INST - Earnings call 4 2023 | 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 Fourth Quarter and Full Year 2023 Earnings Call. [Operator Instructions] Please be advised that this conference is being recorded. I would now like to turn the conference over to your first speaker, April Scee, Investor Relations. April, please go ahead.

April Scee

Good afternoon, and welcome to Instructure's Fourth Quarter and Full Year 2023 Earnings Call.

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

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

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

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

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

included You can press reconciliation GAAP is of release, the our find non-GAAP the to Investor of Relations in which website. section our posted the measures to

to unless nonrevenue me the non-GAAP today turn are that, measure state call GAAP that we the the over discuss of financial is let measures a All we measure. With Steve.

Stephen Daly

joining and XXXX us April, all full our thank you, and you earnings fourth quarter Thank for call. for year conference

for in set fostering that milestones like on driving close to align we ensure shaped call the achievements growth. excited customers. begin In newest key members. and our the as to our Parchment team and successful extremely Instructure's early February, separate a our by to the innovation. I'd in seamless I'm earnings executing Parchment strategies acquisition are XXXX journey a future for the of and we With in offers for reflecting opportunities resources stage extend XXXX will Parchment interim, begin welcome also the and delighted transition today's growth warm to go-to-market operations to maintain

more Peter than each our and efforts; to leading experience go-to-market X COO, X scaled our accelerate new bringing and and decades organizations: unite with leadership executive platform in team, to strengthen President cross-sell of our continued We Rachel success Lysaght, to leaders, Ball, CFO, Walker, Officer, Chris strategic grow technology CTO, to expand our Orston, Experience platform; expertise; customers. our efficiently scale Chief to relationships market and and Customer deepen customer public elevate web our programs with our Michael our

to continue also logos; year-over-year as other artificial intelligence providers recognize we product of XX% of with and feedback our have refine continue roughly network X,XXX with and AI for to million platform, beta user to are base; developing the that the development and further value. cost-effective nearly our loop members, strengthened will and amplified teachers, QX, entered engagement. moat our of impact year-over-year, We and community over enhancing in customers has customers, immediate the we drive innovate across where up feedback power positive we more more to continue effects, X% our power our Instructure as partners, customer a can than edtech and XXX nearly win highest solutions innovation, including our up up as massive important X investments than students safe, provide believe Several new been XXXX ending XX% solutions leaders. We further competitive year-over-year

M&A dedication ESG highlighting value delivers a and stakeholders. all enduring our the commitment road served principles through our Parchment. market that and We edutechnica our higher our executed and map credentials our to social environmental, inaugural our ListEdTech strategy continue expand accelerate position to markets both to access gain new data. budgets in We published expand the live according education share acquisition now on of We our and sustainable report, for to fostering serving our K-XX and and to market to leading buyers governance to future website,

our heading detail provide strength drivers year-over-year, and more the adjusted full of We the results for execute demonstrating of mission pleased and to the to will and opportunity the we of efficiency be X.X% to we high-level progress revenue, we the model. review these provide financial surpassed guidance and targets first company And drove and made continue could our promises discipline. Peter the XXXX. In XX.X%, our results, target the delivered our and then $XXX.X year in long-term margin the discuss highlighting business and overall, priorities. operational outline leverage growth dedication demonstrating established At XXXX in this quarter, million XXX including We the the will quarter in XXXX that results we of have XXXX into on our X.X%. unrelenting of EBITDA best-in-class we with margin full expansion points time, and our and a demonstrating we when same XXXX, now model. not long-term the up subscription we basis IPO-ed, quarter fourth ahead beyond. I fourth of have year

results generate strategy, Continued high-growth execution comprehensive reinvest from the advantage and exceptional strong were and competitive behind formidable a macro resilient initiatives. From by durable. markets increasing our our cash platform end and perspective, our driven remain flow we

the and the available this an learning come. K-XX education fill term, around we be to the education growth, learners impacting higher continued cycles us stimulus funding nontraditional to years this This of customers As in markets is buying nontraditional resilient our opportunity to in This market long continue expand educate expected toward need. as by have temporarily significantly they looking quarter, sales our elongation last are long-term trend see help believe mentioned available markets world. season. serving more higher we result students an to in to is to we growth but to in and is in accelerating

in as and LearnPlatform edtech our their actively acquisitions from management EesySoft our outcomes them. We have demand increased evaluate anchored software solutions, seen interest and districts by investments positive

the continue in will segment. this classroom key to drive position in growth solutions and Our suite durable of market

key of our quarter, new platform drivers, acquisitions, drive key the platform increasing progress and operational how logo expansion share the take our including competitive to cross-sell of X efficiency. strategy highlights driving and increased rates offerings, continued we continue wins and Now we'll from

