INST - Earnings call transcript Q2 2022 | Instructure Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Instructure's Second Quarter 2022 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

afternoon to Good XXXX second earnings call. and you. Instructure's welcome quarter Thank

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

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

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

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

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

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

Steve Daly

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

over since take provide progress on months. During It would like guidance. has results will call, reentered quarter today's to results our the the I Dale second public full and over opportunity reflect second the before year XXXX discussing been XX year details quarter and a our on Instructure I to markets, our and quarter little updated provide last and third a

We’ve than and solutions R&D our average. were our Instructure metrics IPO, significantly today since estimates guidance every the when than are growing XXXX faster full a acquisitions, We public. significantly we guiding three to are Platform assessment strategy have exceeded be investment to will corporate year quarter consensus went and Learning and advanced higher our we the all financial our record K-XX financial

resulted across the channel cost partner in regions, to focus enabling new international Our international profitable has enter us of our major effectively year markets. all strategy growth implemented is program this we to and

and leaves with free generate delivered many further robust options create continue us to going shareholder forward. flow, which significantly to cash have We value

Looking and ahead, we strong confidence of line our including top are growth in model, resilience margins. the solid financial

results, metrics. Turning delivered all another our quarter, communicated to Instructure strong exceeding previously guidance ranges QX across

think XX% the XX% continuously quarter of QX, Combined in underlying Second up non-GAAP better GAAP scale our up to value as was adds gives revenue $XXX.X back visibility adjustments which the up gross of Receipts impact we our demonstrates million, million, year-over-year. the expand $XXX.X ACR year-over-year, We our Allocated year-over-year, into while acquired margins ACR investors We which ability was XXX revenue operational margins growth gross or achieved unearned to focus and of on points basis business. fair XX.X% efficiencies.

lines. Second next their demonstrated choose both to Higher margin and United LMS States to XX% Canvas education our operating EBITDA and generation further XX% quarter international $XX.X solution. EBITDA a grew K-XX leverage markets continue on the million we adjusted margin, adjusted as in gross major institutions and year-over-year across as

rate. assessments large strong gained Beyond Learning our as deals product double-digit further land continued the we a strategy Instructure to grew LMS, at and during quarter Platform traction from the ACR

about an and the four from platform our now strategic organic we We in highlights through teaching and want $XX development billion every increasing key opportunity. M&A continue to learning to the capture connect to aspect quarter. market of share investing of I as strive expect and talk

its in ease country continued gain report U.S. saw each Higher the education UX. past share continue education, higher Canvas from scalability, U.S. Canvas use, recent and and K-XX our we QX of institutions to of strength the for in Edutechnica, flexibility the markets; a across over in Education First, According international. market Higher again year. to superior key to choose LMS

XX% spring, also data showed in from year. significant Institutions systems, coming up Education institutions U.S. Canvas, with opportunity XX% Higher of us last continue run XX% of on Higher As use that U.S. provides of this which legacy growth to LMS the The Education years. over a

for LMS, three Instructure the and enabling support online results Catalog. course quickly and are instructors U.S. with or Instructors online NAU’s Canvas quarter focus innovation the on the of will on efficiently process, ability Higher any in competition. resonating opportunities publish university Education after incumbent online University and Learning which provider the selection by clear to the demonstrated Canvas over to are an Studio and preference Catalog LMS and process. sphere website Canvas evaluation NAU’s NAUs among rigorous month creatively through purchase Platforms: NAU’s Northern university's programs selected Institutions. students address clearly a the XX Arizona replaced review Canvas to During available NAU The a included catalogue.

