Needham & Company reiterated a Buy rating on Instructure, Inc. (NYSE: INST), and raised the price target to $28.00 (from $25.00), following the company's 2Q earnings report. INST reported revenue of $25.9mm, ahead of $24.3mm estimates. EPS of ($0.44) was also ahead of estimates of ($0.52). The company raised the bottom and top end of their full-year revenue guidance by $2.0mm and $1.0mm, respectively, from $108-110mm to $110.8-112mm.

Analyst Scott Berg commented, "Instructure reported another impressive quarter, with 2Q revenues much higher than modeled. Although TTM billings growth was partially aided by early renewals, management commentary on sales indicates 2Q sales likely exceeded expectations. We commend the company for making substantial profitability improvements, most notably on blended gross margins, which crossed the 70% threshold for the first time. We believe these improved gross margins will drive additional valuation multiple expansion with sustained sales efforts as INST's intermediate-term model shows better leverage than prior assumptions, and we raise our PT to $28 based on this assumption. We believe the improved gross margin structure also yields more visibility into management's view that it will not need to access the public capital markets before generating FCF."

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Shares of Instructure, Inc. closed at $21.98 yesterday.