First, more in than we breadth and of bake-offs of portfolio new share the competitive winning bring strength fair offerings. our continue our to to logos, due important

a we have continue As result, been able to driving growth.

of followed a lifelong educational the with other established learning to we effects new George quarter, positive globally During logo This university Canvas helped University, professors already RFP journey. in a academics. the and the from public of high Instructure we University quarter, on outdated largest its Instructure's competitive with network our the top with win The rigorous continued achieved cutting-edge for win. Internationally, U.K.'s with ranked physical the replace for familiar significant focusing and institutions in systems GMU platform derives D.C. Manchester, process renowned Virginia, percentage the win the the and including the dedication legacy students during XX university Virginia our in secure Maryland to underscores modernization. takeaway presence Mason largest

to an comprehensive a leader ability This that with platform offer a learning displace the us relationship position XX-plus-year sale. a landing This in other region full Our their the and solution larger, university this a also entrenched size could given competitor. enabled to illustrated case win are universities for lifelong how platform in lighthouse them flexible be win in a reputation. we will also as with

existing customers. with growth drive to continue we Second,

are base the in installed opportunities into bookings. excluding LMS. our billion facilitated modules base Parchment, estimate additional we positioned could by of a platform global workflows since instructional is well $X alone. year-over-year During XX% cross-sell existing huge increase our reach XX% customers We in an quarter, customer that, saw cross-sell Instructure cross-sell to X,XXX-plus of

During adults university their hold higher This requirements the the aligns credentialing across target a includes of Board Their win system nontraditional in of in in with a a the all in Louisiana. contract the or education system unified age we XX XX% history having of and our campuses and public industry by global learning some higher strengths Louisiana which university degree for showcases digital quarter, Regents, credential entire represents broad toward reflects won XXXX. The X with trend serving skills Louisiana largest systems. degree credentialing, deal prioritizing working proficiency credential purchase roles. enterprises easing our value with of

meaningful Instructure deal, Although opportunity this credentials is validate we Parchment ahead. it see the helps also an

that over Cabarrus to Carolina other win due few pivotal We're tailored North approach schools next the months. streamline with legislation North of from win a legislation. XXXX half new had This with North win County K-XX Carolina We their able North addresses with significant reference first for state Canvas the quarter a will Cabarrus of during compliance privacy chose long-time and legislation in This customer the Instructure a Carolina. schools and the edtech also LearnPlatform the state them during data helps be evaluating each with comply help began as Carolina. to to

continued partnerships strategy through power progress platform and the Third, to in of QX innovation. our acquisition,

announced beginning learners their closed bolstering our reach we in and as Instructure lifelong scale engage Our and Platform's at journey. acquisition QX of learning Parchment throughout the of was Learning February,

process Our combined educational and solutions key the of learners learning for and educators evidence streamline during will facilitate transitions.

billion strategy our and with with reach estimated a nontraditional addressable learners, customer high-quality opportunities our expansion growth accelerating relationships buyers new to base with stream traditional $X also fresh to addition In an our significant market into potential. Parchment's bring of revenue total

for up year-over-year, the our end and is partners continues XX% partner ecosystem key at to selling differentiator grow it more in us the process. mentioned earlier, to a As than XXXX, XXX of nearly

with Our Instructure and study demonstrates virtual AI power ecosystem and AI of customers technologies to the bring University like the our Learning case Platform quickly recent Clemson safely. new Praxis tutor to

analytics. launch organic half to We during content to select learning the of search, through innovation, natural-language-driven semantic continue of expand with our year to the capabilities course creation, and and platform AI-based the help including second customers capabilities

cash also putting important prominent platform win and enabled schools. And flow Simply investing will detail drive We've adjusted that ability generation our comprehensive their nonprofit to third-party homegrown could adaptable, and our durable ability learning enable cash through to with assessment. organization shortly. again quarter We XX%, With discuss a enable growth. leverage integrations the of in in core enhance organically a Peter should to long-term and and K-XX operating modernize put, Platform us adjusted EBITDA quarter support to M&A which more big continue teaching drive at solution strong them Learning finally, in our customization, exceeding development, innovate applications their replace results and accessibility, accelerate both had during across and to Canvas margin free through needed gross their and business. that conversion, on margins flow Instructure's with a to this XX% once best-in-class delivered approaching Instructure more integrate margins the demonstrated the

