Instructure Reports Second Quarter 2018 Financial Results

SALT LAKE CITY, July 30, 2018 /PRNewswire/ -- Instructure, Inc. (NYSE: INST), a leading software-as-a-service (SaaS) technology company in education, learning and talent management, today announced its financial results for the second quarter ended June 30, 2018.

Instructure official logo (PRNewsFoto/Instructure)

"We delivered solid second quarter results with 30% year-over-year revenue growth," said Josh Coates, CEO at Instructure. "Customer adoption for both Canvas and Bridge was strong during the quarter as we surpassed 4,000 customers across 70 countries."

First Quarter Financial Summary

 

(in thousands, except per share data)

 
   

Three Months

Ended June 30,

   

Six Months

Ended June 30,

 
   

2018

   

2017

   

2018

   

2017

 
   

(unaudited)

   

(unaudited)

   

(unaudited)

   

(unaudited)

 

Revenue

 

$

50,063

   

$

38,545

   

$

98,054

   

$

73,017

 

Gross margin

                               

GAAP

   

70.8

%

   

71.3

%

   

70.8

%

   

71.6

%

Non-GAAP(1)

   

72.5

%

   

72.2

%

   

72.5

%

   

72.4

%

Operating loss

                               

GAAP

   

(12,425)

     

(10,160)

     

(24,558)

     

(21,763)

 

Non-GAAP(1)

   

(8,128)

     

(6,627)

     

(15,214)

     

(14,857)

 

Operating margin

                               

GAAP

   

-24.8

%

   

-26.4

%

   

-25.0

%

   

-29.8

%

Non-GAAP(1)

   

-16.2

%

   

-17.2

%

   

-15.5

%

   

-20.3

%

Net loss

                               

GAAP

   

(12,538)

     

(10,268)

     

(24,405)

     

(21,869)

 

Non-GAAP(1)

   

(8,241)

     

(6,659)

     

(15,183)

     

(14,880)

 

EPS

                               

GAAP

 

$

(0.36)

   

$

(0.35)

   

$

(0.73)

   

$

(0.76)

 

Non-GAAP(1)

 

$

(0.24)

   

$

(0.23)

   

$

(0.45)

   

$

(0.51)

 

___________

 

(1)  Non-GAAP financial measures exclude stock-based compensation, reversal of estimated accruals related to payroll taxes on secondary stock purchase transactions, amortization of acquisition related intangibles, the change in fair value of the warrant liability and the change in fair value of the contingent liability.

Second Quarter 2018 Business Highlights

  • Instructure continued to expand its customer base in the second quarter. A few highlights include:
    • U.S. Higher Education and K-12 Schools – Within the U.S. higher education market, Cornell University switched to Canvas for their over 22,000 students. Canvas was also selected by Arizona State University for their over 90,000 students and faculty. ASU has been ranked as the nation's most innovative school for the last three years by U.S. News and World Report. Additionally, Collier County Public Schools in Florida chose Canvas and Arc for their 48,000 K-12 students and educators.
    • International – The University of Toronto, Canada's top ranked university, selected Canvas for their 80,000 students. In Norway, two different municipalities, which are the equivalent of school districts, chose Canvas for their 29,000 faculty and students. Additionally, Global Radio, Europe's largest radio company with 25 million listeners, will use Bridge Learn and Arc for employee training and onboarding. And Bacardi MARTINI chose Bridge Learn for employee engagement and development of their distributed global workforce of over 5,000 employees.
    • Corporate – Qualtrics selected the full Bridge suite of Learn, Perform and Practice, as well as Arc, for sales enablement and partner training for their global sales team. Holiday Retirement, the second largest provider of senior living in the U.S., also chose the full Bridge suite of Learn, Perform and Practice, as well as Arc, for their 10,000 employees. Cox Automotive, the owner of Autotrader.com and Kelley Blue Book, selected Bridge Learn to help increase customer loyalty by offering training, including new orientation training and a manager bootcamp.

