INST - Earnings call transcript Q4 2021 | Instructure Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Instructure’s Fourth Quarter and Fiscal Year 2021 Earnings Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that this conference is being recorded. I would now like to turn the conference over to your first speaker, Denise Garcia, Investor Relations. ahead. go please Denise,

Denise Garcia

Good year welcome XXXX Mel. quarter Instructure’s and full earnings afternoon you, to and fourth Thank call.

me market We announced will Chief today. Financial the Bowen. Daly; in results Chief With closed our press Officer, Officer, be release issued and discussing Steve are Instructure’s the Executive Dale after

number statements and to statements company’s the current and These forward-looking Before like that results materially. conference on remind we may begin, risks call based today’s subject of to our actual a are you uncertainties, I’d will significant include forward-looking differ expectations.

discussion time For reports in other future to the Commission. Exchange with today’s business, factors today’s a results refer to and release and of Securities our and filings that could please disclosure earnings financial we affect – filed the to time and from

statements All required except and as to update statements. made us based any assume obligation of as to available on no are such of our information today, by we law, today

both During and the call, GAAP measures. financial non-GAAP we will also refer to

You reconciliation of posted to call Steve. press Relations in turn GAAP can With let find included section me release, is Investor the to that, to the the our non-GAAP our website. which over measures of our

Steve Daly

joining everyone. year and us Denise, all and Thank you, for quarter Thank XXXX you fourth good afternoon our call. for full earnings

the go-to-market ACR execute which approach, receipts, We across Dale acquired million, up continue $XXX.X previously XXXX while combined GAAP ACR, while our of our GAAP in $XXX.X grew key of end revenue year the quarter at the guidance. XX% exceeding million Impact full quarter Instructure XXXX ranges grew XX% XXX% X,XXX history call, XXX% to quarter We ACR, details year year company adjustments million, XX% $XXX.X up to introduced focused adjusted to XX% was as XXXX than investment Full on strong provide the markets. free full underlying was was adjusted EBITDA fall. and Full adjusted revenue the in growth nearly guidance more year-over-year. adds investors year-over-year to as had up year-over-year, our value best flow. million, customer guidance visibility our our year-over-year $XXX.X will which back fourth converted QX, year of year-over-year. our EBITDA revenue a today’s $XXX.X and we to Total strategy During the provide XX% last EBITDA Net retention base. gives in Fourth XXXX, across of bookings think our or up into opportunity revenue and growth year-over-year; million, our delivered of of fourth I quarter fourth unlevered business. doubled to better each to of the was gained quarter fair share was allocated Thanks QX and metrics. first cash Canvas results unearned communicated customers margin. XX% continued adjusted we quarter all another $XX.X highlights on we XX% million, in

now maintaining while Instructure. Our continue we off want beyond financial enhance to truly We the our key about and quarter Instructure year for to growth on talk industry-leading strong five our outstanding forward our and as margins. in driving fourth to for learning quarter. building highlights XXXX a focused success performance capped platform, on profitable look remaining I

education, international. In strength again education, higher K-XX our we our First, U.S. continue in markets, and in QX, key extendable once platform native cloud legacy and each systems. to of higher displace saw

transition impacts interface of and and superior data scale, from a providing API. included continuity deal its Canvas, functionality. student user XX,XXX Blackboard Walden its previous help because During to access The University robust Walden’s accelerate with while also the for quarter, at selected while flexibility Canvas population providing to

seek impact understand seeing K-XX of strong as in being well institutions educational as are as their uptake how education better used edtech in to higher environment. We tools are

pleased of selected expertise U.S. business International over remained time. migrations Canvas the in Moodle ACU the our continue the university’s a how as process, us and as in take management unpaid broadly, ACU, and both availability systems share because ecosystem legacy In to or terminated market. our also Public a K-XX foundation education our competitive more expect launched and system. from underpin K-XX, the impact vendor, been Schools by deal we Canvas services. continue Hartford we tender been the can after while large After product with addressable believe during solution QX, paid next-generation quarter. and received LMS competitors the of online Studio strong part comprehensive its international announced fully the to Australia, be since in further has markets online, LMS We system. incumbent, and our change Hartford the paid of selected from features chose fall, see for portfolio. Catholic signed K-XX and fastest-growing ACU last LMS very we County the as our and differentiate QX, total a impact their and we business our to legacy recently Australian to us In Impact Canvas replace have digital University, we the to In expanding

