Instructure Reports First Quarter 2016 Financial Results
SALT LAKE CITY, May 4, 2016 /PRNewswire/ -- Instructure, Inc. (NYSE: INST), a leading software-as-a-service (SaaS) technology company that makes software that makes people smarter, today announced its financial results for the first quarter ended March 31, 2016.
"The first quarter of 2016 was an excellent start to our year as we delivered 59% year-over-year growth in revenue, we brought on our 2,000th customer and realized meaningful improvements in margins on a year-over-year basis," said Josh Coates, CEO at Instructure. "A big driver of our continued strong growth is the fundamental change in how people want to learn. Instructure delivers a new way to learn that is highly intuitive, collaborative and provides a compelling user experience."
|
First Quarter Financial Summary | |||||||||
|
(in thousands, except per share data) | |||||||||
|
Three Months Ended March 31, |
|||||||||
|
2016 |
2015 |
||||||||
|
Revenue |
$ |
23,299 |
$ |
14,625 |
|||||
|
Gross Margin |
|||||||||
|
GAAP |
68.5 |
% |
66.4 |
% |
|||||
|
Non-GAAP(1) |
69.3 |
% |
66.7 |
% |
|||||
|
Operating Loss |
|||||||||
|
GAAP |
(13,754) |
(16,684) |
|||||||
|
Non-GAAP(1) |
(11,517) |
(9,426) |
|||||||
|
Net loss |
|||||||||
|
GAAP |
(13,739) |
(17,310) |
|||||||
|
Non-GAAP(1) |
(11,564) |
(9,564) |
|||||||
|
EPS |
|||||||||
|
GAAP(2) |
$ |
(0.50) |
$ |
(2.79) |
|||||
|
Non-GAAP(1)(2) |
$ |
(0.42) |
$ |
(0.45) |
|||||
|
(1) |
Non-GAAP financial measures exclude stock-based compensation, payroll taxes related to equity transactions, amortization of acquisition related intangibles, and change in fair value of the warrant liability. |
|
(2) |
Q1 2016 and Q1 2015 GAAP share count was 27.3M and 6.2M, respectively, due to the conversion of redeemable convertible preferred shares into common stock, which occurred on the closing of Instructure's IPO on November 18, 2015. Non-GAAP share count assumes the conversion of the redeemable convertible preferred shares to common stock occurred at the beginning of the annual period. |
First Quarter 2016 Business Highlights
- Instructure continued to grow its customer base in the first quarter. A few highlights include:
- Higher Education – Canvas was selected by the University of California, Davis, which chose Canvas as the primary platform for course management for their 30,000 students and by the University of Nevada Reno for their 17,000 students.
- K-12 Schools - Canvas was chosen by the Regional School District 18 in Connecticut and Dunlap School District 323 in Illinois.
- International– Canvas was selected by the University of Copenhagen in Denmark for their 40,000 students, by Eindhoven University of Technology in the Netherlands, and by one of Australia's oldest and most prestigious universities, the University of Adelaide.
- Corporate – Bridge was chosen by the American Kennel Club to provide training to 30,000 Kennel Club judges, by Lockheed Martin to support safety training for 3,000 seasonal employees, by ecommerce company Shopify to provide onboarding and ongoing learning for their 1,000 employees and by the world's largest contact lens store, 1-800-Contacts to support a comprehensive leadership development program.
Business OutlookToday, Instructure issued financial guidance for the second quarter and full year 2016.
For the second quarter ending June 30, 2016, Instructure expects revenue of approximately $24 million to $24.6 million, a non-GAAP net loss of ($14.6) million to ($14.2) million, and non-GAAP net loss per share of ($0.53) to ($0.51).
For the full year ending December 31, 2016, Instructure expects revenue of approximately $108 million to $110 million, up from previously stated guidance of $106 million to $109 million, a non-GAAP net loss of ($52) million to ($50) million, up from ($54) million to ($52) million, and non-GAAP net loss per share of ($1.87) to ($1.81), up from ($1.96) to ($1.88).