Business Outlook

Today, Instructure issued financial guidance for the third quarter and full year 2018. The financial guidance discussed below is on a non-GAAP basis, except for revenue, and excludes stock-based compensation expense, reversal of payroll tax expense on secondary stock purchase transactions, amortization of acquisition related intangibles, the change in fair value of the warrant liability, and the change in fair value of the contingent liability (see tables below that reconcile these non-GAAP financial measures to the related GAAP measures). On January 1, 2018, Instructure adopted Accounting Standards Codification (ASC) 606 "Revenue from Contracts with Customers" using the full retrospective transition method.

For the third quarter ending September 30, 2018, Instructure expects revenue of approximately $53.6 million to $54.2 million, a non-GAAP net loss of ($8.6) million to ($8.0) million, and non-GAAP net loss per common share of ($0.25) to ($0.23).

For the full year ending December 31, 2018, Instructure expects revenue of approximately $205.1 million to $209.5 million, as compared to previously stated guidance of $204.5 million to $209.5 million, non-GAAP net loss of ($31.8) million to ($29.8) million, up from ($32.0) million to ($30.0) million, and non-GAAP net loss per common share of ($0.93) to ($0.87), up from ($0.94) to ($0.88).

Conference Call Details:

Instructure will discuss its second quarter 2018 results today, July 30, 2018, via teleconference at 3:00 p.m. Mountain Time / 5:00 p.m. Eastern Time. The call may be accessed at (888) 204-4368 or (323) 794-2423, passcode 4199102. 

The live webcast of the call can be accessed at the Instructure Investor Relations website at ir.instructure.com. A replay of the call will be available at the same web address approximately two hours following the conclusion of the live event. You may register for the live webcast at http://bit.ly/INST_Q22018EarningsCall.

Non-GAAP Financial Measures

In this press release and related conference call, Instructure's non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, non-GAAP free cash flow 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.

Non-GAAP measures exclude stock-based compensation, payroll taxes related to secondary stock purchase transactions or the reversal of such expense due to the retirement of the liability, amortization of acquisition related intangibles, the change in fair value of the warrant liability, and the change in fair value of the contingent 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.
  • Reversal of estimated accruals related to payroll taxes on secondary stock purchase transactions – Prior to our IPO, operating expenses included employer payroll tax-related items on employee sales of securities to investors. The amount of employer payroll tax-related items on these transactions was dependent on the fair market value of our stock. Beginning in the second quarter of 2016, operating expenses included the reversal of such payroll tax expense due to the reduction of the estimated liability, which will continue to occur in the second quarter of each year.
  • 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.
  • Change in fair value of the contingent liability - Under GAAP, we are required to record mark-to-market adjustments for the change in the fair value of the liability for contingent consideration related to an acquisition. The expense or gain recognized 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 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 third quarter of 2018 and for the full year ending December 31, 2018, 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 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, which was filed with the Securities and Exchange Commission (the "SEC") on May 2, 2018, and other documents filed with the SEC 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.

About Instructure

Instructure, 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, Gauge, Arc 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 4,000 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:
Keaton Godfrey
Manager, Investor Relations
Instructure
(866) 574-3127
[email protected]

Becky Frost
Senior Director, Corporate Communications
Instructure
(801) 869-5017
[email protected]

INSTRUCTURE, INC.

 

CONSOLIDATED BALANCE SHEETS

 

(in thousands)

 
   

June 30,

2018

   

December 31,

2017

 
   

(unaudited)

   

(unaudited)

 

Assets

               

Current assets:

               

Cash and cash equivalents

 

$

67,951

   

$

35,693

 

Short-term marketable securities

   

48,588

     

5,697

 

Accounts receivable—net of allowances of $387 and $318 at June 30, 2018 and December 31, 2017, respectively

   

93,841

     

34,312

 

Prepaid expenses

   

10,079

     

11,492

 

Deferred commissions

   

8,070

     

7,086

 

Other current assets

   

2,010

     

2,419

 

Total current assets

   

230,539

     

96,699

 

Property and equipment, net

   

27,547

     

23,926

 

Goodwill

   

12,354

     

12,354

 

Intangible assets, net

   

7,609

     

9,048

 

Noncurrent prepaid expenses

   

3,347

     

2,939

 

Deferred commissions, net of current portion

   

11,108

     

11,160

 

Other assets

   

537

     

497

 

Total assets

 

$

293,041

   

$

156,623

 

Liabilities and stockholders' equity

               

Current liabilities:

               

Accounts payable

 

$

6,961

   