one and in higher of through focused and our of from are base wins across in In penetration new customer expanded opportunities up our XXXX, products cross-sell more XX% go-to-market of Second, XXXX. logo deals. set both XX% resulting new offerings than product, involve

which success and management K-XX our sales better MasteryConnect of cross-selling with including assessment is and took our the great base. sales a into Virginia to vehicle our News Found Virtual districts procurement the statewide of allows K-XX to purchase installed use Schools Newport contract, management tools, assessment MasteryConnect, Public as system. suite having assessment Canvas our Canvas solutions, advantage During Certica student quarter, dedicated customer team

growth. to drive Third, platform disciplined we investments are making expand long-term and our

execution, maintaining allow investment capital pursue high R&D low requirements business, sales and margins, to margins. productive and Our us in industry-leading reinvest strong deleverage, the M&A strategic gross while

today, margin, accessibility year call, we guidance M&A. well and capable acquired we sales ahead the the record which will into full detail uniquely providing adjusted delivering of expanding in our are greater consensus XXXX in XXXX the software track core, a estimates capacity, sales edtech discuss Canvas R&D for we solutions. reach while our have through in takes Fourth, headcount, XX% at improving of expected are value of example, For performance, and strong increases EBITDA account our the meaningful creation later peers. of Dale With

gone while our allowed schedule, to sales products – which newly smoothly into acquired Our conversations. rapidly technical ahead of integrations has teams have incorporate and their

channel and expansion has we spur APAC, offers partners The are training Early with months in program, our ways result, Fifth, LatAm optimistic existing the turbocharge international revenue a very growth. to As base. new cost-effective of been implementation, looking additional business announced channel products continues been share, of to such which Last grow a to successful markets. Canvas in the we’re last as expected ways and potential program EMEA through XX opportunities positive partners. we’ve market as products services. month, is growth launch and generate international at over the we feedback support our footprint acquired beyond rapidly gain our about we to partner and adding to reselling new

$XXX of funding, announced had every their additional XXXX, to funding environment stimulus education Secondary of of used the approval state billion received of $XX Turning as only which American With contingent month, funds Elementary Department for been come. funding. Relief, plan to distribution and of School Rescue to favorable XXXX, of expect Last November that billion state the approval. in ESSER $XX agency the remain Emergency Education planned we resulting of billion ESSER, the before Plan on of years or the end

learning XXXX Looking believe beyond, educational is positioned and to and presented proliferation complex help tools. the the to Instructure of solve challenges remainder edtech institutions the developers uniquely platform we of by the

these and risks difficulties unclear challenges fragmented user ROI, applications. evaluating, include data, educational siloed a institutions, implementing managing experience, security and in For

markets education procurement are edtech navigating and significant processes For hurdles. developers, tool tools accessing

larger Our education number our upgrade core we RFP expand universities business, roadmap significantly higher look market of in capabilities opportunity. platform total includes to address of billion we to the XXXX of their the $XX an opportunities our American relative XXXX XXXX North In increase share product investments as expect even infrastructures. to as our to

Our with users. meet growing of large to legacy cannot pipeline universities includes LMS which scale millions systems, the of simply concurrent demands

now continued We would and through forward momentum in your our talk financial competitive look call be turn summary, the we’re into years. our employees Dale to thank the to teaching ongoing With our lead worldwide. like to partners, Instructure in that, and and will more excited and ongoing learning coming about for support. our I business. the I confident comprehensive the over most seeing to shareholders results platform our to our couldn’t momentum In are evolution highly customers, the I in position

Dale Bowen

everyone and to Thank you, thanks Steve, for joining us again today.

in like non-GAAP detailed results. GAAP results, certain out to point that Before be addition discussing our will results, financial discussing our I’d I to

Our EBITDA is Relations reconciliation between the GAAP be financial combination release, and posted top quarter, GAAP adjusted found results, along we in the to and with strong fourth line non-GAAP the continued section our a In our Investor expanding which website. growth of of earnings show in results can margins.

