Instructure(INST) - 2024 Q2 - Quarterly Report

Financial Performance - Revenue for Q2 2024 was $170.4 million, up 30% from $131.1 million in Q2 2023[75] - Net loss for Q2 2024 was $20.9 million, compared to a net loss of $11.0 million in Q2 2023[75] - Adjusted EBITDA for Q2 2024 was $73.4 million, an increase from $51.3 million in Q2 2023[76] - Revenue for the first half of 2024 was $325.9 million, up 25.4% from $259.9 million in the first half of 2023[76] - Net loss for the first half of 2024 was $42.1 million, compared to a net loss of $22.8 million in the first half of 2023[76] - Total revenue for the three months ended June 30, 2024, was $170.4 million, a 30% increase from $131.1 million in the same period of 2023[99] - Net loss for the three months ended June 30, 2024, was $20.9 million, compared to a net loss of $11.0 million in the same period of 2023[99] Cash Flow and Liquidity - Operating cash flow for Q2 2024 was $(8.2) million, down from $25.1 million in Q2 2023[76] - Free cash flow for Q2 2024 was $(10.0) million, compared to $23.5 million in Q2 2023[76] - As of June 30, 2024, the company's liquidity sources included cash, cash equivalents, and restricted cash totaling $145.2 million, down from $344.2 million as of December 31, 2023[117] - Net cash used in operating activities for the six months ended June 30, 2024, was $100.7 million, compared to $55.8 million for the same period in 2023[121] - Net cash used in investing activities during the six months ended June 30, 2024, was $825.5 million, primarily due to the acquisition of Parchment[122] - Net cash provided by financing activities for the six months ended June 30, 2024, was $728.3 million, driven by borrowings under the 2023 Incremental Term Loans[123] Expenses and Costs - Operating expenses increased to $113.2 million for the three months ended June 30, 2024, up from $87.9 million in the same period of 2023, reflecting higher sales and marketing costs[99] - Research and development expenses increased to $31.2 million for the three months ended June 30, 2024, compared to $21.5 million in the same period of 2023[99] - Interest expense for the three months ended June 30, 2024, was $26.4 million, significantly higher than $10.3 million in the same period of 2023[99] - General and administrative expenses rose by $6.8 million (48%) for the three months ended June 30, 2024, mainly due to increased third-party contractor costs[111] - Sales and marketing expenses increased by $8.8 million (17%) for the three months ended June 30, 2024, driven by higher salaries and amortization of acquisition-related intangibles[107] Acquisitions and Strategic Moves - The company acquired Parchment in February 2024 and Scribbles on July 1, 2024, to enhance its learning platform[75] - For the six months ended June 30, 2024, subscription and support revenue rose by $65.2 million (27%) compared to the same period in 2023, with significant contributions from the acquisition of Parchment[102] Debt and Financing - The company had outstanding borrowings of $1,170.3 million on the Senior Term Loan and the 2023 Incremental Term Loans as of June 30, 2024[120] - The Senior Secured Credit Facilities include a $500.0 million senior secured term loan and a $125.0 million revolving credit facility[119] - The interest rate on the Senior Term Loan decreased from 8.68% to 8.35% between December 31, 2023, and June 30, 2024[80] - The company may seek additional equity or debt financing if required, which could impact its ability to compete successfully[117] Future Outlook and Risks - The company expects operating cash flows to improve as operational efficiency increases and economies of scale are realized[117] - The company expects continued challenges in acquiring new customers and retaining existing ones, impacting future revenue growth[137] - Forward-looking statements indicate potential risks related to the completion of the merger and overall economic conditions affecting business performance[137]