we learning excited also and the With of As increase Learning outcomes this Platform, our two solutions user expect as learning average further. in-line, build by significant for to opportunity need differentiation our in assessments competitive assessment Instructure assessment three solutions remains K-XX interim robust product for educators LMS, and mitigate an of seek Platform Learning value our the to Demand represent loss. out districts we for K-XX innovative, and a per revenue pandemic higher vision. market Instructure growth to our related increasing the Instructure. improve to portfolio are support formative standard times also

which culture the Joint key fastest School our LMS, its advantage. the ability the part a district’s as integration this JSD, between unique a with party is as business LMS system generation Neenah case organization, International of two in Neenah based XX our in Instructure bundle excellence with management MasteryConnect During on tight our next chose across leading Wisconsin decision of solution. remained well JSD support Canvas District, schools students Instructure’s led Instructure. growing solutions in In the the competitive X,XXX to also assessment over to Neenah our which the QX. hallmark decision as of serves quarter, and

online payment CBR a program offerings integrates it with course especially higher offer Imaging offerings, we're the During the or only its strategic looks customizable and as institutions Diagnostic institutions quarter their education transformation. course many asset be signed deal, its Instructure and online. – online expand because to them Catalog power to LMS, to digital but Catalog. provides in able an not agreement a for tightly CBR to worldwide of included Brazilian College storefront offering selected solution systems. Studio Catalog Radiology into we most proved an CBR like Canvas and integrated which

region CBR ability was provide key Our winning to the the business. Latin a for payment solution gateway American factor in with a

the continue LMS we international build in market our ahead. share segment our expect higher to the With digits, addition, In growing this channel out program in to footprint. fastest segment remain education cost-effectively we international to our single years expand our

go-to-market Second, of our customer penetration set in expanded deals. and opportunities offerings both new higher resulting are base logo of and cross-sell our focused through products across

its districts. DeKalb the learning student existing to improve technology purchased Schools, the Services Impact classroom quarter adoption in an customer across the the of XX,XXX Canvas and LMS advance During County and Studio, digital

students As new faculty evaluate educational seamlessly Impact platforms. navigate helps administrators reminder, the of impact technology, a and while helping

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

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

to due near-term vertical with revenues education enterprise excellent Our to our volatility. macroeconomic into visibility provide software focus minimal our business sensitivity and the verticals contracts model us long-term, non-cancelable and of

We accretive of environment, an our revenue in continue and the base for deteriorating macroeconomic margins. rule outcome we and headcount adjusted opportunities M&A to expect growth unchanged. the invest capacity spite full year continued double-digit with remains our and strong appetite R&D sales In to and this driven on year, for EBITDA by

We in consistent, Fourth, business our TAM expanding capabilities. the M&A of our increasing to Instructure we long-term continue Learning expect our to goal and strategic investing profitable with growth. to Platform use continue drive

and current cash providing enables We and acquisition look we using and establish that opportunities programs growth forward arise Institutions of rollout and their take to flows Canvas Concentric our Education to technologies Sky Canvas to strategy foundational conservatively During second higher while significant Instructure believe excellent as skills free Platform expectations Learning adjust partnering quarter for Canvas TAM with to a non-traditional we future to of record their With through advantage of Higher balance market to share seller market. strong validated and employers. position student institutions the our to sheet, online to Instructure, way and advanced expansion opportunity. environment. education from the rates, the badging Credentials are the with learners the grow achievements Credentials in we capitalized inorganic may enrollment use the an increase and digital seamless a retention Badges

remains to their pipeline to the and students. robust, M&A Learning expect with institutions the pursue strategic the Platform goal and expanding educational value enhancing TAM our Our of and of acquisitions continue we Instructure to

to earlier, County Learning been as for data funding, of billion unspent. to over cross-sell reports ESSER have Instructure the Turning Education, of ESSER schools the have funds a of or invested. the I of stimulus Platform. or $XXX spending. technology to to in mentioned Elementary According yet Emergency $XXX Secondary of a funds that its finance Department under utilized ESSER and remains Schools, help additional funds DeKalb XX% vast end May, majority example fund K-XX of aggregator the appropriated III billion VERBIO the School XX% be ESSER for earmarked Relief investment

virtual InstructureCon with at forward-thinking next significant demand the ESSER Microsoft County Instructure Collective many in Many such K-XX DeKalb over Canvas host the in virtual month partners years. registrants partners Last our few LMS thrilled North our XXX-plus at funds customers were like generate EdTech June, segment hosted sessions to viewers Schools XX,XXX we expect in other We delivering using America. to incremental as conference. over XXXX of Google,