margin we X,XXX by points. year, EBITDA For the full basis expanded adjusted

we deliver growth We durable, expect industry-leading to as in profitable maintain margins ahead. our years

performance fourth we Steve a Professional and business. K-XX momentum ACR As of revenue million, of and our the our of end the other our and support XX% XX% RPO, driven million, year-over-year. upsell revenue of up XXXX quarter year-over-year, million year-over-year, year-over-year. $XXX total $XXX.X quarter in revenue assessment. and fourth Deferred for LMS or Subscription by year-over-year; the implementation was ACR up XX% end strong up addition for quarter and at to accounted of XX% up primarily core Canvas strong and revenue at result services revenue delivery as domestically fourth fourth XX% million, continued products, the both Remaining $XXX.X generated our products, mentioned, million, obligations, the XX% in at of XX% specialty quarter, $XXX quarter up were our year-over-year. GAAP at fourth $XXX.X X% million, of training services accounted up other cross-sell the internationally, of within $X.X

I’m on when expenses, ACR. to XX% a otherwise next of revenue are our the remainder comments, to and RPO a stated, statement, recognize please Please count operating months. that note results to upcoming margins on note of referring over that approximately margins all to the We XX non-GAAP percentage refer the share the income of In expect discussing in basis. references our as calculated I unless

margin In demand. profile margin model customer support representing profit optimized supported by million, the gross that quarter, margin, flexible operating model a XX.X% our on gross strong fourth XX.X% scales $XX pleased more up and enhanced with Our couldn’t and was meet be to the quarter in leverage was from the continued architecture cloud gross gross seasonal line. We fourth of operating XXXX. our

million the for $XX.X Turning XX% of for adjusted $XX.X the for from ACR, in quarter now up was up in margin, was $XX.X million, million, of $XX.X XX.X% or per of share of XXXX. to quarter administrative the quarter from compared $XX.X or to from for the General XXXX costs the to were the largely representing fourth up fourth income XXXX, marketing or Fourth Non-GAAP ACR, of fourth the share income EBITDA Research net we in was $X.XX fourth XX.X% addition a and million XX.X% public quarter headcount expenses invested X.X% representing $X.XX of per in in were were from or Sales XX.X% to expenses million quarter XX.X% or quarter the in million of a ambitious fourth fourth the quarter margin, the of in year expenses. $XX the for product XXXX. second fourth our the million XXXX. and road a of expenses pursue compared ACR as map. operating fourth operating development EBITDA by X.X% fourth operating quarter XXXX. of half quarter XX.X% quarter XX.X% engineering company quarter driven $XX.X down Non-GAAP adjusted and fourth ago.

cash cash $XXX.X Turning ratio. the $XXX.X EBITDA X.X a was in year XX-months statement. million of ended to XXXX million $XXX.X operating discount, the compared increase cash million long-term of net $XXX.X to while and debt XXXX, Full a year-over-year negative cash XXX% XXXX and in was with to $XX.X GAAP free balance sheet unlevered net cash times debt, $XXX.X equivalents $XX.X in from in free flow million the for cash $XX.X quarter and cash; adjusted adjusted million, million, in impact the to $XXX.X restricted increase trailing year. cash, cost unlevered adjusts flow resulting was transaction and cash Full prior prior was flow, year $XX.X million million from fourth year-over-year negative year. compared in million We million free flow paid of restructuring, sponsor-related year which Full XXXX. a in flow the XX%

the ACR, for full for now QX adjusted guidance act reminder, free and will of free and which As is by unlevered several a next tax accumulated providing favorable driven for capital tax conclude EBITDA adjusted I billing years. for call XXXX flow. the the a cash we our year conversion terms, shield as flow expenditures strong our believe by low cash will our assets, and

press provided additional details have release. earnings our We in guidance

first million of Normalizing to the the divestiture, ACR at million. is fiscal quarter quarter Bridge rate XXXX, the of guidance for $XXX.X we our ACR expect For XX% $XXX.X the midpoint. first growth range in

For the $XXX.X the for ACR rate million. at the guidance, XX%, expect Normalizing full midpoint. in full to million Bridge or year, growth range divestiture year the of we $XXX.X is ACR

of a first $X we Bridge, the XXXX. reminder, in XXXX, sold of during business. approximately contributed ACR of LMS corporate our February As quarter Bridge million

$XX.X We XX% representing expect at an $XX.X range. EBITDA range margin adjusted the midpoint million, of the adjusted million in first the of quarter EBITDA of to

of at free $XXX $XXX.X the $XXX.X as million adjusted to adjusted the and between the measure million, to the flow year range. unlevered For ongoing forward, our adjusted provides cash free couple $XXX generation. we XX.X% cash moving margin free because full primary flow use seasonality. on million. expect XXXX be million metric Please note that in of points EBITDA a year, it of cash we anticipate our A range full midpoint an representing EBITDA plan to We cash flow of adjusted unlevered quick of better