Conference Call Details:Instructure will discuss its first quarter 2016 results today, May 4, 2016, via teleconference at 3:00 p.m. Mountain Time / 5:00 p.m. Eastern Time. The call may be accessed at (877) 340-7912 or (719) 325-4813, passcode 3754097. A live webcast, as well as replay, of the conference call will be accessible at Instructure's investor relations website, http://ir.instructure.com.
Non-GAAP Financial MeasuresIn this release, Instructure's non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, and 12-month billings are not presented in accordance with GAAP and are not intended to be used in lieu of GAAP presentations of results of operations.
Management presents these non-GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. However, these non-GAAP financial measures have limitations as an analytical tool and are not intended to be an alternative to financial measures prepared in accordance with GAAP. We intend to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics.
These non-GAAP measures exclude stock-based compensation, payroll taxes related to equity transactions, amortization of acquisition related intangibles, and change in fair value of the warrant liability. We believe investors may want to exclude the effects of these items in order to compare our financial performance between time periods:
- Stock-based compensation - Although stock-based compensation is an important aspect of the compensation of our employees and executives, management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business. Unlike cash compensation, the value of equity awards is determined using a complex formula that incorporates factors, such as market volatility and forfeiture rates that are beyond our control. Stock-based compensation from the employee sale of securities to investors, prior to our IPO, at a price above the current fair market value was dependent on our fair value assumptions and other factors that were beyond our control.
- Payroll taxes related to equity transactions - Operating expenses included employer payroll tax-related items on employee sales of securities to investors prior to our IPO. The amount of employer payroll tax-related items on these transactions was dependent on the fair market value of our stock.
- Amortization of acquisition related intangibles - Expense for the amortization of acquisition related intangibles is a non-cash item, and we believe that the exclusion of this expense provides for a useful comparison of our operating results to prior periods.
- Change in fair value of the warrant liability - Under GAAP, we are required to record mark-to-market adjustments for the change in fair value of the liability for warrants issued in connection with term debt and our credit facility. This expense or gain is excluded from management's assessment of our operating performance because management believes that these non-cash items are not indicative of ongoing operating performance.
Forward-Looking StatementsThis 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 2016 and full year 2016, 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 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 anticipated growth in Instructure's addressable market; competitive factors, including changes in the competitive environment, pricing changes, sales cycle time and increased competition; Instructure's ability to build and expand its sales efforts; general economic and industry conditions; new application introductions and Instructure's ability to develop and deliver innovative applications and features; Instructure's ability to provide high-quality service and support offerings; risks associated with international operations; and macroeconomic conditions. These and other important risk factors are described more fully in the Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the Securities and Exchange Commission (the "SEC") on February 19, 2016 and other documents filed with the SEC and could cause actual results to vary from expectations. All information provided in this 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.
About InstructureInstructure, Inc. is a leading software-as-a-service (SaaS) technology company that makes software that makes people smarter. With a vision to help maximize the potential of people through technology, Instructure created Canvas and Bridge to enable organizations everywhere to easily develop, deliver and manage engaging face-to-face and online learning experiences. To date, Instructure has connected millions of instructors and learners at more than 2,000 educational institutions and corporations throughout the world. Learn more about Canvas for higher ed and K-12, and Bridge for the corporate market at www.Instructure.com.
