Instructure(US:INST)2023-10-31 02:07Financial Data and Key Metrics Changes - In Q3 2023, the company reported total GAAP revenue of $134.9 million, representing a year-over-year increase of 10.2%, impacted by a currency headwind of approximately 60 basis points [38][49] - Subscription and support revenue accounted for 91% of total revenue at $123.1 million, up 12.2% year-over-year, also affected by a currency headwind of approximately 60 basis points [38] - Adjusted EBITDA grew 22% year-over-year to $58.2 million, resulting in a strong adjusted EBITDA margin of 43.2% [49][123] Business Line Data and Key Metrics Changes - The company experienced significant cross-sell activity in the K-12 segment, particularly with the Nevada Department of Education adding Mastery Connect alongside its renewal of Canvas [38][119] - Professional services and other revenue accounted for 9% of Q3 revenue at $11.8 million, compared to $12.7 million in Q3 of the previous year [122] Market Data and Key Metrics Changes - The company noted a slowdown in the timing of deal closures in higher education, both domestically and internationally, despite strong RFP activity [50][94] - The company continues to gain market share in higher education, with Canvas LMS leading by more than double its nearest competitor in terms of institutions and enrollments [118] Company Strategy and Development Direction - The acquisition of Parchment is expected to enhance the Instructure Learning Platform, providing deeper relationships within institutions and connections to the workforce [32][116] - The company aims to address the needs of nontraditional learners and is focused on expanding its offerings to support dual enrollment and course sharing [83][100] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term durable growth of the business despite current challenges in the higher education sector, including declining enrollments and budget constraints [50][94] - The company anticipates that the integration of Parchment will drive new growth opportunities while maintaining or improving profitability over time [117][84] Other Important Information - The company ended Q3 with $308.6 million in cash and cash equivalents, and $487.4 million in long-term debt, resulting in a net debt to adjusted EBITDA ratio of 0.88 times [55] - The company expects to recognize revenue on approximately 75% of its remaining performance obligations (RPO) over the next 24 months [122] Q&A Session Summary Question: What is the company's perspective on the nontraditional learner segment? - Management indicated that the nontraditional learner segment is still small but is expected to grow significantly as institutions adapt to new learning pathways [23] Question: How is the integration of Parchment expected to impact the company's strategy? - The integration of Parchment is seen as a strategic move to enhance the company's offerings and create new growth opportunities, particularly in credentialing and learner mobility [116][117] Question: What are the expectations for deal closures in higher education? - Management noted a slowdown in deal closures but emphasized strong RFP activity and confidence in winning future deals [50][94]