ACR our repeat reminder, year. is to we as second First, and flat and quarters, a first this trend between typically expect this roughly itself

adjusted we’ve our with terms our strong to our our improving expect favorable year. structure flow gross little leveraging balance this over margins we and look different scale been cash time. unlevered reducing vendors, Second, our able and a free secure seasonality cost to By sheet, thereby

happy we I couldn’t and to are a combination And In year-over-year in unlevered of free on Steve at momentum the summary, of best-in-class million, an we throughout of the public you We’re for With questions. updating order education. to markets which growth able to this transformation teaching our double-digit about the XXXX. quarter. center impact do first pleased by learning, high more From rare and financially, We our of $XX forward are prepayments and million exceeding level, XXXX margins. position the of to take every will leading quarter. making digital incremental for offer adjusted your for our incredible vendors that, was be guidance flow executed Instructure. a marketplace comparisons $XX very the progress the at and cash and in year We any our reentered in look

Operator

have [Operator the you. Thank Baer We Stanley. first of the comes Morgan line question Instructions] Josh of from

Your line now open. is

You may ask question. your

Josh Baer

rate, into really Thanks XXX% XXX to does a like segments, Great. ed, XXXX? strong international I look on you higher K-XX adding guess give customers context congrats year. with the the across retention could on to kind for finish want pipeline please? ask, and question I and and And what any of heading the If

Steve Daly

is the momentum we higher U.S. prepared marketplace. RFP continued from mentioned What in that ed XXXX so XXXX. looking seeing to significantly the We that is up in the increased Josh. are pipeline good. activity we’re space, seeing in remarks Thanks, a The

good So we continue the see in to XXXX and U.S. pipeline in higher build frankly, XXXX business. ed

confident really this starting about So pipeline we the year. is feel where

Josh Baer

the you. Okay. year or Great. think Thank new should about this channel international partner years? And on that how then from in the program, contribution the we coming

Steve Daly

Yes.

about that important fastest-growing calls, business, we previous strategy. have long-term in drive our we’ve continuing this a focus international our for suited those overall very growth segment as the the our We’ve evidenced we’re put countries direct still those and with Australian investing So And are on sales markets heavily to teams. believe engagement, we are recent Catholic win sales identified University. is an by direct of as talked best in really of as part a

countries. at direct, a we seeing but wouldn’t if first We’re XX way channel went program months, and The to good said, momentum. to is that we break those looked in much those this address in even markets us they necessarily more okay, allows efficient address the

in So market it’s to going expand space. addressable international our the

and to driver getting to the next Josh, is we’re to something really to durable that again, just up in expect of it, the sign – three feedback to good two years. over we’re years. and program, be, the drive two growth markets three to starting And the partners a growth about channel So is starting think it next way international our on really that it to we’re for

Operator

you. Thank

have Next JPMorgan. Sterling line we Auty of question, the of

line Your now open. is

ask the question. may You

Drew Glaeser

Drew this Hi, on is Sterling. for

Given spending are in that have the district do the upcoming Instructure you K-XX budget preliminary the over budget months, any sense solutions coming cycle? of on happening votes

Steve Daly

Drew. Yes. the Thanks for question,

we’re a pipeline We guidance the we’ve in will numbers. have pipeline feel the managing. very given confident that We support you that those that

COVID that As a going digital really is been through and for we starting transformation. was catalyst mentioned, the that’s digital this an transformation. point area

digital but portfolio as that a impact transformation. amass the more of of adding. we the And the So than business this LMS, that we we’re lot have products a apply the just and particularly part as to products assessment

where for K-XX from feel our pipeline very business. we perspective So sitting we’re a good about

Drew Glaeser

great. you. Okay, Thank

Operator

you. Thank

line Macquarie. the have Havemeyer we Fred of question, of Next

line now Your is open.

