Instructure(US:INST)2024-05-09 20:07Financial Performance - Revenue for Q1 2024 was $155.5 million, up from $128.8 million in Q1 2023, representing a growth of 20.7%[97] - Adjusted EBITDA increased to $64.9 million in Q1 2024 from $48.3 million in Q1 2023, reflecting a growth of 34.3%[97] - Net loss widened to $21.1 million in Q1 2024 compared to a net loss of $11.9 million in Q1 2023[97] - Subscription and support revenue reached $144.7 million in Q1 2024, compared to $118.5 million in Q1 2023, indicating a growth of 22.1%[119] - Professional services and other revenue slightly increased to $10.8 million in Q1 2024 from $10.4 million in Q1 2023[119] - Total revenue for the three months ended March 31, 2024, was $155.5 million, an increase of $26.6 million or 21% compared to $128.8 million in the same period of 2023[123] - Subscription and support revenue increased by $26.2 million to $144.7 million, driven by expanded use among new and existing customers, with international markets contributing 19% of total revenue[124] - Non-GAAP operating income for the three months ended March 31, 2024 was $63.5 million, an increase from $47.2 million in the same period in 2023[160] - Adjusted EBITDA for the three months ended March 31, 2024, was $64,944 thousand, up from $48,258 thousand in 2023, representing a year-over-year increase of approximately 34.5%[166]. - The net loss for the three months ended March 31, 2024, was $(21,125) thousand, compared to $(11,857) thousand in 2023, indicating a significant increase in losses[166]. Operating Expenses - Total operating expenses rose to $107.2 million in Q1 2024, up from $88.9 million in Q1 2023, marking an increase of 20.5%[119] - Sales and marketing expenses rose to $59.3 million, an increase of $8.4 million or 17% compared to $50.9 million in the prior year[128] - Research and development expenses increased by $3.8 million to $27.5 million, primarily due to higher salaries and stock-based compensation[129] - General and administrative expenses surged by $6.0 million to $20.4 million, reflecting increased contractor costs and payroll-related benefits[130] - Other income (expense), net, showed a significant increase in expense of $14.0 million, primarily due to higher interest expenses related to additional borrowings[131] Cash Flow and Liquidity - As of March 31, 2024, the company had cash, cash equivalents, and restricted cash totaling $89.3 million, down from $344.2 million as of December 31, 2023[133] - Net cash used in operating activities for the three months ended March 31, 2024 was $92.6 million, compared to $80.9 million for the same period in 2023, reflecting a net loss of $21.1 million[147][148] - Free cash flow for the three months ended March 31, 2024, was $(94,426) thousand, compared to $(82,239) thousand for the same period in 2023, reflecting a worsening cash position[163]. - The company had outstanding borrowings of $1,173.3 million on the Senior Term Loan and the 2023 Incremental Term Loans as of March 31, 2024[145] - The company had no outstanding borrowings under its $125.0 million Senior Revolver as of March 31, 2024, with interest rates at 2.5%[177]. Acquisitions and Investments - The company acquired Parchment, enhancing its credentialing capabilities and expanding its market presence[95] - Net cash used in investing activities during the three months ended March 31, 2024 was $823.6 million, primarily due to the acquisition of Parchment, compared to $1.3 million in the same period in 2023[150] - The company incurred $5,615 thousand in transaction costs related to merger and acquisition activities during the three months ended March 31, 2024[166]. Debt and Financing - The company entered into the second amendment to the 2021 Credit Agreement on February 1, 2024, which included an aggregate principal amount of $685.0 million for the 2023 Incremental Term Loans[144] - The Senior Term Loan has a seven-year maturity, with quarterly principal installments required starting June 30, 2022[142] - The transition from LIBOR to SOFR for borrowings was effective on July 5, 2023, with applicable rates remaining at 2.75% per annum for SOFR loans[143] Market Strategy and Risks - The company is focused on increasing cloud-based software adoption among Higher Education and K-12 institutions to drive future growth[102] - The company aims to grow its customer base through targeted investments in sales and marketing, particularly in North America and internationally[103] - The company continues to face risks related to economic uncertainty, including inflation and labor shortages, which may impact future performance[171]. - The company has not entered into any hedging arrangements for foreign currency risk, which may affect its financial results due to fluctuations in exchange rates[175].