Learning event Mastery data the engagement. four for by for unveiled content, adoption brand and for pillars: updated for tools we During and brand Elevate Canvas architecture and Impact EdTech analytics, assessment solutions, our Management and supported

America, Learning also Pacific the that make the Instructure regions. powerful to for Asia hosting product the three Latin even in InstructureCons Platform more look and EMEA We We forward highlighted this later XXXX. year additional improvements

build, as and by looked to results, purchasing remainder encouraged quarter which upgrade to delayed institutions strong Higher infrastructures. all the North Looking decisions metrics. exceeded many ranges the which summary, second continues guidance beyond, major American opportunities pandemic to In our during our our Education their of RFP I'm in pipeline financial XXXX for

to our balance like thank to We that our XXXX of outperformance quarter the the continue guidance. our trends which once in drove customers, was year, to again second revised favorable reflected for would expect the I Dale and about I will we talk to shareholders ongoing partners, turn employees support. in the for results call that, With seeing the momentum ongoing are the your our financial business. now over and

Dale Bowen

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

section of gross growth website. QX to line top margin results, adjusted out delivered quarter basis in results, our which I'll can In I'd earnings XX.X%. to certain by Building non-GAAP The a we results, year-over-year point be to discussing and GAAP addition is margins. the with found second financial Relations points show quarters, reconciliation GAAP the XXX have GAAP continue a recent posted that margin improvement, in results in our EBITDA strong Before and non-GAAP between consistent to detailed financial our the results. we be like non-GAAP gross expanding on discussing expanded of release, along in our Investor combination

end end recognize percentage at next on XX services million, was second quarter LMS As the product, year-over-year business. year-over-year, we especially year-over-year, the In ACR our at both cross-sell the the of the Steve quarter and of strong in of at primarily of year-over-year. million, over expect year-over-year. RPO XX% our XX% approximately products, delivery continued of a our of Deferred up core $XXX.X XXXX Remaining Performance for our $XXX.X ACR within and second million, to result up months. RPO Obligations other revenue strong $XXX.X up to services of and revenue internationally, implementation second quarter, XX% to of up references or upcoming of and XX% results up and were addition second Professional million the ACR. referring note second ACR the our revenue refer when GAAP a million, in income training in accounted $XX.X by as as remainder revenue and mentioned, total discussing our all our a unless XX% are for please the $XXX.X count statement, of Canvas XX% up XX% Subscription I'm non-GAAP upsell year-over-year, support Please million, margins quarter calculated other of that High-Ed accounted to the basis. domestically assessments. driven XX% on $XXX.X generated stated, revenue note and operating expenses, we momentum XX% that comments, at to otherwise share margins I and quarter

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

million expenses million XX.X% $XX.X quarter second the Turning XX.X% in sales the in now XX.X% for expenses, ACR second ACR, XXXX. XXXX. and from quarter operating of development were second XX.X% second $XX.X the and or were quarter down to expenses to compared of the of quarter marketing for or of Research

invest map, costs. XXXX, quarter ongoing XXXX. second in headcount efficiencies. and XX.X% public of pursue of to road talent largely from or XX.X% the of offshore $XX.X expenses quarter second million up quarter ACR, was income while the of product to administrative company for in $XX.X the million, the General our X% continue the in by operating second were R&D from driven a up to Non-GAAP leveraging engineering the ambitious X.X% We representing second drive margin, quarter operating addition for

for fully million in the up representing of per was $XX.X quarter the compared adjusted per $XX.X a Second a on income Non-GAAP $X.XX basis million, share to from XX.X% $X.XX quarter XXXX. was net diluted $XX.X or ago. EBITDA adjusted-EBITDA second quarter second a XX.X% million share margin, or year

cash statement, with resulting debt, and the debt Turning discount, to equivalents to long-term cash of months $XXX.X net adjusted million and XX restricted in X.XXx cash, second sheet quarter ended of balance in ratio. flow and we net the trailing a million cash $XX.X EBITDA

cash our collected the fees during and of timing license the quarters. collections third is of in vast reminder, highly and second seasonal annual the quarters in a As majority business the with invoiced fourth and third

