Instructure(US:INST)2021-08-18 02:38Financial Data and Key Metrics Changes - Q2 GAAP revenue was $93.6 million, up 52% year-over-year, while total Allocated Combined Receipts (ACR) was $95.9 million, up 28% year-over-year [8][30] - Adjusted EBITDA margins for Q2 were 33%, up over 1,400 basis points year-over-year [8] - Non-GAAP operating income for Q2 was $30.4 million, representing a 32% operating margin, up from 16% in the same quarter last year [43] Business Line Data and Key Metrics Changes - Subscription and support revenue accounted for 90% of Q2 revenue at $84.3 million, up 50% year-over-year, driven by momentum in the core Canvas LMS product [33] - Professional services and other revenue accounted for 10% of Q2 revenue at $9.3 million, up 78% year-over-year, due to strong implementation and training services [34] Market Data and Key Metrics Changes - The education technology market is expected to grow to $404 billion by 2025, with Instructure estimating its total market opportunity at approximately $30 billion [13] - K-12 business grew over 50% year-over-year, attributed to increased digital transformation investments by districts [55] Company Strategy and Development Direction - Instructure aims to expand its market share in both higher education and K-12 institutions, focusing on replacing legacy LMS systems and targeting international markets [19][21] - The company has divested its corporate LMS business, Bridge, to streamline operations and focus on its core education technology offerings [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the K-12 segment, driven by ongoing digital transformation and increased funding for educational technology [56] - The company anticipates a multi-year trend of growth in the K-12 market, supported by stimulus funds and a shift towards enterprise-grade LMS solutions [56] Other Important Information - Deferred revenue at the end of Q2 was $215.7 million, up 40% year-over-year [36] - Remaining performance obligations (RPO) were $667 million, up 29% year-over-year, with expectations to recognize revenue on approximately 78% of RPO over the next 24 months [37] Q&A Session Summary Question: How does the $122 billion American investment plan impact growth prospects in the K-12 market? - Management noted that K-12 districts are making investments in digital transformation, which benefits Instructure as they deploy technology integral to educational workflows [55] Question: What are the opportunities for adding more products to the portfolio? - Management sees the expansion of the Instructure Learning Platform as a key growth driver, aiming to increase average revenue per student and enhance the stickiness of their solutions [59] Question: What is the current pipeline of statewide deals for 2021? - Management reported a strong pipeline for statewide deals, with a focus on winning key districts and developing advocates within states [62] Question: How has the pandemic affected the Higher Ed RFP environment? - Management indicated that many institutions postponed decisions during the pandemic, but RFP activity is picking up as they seek to modernize their LMS [84] Question: What is the impact of stimulus funding on demand for Instructure's products? - Management confirmed that stimulus funds are driving demand for technology that addresses learning loss, and they expect this trend to continue as districts recognize the value of their solutions [86]