landscape. educational have and look address today's advantages that we ahead XXXX Instructure the the unwavering beyond, posed to intricate As challenges unique Platform's confidence Learning we by

will embed growth finally, existing for technology as all strategic and of growth markets; Instructure key AI within will other the centered foster third, our ecosystem to propel we second, critical ensure the go-to-market new across assist at success, international new our further inside to we our and accelerate edtech nontraditional enhanced platform durable help increase Our opportunities to create classroom. infrastructure strategies, leverage and forefront fourth, student in remain learning; remain segments. moat customers learners; and drive on growth first, outside focus displace function revenue Deploying opportunities; several platform meet innovations efforts these believe and harness teaching both and and needs our to the of technology and pillars: legacy cross-selling to

as confident am and and business into we I summary, optimistic beyond. head about our In XXXX

to talk about March join turn road discussion. I and our XX will talk We we now model guidance. the Investor to hope long-term will our for our financial during Peter more will Day, and us financial and over results this map you call much about

Peter Walker

Steve, and Thank you, everyone. good afternoon,

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

reconciliation Our results, between GAAP found a release, non-GAAP GAAP the financial section of Investor can Relations be earnings results, in and along posted our in which is with website. our

of headwind we We're was delivered the revenues increase was for the institutions to impacted results, an basis XXXX, a very $XXX.X continued million. platform set annual of around This we XX.X% a over as which XXXX, record world. new XX by company these points. proud share of choice of gain due During currency which for

adjusted a We over a increase achieved record year XX.X% company full adjusted EBITDA of exceeded was XXXX increase basis expanded XXXX. XXXX EBITDA delivering related free cash over XXX margin a adjusted approximately adjusted driven partially flow $XX of million, also $XXX.X XX.X%. by margin million, XX.X% million unlevered for We early new our This XXXX. XXXX. points, a EBITDA of collections $XXX.X expectations, to

Turning to now QX.

and growth revenue strong of combination margins. a best-in-class deliver to continued We

As driven currency. year-over-year. up point Steve RPO will a impacted statement, over that mentioned, driven we was The future revenues results basis share performance And services of markets. Deferred RPO accounted of we revenue our of accounted to foreign impacted fourth to revenue remainder later revenue. In headwind please X.X% a start approximately revenue benefit a impacted year-over-year. the support total primarily by who note headwind. Subscription by at points million, XX% stated, are distribution next counts growth The currency which growth international $XXX.X for of services non-GAAP at $XXX.X revenue months. Professional of year-over-year, million, deals quarter million, of expect basis. revenue of minor increase of $XXX.X X.X% on X.X% revenue was quarter higher or otherwise XXXX billings generated down quarter and rate fourth XX% end X% discussing decline $XX million, dates and expenses, XX year-over-year and $XXX.X the channel our quarter fourth at as were operating XX This the quarter million. year-over-year, at by up recognize all Remaining fourth international for by revenue currency on we and end with references basis was and from our unless which the evolve headwinds. the the by our lower XX% was is obligations, income other up was XX RPO, our fourth an X.X%

XX.X%, very basis efficient cloud points that support demand. our customer In strong to structure the and remains gross million, given margin our representing a year-over-year. fourth architecture gross of meet profile quarter, up flexible $XXX.X margin our Our was scales XX profit gross

margin, fourth Operating revenue million, of Our operating $XX.X as remains were year. Non-GAAP income improvement continue an margin we to as expenses operating points leverage scale. same $XX.X the the the points basis were over EBITDA over efficiency in year. EBITDA $XX.X per year. income year million a operating strong, $XX.X was a prior $X.XX $XX.X approximately XX.X% of for XXX XX.X% as resulting fourth adjusted of Total business per prior percent the an million expenses was in improvement Non-GAAP our demonstrate operating a for expanding in basis an resulting compared power of allowing million, share of prior model. and million, Adjusted These XX.X%, year. basis us over margin, improvement points net or was quarter a the quarter results the ago. non-GAAP net share income in quarter to of or $X.XX XXX XXX prior