Adjusted As a the flow during significantly and of year cash of balances and our the are year. first during half flows cash $XX.X during quarter. million and $XXX.X second million was XX million was the XX the $X.X built Free $X.X was second half second unlevered last flow months. quarter $XX.X the the the cash second during during over over lower the million cash quarter last flow and result, months. million the free Operating cash

months XX million. free was unlevered last the adjusted Over cash flow $XXX.X

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

the we fiscal of quarter to million XXXX, third range expect $XXX.X the For $XXX.X of million. ACR in

our by ACR our million million. $X to range Bridge expect the year guidance the XX% fiscal rate is ACR divestiture, $XXX.X now ACR million and growth are of XXXX we guidance full in at $XXX.X for Normalizing We midpoint. raising the

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

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

of For $XXX.X the the midpoint an EBITDA in to of range million, million the XX.X% at now we adjusted expect EBITDA full year, the range. $XXX.X adjusted representing margin of

growth costs. we gross adjusted-EBITDA our as margins XXXX continue reflects year higher technology optimize fiscal stronger increased third-party and to ACR guidance Our

year we metrics. our ranges in million and full now XXXX increasing have also flow year $XXX.X XXXX to to ranges quarter we cash free guidance, raising adjusted adjusted be guidance free range $XXX.X are cash all unlevered second summary, our expect We our guidance pleased million. unlevered to full across flow the of are exceeded and In

is We Instructure We have company of that's other opportunity. legacy transformation positioned high billion $XX this digital no wallet the and that solutions. to scratched Instructure education, as to share display of and continue Learning our are than LMS market lead executing the gained competitors we surface we Platform at believe there better a with level only

questions. solid happy margins any is your profile to with of the growth, on superior cash that, financial and XXXX. conversion. free I adjusted line flow compelling, We to top throughout look Our updating are and you best-in-class progress unlevered remainder of forward Steve take our With

Operator

Instructions]. [Operator

Your line first the Baer question Stanley. of from with Josh comes Morgan

line Your is open.

Josh Baer

Great! question a congrats the on quarter. for Thanks really strong and

It and post I onset now a COVID. really almost in we're So the two K-XX. landscape and changed years half opportunity of the the think

was do I environment. get latest penetrated the do What the portion Where as the update a years LMS far momentum an in K-XX? that paid to the you perspective? what's hoping several going your on see on versus as K-XX you over see competitive alternatives So competitive as of next and

Steve Daly

change you're recognizing talked Yes. see interests. lot pandemic transformation the Thanks, still of digital We that happened think strategy. K-XX a I right when you about for and a with the and Josh, need

high enterprise class, You a bit be on dealing and pressure, get system really you foundation to break. order in that and know a as call, go into happy summer transformation know remains teacher needed recognition to little the K-XX we for lot a under mentioned of been I administrators But and the a the shortages that. LMS of strategic were the particularly they think for digital has priority with last an our

cross-sell of opportunities. K-XX; the to really continue we a we the demand in build. pipeline to We've you some – had continues couple good our see mentioned So know

know but up an Instructure unpaid. on other So don't the that update you or Platform. just breakout Learning We between not have make the it's paid – the the also products the LMS,

says XX% – in its out and data of XX% pandemic, some last paid there's of the the paid the year for sense kind market continue we've last during we since of that is of that's that expect penetration to unpaid, still LMS. pandemic while increased you come the Our to at forward march we about slower it than the it expect was to know over

world still know Our are rates class. win you

in we've more drop win do and know you any deals continue We still fair the deal cost that the share that of been we to space, than without to lowest having haven't We in price. lost. our

So we past position have as quarters. feel good our about we the few in competitive

Josh Baer

you. Thank Great!

Operator

comes Your Macquarie. of line with Fred next the Havemeyer from question

Your line is open.