$

2,892

 

Accrued liabilities

   

11,437

     

13,702

 

Deferred rent

   

1,330

     

936

 

Deferred revenue

   

129,860

     

99,773

 

Total current liabilities

   

149,588

     

117,303

 

Deferred revenue, net of current portion

   

2,666

     

1,889

 

Deferred rent, net of current portion

   

10,643

     

9,201

 

Other long-term liabilities

   

20

     

1,286

 

Total liabilities

   

162,917

     

129,679

 

Commitments and contingencies

               

Stockholders' equity:

               

Common stock

   

3

     

3

 

Additional paid-in capital

   

378,485

     

250,899

 

Accumulated other comprehensive income

   

(2)

     

(1)

 

Accumulated deficit

   

(248,362)

     

(223,957)

 

Total stockholders' equity

   

130,124

     

26,944

 

Total liabilities and stockholders' equity

 

$

293,041

   

$

156,623

 

 

 

 

INSTRUCTURE, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands, except per share data)

 
   

Three Months

Ended June 30,

   

Six Months

Ended June 30,

 
   

2018

   

2017

   

2018

   

2017

 
   

(unaudited)

   

(unaudited)

   

(unaudited)

   

(unaudited)

 

Revenue:

                               

Subscription and support

 

$

45,104

   

$

33,713

   

$

88,304

   

$

65,267

 

Professional services and other

   

4,959

     

4,832

     

9,750

     

7,750

 

Total net revenue

   

50,063

     

38,545

     

98,054

     

73,017

 

Cost of Revenue:

                               

Subscription and support

   

10,784

     

7,967

     

21,175

     

15,072

 

Professional services and other

   

3,814

     

3,088

     

7,408

     

5,663

 

Total cost of revenue

   

14,598

     

11,055

     

28,583

     

20,735

 

Gross profit

   

35,465

     

27,490

     

69,471

     

52,282

 

Operating expenses:

                               

Sales and marketing

   

24,841

     

18,972

     

48,029

     

37,199

 

Research and development

   

14,849

     

11,057

     

29,509

     

22,239

 

General and administrative

   

8,200

     

7,621

     

16,491

     

14,607

 

Total operating expenses

   

47,890

     

37,650

     

94,029

     

74,045

 

Loss from operations

   

(12,425)

     

(10,160)

     

(24,558)

     

(21,763)

 

Other income (expense):

                               

Interest income

   

529

     

39

     

767

     

115

 

Interest expense

   

(20)

     

(4)

     

(29)

     

(18)

 

Other income (expense), net

   

(529)

     

25

     

(353)

     

48

 

Total other income (expense), net

   

(20)

     

60

     

385

     

145

 

Loss before income taxes

   

(12,445)

     

(10,100)

     

(24,173)

     

(21,618)

 

Income tax expense

   

(93)

     

(168)

     

(232)

     

(251)

 

Net loss

 

$

(12,538)

   

$

(10,268)

   

$

(24,405)

   

$

(21,869)

 

Net loss per common share, basic and diluted

 

$

(0.36)

   

$

(0.35)

   

$

(0.73)

   

$

(0.76)

 

Weighted average shares used to compute net loss per share, basic and diluted

   

34,491

     

29,090

     

33,444

     

28,909

 

 

 

 

INSTRUCTURE, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 
   

Three Months

Ended June 30,

   

Six Months

Ended June 30,

 
   

2018

   

2017

   

2018

   

2017

 
   

(unaudited)

   

(unaudited)

   

(unaudited)

   

(unaudited)

 

Operating activities:

                               

Net loss

 

$

(12,538)

   

$

(10,268)

   

$

(24,405)

   

$

(21,869)

 

Adjustments to reconcile net loss to net cash used in operating activities:

                               

Depreciation of property and equipment

   

2,105

     

1,456

     

4,118

     

2,693

 

Amortization of intangible assets

   

676

     

117

     

1,439

     

259

 

Amortization of deferred financing costs

   

3

     

10

     

10

     

16

 

Change in fair value of mark-to-market liabilities

   

(755)

     

76

     

(1,266)

     

83

 

Stock-based compensation

   

5,675

     

4,067

     

10,419

     

7,440

 

Other

   

(963)

     

(68)

     

(899)

     

(66)

