Net cash used in operating activities



(80,918)




(65,945)


Investing Activities:







Purchases of property and equipment



(1,327)




(1,333)


Proceeds from sale of property and equipment



6




22


Net cash used in investing activities



(1,321)




(1,311)


Financing Activities:







Proceeds from issuance of common stock from employee equity plans



3,295




4,076


Shares repurchased for tax withholdings on vesting of restricted stock units



(1,279)




(1,263)


Repayments of long-term debt



(1,250)





Net cash provided by financing activities



766




2,813


Foreign currency impacts on cash, cash equivalents and restricted cash



301




590


Net decrease in cash, cash equivalents and restricted cash



(81,172)




(63,853)


Cash, cash equivalents and restricted cash, beginning of period



190,266




169,152


Cash, cash equivalents and restricted cash, end of period


$

109,094



$

105,299


Supplemental cash flow disclosure:







Cash paid for taxes


$

181



$

69


Interest paid


$

8,096



$

1,424


Non-cash investing and financing activities:







Capital expenditures incurred but not yet paid


$

186



$

119


 

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES






INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP ALLOCATED COMBINED RECEIPTS


(in thousands)


(unaudited)

 




Three months

ended March 31,




2023



2022


Revenue


$

128,843



$

113,462


Fair value adjustments to deferred revenue in connection with purchase accounting






499


Allocated combined receipts


$

128,843



$

113,961


 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP OPERATING INCOME


(in thousands)


(unaudited)

 




Three months

ended March 31,




2023



2022


Loss from operations


$

(5,914)



$

(3,687)


Stock-based compensation



10,010




9,476


Transaction costs(1)



3,836




1,424


Sponsor costs(2)



58




134


Other non-recurring costs(3)



3,449




912


Amortization of acquisition-related intangibles



35,748




33,739


Fair value adjustments to deferred revenue in connection with purchase accounting






499


Non-GAAP operating income


$

47,187



$

42,497


 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP ADJUSTED EBITDA


(in thousands)


(unaudited)

 




Three months

ended March 31,




2023



2022


Net loss


$

(11,857)



$

(5,545)


Interest on outstanding debt



9,485




4,553


Benefit for taxes



(2,125)




(2,353)


Depreciation



1,203




1,004


Amortization



2




2


Stock-based compensation



10,010




9,476


Transaction costs(1)



3,836




1,424


Sponsor costs(2)



58




134


Other non-recurring costs(4)



3,550




912


Effects of foreign currency transaction gains



(351)




(292)


Amortization of acquisition-related intangibles



35,748




33,739


Interest income



(1,301)





Fair value adjustments to deferred revenue in connection with purchase accounting






499


Adjusted EBITDA


$

48,258



$

43,553









Net loss margin



(9.2)

%



(4.9)

%

Adjusted EBITDA margin



37.5

%



38.2

%

 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF FREE CASH FLOW, UNLEVERED FREE CASH FLOW & ADJUSTED UNLEVERED FREE CASH FLOW


(in thousands)


(unaudited)

 




Three months

ended March 31,




2023



2022









Net cash used in operating activities


$

(80,918)



$

(65,945)


Purchases of property and equipment



(1,327)




(1,333)


Proceeds from disposals of property and equipment



6




22


Free cash flow


$

(82,239)



$

(67,256)


Cash paid for interest on outstanding debt



8,096




1,424


Cash settled stock-based compensation



374




1,664


Unlevered free cash flow


$

(73,769)



$

(64,168)


Transaction costs(1)



6,754




2,662


Sponsor costs(2)



57




50


Impaired leases



345





Other non-recurring costs(5)



3,169




1,166


Adjusted unlevered free cash flow


$

(63,444)



$

(60,290)


 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP NET INCOME


(in thousands, except per share data)


(unaudited)

 




Three months

ended March 31,




2023



2022


Net loss


$

(11,857)



$

(5,545)


Stock-based compensation



10,010




9,476


Amortization of acquisition-related intangibles



35,748




33,739


Fair value adjustments to deferred revenue in connection with purchase accounting






499


Transaction costs(1)



3,836




1,424


Sponsor costs(2)



58




134


Other non-recurring costs(4)



3,550




912


Effects of foreign currency transaction gains



(351)




(292)


Tax effects of adjustments(6)



(13,118)




(11,421)


Non-GAAP net income


$

27,876



$

28,926


Non-GAAP net income per common share, basic


$

0.19



$

0.21


Non-GAAP net income per common share, diluted


$

0.19



$

0.20


Weighted average common shares used in computing basic Non-GAAP net income per common share



143,112




140,952


Weighted average common shares used in computing diluted Non-GAAP net income per common share



144,765




142,710


 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP GROSS PROFIT


(in thousands)


(unaudited)

 




Three months

ended March 31,




2023



2022


Gross profit


$

83,011



$

72,451


Stock-based compensation



793




658


Transaction costs(1)