Fred Havemeyer

and Hey! has like – transmit as Thank to and wanted is of been something all education that considering strong mind macro of I that market, to the congratulations considering you, I I'd ask, here. a that the service reiterate think quarter on vertical Instructure the is just about with addressing every top a this lens backdrop, other pressuring to interpret deleveraged your pressuring this company customers. software, ask, the this your or of and your from? any model larger I recessionary or just impacts really or something generally customers do how environment you education is you're macro the tend software to see you potentially of Is through something the that inflationary wanted recessionary,

Steve Daly

it's the out question are headlines there. a because good obviously, Yes, of effortful very and Fred, that

has of to market, the know You be in education particularly countercyclical. the past tended Higher-Ed kind

to need digital laid to get see the will funded in then to it go And know by transformation probably continue tax education. that and receipts is we You K-XX. know you off K-XX back

potential of a for number students the there is recession. going know to because isn't a You change,

- we I results, tend to markets is overstate much don't I muted. say more it we're we insulated that of be see from from some it the in market to we that can the these as from immune the but macro to wouldn't So, just trends them, and want and planned, completely today, you see

from and much more as those said trends. delevered We are you insulated

So to has good going where decade. our the system that happen position we next and as and education in feel about the we're digital transformation transforms

Fred Havemeyer

that consequential Thank headlines seen been just up recently acting your headwind a though. to with seen about its ask, of is the for reports I showing as out the or a of that institutions any follow-up a education potentially declining. showing enrollments institutions thinking coming you certainly wanted whole? then for of this enrollment Instructure any higher that deployments something conversations We've has question with resizing Instructure and higher trends, were as less education sort has in or for about this is model this in

Steve Daly

this of couple throughout trend that pandemic. in been Data Yes, down. the it enrollment is you enrollments show for has have a declines know years would been –

from moves may training, know – not little against they acquisition in we students get in enrollments to with you You Concentric product, right, that not is addition, some that non-traditional, into degree year with higher and for a education, those enrollment it hedged Sky, maybe of seeking completely want business still on higher translate we're so doesn't want online non-traditional our to U.S. or traditional the that we're Like our declines so institutions our catalog serve bit, credential know and the by going degree with a is responding our of – half of down education. it's a are four reliant business be while necessarily so being to less get U.S. sort than online, students. our we're

are of contracts market, the impact. business really you model with nature the So are kind mutes then sort of we a we any one institutions, know huge streams non-cancelable, a in of because multiyear see dealing with BXB revenue any don't and that changes diverse our directly

the in there last has those enrollment two there's – minimis for been So years de on business impact declines our been based of a reasons.

Fred Havemeyer

you. Thank

Operator

Baird. of the with next comes question Your line from Joe Vruwink

Your open. line is

Joe Vruwink

Great! guess brought Steve, data with I earlier. topic. the you enrollment some everyone! up I'll Hi same stay

on or reinforcement, When students, you maybe of it success within so a in more the think trend are feedback, in give participating of XXXX enrollment positive Higher-Ed is these I growing vendors Instructure participating still a about RFP for their - XX% your how take. institutions only is what you institution more you think one kind XXXX and processes? just to bake-offs and be that correct U.S. for getting you're breeds positive still Canvas shows that growing student by in kind of challenging some rate tips could looking course to maybe

Stephen Daly

good The – short short Thanks with it's the talk to answer is, yes. again. you Joe, Yes, answer

We non-traditional done, are how How do? those institutions of for look what – those one are know asking RFP we effects students, have to – that particularly address it and your point, us ways they seen us it's as they in you helps to network should kind the process. of

addition of customer which to being strength In one in a that in has been differentiators of think our relationships I the have, we ours that success the traditional talked those combined, about know you we win. the script

a that we're help to yes, we're us again, world kind So win of class rates. get is you that network those that effect starting, know seeing

Joseph Vruwink

still K-XX of of of the Okay, different the look getting time, X% you great! it as stimulus Would so you Instructure go the of shift to of to the over upside consistent, on but magnitude by been past has bringing the over areas stretch forecast XX seen average has left you're other the areas of just IPO upside maybe upside revenue mentioned to remaining. I much business, back, how just you potential each stays than up quarter, you exceeded that, and just know since some from of where think is sources like forward, or that the X% have expect And months? you then best some maybe

Stephen Daly

right. you're think I Yes, – it’s Yeah,

funds, where look to talked minority business. of lot impacted the We starting we still a but not has the they source our of that. it. see at We're it's funding, point our about it DeKalb deals ESSER of stimulus a in to as really funds as using think I ESSER

trends think lines, to quarter RFP increased away couple see and and in across three. I move saw we happening. between by the talked the them strength to and from know that's all Ed, about, those, of you'll we that the we've K-XX know the this international But we years the of transformation growth in digital business Higher you strong yes, those But next that see you to So driven do that markets the those contributors continue. over overachievement again, expect shift – Moodle

Joseph Vruwink

very Okay, you Thank great! much.

