Instructure (INST) Baird 2024 Global Consumer, Technology, & Services Conference summary

Business overview and growth strategy

• Vision centers on powering lifelong learning with a global, scalable LMS and a portfolio of growth products.

• Core products are expected to grow ARR at 5%-10%, while growth products target 10%-15% growth.

• 2023 ARR was $660M, split between core ($300M) and growth ($360M) businesses, supporting a 9%-11% medium-term organic growth target.

• Go-to-market strategy was revamped to enable cross-selling and scale new product adoption, with a $2.4B cross-sell opportunity identified.

• International expansion is a focus, leveraging a scalable, multi-language platform to challenge incumbents with a winner-take-all approach.

Market dynamics and competitive landscape

• Holds over 40% share in US higher ed LMS and 30%+ in K-12, with significant unvended K-12 market remaining.

• Price is the main reason for losing deals, but usability and community support drive most wins.

• Higher ed faces extended decision cycles due to macroeconomic and campus disruptions, but RFP activity remains robust.

• K-12 sales are stable, with products funded from operational budgets and benefiting from digitization trends.

Product portfolio and innovation

• Canvas is the flagship LMS, complemented by 11+ products, including assessment and credentialing tools.

• Acquisitions like MasteryConnect and Parchment were driven by identified educator needs and have been integrated into a unified sales approach.

• Parchment enhances the platform by enabling lifelong credential management, supporting both traditional and non-traditional learners.

• Enterprise agreements are evolving to include both traditional and non-traditional users, with stable margin profiles across segments.