ask the You question. may

Fred Havemeyer

dig is at it MasteryConnect. Instructure the what loss and wanted to on relates specifically to congratulations the really as K-XX I and to help able you quarter. address learning into the moment thank Hi, and do environment to

pandemic. tackling thinking out domestic and the during schools and have K-XX the for the able what really U.S. more about learning throughout capabilities, have schools and assessment problems accrue are And what to MasteryConnect how is you. looking loss you’re at learning of further, stop marketplace, essentially insights the continue As go cycles to more you that accrued find throughout appetite deliver. Thank

Steve Daly

the K-XX you’ve ESSER big And Okay. The Thanks, you. a Certica great done address Fred. specifically has is learning is beginning assessment, bit traditionally products as to And the address it stakes have assessment little of Good real-time funding which at loss. is to standards, of stimulus our different targeted to in journey. that that as a their the This than the are been hit targeted MasteryConnect at testing, year. should funds how teachers kind solutions where against end-of-year we the last the students head. of learning a to the our within tool help been from it’s hear whereas feedback acquired There are And educational on really solutions, for were our schools challenge all approach main question. has through we they our against doing loss in on high both be system. well

hitting, to and the seeing how the end did. lightweight, are, their doing so year Mastery waiting till review test again, last ways products how that they along quick journey we really are And announced students psychometrically than rather sound these

that assessment. ability the part LMS, how of again, learning at how big students a teaching. a on they they are a with XXX-degree is to that so – are provide their feedback able And classroom be from doing. stuff students look to overall students the have good get have real-time then for what able teaching we teachers for they as teachers view lot we this on also the And our the of in are solutions, how to they’re the going, can So adjust get the assessment that feedback

Fred Havemeyer

know ask…. wanted Okay. then, you And Thank you. to I

Operator

Thill have Jefferies. question We disconnected. of from Brent Okay, just got a Instructions] [Operator

now is open. line Your

You may ask your question.

Brent Thill

K-XX, the some colleges afternoon. you on any curious offer. in that out business K-XX ed other overall time change I’m believe over to And have on engagements? of revenue side these for then in Any come observations of metric could in it into relates mix Good curious customers the and where Thanks. have behavior and as the as back higher I’m perspective observations you you any session. the a the terms settled just from mix of or

Steve Daly

perspective, higher was is engagement you seeing about U.S. what the at an asked ed, From it platform pandemic. utilization is Yes. same the we’re on about that specifically our level during

more make each glue on is that back or teaching as infrastructure delivering it in-person, and So still core to environment, that become has remote is it’s that what of we’ve seamless for – in-person learning, there’s use is this whether the being engagement those they recognized gone to the experience methods. fully a teaching across hybrid sure

so see education we the deployed continued to From U.S. strong really churn. good very sticky, very it very than low going K-XX, pre-pandemic, We’ve That higher fully higher on And four-year a never a is higher have frankly. is was we and it’s the mix lost slowly. our institution. platform engagement, ed, change reality in business

So the just business of because one-third our that a points is ed over seeing. that higher K-XX. next few right than of business don’t more durability U.S. to the again, I several that change of we’re years, now we’re over expect

Brent Thill

Thanks. Great.

Operator

you. Thank

line now of have the We Macquarie. Havemeyer again Mr. of Fred

now Your open. is line

the may You ask question.

Fred Havemeyer

you see I to higher certainly my Canvas? with there competitive some some highlighted Thank sort I’m wanted about RFPs at ed, are you potentially how And shift that any I do is progressing? that been in follow-up. ask activity in as wanted ask, and you the bit and things this there And back there’s see are in at quite as the market. looking ed I out competitive looking to the of that as landscape. well space, with you’re wins higher know landscape you. do the the of a competitive you just favoring consolidation quarter

Steve Daly

welcome question, good Fred, and a It’s Yes. back.

dynamic of said a hunkered solutions been, down it already was place that was the they and during just recognized what institutions source the on-prem although something that didn’t didn’t of where they We What to situation open scale, pandemic, higher competitive kind lot have. we meet this is going demands. have we’re get the in seeing we’re just had as education or – through it’s with and – the

to to we’re And the and what do next going decide time so now for decade. they’re re-platform looking at it’s

And so as that for of they’re coming And we the we’re well next for goes out of a that XXXX, to in starting up look kind very us had from panic the open and generation. situation competitive perspective.

As scaled we the some up open during the the Whereas scale. of like have fell dramatically we some source that just stayed – of Moodle technologies up. – legacy pandemic. We they’re down in the

looking driver that’s is so technology And for to again, transformation, XX digital primary really now to see years. the what’s XX into well bode And us. for going be next we the that them that to take a right

win Our rates are around XX%.

continue So see we rates to those opportunities. high in win

Fred Havemeyer

Appreciate you. the context. Thank

Operator

Thank you.