Steve Daly

Thanks Joe.

Operator

Alex from next line Sklar of James. Your comes Raymond the question with

is line Your open.

Alex Sklar

about to international wanted ask I Steve, demand. Thanks.

the be any international Some more but to do of prior demand of markets Are kind a concerns, changes the broadly bit impacting in hit questions seem acutely. you macro they on internationally? seeing

Stephen Daly

haven't That markets not. short the the need our in need you of any demand enterprise educational those have address big of answer, changing institutions be so student is is the needs continues and seen We for to system, know the transcends Alex, learning macro in I think changes we in fastest-growing and the that know and to class drivers management students the for you concerns demands one those some education, their a markets.

Alex Sklar

I overall know setup greater talked up slightly on of from growth? pipeline And your into ability pipeline helpful. a you Dale, pandemic, question, ask the just Okay, should in deals double-digit in were that the but a about delayed maybe perspective? following Joe's then to about coming it number differently. the How we of XXXX terms thinking during support be

Dale Bowen

look ways Alex. that. got Yes, it's a we of a good We've couple at question that

had two, It's we record a have we visibility into helps have. our we that RPO number us very RPO three all for revenue mentioned have high that of years. First the that next

So you line and tremendous that us into it environment. direction take visibility top that the layer the with we we gives have and business on that It the into pipeline and there. growth visibility that strong see of RFPs top

Alex Sklar

good see as there my County, back Okay, Good Dekalb it’s nice And well. a to one yard. thanks. cross-sell in

Steve Daly

Alex! Thanks

Dale Bowen

have Nice! used We could you.

Operator

next the Your Terry comes Tillman line from question with of Truist Securities.

Your line is open.

Terry Tillman

a County. Alex. I I'm Yeah, Dekalb guess I a for Fulton hey well I as congrats guess Steve for neighbor, Dale! me County questions. of and couple from and Congrats just so had

there, you question it's U.S. XX% think think mean I you I legacy, there had – Higher-Ed I is, right. LMS that The kind out that that of striking is first said

more environment, inflationary gets or do to of looming systems? question uptick more? about notable maintain about sort in at see there's old have getting an the on-prem like, kind you're is infrastructure. kind just gets know Do maybe costly where I follow-up. couple What you a costly potential, no in you – of we're prior about of how It know next it. too over of kind some and years, You it these to you these maintain even the And as I'm RFP activity managing of shots-on-go U.S. or event in just on activity the volumes questions then potentially think building building solutions of Higher-Ed

Stephen Daly

have major as we've next so technology activity. everything our difficulty talked key we year, your end the in and stack activity with up, this maintaining driver is that The the pandemic and that for visibility the that. about own that was around Yes, year into hardware of right, lot of point a

I to much more institutions that think it's going for become your on their point, do own. to costly to

I find factor is in the tight think market ability the Terry there to that and talent manage labor the plays other to that.

– those learning for systems know system. see – all the are management all right, fact good onto to legacy good So us those think Canvas are from it's those pattern a you I move increasingly away that

activity is our I that I answer XXXX. showing RFP do We think already it's significantly So as and pipeline yes. up data see think those short is, catalysts, shows from up that in

Terry Tillman

think seems like right how any do because the much it's next mean, you. the but tank how I in worth in opportunities about years, out, couple it of you It's now? left really Got incremental expansion, of Okay. And you're half, again. Dale, things Thank you year-over-year it. is the optimizing or margin impressive gross just second it terms over mentioning called more more even in

Dale Bowen

It's a Terry. great question,

it team of numbers We pleased with done engineering past gross result are the addressing customers with really sure this really that team team timing that the variable the are is years. make of environment, the have, the and to a over the have. customer support It's our they that couple nature and our hosting is we of margin and has work and questions they the the

for the where As with expand to margins in are and we but expect our yes, that. gross to us maintain we this There's the at we're said XXs, room upper be we pleased point of really we there, in past, time. still

Operator

with of VanVliet line the BTIG. from comes question next Matt Your

Your line is open.