Turning in $XXX.X balance fourth restricted cash. prior increase of and cash statement. We year. quarter ended flow cash sheet an million million $XXX.X is equivalents and cash, with to over This

fourth the cash cash debt $XX year $XX.X fourth in than billing generation cash to Free flow was expenditures. in is X.Xx compared by terms Operating was of million our EBITDA, Our leverage fourth the capital and $XX.X XXXX. favorable $XX.X in to point net million ended million strong quarter We the driven low fourth lower of the to the year-end quarter full net with in a XXXX. flow of quarter compared XXXX. quarter million adjusted

of adjusted free quarter the unlevered to in the quarter flow Our $XX.X cash was in compared $XX.X million million 'XX. fourth fourth

with company and high-quality acquisition cash As a conversion. of strong flow is recurring our Parchment Steve profitable closed mentioned, Parchment. we revenue

an our M&A drive strategy communicated, we durable growth. As of long-term have to is consistently important part

existing facility. a and we'll X financed we credit Parchment. We under of incremental the of million completing integrating the similarly debt last execute acquisition acquired with integrations years, and record strong We $XXX our cash have have X companies, confidence successfully track in with

Our be adjusted net at expected year-end to approximately debt is ratio X.Xx to EBITDA. net XXXX leverage

continue cash We delever generate expect flow. to rapidly to adjusted as we grow EBITDA and

and year in Our M&A organic priorities remain growth, a for and balance by unchanged will guidance allocation capital for since call conclude QX sheet. I healthy investing full IPO, our pursuing providing revenue XXXX. maintaining the

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

when results. our Parchment year of results, of closed, includes full X includes timing guidance first months and XXXX the Parchment months of quarter our XX Given Parchment guidance

quarter a at to we revenue of For first $XXX.X growth rate the range XXXX, the XX.X% in of million million, $XXX.X the of midpoint. expect

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

single the to year for XXXX. expect rate million digits to $XXX annual recurring the we of recurring grew the revenue. best XXXX, predictor For XXXX to full combined $XXX forma in midpoint. we XXXX, pro revenue growth or of revenue and annual business range that high the a expect Instructure view future It's growth revenue in to XX.X% important high at as Parchment similar We XXXX million single-digit of the and note

the expect XX.X% at million the year full basis We by range an margin to of adjusted midpoint, EBITDA $XXX.X EBITDA expanding million, margins $XXX.X adjusted of in XX year-over-year. representing points

adjusted year unlevered of earlier. is to a I adjusted of to rate million when million, that range the growth for midpoint. XX% mentioned rate in growth collections of full XX.X% the expect related at This We $XXX.X free the $XXX.X XXXX flow million cash XXXX in $XX

expect Parchment. the years to different XXXX the unlevered prior cash of slightly of due than seasonality We free adjusted be to acquisition flow

X% The compared and X% of patterns. first to XXXX lower XXXX of second higher, when should XXXX be half be the half should

inaugural you concludes share on and our our operator, of we Steve As At we'll time, mentioned, the you targets. That will on questions. remarks. open this where our prepared hope Investor for midterm please business March the of us future XX, new all join Day at financial line update

Operator

of question Your Instructions] Baird. comes Joe the Vruwink from from line first [Operator

Joseph Vruwink

really cycles, deal ed centered within clarification K-XX a Maybe and higher that think is you're the kind The growing primarily business? just we slowdown? commensurate seeing ultimately that longer about And impacts the should of on to and not growth start. faster a discussing still

Stephen Daly

question. good higher to your still lot the And comments a K-XX, about a we of in feel buying backdrop when this season point, specifically were there. out Those it's Joe, ed there's about in good dollars Yes, globally. particularly ESSER

And is seeing question. in we're is short to so that higher yes the slowdown The entirely answer higher ed. ed your

Joseph Vruwink

around and a also how And and about made you more actually coming that? growth North you acceleration, then future? learners you can guardrails a how how nontraditional something higher That's platform as single-digit the think, put you the the the evolved Okay. you can some growth faster. certainly the helpful. given better has of be the kind ed that Parchment, and in business Do the being America comment that's think serving high maybe this Growth of of all-in I should accelerate, can framed you're past, talk think incorporation be of platform and that it out When in has grower. faster today. evolved you reflection

Stephen Daly

Yes, growth. where just as -- -- part and dealing is comments tenor much segments the the question. a Joe, into traditionally those a my is than answer with addressed like traditional that ed punt going to the I'm Day one, macro higher we'll our on we available of education. to have we're about today larger challenges of it's number I where driving is as of few what's detail is they as more lot as What a far the through till Investor -- go learners good declining this going enrollments, at

in higher we'll for context just ability faster. ed backdrop worldwide, you of that's a growth the -- good we to Day much kind about not kind in that. it's little detail more more growing a lot give TAM. and into lot And is It's a But Investor our of that And so a much in it North larger the a accelerate America. feel go

Peter Walker

at continue single-digit pointed we revenue. out, And believe add, but cover long we'll we'll grower low high just a I more double-digit Day, detail to to terms would term, in be Steve Investor that, of as

Joseph Vruwink

a I will few more in wanting Great. around and forward look stick that to update weeks.