Contacts:
Lisa LaukkanenThe Blueshirt Group(415) 217-4967[email protected]
Heather EricksonVP, Global CommunicationsInstructure(866) 574-3127[email protected]
|
INSTRUCTURE, INC. |
||||||||
|
CONSOLIDATED BALANCE SHEETS |
||||||||
|
(in thousands) |
||||||||
|
March 31, 2016 |
December 31, 2015 |
|||||||
|
Assets |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ |
69,658 |
$ |
90,471 |
||||
|
Short term marketable securities |
— |
325 |
||||||
|
Accounts receivable, net |
6,892 |
9,523 |
||||||
|
Prepaid expenses |
4,921 |
5,010 |
||||||
|
Other current assets |
658 |
614 |
||||||
|
Total current assets |
82,129 |
105,943 |
||||||
|
Property and equipment, net |
13,082 |
11,732 |
||||||
|
Goodwill |
989 |
989 |
||||||
|
Intangible assets, net |
518 |
444 |
||||||
|
Noncurrent prepaid expenses |
706 |
749 |
||||||
|
Other assets |
1,144 |
1,203 |
||||||
|
Total assets |
$ |
98,568 |
$ |
121,060 |
||||
|
Liabilities and stockholders' equity |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
$ |
3,772 |
$ |
3,912 |
||||
|
Accrued liabilities |
9,507 |
8,852 |
||||||
|
Deferred rent |
630 |
541 |
||||||
|
Deferred revenue |
38,144 |
49,384 |
||||||
|
Total current liabilities |
52,053 |
62,689 |
||||||
|
Deferred revenue, net of current portion |
2,679 |
2,941 |
||||||
|
Deferred rent, net of current portion |
8,954 |
9,078 |
||||||
|
Warrant liability |
25 |
331 |
||||||
|
Other long term liabilities |
367 |
402 |
||||||
|
Total liabilities |
64,078 |
75,441 |
||||||
|
Commitments and contingencies |
||||||||
|
Stockholders' equity: |
||||||||
|
Common stock |
4 |
4 |
||||||
|
Treasury stock |
(1) |
(1) |
||||||
|
Additional paid-in capital |
191,127 |
188,517 |
||||||
|
Accumulated other comprehensive income |
— |
— |
||||||
|
Accumulated deficit |
(156,640) |
(142,901) |
||||||
|
Total stockholders' equity |
34,490 |
45,619 |
||||||
|
Total liabilities and stockholders' equity |
$ |
98,568 |
$ |
121,060 |
||||
|
INSTRUCTURE, INC. |
||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
|
(in thousands, except per share data) |
||||||||
|
Three Months Ended March 31, |
||||||||
|
2016 |
2015 |
|||||||
|
(unaudited) |
(unaudited) |
|||||||
|
Revenue: |
||||||||
|
Subscription and support |
$ |
20,577 |
$ |
12,601 |
||||
|
Professional services and other |
2,722 |
2,024 |
||||||
|
Total net revenue |
23,299 |
14,625 |
||||||
|
Cost of Revenue: |
||||||||
|
Subscription and support |
5,437 |
3,676 |
||||||
|
Professional services and other |
1,912 |
1,235 |
||||||
|
Total cost of revenue |
7,349 |
4,911 |
||||||
|
Gross profit |
15,950 |
9,714 |
||||||
|
Operating expenses: |
||||||||
|
Sales and marketing |
16,163 |
11,081 |
||||||
|
Research and development |
7,805 |
5,271 |
||||||
|
General and administrative |
5,736 |
10,046 |
||||||
|
Total operating expenses |
29,704 |
26,398 |
||||||
|
Loss from operations |
(13,754) |
(16,684) |
||||||
|
Other income (expense): |
||||||||
|
Interest income |
71 |
3 |
||||||
|
Interest expense |
(11) |
(22) |
||||||
|
Change in fair value of warrant liability |
62 |
(488) |
||||||
|
Other income (expense), net |
(75) |
(119) |
||||||
|
Total other income (expense) |
47 |
(626) |
||||||
|
Loss before income taxes |
(13,707) |
(17,310) |
||||||
|
Income tax expense |
(32) |
— |
||||||
|
Net loss |
$ |
(13,739) |
$ |
(17,310) |
||||
|
Net loss per common share, basic and diluted |
$ |
(0.50) |
$ |
(2.79) |
||||
|
Weighted average shares used to compute net loss per share, basic and diluted |
27,301 |
6,207 |
||||||
|