 

Changes in assets and liabilities:

                               

Accounts receivable, net

   

(68,724)

     

(59,786)

     

(60,004)

     

(54,489)

 

Prepaid expenses and other assets

   

(1,241)

     

3,483

     

1,382

     

(2,035)

 

Accounts payable and accrued liabilities

   

942

     

3,720

     

3,010

     

2,198

 

Deferred revenue

   

53,419

     

47,913

     

30,864

     

29,639

 

Deferred rent

   

464

     

(275)

     

1,836

     

(414)

 

Deferred commissions

   

(1,144)

     

(2,342)

     

(932)

     

(3,101)

 

Net cash used in operating activities

   

(22,081)

     

(11,897)

     

(34,428)

     

(39,646)

 

Investing activities:

                               

Purchases of property and equipment

   

(2,543)

     

(3,810)

     

(7,390)

     

(6,955)

 

Purchases of intangible assets

   

     

(11)

     

     

(301)

 

Proceeds from disposal of property and equipment

   

26

     

23

     

52

     

38

 

Purchases of marketable securities

   

(48,441)

     

     

(48,441)

     

 

Maturities of marketable securities

   

     

10,000

     

5,700

     

23,900

 

Net cash (used in) provided by investing activities

   

(50,958)

     

6,202

     

(50,079)

     

16,682

 

Financing activities:

                               

Proceeds from common stock offerings, net of offering costs

   

(14)

     

     

109,789

     

 

Proceeds from issuance of common stock from employee equity plans

   

4,417

     

3,278

     

7,249

     

4,316

 

Shares repurchased for tax withholdings on vesting of restricted stock

   

(128)

     

(81)

     

(255)

     

(123)

 

Payments for financing costs

   

(18)

     

(24)

     

(18)

     

(24)

 

Net cash provided by financing activities

   

4,257

     

3,173

     

116,765

     

4,169

 

Net (decrease) increase in cash and cash equivalents

   

(68,782)

     

(2,522)

     

32,258

     

(18,795)

 

Cash and cash equivalents, beginning of period

   

136,733

     

28,266

     

35,693

     

44,539

 

Cash and cash equivalents, end of period

 

$

67,951

   

$

25,744

   

$

67,951

   

$

25,744

 

 

 

 

INSTRUCTURE, INC.

 

RECONCILIATION OF NON-GAAP GROSS MARGIN

 

(in thousands, except percentages)

 

(unaudited)

 
   

Three Months

Ended June 30,

   

Six Months

Ended June 30,

 
   

2018

   

2017

   

2018

   

2017

 

GAAP gross profit

 

$

35,465

   

$

27,490

   

$

69,471

   

$

52,282

 

Stock-based compensation

   

553

     

347

     

975

     

578

 

Amortization of acquisition related intangibles

   

333

     

     

675

     

 

Reversal of payroll tax expense on secondary stock purchase transactions

   

(49)

     

     

(49)

     

 

Non-GAAP gross margin

 

$

36,302

   

$

27,837

   

$

71,072

   

$

52,860

 
                                 

GAAP gross margin %

   

70.8

%

   

71.3

%

   

70.8

%

   

71.6

%

Non-GAAP gross margin %

   

72.5

%

   

72.2

%

   

72.5

%

   

72.4

%

 

INSTRUCTURE, INC.

 

RECONCILIATION OF NON-GAAP OPERATING LOSS

 

(in thousands, except percentages)

 

(unaudited)

 
   

Three Months

Ended June 30,

   

Six Months

Ended June 30,

 
   

2018

   

2017

   

2018

   

2017

 

Loss from operations

 

$

(12,425)

   

$

(10,160)

   

$

(24,558)

   

$

(21,763)

 

Stock-based compensation

   

5,675

     

4,067

     

10,419

     

7,440

 

Reversal of payroll tax expense on secondary stock purchase transactions

   

(1,225)

     

(534)

     

(1,225)

     

(534)

 

Amortization of acquisition related intangibles

   

602

     

     

1,294

     

 

Change in fair value of contingent liability

   

(755)

     

     

(1,144)

     

 

Non-GAAP operating loss

 

$

(8,128)

   

$

(6,627)

   

$

(15,214)

   

$

(14,857)

 
                                 

GAAP operating margin

   

-24.8

%

   

-26.4

%

   

-25.0

%

   

-29.8

%

Non-GAAP operating margin

   

-16.2

%

   

-17.2

%

   

-15.5

%

   

-20.3

%

 

INSTRUCTURE, INC.

