SALT LAKE CITY — July 31, 2023 — Instructure Holdings, Inc. (Instructure) (NYSE: INST), the makers of the Canvas Learning Management System, today announced financial results for the second quarter ended June 30, 2023.

“Our second quarter results were solid with double-digit top line growth, best-in-class margin performance, and strong free cash flow generation,” said Steve Daly, Instructure CEO. “Our teams continue to drive that performance with their dedication to our customers and the innovative products and services we deliver across our expanding platform. We’re as optimistic as ever about our outlook for sustained growth and profitability.”

Financial Highlights:

• • GAAP Revenue of $131.1 million, an increase of 14.4% year over year
  • Operating loss of $2.1 million, an improvement of $4.6 million compared with a loss of $6.6 million in the second quarter of 2022
  • Non-GAAP operating income* of $50.2 million, or 38.3% of revenue, up $11.5 million from the second quarter of 2022
  • GAAP net loss of $11.0 million, a $1.9 million improvement compared with a net loss of $12.9 million in the second quarter of 2022
  • Adjusted EBITDA* grew to $51.3 million for the quarter, or 39.1% of revenue, an increase of $11.5 million compared with the second quarter of 2022
  • Cash flow from operations of $25.1 million and Adjusted Unlevered Free Cash Flow* of $37.1 million, up $16.5 million and $20.9 million, respectively, compared with the second quarter of 2022

Remaining Performance Obligations (RPOs) were $853.6 million, the Company’s best RPO level ever, driven by a significant number of successful renewals as we reached the three-year anniversary of COVID-19
*See “Non-GAAP Financial Measures” for information regarding the Company’s use of non-GAAP financial measures as well as reconciliations to the most closely comparable GAAP measures in this press release.

Business and Operating Highlights:

• • Duke University selected Canvas learning management system (“LMS”) to power innovative instruction and learning experiences across its learning institution. The decision represents a significant investment in the entire Instructure Learning Platform, with implementations of Canvas LMS, Impact, Canvas Studio and Canvas Credentials to transform teaching and learning at the university. Duke’s Office of Teaching and Learning spearheaded this transition to bolster their vision of being a front-runner in life-long non-traditional education. With this deeper partnership with Duke, each of the top ten U.S. universities now use Canvas LMS.
  • Ohio University selected Canvas LMS as part of a major initiative to transform and modernize its learning experience and increase student success, switching from a legacy system. The university’s main campus in Athens and five regional campuses will implement Canvas alongside Impact by Instructure, a data and analytics solution that improves adoption and evaluates the impact of edtech, as part of its migration to the Instructure Learning Platform.
  • The Charlotte-Mecklenburg Schools, a long-time Canvas and MasteryConnect customer, selected Mastery View Predictive Assessments in the quarter, helping fuel cross sales. Based in North Carolina, Charlotte-Mecklenburg selected Instructure’s assessment tool because of the rigor and accuracy of the solution, which provides better insight into student growth.
  • Austrian-based University for Continuing Education Krems, the leading public university for continuing education in Europe, became a new customer in the second quarter, migrating its LMS platform from a legacy European-based provider. The institution recognized that demographics were creating a skills gap between the workforce and graduates, and that the average retirement age was increasing. Canvas LMS allows them to meet this challenge and serve traditional and non-traditional students alike. The relationship also provides Krems an advantage in meeting stringent privacy standards as a result of Instructure’s commitment to protecting student data and reducing the regulatory burden.

Business Outlook

Based on information as of today, July 31, 2023, the Company is issuing the following financial guidance.

Third Quarter Fiscal 2023:

• • Revenue is expected to be in the range of $132.0 million to $133.0 million
  • Non-GAAP operating income* is expected to be in the range of $51.2 million to $52.2 million
  • Adjusted EBITDA* is expected to be in the range of $52.5 million to $53.5 million
  • Non-GAAP net income* is expected to be in the range of $29.1 million to $30.1 million

Full Year 2023:

• • Revenue is expected to be in the range of $524.0 million to $528.0 million
  • Non-GAAP operating income* is expected to be in the range of $198.5 million to $202.5 million
  • Adjusted EBITDA* is expected to be in the range of $203.5 million to $207.5 million
  • Non-GAAP net income* is expected to be in the range of $113.0 million to $117.0 million
  • Adjusted Unlevered Free Cash Flow* is expected to be in the range of $207.0 million to $211.0 million

*Non-GAAP operating income, Adjusted EBITDA, non-GAAP net income and Adjusted Unlevered Free Cash Flow are non-GAAP measures. Instructure is unable to provide guidance, or a reconciliation, for operating loss and net loss, the most closely comparable GAAP measures with respect to non-GAAP operating income, Adjusted EBITDA and non-GAAP net income, and net cash provided by (used in) operating activities, the most closely comparable measure with respect to Adjusted Unlevered Free Cash Flow, because Instructure cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. This is due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including stock-based compensation and amortization of acquisition-related intangibles. Thus, Instructure is unable to present a quantitative reconciliation of non-GAAP guidance to GAAP guidance because such information is not available.

Effective January 1, 2022, Instructure adopted ASU No. 2021-08, Business Combinations (Topic 805), which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606). As a result, Instructure will no longer present guidance for ACR because GAAP revenue and ACR have now converged.

Conference Call Information

Instructure’s management team will hold a conference call to discuss our second quarter ended June 30, 2023 results today, July 31, 2023 at 5:00 p.m. ET. The conference call can be accessed by dialing (888) 330-2384 from the United States and Canada or (240) 789-2701 internationally with conference ID 1348899. A live webcast and replay of the conference call can be accessed from the investor relations page of Instructure’s website at ir.instructure.com. An archived replay of the webcast will be available following the conclusion of the call.

About Instructure

Instructure (NYSE: INST) is an education technology company dedicated to elevating student success, amplifying the power of teaching, and inspiring everyone to learn together. Today the Instructure Learning Platform supports tens of millions of educators and learners around the world. Learn more at www.instructure.com.