Matt VanVliet

sort looking and two on years you're the the have features, catalysts additional job pulling additional maybe functionality, bigger potentially that look, want at because demand nice little LMS market we of these additional factor this now we curious Canvas Terry's to one from choose we decision still Catalog overall and are but guess driving to the for and projects quarter. RFPs make that question, the Studio of or bringing taking K-XX saying, how or of, the following need that I add-ons? forward, but those for that modules, LMS and in Thanks out, to is now is to have opposite on were assessments for upgrade another add-on Ed, guys. bus, the afternoon you bit on angle question, Good these structure a and maybe are in maybe we or the Higher scheduled the have Hey!

Steve Daly

selling the to a to benefit definite process. it's to third entire Matt, out high we're differentiate you and is when core technology, Yes, because gone I parts and us. have of our which far foundational, still than we're just contributor is our the customers interesting in from a rate. that these But product it tends over LMS a very low talked win as think opportunity, the as about, new in fact have more one platform be as other I've a logo The the customers that penetration know market

optimize go-to-market around to of for ourselves opportunity some and cross-sell existing for us to existing the be quite that motions base is accounts. a growth cross-selling So kind as going into driver time into we

So in contributes us, it for really areas Matt. both

Matt VanVliet

And that, another the Obviously for and partner various side lean confident more and you to viable on leaning just maybe partner, the a you the of great Indian helpful! partner being economically into market. less still then maybe direct identified do off about direct partner it Are and partners little you're map changing versus it's in to enough program? be great announced a sort the the the guess international bit. so. markets enough start as road program pretty digging Is to very where markets in seems I being what maybe the on even thinking large Alright, or

Steve Daly

in international characterize it I markets. tremendous I a as, got would Yes, think the we've opportunity

markets many at that hasn't look direct to of of list as the we’re we lowly after we Some penetrated. still go share still were those going believe, of potential those, and them changed, very and market in each

our in most a are of one penetrated been we've think I XX% the while. for in we is markets that

immediately, that lot a to would still for just So investment opens because direct perspective. and efforts. what out in we of us government growth of on us that direct business, the channel top opportunity we're required, doing business it a of our to come but existing The just not of business contracts. do do is relationships, up opportunity channel grow We markets with from incremental It’s entities. the incremental partners existing have that's for

think that in I is those – don't our an and direct are definitely don't come that markets. I already channel and opportunities not happen either/or to know all catch you for So it's by,

Matt VanVliet

you. Thank great! Alright,

Operator

Instructions]. [Operator

line comes question with next Your of William Stephen Sheldon the from Blair.

line Your is open.

Pat McIlwee

Stephen Pat is for Hi team! McIlwee tonight. This on

deals, know I So, was just it. of minority ask you of clear stimulus a your use the had to in but still that I wanted mentioned

As season, through from that through you've seem if any an seen selling support work work that have as on spend the peak all update for and can been to that, If have funds? there used? specific the you've benefited at provide pick allocation you seen how those window you that we up products

Steve Daly

Yes.

those from. is, function knows One there the a them to from from district aren’t came for always a district a haven't It's so deals not the that came will they're other of district that just not of bucket it's to a – it's funds where spend. state, a you lot clear a ESSER point that two the of get fund, yet, and here's You funds, spent those know to and can where lot things. you the funds funds just is

a a I QX. The very available, response years funds they digital – in be is feel ended tailwind that the last so these high and your couple K-XX the will would of states you question, is a a accurate space it this are what But these kind are in year that confident know each Pat. education of to next for So in that cloudy there in detailed an say of figuring them. transformation little little is looking at and for of just budget each for us districts is strategically priority the we this of quarter