INSTRUCTURE, INC. |
||||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
|
(in thousands) |
||||||||
|
Three Months Ended March 31, |
||||||||
|
2016 |
2015 |
|||||||
|
(unaudited) |
(unaudited) |
|||||||
|
Operating Activities: |
||||||||
|
Net loss |
$ |
(13,739) |
$ |
(17,310) |
||||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Depreciation of property and equipment |
912 |
523 |
||||||
|
Amortization of intangible assets |
77 |
77 |
||||||
|
Amortization of deferred financing costs |
12 |
15 |
||||||
|
Change in fair value of warrant liability |
(62) |
488 |
||||||
|
Stock-based compensation |
2,235 |
5,929 |
||||||
|
Other |
28 |
27 |
||||||
|
Changes in assets and liabilities: |
||||||||
|
Accounts receivable, net |
2,601 |
3,135 |
||||||
|
Prepaid expenses and other assets |
135 |
(588) |
||||||
|
Accounts payable and accrued liabilities |
515 |
682 |
||||||
|
Deferred revenue |
(11,502) |
(6,794) |
||||||
|
Deferred rent |
(35) |
(75) |
||||||
|
Other liabilities |
(27) |
(24) |
||||||
|
Net cash used in operating activities |
(18,850) |
(13,915) |
||||||
|
Investing Activities: |
||||||||
|
Purchases of property and equipment |
(2,268) |
(927) |
||||||
|
Purchases of intangible assets |
(151) |
— |
||||||
|
Proceeds from disposal of property and equipment |
8 |
9 |
||||||
|
Maturities of marketable securities |
325 |
500 |
||||||
|
Net cash used in investing activities |
(2,086) |
(418) |
||||||
|
Financing Activities: |
||||||||
|
Proceeds from exercise of redeemable convertible preferred stock warrants |
— |
250 |
||||||
|
Proceeds from exercise of stock options |
123 |
65 |
||||||
|
Repayment of capital lease obligations |
— |
(74) |
||||||
|
Net cash provided by financing activities |
123 |
241 |
||||||
|
Net decrease in cash |
(20,813) |
(14,092) |
||||||
|
Cash, beginning of period |
90,471 |
43,915 |
||||||
|
Cash, end of period |
$ |
69,658 |
$ |
29,823 |
||||
|
INSTRUCTURE, INC. |
||||||||
|
RECONCILIATION OF NON-GAAP GROSS MARGIN |
||||||||
|
(in thousands, except percentages) |
||||||||
|
Three Months Ended March 31, |
||||||||
|
2016 |
2015 |
|||||||
|
(unaudited) |
(unaudited) |
|||||||
|
GAAP gross profit |
$ |
15,950 |
$ |
9,714 |
||||
|
Stock-based compensation |
193 |
48 |
||||||
|
Payroll taxes related to equity transaction |
— |
— |
||||||
|
Non-GAAP gross margin |
$ |
16,143 |
$ |
9,762 |
||||
|
GAAP gross margin % |
68.5 |
% |
66.4 |
% | ||||
|
Non-GAAP gross margin % |
69.3 |
% |
66.7 |
% | ||||
|
INSTRUCTURE, INC. |
||||||||
|
RECONCILIATION OF NON-GAAP OPERATING LOSS |
||||||||
|
(in thousands) |
||||||||
|
Three Months Ended March 31, |
||||||||
|
2016 |
2015 |
|||||||
|
(unaudited) |
(unaudited) |
|||||||
|
Loss from operations |
$ |
(13,754) |
$ |
(16,684) |
||||
|
Stock-based compensation |
2,235 |
5,929 |
||||||
|
Payroll taxes related to equity transaction |
— |
1,327 |
||||||
|
Amortization of acquisition related intangibles |
2 |
2 |
||||||
|
Non-GAAP operating loss |
$ |
(11,517) |
$ |
(9,426) |
||||
|
GAAP operating margin |
-59 |
% |
-114 |
% | ||||
|
Non-GAAP operating margin |
-49 |
% |
-64 |
% | ||||
|
INSTRUCTURE, INC. |
||||||||
|
RECONCILIATION OF NON-GAAP NET LOSS |
||||||||
|
(in thousands) |
||||||||
|
Three Months Ended March 31, |
||||||||
|
2016 |
2015 |
|||||||
|
(unaudited) |
(unaudited) |
|||||||
|
Net Loss |
$ |
(13,739) |
$ |
(17,310) |
||||
|
Stock-based compensation |
2,235 |
5,929 |
||||||
|
Payroll taxes related to equity transactions |
— |
1,327 |
||||||
|
Amortization of acquisition related intangibles |