Operator

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

Stephen Sheldon

guidance revenue you've single-digit expect I think Parchment? this Parchment high walk through into for stand-alone what you and layered for you year. that both for can noted growth the Instructure First, you

should Parchment then And for the fair? the is about implications for So that year? adjusted think we how EBITDA

Peter Walker

Stephen. Thanks question, Sure. the for

our businesses So year-over-year. our growth M&A -- approximately not organic inorganic broken because because is and synergies with single-digit, critical we a points. growth G&A. will high shared be will growth in question, high part in that expanding strategy you margin margin we've rate this single what single basis XX to model The once expansion then provide year-over-year assumed fully revenue 'XX and executed. XX% combined of and that continue the your to of margin We're growth in high you out affirming and executing as in we this digits the long-term double-digit we've are so really Parchment those is rate And XXXX that those terms in in between ARR XXXX, the synergies low within of the a digits by the grower. And synergies and on the been rate additional year, have pointed for X fact view

Stephen Sheldon

it. Got

potentially few roll in traction to out K-XX? ed you're about and that market? LearnPlatform And years as guess wins are an thinking you've potential the the capabilities seen higher you that success its in to next expand about I just sounds with then opportunity How given the a thinking see over Is Okay. continuing the like K-XX. good that and you're it follow-up, to

Stephen Daly

a great as asking Yes, well. have ed of lot question, and our question it's higher customers been it's a us a

the is have there couple can over as looking their demand almost the at of the years. So -- last grown there, as exponentially imagine, they're particularly states you software

So is There yes, are demand -- it there plans. is there.

be to expect in year in half after the go next opportunity Stephen. to the years, over able that couple a second solution We of be beta to of this with

Operator

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

Connor Passarella

for Connor the mentioned, with you start one pillars want of I international. just Passarella growth is to This Terry. on

think this internationally driver share this I'm you how gains as curious direct a fared So growth on I the year. both pretty plan how has guess, just market on partnership work and very channels it year the to, should seems like seller we channels about international well. maybe performance and

Stephen Daly

going there on There's brought up. few that dynamics you Yes. a

lot really about on First are -- for that University we out successful. need international we been of case feel the a talked we need, taking legacy all, position, the particularly remarks. when we're Manchester of and The very platform institutions next-generation prepared of our Direct's that about technology good a

markets going have actually our in U.K. as over with services the the particularly of And own market-leading markets the Zealand well and as with -- and We're seeing dynamic our to in we there the as to New comments, these be we're -- Nordics. and We the The so shift in. Ireland we're down. the over a share services program, direct from in our emerging them. We've short driver, some position Australia is, the international per that right in to expect success channel playing growth emerging term, doubling little for those recurring both brought in fewer that a the rate dominant in channel, the we'll deeper with and it's partners level. some bit a thing going the and take earlier actually and in and in services, the long-term some in short for growth. depress next markets, new between term. shift leadership the to partners growth you'll that a see it But channel We're

Connor Passarella

their learners. Great. for first I strategies to conversations around implement on mentioned are institutions follow-up. Wanted was customers, have a to to with of to refine in something nontraditional this your And terms the guess, of there before we Or Helpful. quick the that of are just cohort term? most sophisticated more administrators immediate some continue that guess before then in that onboard? get looking I movers to broader we more, the get will kind jump

Stephen Daly

early early opinion. days majority, question. great We're that a of my it's kind Yes, in of at

early at seen rates. reach now. every really the grow our to coming State adopters, So conversation lot now those in nontraditional we're up ability and almost It's of it have some that And starting University a exponential like Arizona more. we learners customers see shown those we've the longtime have to

be strategies early to driver. through growth. we -- as of years, kind their see we it what start that next market to platform good make couple expect and The I work they about they growth looks these ought of will that So like, decisions long-term some as a

Operator

Your line Needham next question MacDonald of comes Company. from from Ryan & the

Ryan MacDonald

it your you're a expected from me I'm growth wrong, in this of bit Steve, lower correct year. comments, like -- little sounds Parchment talking if but maybe about you're than

could there's decisions. new As -- that and the business delays We the versus that that's the some ] been sort or all, obviously that know Parchment perhaps prior something be that's of [ that? I think in causing what drivers at financial with forms FAFSA impacting about of Is delays maybe year expectations? your this new applications maybe

Peter Walker

Ryan, thanks for the question. It's Peter.

rate in and So We are ARR have in versus is And only created what businesses all months just on of of would not in XX double-digit for XXXX. Parchment to in we we terms go and 'XX of back terms combined to shared growth the growth focus XXXX, what maybe the growth rate, is equal. rate. our XX months view that's a

in Parchment with would you line we you in of expected QX So is where to be on shared we call. it to terms what is say I revenue what growth on based with

Stephen Daly

clarify not yes, growth, Peter double clarify for just -- digit. when high said just And to the to single ARR digit

Peter Walker

Correct.

