Instructure (INST) Q3 2024 earnings summary

Executive summary

• Revenue for Q3 2024 was $173.2 million, up 28% year-over-year, driven by expanded use and acquisitions.

• Net loss for Q3 2024 was $24.7 million, compared to $5.5 million in Q3 2023, reflecting higher operating expenses and interest costs.

• Adjusted EBITDA for Q3 2024 was $70.1 million, up from $58.2 million in Q3 2023.

• Major acquisitions included Parchment (February 2024) and Scribbles (July 2024), expanding the credentialing and records management portfolio.

• A merger agreement was signed with KKR affiliates to take the company private at $23.60 per share, pending customary closing conditions and expected to close in H2 2024.

Financial highlights

• Q3 2024 revenue increased 28% year-over-year to $173.2 million; nine-month revenue rose 26% to $499.1 million.

• Net loss for Q3 2024 was $24.7 million; nine-month net loss was $66.8 million, both higher than prior year periods.

• Adjusted EBITDA reached $70.1 million for Q3 and $208.4 million for the nine months, both showing strong growth.

• Operating cash flow for the nine months was $102.5 million; free cash flow was $96.3 million.

• Gross margin for Q3 2024 was 66%, up from 65% in Q3 2023.

Outlook and guidance

• The merger with KKR is expected to close in the second half of 2024, after which the company will become privately held.

• Management expects continued growth in cloud-based education solutions, with a focus on expanding the customer base and cross-selling, and sees growth opportunities in non-traditional student segments.