180




44


Other non-recurring costs



339




19


Amortization of acquisition-related intangibles



16,073




15,690


Fair value adjustments to deferred revenue in connection with purchase accounting






499


Non-GAAP gross profit


$

100,396



$

89,361









GAAP gross margin



64.4

%



63.9

%

Non-GAAP gross margin



77.9

%



78.4

%

 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NET DEBT


(in thousands)


(unaudited)











March 31,

2023



December 31,

2022


Long-term debt, current


$

4,013



$

4,013


Long-term debt, net of current portion



485,468




486,471


Cash, cash equivalents and restricted cash



(109,094)




(190,266)


Net debt


$

380,387



$

300,218


 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF TRAILING TWELVE MONTHS NON-GAAP ADJUSTED EBITDA


(in thousands)


(unaudited)

 




March 31,




2023


Net loss


$

(40,554)


Interest on outstanding debt



29,523


Benefit for taxes



(7,904)


Depreciation



4,690


Amortization



7


Stock-based compensation



40,313


Transaction costs(1)



11,535


Sponsor costs(2)



441


Other non-recurring costs(7)



6,003


Effects of foreign currency transaction losses



2,455


Amortization of acquisition-related intangibles



138,719


Interest income



(1,301)


Fair value adjustments to deferred revenue in connection with purchase accounting



369


Adjusted EBITDA


$

184,296


 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP COST OF REVENUE


Three Months Ended March 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


$

38,810



$

(379)



$

(160)



$

(134)



$

(16,073)



$

22,064


Professional services and other



7,022




(414)




(20)




(205)







6,383


Total cost of revenue


$

45,832



$

(793)



$

(180)



$

(339)



$

(16,073)



$

28,447


 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP COST OF REVENUE


Three Months Ended March 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


$

35,546



$

(282)



$



$

(9)



$

(15,690)



$

19,565


Professional services and other



5,465




(376)




(44)




(10)







5,035


Total cost of revenue


$

41,011



$

(658)



$

(44)



$

(19)



$

(15,690)



$

24,600


 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP OPERATING EXPENSES


Three Months Ended March 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 ACR


Operating expenses:




























Sales and marketing


$

50,850



$

(2,528)



$

(628)



$



$

(1,131)



$

(19,670)



$

26,893




39.5

%



20.9

%

Research and development



23,702




(3,174)




(2,241)







(1,327)




(5)




16,955




18.4

%



13.2

%

General and administrative



14,373




(3,515)




(787)




(58)




(652)







9,361




11.2

%



7.3

%

Total operating expenses


$

88,925



$

(9,217)



$

(3,656)



$

(58)



$

(3,110)



$

(19,675)



$

53,209




69.1

%



41.4

%

 

INSTRUCTURE HOLDINGS, INC.


RECONCILIATION OF NON-GAAP OPERATING EXPENSES


Three Months Ended March 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

% ACR


Operating expenses:




























Sales and marketing


$

43,321



$

(2,577)



$

(9)



$



$

(271)



$

(18,049)



$

22,415




38.2

%



19.7

%

Research and development



17,201




(2,540)




(97)







(193)







14,371




15.2

%



12.6

%

General and administrative



15,616




(3,701)




(1,273)




(134)




(430)







10,078




13.8

%



8.8

%

Total operating expenses


$

76,138



$

(8,818)



$

(1,379)



$

(134)



$

(894)



$

(18,049)



$

46,864




67.2

%



41.1

%

 


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 other non-recurring costs as follows (in thousands):


Three months

ended March 31,




2023



2022


Contract modification fees



115




230


Employee severance



1,859




65


Workforce realignment costs



1,060




354


Other insignificant non-recurring costs



415




263


Total other non-recurring costs


$

3,449



$

912






(4) Includes other non-recurring costs as follows (in thousands):


Three months

ended March 31,




2023



2022


Loss on exit of leased properties



101





Contract modification fees



115




230


Employee severance



1,859




65


Workforce realignment costs



1,060




354


Other insignificant non-recurring costs



415




263


Total other non-recurring costs


$

3,550



$

912




(5) Includes other non-recurring costs paid in cash as follows (in thousands):


Three months

ended March 31,




2023



2022


Employee severance


$

1,669



$

65


Workforce realignment costs



1,060




215


Other insignificant non-recurring costs



440




886


Total other non-recurring costs paid in cash


$

3,169



$

1,166




(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.


 

(7) Includes other non-recurring costs as follows (in thousands):


March 31,




2023


Loss on exit of leased properties



101


Contract modification fees



115


Employee severance



2,538


Workforce realignment costs



2,094


Other insignificant non-recurring costs



1,155


Total other non-recurring costs


$

6,003



 

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-first-quarter-2023-financial-results-301812209.html

SOURCE Instructure Holdings, Inc.

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