Sorry.

Ryan MacDonald

Okay.

high single-digit combined So for All the business? growth ARR for Okay. right.

Stephen Daly

That's right.

Ryan MacDonald

Okay.

terms funding conversations I a allocated? we're shifting as Are of of X you going And ESSER the benefit in into to is of the spending for that you you in all with having order areas a of favor that the at budgets any reprioritization are In prioritization bit finding obviously now seeing K-XX, maybe K-XX for guess, LMS be allocated months mentioned How that conversations there. down ESSER funds? early that, core on spend is maybe of in pecking on directly the of sort those being final, 'XX? more

Stephen Daly

months a lot lot these that Yes, question probably that a nonrecurring. they recognize actually end is X a of cliff the a of because that over that federal this funds, they're seen fiscal at yes. coming year, the It's allocating towards these we've year the trend the last of

efforts. development we see And training, it so going implementation, professional towards

we is of like any it's see what implementing backdrop. creating nice LMS. It's barriers new something So to kind removing a a actually

making have the from money Although we enduring future. long-term it as that when with seeing they ensure us. really the nice we them, through appropriations process these for to go to the for in state they're But legislatures backdrop a the we're are sure that pay

to the -- would those we're seeing they're to away. that try of say thing is starting that they're have something to ahead happening I other do that's go there when going dollars recognizing to get

in because at and looking interest And so lot things to term. we've seeing the got they're it we're Learn our management and saying, rationalize Impact of a longer edtech some okay, in solutions like

towards And going seeing are technologies like of so and Impact. some those LearnPlatform types we dollars

Operator

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

Josh Baer

Steve, if broader, revisit confidence higher more about sales in could temporary One is Steve, like lasting and an talk you for wondering that one and longer the issue. the giving ed not for what -- cycles elongating are just or execution just you those demand Peter. impacts demand

Stephen Daly

when Yes, activity just great concluded, at higher the RFP question. we particularly look year had or ed activity, I'm Josh. XXXX. look that RFP at year for the since when glad highest and the you -- we we The so asked pipeline this we it,

-- and how around of what that next-generation going like. So there's conversations those a to that happening look lot are platform is conversations are

we year. about going on pushing the they're share their show we latest -- good The pipeline. It's report deal feel that to but out And this close again we not dates market and continue away. are So cycles share the just share. gained the those, out win of stretching market the are state that

to good So those we how positioned close. feel about in market for deals as the start those we're

Josh Baer

about -- here. the wondering margin, Okay. Great. some you sources already And from see efficient, then, of leverage where XX%, company XX% you're this just talking just so very like largest coming wondering that's into Peter, of

Peter Walker

Sure.

the for thanks So question, Josh.

say investing disciplined allocation prioritizes we margins. So growth I'd expand long-term to approach have durable a to capital that the revenue allows for us and in

So to a going going how definitely I'm with forward. that around execute coming against to in continue we're framework

expansion think does of X come margin in about. can probably specifically I terms think In you future, there's from opportunities where the

efficiency. of hosting that be and I scale optimization think in our would first of platform, be terms and would

our already the is in lower-cost the expand it's and to Michael platform. And new in CTO us here. with have opportunity second continue mentioned, focused for opportunity really success days great this kind to then and hosting terms a early what of on is Steve really Budapest, our both geographies. of is these We've of had As footprint we opportunities in the onboard, in

Operator

Your comes Devin Markets. next from Capital of the KeyBanc line question Au from

Devin Au

I Maybe of just also to that get more stretched deal last cycle ed. or out so and kind have perhaps another deteriorate cycle you higher on kind persist longer And the you quarter? clarify, the environment environment expecting of challenging even deal than 'XX? in difficult see to did more are selling selling question the in

Stephen Daly

the we higher hasn't in international seeing We saw that are worse, still those it elongated similar ed characteristics. we QX. for it of cycles. exhibiting got But kind Yes. our little We -- quarter large be far saw it fidelity more as to in saw as sales see what was We but similar last a international, gotten QX quarter. so we was that tends

Devin Au

that contributions business in one a is Got it. meaningful give see like a beyond kind traction. 'XX, time is an that on Or us LearnPlatform. It driving just at finished then 'XX? update seems Could That's more And when on LearnPlatform that of how helpful. more of to we look And revenue? 'XX you just we gaining and could business frame?