 

RECONCILIATION OF NON-GAAP NET LOSS

 

(in thousands, except per share data)

 

(unaudited)

 
   

Three Months

Ended June 30,

   

Six Months

Ended June 30,

 
   

2018

   

2017

   

2018

   

2017

 

Net loss

 

$

(12,538)

   

$

(10,268)

   

$

(24,405)

   

$

(21,869)

 

Stock-based compensation

   

5,675

     

4,067

     

10,419

     

7,440

 

Reversal of payroll tax expense on secondary stock purchase transactions

   

(1,225)

     

(534)

     

(1,225)

     

(534)

 

Amortization of acquisition related intangibles

   

602

     

     

1,294

     

 

Change in fair value of mark-to-market liabilities

   

     

76

     

(122)

     

83

 

Change in fair value of contingent liability

   

(755)

     

     

(1,144)

     

 

Non-GAAP net loss

 

$

(8,241)

   

$

(6,659)

   

$

(15,183)

   

$

(14,880)

 

Non-GAAP net loss per common share,

   basic and diluted

 

$

(0.24)

   

$

(0.23)

   

$

(0.45)

   

$

(0.51)

 

Weighted average common shares used in computing

   basic and diluted net loss per common share

   

34,491

     

29,090

     

33,444

     

28,909

 

 

 

 

INSTRUCTURE, INC.

 

RECONCILIATION OF FREE CASH FLOW

 

(in thousands)

 

(unaudited)

 
   

Three Months Ended

June 30,

 
   

2018

   

2017

 

Net cash used in operating activities

 

$

(22,081)

   

$

(11,897)

 

Purchase of property and equipment and intangibles

   

(2,543)

     

(3,821)

 

Proceeds from disposals of property and equipment

   

26

     

23

 

Free cash flow

 

$

(24,598)

   

$

(15,695)

 

 

INSTRUCTURE, INC.

 

RECONCILIATION OF 12-MONTH BILLINGS

 

(in thousands)

 

(unaudited)

 
   

Trailing Twelve Months Ended

June 30,

 
   

2018

   

2017

 

Total net revenue

 

$

186,008

   

$

135,475

 
                 

Total deferred revenue

               

Beginning balance

   

104,275

     

76,281

 

Ending balance

   

132,526

     

104,275

 

Net change in current deferred revenue

   

28,251

     

27,994

 
                 

Total 12-month billings

 

$

214,259

   

$

163,469

 

 

 

INSTRUCTURE, INC.

RECONCILIATION OF NON-GAAP OPERATING EXPENSES

Three Months Ended June 30, 2018

(in thousands)

(unaudited)

   

GAAP

   

Stock-based
Compensation
Expense

   

Reversal of
Payroll Tax
Associated
with Equity
Transactions

   

Amortization

of
acquired
intangibles

   

Change in
fair value
of
contingent
liability

   

NON-
GAAP

Operating expenses:

                                             

Sales and marketing

 

$

24,841

     

(1,671)

     

430

     

(269)

     

   

$

23,331

Research and development

   

14,849

     

(2,033)

     

616

     

     

   

$

13,432

General and administrative

   

8,200

     

(1,418)

     

130

     

     

755

   

$

7,667

Total operating expenses

 

$

47,890

     

(5,122)

     

1,176

     

(269)

     

755

   

$

44,430

 

INSTRUCTURE, INC.

RECONCILIATION OF NON-GAAP OPERATING EXPENSES

Three Months Ended June 30, 2017

(in thousands)

(unaudited)

   

GAAP

   

Stock-based
Compensation
Expense

   

Reversal of

Payroll Tax
Associated
with Equity

Transactions

   

Amortization
of
acquired
intangibles

   

Change in
fair value
of
contingent
liability

   

NON-
GAAP

Operating expenses:

                                             

Sales and marketing

 

$

18,972

     

(1,195)

     

256

     

     

   

$

18,033

Research and development

   

11,057

     

(1,506)

     

256

     

     

   

$

9,807

General and administrative

   

7,621

     

(1,019)

     

22

     

     

   

$

6,624

Total operating expenses

 

$

37,650

     

(3,720)

     

534

     

     

   

$

34,464

 

INSTRUCTURE, INC.