We haven't flow yet a lot through. seen of it

for lot a powder still if will of there's years, of So the couple you we believe. next dry

Pat McIlwee

during ask, has additional of Got but quarter, you wanted an to recent trended? you provide of update continue a on some has on cross-selling Canvas then signing just as ability modules the product to And your to your I Credentials for also, success follow-up, as out are more the And build set, touched it. of example some those able attach you reception how your been? additions how at to like product

Steve Daly

you Concentric I new nicely the but early Yes, that really pipeline knows acquisitions, on attach each always the provide will to year attached couple in examples that the know those one and a a reskilling student. interact wants opportunity it. and Sky sale. certificate go of about it’s excited for base and degree, never a Canvas growing how from the strategy or those still are campus of the market were address our It's education days Impact students logo the the of my is we with able the to that And the perspective, Credentials most remarks, – maybe a and know a degree-seeking institution. been, it's we've – the with to Catalog got market again, come customers you Every customer to additional products, used Studio, prepared in commonly a the traditional institutions strong four has credential market, address being

expect as landscape we're the big growth Credentials begins investments the making, and drivers So I for us future education shift. in the be to to that Catalog

Pat McIlwee

it! to hear. congrats on great Got and strong a again That’s quarter! you, Thank

Steve Daly

Thank you.

Operator

Your next Brent line of with Thill comes question from the Jefferies.

open. Your line is

Brent Thill

help great Thanks. and the two just you're outline to the in, or of how talk going? finding if maybe drivers? that's you three international Can now can build are that markets the top you out Kind what of traction

Steve Daly

Sure.

Both across Latin higher primarily whereas know K-XX We you the in The quite targeting are markets easier K-XX America. it's performed – market. are, than we're for higher well past the APAC strength and this saw markets. that we education We very institutions to those seeing is and in address education fragmented quarter in strength and of those particular market very markets. us

had good stood two quarters. as Latin So but EMEA, those that we quarter, progress past across good both and in making APAC growth feel about the America we're We markets. strong exceptionally those this out

Brent Thill

in you to piece that at, is give of maybe you way of flavor on kind then us us of at. a or you're you're there cross-sell? that don't What's Can the just baseball of And what this you’d a terms is in where which where that, do you're I the level? [inaudible] hole assessment, for what reference and the describe course. kind on know think this next the supercharged continued golf brings

Steve Daly

would we're I Yes. early innings. say still

measured assessment One that. an driving the, I in think there world the basically have really in is of that two far you is perspective inning the with is, waiting is third assessment until are concepts. from the move to students your in second year risk there’s that maybe or we're recognize and by know mastered if the that formed things as to number of a end do kind an success as certain of education the

right, the so at track way be institutions And to the throughout and on with is and able more assess that you really teachers bubble and it's the tools it or sheets semester. order that. mastery that, to requires – and to pencil and of a things predict looking end are more student know the like In you're paper, a that whether hard to if do show year at give to doing not

those integrated you of through automated with to be that's place that is the have have to do Management able System one an well. having technologies system that to online So that Learning in

seeing Management, Management. perspective, good mentioned great And just from a seeing digital as that we're we're product transformation. of line the Assessment Integrating assessment – also we remarks, It’s business not in but Learning growth so, part in our like

interim to these and uptake the that in see continue, we assessments we is formative accelerate. think As going

will I indicator again, our faster that kind early faster we're management early as we be innings, think we'll growth of assessment technologies that MasteryConnect penetration So that get the of and like space. in system, see

Brent Thill

you. Thank

Operator

I'd turn questions. CEO, like the call back closing further no for to Daly are remarks. to There Steve

Steve Daly

highly partners, thank Well, execute to vertical your our impact software company. proud has profitable transformation We our performance I education. customers, building of of public on digital and shareholders forward growing on our support. look ongoing our significant the to strategy and our as employees to year a continuing wanted again We're our a that first just for in during a business

next for you today, see we'll quarter. thank and joining you So, us

Operator

today's conference concludes call. This

You may disconnect. now

Instructure (INST) 2 Aug 222022 Q2 Earnings call transcript