Stephen Daly

Yes.

well. bag some started we we pipeline into -- we're it put We've build to the deals been they're saw as seller's is kind performing business of the seeing good XXXX. in So good to and and see able selling, -- saw out close yes, we

of to growth area expect mentioned remarks, in we our in the of So even do as bookings accelerating saw growth XXXX. our continue it we with we cross-sell saw QX, in was growth one be prepared XX% bookings. in areas. fastest We that And to cross-sell

So -- overall that's rate. one products of this growth just above the that to is contributes that company the

Operator

Macquarie. comes next of line Havemeyer the Your Frederick question from from

Frederick Havemeyer

out from wanted enrollment revisit institutions in there just Or seeing, trend well playing generally, overall deal higher through software education are enrollment platforms? landscape trends? the higher seeing sizes as I how education Around at you [ all education the to any are ] higher here. demand impacts their for in you're

Stephen Daly

enrollment our we're perspective for They've down. our -- rates. haven't change seen to The have the really hear seeing you, retention been what from from been years. Fred. is -- I The trends seeing, in good mean, Yes. And down it's we we're what a

good on trend. They're retention. world-class remain rates retention Our

having. degree institutions good a really to drive on is and we model come big recognizing catalyst on-campus go -- discussions bigger is really their model. it going the institutions that's the the we do a that's where and that as into more about an plan a into And our So dynamics. for to for driver for of this growth because declining, receive that of students, business is longer and student feel to do is some again, to, the we're part that business a they enrollment long-term how revenue for ultimately at It's that universities conversations What right? driver really get really institution? So the look a opportunity reach is more

Frederick Havemeyer

as seen to And With revisit have on growth? potential assessments well. XXXX terms ESSER priorities? are the area viewing K-XX masse for the into your here en K-XX And you landscape, of ranking landscape, as [ where an assessments wanted the you that I how in ] beyond and

Stephen Daly

Yes.

all to to ultimately, assessment We platform we both receiving they're a management learners and system, own -- opportunity. real-time We the learning well and and management delivery tightly assessment real-time from on integrate feedback the to -- with continue as content view of want the the of a be that so assessment from want how education. across that as have a get education doing teachers delivery bullish on

that And that we're in outsized outsized key opportunity go-to-market what XXXX to continue into year. And them for us. will that a the of to cross-sell. to to that's And in and go from our Day drive contributed Chris at some led of we've in learnings that growth to growth, still model. cross-sell It's growth so believe applying part Investor the that this drive taken -- detail growth long-term we more

competency-based business ed K-XX and higher those outcomes-based the more as believers over in learnings time. we ultimately believe moves are in we assessment higher So to can learning of ed, apply and particularly to lot a

long-term believe driver So for growth our business. we do it's a of

Operator

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

David Lustberg

how ask if I is for something of Any early about the raising you This is helpful this guess on more you the use wanted into more it use for something think think monetizing through specifically guys feedback you would time? plugged and think you that about I be some platform you're I offerings kind AI talk can justify over solutions AI in could the in mentioned Or launches? of it's that AI's do Brent. [ And Is on beta. you've these you to AI David the think that to during broadly, prices Lustberg do you join beta. guys received ]? have you to going future?

Stephen Daly

price along, half. I us this where as as and first learning working more But David, There's core we're analytics, we've to that of doing. that products, a got would that, the beta -- we are before the innovation so say Yes. bringing retain now and into It's language be others the to expect the mentioned of AI pretty will great those is are in prepared number you natural we're questions, increases. questions. those I as we can going again, monetize call David. as I features creation -- previewed believe a And -- far far and in got work win we're around we we be, go all as we -- there question, The get add-on. -- through beta-ing it good through that charge that piece we it in up. on do number a that search, course where for so but of well go helps for analytics an so again, and remarks

in made these can the and understanding underlying in potential progress fact, this cost these. In the months on we architecture and last each our cost most do privacy education don't the we necessary so X for hammer effectively, models of revenue we've margins, significant how gross that's

go detail we'll again, in into a So our little couple in Investor a weeks. of Day more