RECONCILIATION OF NON-GAAP OPERATING EXPENSES

Six Months Ended June 30, 2018

(in thousands)

(unaudited)

   

GAAP

   

Stock-based
Compensation
Expense

   

Reversal of
Payroll Tax
Associated
with Equity
Transactions

   

Amortization
of
acquired
intangibles

   

Change in
fair value
of
contingent
liability

   

NON-
GAAP

Operating expenses:

                                             

Sales and marketing

 

$

48,029

     

(3,019)

     

430

     

(619)

     

   

$

44,821

Research and development

 

$

29,509

     

(3,927)

     

616

     

     

     

26,198

General and administrative

 

$

16,491

     

(2,498)

     

130

     

     

1,144

     

15,267

Total operating expenses

 

$

94,029

     

(9,444)

     

1,176

     

(619)

     

1,144

   

$

86,286

 

INSTRUCTURE, INC.

RECONCILIATION OF NON-GAAP OPERATING EXPENSES

Six Months Ended June 30, 2017

(in thousands)

(unaudited)

   

GAAP

   

Stock-based
Compensation
Expense

   

Reversal of
Payroll Tax
Associated
with Equity
Transactions

   

Amortization
of
acquired
intangibles

   

Change in
fair value
of
contingent
liability

   

NON-
GAAP

Operating expenses:

                                             

Sales and marketing

 

$

37,199

     

(2,150)

     

256

     

     

   

$

35,305

Research and development

   

22,239

     

(2,738)

     

256

     

     

     

19,757

General and administrative

   

14,607

     

(1,974)

     

22

     

     

     

12,655

Total operating expenses

 

$

74,045

     

(6,862)

     

534

     

     

   

$

67,717

 

INSTRUCTURE, INC.

RECONCILIATION OF NON-GAAP NET LOSS GUIDANCE

(in thousands)

(unaudited)

   

Three Months Ending

September 30,

   

Full Year Ending

December 31,

   

2018

   

2018

   

2018

   

2018

   

LOW

   

HIGH

   

LOW

   

HIGH

Net loss

 

$

(15,650)

   

$

(15,050)

   

$

(55,155)

   

$

(53,155)

Stock-based compensation

   

6,425

     

6,425

     

23,300

     

23,300

Reversal of payroll tax expense on secondary stock purchase transactions

   

     

     

(1,225)

     

(1,225)

Amortization of acquisition related intangibles

   

625

     

625

     

2,550

     

2,550

Change in fair value of warrant liability

   

     

     

(120)

     

(120)

Change in fair value of contingent liability

   

     

     

(1,150)

     

(1,150)

Non-GAAP net loss

 

$

(8,600)

   

$

(8,000)

   

$

(31,800)

   

$

(29,800)

 

INSTRUCTURE, INC.

RECONCILIATION OF NON-GAAP NET LOSS PER COMMON SHARE GUIDANCE

(unaudited)

   

Three Months Ending

September 30,

   

Full Year Ending

December 31,

   

2018

   

2018

   

2018

   

2018

   

LOW

   

HIGH

   

LOW

   

HIGH

Net loss per common share

 

$

(0.45)

   

$

(0.43)

   

$

(1.61)

   

$

(1.55)

Stock-based compensation

   

0.18

     

0.18

     

0.68

     

0.68

Reversal of payroll tax expense on secondary stock purchase transactions

   

     

     

(0.04)

     

(0.04)

Amortization of acquisition related intangibles

   

0.02

     

0.02

     

0.07

     

0.07

Change in fair value of warrant liability

   

     

     

(0.00)

     

(0.00)

Change in fair value of contingent liability

   

     

     

(0.03)

     

(0.03)

Non-GAAP net loss per common share, basic and diluted

 

$

(0.25)

   

$

(0.23)

   

$

(0.93)

   

$

(0.87)

Non-GAAP weighted average common shares used in computing basic and diluted net loss per common share (in thousands)

   

34,800

     

34,800

     

34,200

     

34,200

 

 

SOURCE Instructure