Brian Raymond the next from the James. of Peterson comes of line have We question

open. now is line Your

You may ask question. the

Brian Peterson

Thanks evening Good question. gentlemen. for the taking

up follow So to K-XX. I wanted on

incremental that, think trying there’s curious, some on know you the debate mentioned guys also today, I today? curious, funding But assessments, I’m but And like peg markets where think K-XX to in know you I think the right? about at been that’s hard I’d I I see be K-XX. of we’re adoption. where maybe of do the as look is penetration to opportunity backdrop. the you like rate

there you helpful. that really be anything can share would So

Steve Daly

still with market with this time It’s think for share about LMS. for study, Yes. still did we the K-XX paid space, we be when leader latest we it XX% we’re market of the the last in get and data, – for. suspect I are paid in XX% it LMS, paid we penetrated the that’s the penetrated will – more around was

assessment districts out seeing funds, use to lot greenfield of don’t of that those especially is, a of it going they’re as LMS have the comes still looking as it’s where automation about ways for opportunity they on, districts assessments, The plans, LMS we’re know We’re talking digital the processes. frankly, – put at the when that’s their penetration but still don’t paid that there’s for interim stimulus these we is, together transformation it ahead those us the I in the on yet. to assessments room of exactly and believe penetration as figure

I So think an and use – system order of still an assessments. management formative from these assessment we’re interim in to assessment early days automated do

runway So still there. got lot a we’ve of

Brian Peterson

Good Steve. you. follow-up Dale, And to maybe a hear, for

XXX NRR, new guys. on in think metric those the the sense also buckets. And or do about customers XXX% the Thanks any Just forward? that customers, going compare rough curious, on I’d we three how how across be

Dale Bowen

Sure.

– able acquire customers So different pleased what we don’t customers with of the the break down the year. and growth past during customers But those in segments. we’re been growth really this we’ve to

let NRR. So Brian, your over transition me to question, second on the XXX%

best-in-class is the It’s rate that something it. year. XXX that’s an on opened question increases the expansion customers with cross-sell mid-XXs. really on landing adding of That’s including it’s larger captured but our we we’ve GRR really right and is We’re gross annual that growth – our it to than add that. expected And your we’re have, that strong against is within We happy did we with number Steve also that not this you at more based it’s remarks revenue with really new What excited with then landed our where that of not opening price about retention though, of upon It that that XXX number we year-over-year. made of be. products retention. our net top adding that that last also number, we in the mentioned land are new logos progress all that his this with logos. those top when NRR we revenue just in

Brian Peterson

Thanks, Dale.

Operator

you. Thank

the from Tillman comes question of of next We Truist. line the Terry have

open. Your line is now

your may You ask question.

Terry Tillman

size to growth something is Steve there. is or anything fall the the of relation question Dale, And about variety to But scale Hey, assessments for And its here assessment. that the multiples me kind our of just whole under about on can rate? – then evening, share from that broader more theme is about anything share and that guidance going and first we know at relative that well. you momentum XXXX. talked see can the My of a business. would you you we’ve talked assessment about follow-up. a good But or SKUs congrats have I as in of And I grow there’s

Steve Daly

Yes.

revenue than So it those is break areas we down expect between of faster is the than this faster to core business, business. core one the where where don’t and growing continue down. But the broken we products grow it to is

really pleased And platform. some with discipline about we past, into the about he how on Frank some We’re the We’ve we talk place we’ve motion. came uptake those talk in, around products. seen about how as product, talked the the great put sales in when

So business also traditional the as a good that or driver size it core about increase – driver well. will be that XXXX those and continue the an will business to be we seen growth a And deal in cross-sell rate. over above we’ve feel and with in

a longer Terry. us, for term for So growth good driver

Terry Tillman

about good. sounds excited I’m the uptick. Yes. that excited Steve, to And hear That also, you’re

And is the color it What I what said composition Higher there looking Or U.S. some just like? in think mean, you some of? schools? the of significant I state opportunities what’s of are hear. terms larger of smaller is Or of private flavor in think made really XXXX? business end Dale Are out conservatism we is because more the like think very growth what XX% institutions? to that how Depending kind high kind the five I year. Ed. RFP flows up pipeline through being one converted curious about that’s was hopefully of any I this a this I’m more and on some activity great gets Or increase at could of areas the of that win rate, the there’s questions. where know XXXX? in plays ACR of for gave should

feel all you. like that. with I Thank So of

Steve Daly

Terry. Thanks, Okay.