So hopefully, it, David. you can make

David Lustberg

may, there. the be a question And maybe just thinking Yes, second cross-sell we'll I opportunity. if about

are that different cross-sell. color on You like on guys some will products well give performing sometimes

talked I think maybe product. growing about assessments or maybe the it last quarters being ago, fastest was quarter X you

Just any wondering an be seeing great. any color on you're maybe impact. specific guys what That on cross-sell if drivers are there's you outsized can having that add and product would incremental

Stephen Daly

Yes.

do cross-sell And better sellers the piloted been marry cross-sell attribute our going the in better talked we of we're kind were bookings I growth what of and -- year. seeing We've for to the the from of bookings say has opportunities grown would we the that, -- we some do I out in -- changes of customer as for of and our books would perspective. think look, QX ideas so Chris a -- is, -- that actually I part kind we've get as -- making. He's we mid-XXs XX% some cross-sell. increase far about together of year, in of acceleration success to how that's and then

So we're problems solve and about say will and our pretty opportunity our we'll share cross-sell some ability of pretty more Investor that term. I those customers details optimistic for But with you to bullish in Day. the longer

Operator

from comes of line question the next William from Your BTIG. McNamara

William McNamara

such you're you deals for going When in would of most these from like the in on Montana interested Bill what for say recent competing you're announcement competition? them that Matt. the University that with set able win the customers the System, is you kind and to with This apart as are

Stephen Daly

Yes. There's education. K-XX One our both the things. is have a higher footprint of in footprint couple just we a fact and that and

from higher keep as you're lot we of as they school really that students simple state do into there systems, do possible? conversations high there's a when make go ed? particularly really How are talking -- So as about we transition how about

and Canvas Specifically integrated made for that easier in Montana some that seamless Parchment that is with them. had the technology University much more transition System,

they we sold And case. went really joint in so that -- like actually and in

far think we tighter for into as we of to more as as term us accelerant deals long bring an as portfolio, so our and And that's we that be winning as going forward. get company types even one integration of those going

already some of those transitions manage ability College to System, in seamless of our -- some And some those the of about then Alabama seamlessly. really in our about Community landed in institutions. had is we So Montana, it those footprint,

when the of -- that join It And our with. all the was, that choice. that to and how decision massive of a they into large were made Canvas to the those number user go the a has so from are ecosystem, integrations able they as position they as the played well had, which the and experience both that incumbents there, experience systems in partner of that that those decided easy community

Operator

from of JPMorgan. the comes line from Noah question Herman next Your

Noah Herman

XX% total now you mean revenue? above a expansion really see the should with here? to opportunity know sticking really space that Just the how for reached what mark are I that forward white it's -- this we sort international pretty the of But as you what with do levers referenced percentage a here year little think about momentum bit a of growth frequently. going biggest bit. into going expand I little international as

Stephen Daly

the the Southeast Yes. region, We've made -- countries. some developed the particularly of the of markets, Europe, some Benelux some investments Asian in Spain in and Philippines the

growth one will those those will -- driver. us provide So be

us continue to be biggest for in the driver channel. growth the think will I

we and almost public India, so some making have in in channel. Japan America we're investments the markets in that entirely Southeast Asia. of Latin And is a

where refine areas in the the the we next and little put our our years, are key we'll the arrow partners. as behind probably of a there few couple more kind growth those a strategy wood particularly So see around most of of

Noah Herman

years? And we in in conservatism I all? prior the about you mean, thinking any relative are of as XXXX, Great. extra philosophy sort model at any change to guidance there layering for are the And

Peter Walker

Yes.

the our expectation would So with point question of appreciate years. philosophy of say the relatively would midpoint for I is consistent range prior guidance you I there. as kind to the performance.

Operator

now over Officer, Executive Chief to we And call this the queue questions closing further I turn will our back Daly, remarks. no for have Steve in time. at

Stephen Daly

everybody, today. Well, thank joining you, for us

and quarter scale, to execution and increasing behind year meaningfully with due into enhanced we our Parchment buyers generate and our strong broader fourth And 'XX acquisition. the formidable competitive we high-growth initiatives. a cash by advantage, access our new driven head exceptional Our flow full to results reinvest were and XXXX portfolio

ability about map and to elevate and excited Investor learning our we teaching more a in drive March shareholders. journey XX Day, hope more ahead of so lot our share been personally results never the road to about our we'll our I've so And look all for there. to and see forward And and you

thanks. So

Operator

for your today's concludes participation, now disconnect. and you Thank you conference call. may This

Instructure (INST) 20 Feb 242023 Q4 Earnings call transcript