2 |
2 |
||||||
|
Change in fair value of warrant liability |
(62) |
488 |
||||||
|
Non-GAAP net loss |
$ |
(11,564) |
$ |
(9,564) |
||||
|
Non-GAAP net loss per common share, basic and Diluted |
$ |
(0.42) |
$ |
(0.45) |
||||
|
Non-GAAP weighted average common shares used in computing basic and diluted net loss per common share(1) |
27,301 |
21,184 |
||||||
|
(1) |
Non-GAAP weighted average common shares used in computing basic and diluted net loss per common share on a non-GAAP basis assumes that the redeemable convertible preferred shares that converted to common shares upon execution of our IPO were outstanding for the full year. |
|
INSTRUCTURE, INC. |
||||||||
|
RECONCILIATION OF NON-GAAP WEIGHTED AVERAGE SHARES OUTSTANDING |
||||||||
|
(in thousands) |
||||||||
|
Three Months Ended March 31, |
||||||||
|
2016 |
2015 |
|||||||
|
(unaudited) |
(unaudited) |
|||||||
|
GAAP weighted average common shares, basic and diluted |
27,301 |
6,207 |
||||||
|
Effect of redeemable convertible preferred stock conversion (assuming converted shares were outstanding for the full year) |
- |
14,977 |
||||||
|
Non-GAAP weighted average common shares used in computing basic and diluted non-GAAP net loss per common share |
27,301 |
21,184 |
||||||
|
INSTRUCTURE, INC. |
||||||||
|
RECONCILIATION OF 12-MONTH BILLINGS |
||||||||
|
(in thousands) |
||||||||
|
Trailing Twelve Months Ended March 31, |
||||||||
|
2016 |
2015 |
|||||||
|
Total net revenue |
$ |
81,867 |
$ |
50,367 |
||||
|
Current deferred revenue |
||||||||
|
Beginning balance |
22,631 |
12,822 |
||||||
|
Ending balance |
38,144 |
22,631 |
||||||
|
Net change in current deferred revenue |
15,513 |
9,809 |
||||||
|
Long term deferred revenue |
||||||||
|
Beginning balance |
2,529 |
2,441 |
||||||
|
Ending balance |
2,679 |
2,529 |
||||||
|
Net change in long term deferred revenue |
150 |
88 |
||||||
|
Total 12-month billings |
$ |
97,530 |
$ |
60,264 |
||||
|
INSTRUCTURE, INC. |
||||||||||||||||||||
|
RECONCILIATION OF NON-GAAP OPERATING EXPENSES |
||||||||||||||||||||
|
Three Months Ended March 31, 2016 |
||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||
|
GAAP |
Stock-based Compensation Expense |
Payroll Tax Associated with Equity Transactions |
Amortization of acquired intangibles |
NON-GAAP |
||||||||||||||||
|
Operating expenses: |
||||||||||||||||||||
|
Sales and marketing |
$ |
16,163 |
(655) |
— |
— |
$ |
15,508 |
|||||||||||||
|
Research and development |
7,805 |
(785) |
— |
(2) |
7,018 |
|||||||||||||||
|
General and administrative |
5,736 |
(602) |
— |
— |
5,134 |
|||||||||||||||
|
Total operating expenses |
$ |
29,704 |
(2,042) |
— |
(2) |
$ |
27,660 |
|||||||||||||
|
INSTRUCTURE, INC. |
||||||||||||||||||||
|
RECONCILIATION OF NON-GAAP OPERATING EXPENSES |
||||||||||||||||||||
|
Three Months Ended March 31, 2015 |
||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||
|
GAAP |
Stock-based Compensation Expense |
Payroll Tax Associated with Equity Transactions |
Amortization of acquired intangibles |
NON-GAAP |
||||||||||||||||
|
Operating expenses: |
||||||||||||||||||||
|
Sales and marketing |
$ |
11,081 |
(181) |
— |
— |
$ |
10,900 |
|||||||||||||
|
Research and development |
5,271 |
(240) |
— |
(2) |
5,029 |
|||||||||||||||
|
General and administrative |
10,046 |
(5,460) |
(1,327) |
— |
3,259 |
|||||||||||||||
|
Total operating expenses |
$ |
26,398 |
(5,881) |
(1,327) |
(2) |
$ |
19,188 |
|||||||||||||
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SOURCE Instructure