Just keep me on [indiscernible].

about I am RFP So activity. yes, excited the

the – a space for XXXX. about good really activity. and of build pipeline ed bit is talked see you XXXX in across – We XXXX we’ve with The breakdown was an little it’s board. before RFP kind XXXX is As higher from the slow

that have competitors across, the are over it’s institutions long-term one real see board. say, large towards just it customer been but of well coming across there’s I’d not contracts Terry, that size trending other, up number the some on – as a are there with no as of we of So our

driver Higher look feel you. are feel this of can really about And at the where Ed that years, decisions We good for growth, lot as over that it’s to we next a are be three given I guidance. to these two area an we the and growth the be going for going we we’ve years. next – a business we made a that that guidance As of is driver of the two hit think confident to

pipeline, what guess build we’re how So that’s seeing I – characterize the in I that’s Terry.

Terry Tillman

That’s great.

Thank You an really That’s answered nice. A question. actually all plus. you. That’s the

Operator

the Thank next you. [Operator Instructions] We VanVliet the have line Matt question from of of comes BTIG.

open. Your line is

You the question. may ask

Matt VanVliet

Any, new bit help at? the channel your you’re tech guys. guess, the who taking understand job edtech to to looking and guess, selling the just selling Are they into quarter. a Nice space? for better ad looking they these Are the Are happen additional sort partners some organizations of I partners details us scope internationally. strategy already dig in of competitors? are? more the of break larger thanks wanted you the in on to that Yes, they little market? some of channel maybe question size in in Can I consulting be I that

Steve Daly

we way It’s team a all associated sales in we’ve countries all want and where and question. direct a in we is Yes. success that. the presence good not program The customer that the go may a targeted on

investment our be to we to way those. the the in that have able country, able support significant were the our have they’re looking and to customers enough for So customers surrounding provide that to, big in services accustomed presence partners are be

we’re lot of the a in of that cases, some resellers So larger of value-added targeting distributors have country. kind either in there, multinational

targeting We’re edtech space. already groups within that consulting have the presence

presence with working already almost In edtech. we have the fact, in our, that are exclusively partners

really the that we’re So for. looking again, is looking And that for we’re scale. profile

presence, span that countries cases, local partners a and for looking significant us. could for in We’re presence, multiple many

Matt VanVliet

when the sort of around I’m spent Okay. actually have out X those a but the of now point. additional you federal we budget if be Project Obviously, forward in seem this line much very it those in to And there’s into has there. with earmarked come curious have timing to be explicit line Do sight very put se, needs up low to when you use mentioned budget. time of a been because might per of conversations funding, we’re have surplus saying been that stimulus then pulling a or to the of on percentage kind some the projects

Steve Daly

most cases, level. allocated Yes. the the In are at state dollars

district down they they of state buyers all the get this funds, don’t they amount. level exactly this technologies, know from as always stimulus our from is have funds know So general and or where we the to

don’t in whether dollars to is committed is But to for using this visibility you have by could the committed the government they’re technology and into past, we that are money our three XXXX this as talked or deal – year these funds means about So specifically the by be not. state. earmarked the XXXX, great and a in we’ve sign

we do is this market that so catalyst a multiyear us. And this in expect for

Matt VanVliet

Okay, great. Thank you.

Operator

Thank you.

question of Vruwink Joe line have of from we the Next Baird.

Your now line open. is

ask may question. your You

Peter Arment

into I wanted keep Great. Everyone, And space. talking assessments. for it. actually Clearly, about to ask about also other you there. there’s continued maybe entities Peter Joe like on guys positively It momentum is this the assessment seems Vruwink. has moving the again

a deals? changed? competitive the seeing, has anyone is in environment competitive ask, to are wanted from who in I So perspective Or you these

Steve Daly

changed. been necessarily There’s space. hasn’t players landscape competitive always that in The have Yes. been this

the that What or sales get tightly that focus, advantage seen we’ve in motion the so integrated really our Peter, sales around a we it’s – there. system, they’re that how teaching, are lesson are then so into creating. feedback that assessment it there real-time those management plans learning have they’re and against great get and teaching visibility students they they about the engagement, we in see, secure in can can what district a doing a having And where how players is our usual can

our is assessment more having the solutions you can competitively And focus insights management We the learning tight you so give a We can and by better lot integrations between together. these lot a better give really, system. insights.

players. our really and as is positioning competitive it’s ever like the So we created solutions we some feel new between have integrations been necessarily again, We had much team better not that Mitch Certica. tight that than and acquired through

Peter Arment

Okay.

the say mind Sounds in have if also, those? year guidance? going of how And anything good. And you directional growth Would ask the to with given you you’ve wanted should to look past international. for that K-XX, then I rates on to providing Higher Ed couple quarters, next Thanks.

Steve Daly

about Yes. expect we we feel for – to we we line look growth. general, to We next a segments. top guided from – international grow three guidance at really as the business to – what fastest are continue our we’ve good year, we’re our of In the

Higher happy We business. our business are about and K-XX super Ed our

to see We continue growing. them

All segments in the double digits of growing plus our space. kind of

the we the given piece faster subscription guidance grow in other slightly services guidance to overall our that So would in we’ve the add I than do is that our you. expect and the

Peter Arment

much. very you Thank Awesome.

Operator

Thank you.

of have Blair. question of line We Sheldon from William the Stephen

Your line is now open.

ask may question. You your

Stephen Sheldon

turnover dealing districts to results Nice lot are issues related and school I know a Hey, in of burnout. teacher here. thanks. with guidance K-XX

think and you burden there to potential few suite capabilities years? with product you talked easier M&A to how for is do more you could about to teacher Canvas guess, even space do I So your think and development about? use lives of as assessment the the reduce Instructure’s your teachers over current about that the road ability make And the tech you some next map

Steve Daly

Yes, it’s a K-XX. great in huge a problem question. It’s

of rightfully address you we help do that. As things out pointed that there’s couple there, to

the was teaching can it that a And can the leading The on processes ago. The I that that customers they make his it’s lot off, and manual of and through which one month met about fact a exciting generation, students their cool again. our go with teacher students. part eases focus first a next job, me has to of of inspiring, just Canvas so is feedback mentoring to

having And we processes teachers. a systems of those manual lot the place, so in from away take by the

or classroom, have having helped are by variety system absenteeism turnover substitute that sick for content, that of out record plans, from we also, the as we the the whoever over We a have district all is we all it’s that – taking that for we there teacher. and reasons, that teachers or the in lesson see for of from as also

teacher learning workforce. areas that increase again, believe common in their make easier an is going it to automated them, can is needs help around lives ways of them engagement that better We areas the do do both much as we mentioned that of students, assess and to social having do going anything can it it and of anything to we an organically trying infrastructure their realm be in help M&A, more inorganically the help students teachers they’re makes well. for make looking fun So easier help from the and emotional manage better, in to way engagement, the to as to to address a you and

Stephen Sheldon

headcount just Got ramp into sounds planning then to R&D it. It a like helpful. you’re as really follow-up. And get That’s Yes. XXXX.

hiring of the you’ve there? you’re how success, on and for what environment side I tech terms curious in much had seeing and the So retention hiring talent – guess,

Steve Daly

and parents challenges is become them could being able educate teachers and And together. labor have ability facing to to important attract and in out learn I say advantages, world’s there. to talent. that in everybody is. wish doing are really that teachers is students, we us have fact administrators all very, and The that help The of more effective a students addressing bring helping a the we is great and that same challenges teach retain important I allowing are helping Yes. do helpful can we their or to help It couple mission market lot a we really very together society a a and we – the – in really that mission. else weren’t competitive of

now also In addition, and retain additional allowed and have other going year us the to this to ways public offer equity attract to ability talent.

year. last in in particular number, add hire. more we’ll half and this of year, We started significant the those. about in second we year to year, our to go more We were So than to into feel good very we the heads really R&D with continue ability last successful

investment So that plan. we ramp ability the built our feel into good hit about our to we’ve

Stephen Sheldon

Thank hear. you. to Good

Operator

questions. participating. everyone. all you ladies for conference There call. are Thank no And you more concludes that gentlemen, Thank and today’s

disconnect. may You now

Instructure (INST) 18 Feb 222021 Q4 Earnings call transcript