Date post: | 22-Jan-2018 |
Category: |
Investor Relations |
Upload: | instructure |
View: | 1,056 times |
Download: | 0 times |
FORWARDING LOOKING STATEMENTS & NON-GAAP MEASURES This presentation and the accompanying oral commentary contain “forward-looking” statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations and financial performance, business strategies, potential growth opportunities and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “might,” approximately,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or other similar expressions. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In evaluating these statements, you should specifically consider various factors, including the risks outlined under the caption “Risk Factors” set forth in our final prospectus for our initial public offering, which was filed with the Securities and Exchange Commission (the “SEC”) on November 13, 2015, and is available on the SEC’s website at www.sec.gov. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this presentation. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons why actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. This presentation includes certain non-GAAP financial measures as defined by the SEC rules. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As required by Regulation G, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the appendix.
2
SOFTWARE PEOPLE SMARTER
that makes
3
PRODUCT OVERVIEW
4
100% native cloud
70% visibility at 12/31/2013
>700 employees4
Headquartered in Salt Lake City
THE INSTRUCTURE STORY High Growth Subscription Revenue
>1,600 customers4
Customers in 25 countries4
>10 million users1
Recurring (2014 ~86%)
Non-recurring (2014 ~14%)
+197%
+70%
$44.4M
2014 2013
$26.1M
2012
$8.8M
LTM1
$65.1M
5
Total Number of Customers2
100%
Deferred Revenue
Backlog $201M
$145M
$92M
$58M
$32M
$19M
$143M $113M
$73M
2014 2013 Q3 2015
1Measured over the 12 months ended September 30, 2015. 2Measured as of month end, from January 2011 to September 2015. 3At 12/31/2013 the portion of backlog to be recognized in the following year plus the short-term deferred revenue balance accounted for approximately 70% of 2014 revenue. 4As of September 30, 2015.
Backlog & Deferred Revenue Rapid Customer Adoption
for 2014 revenue4
CURRENT LEARNING NEEDS ARE NOT BEING MET
• Limited Features
• Poor Uptime
• Expensive
• On Premise
• Lack of Data Solutions
• Poor Interface
• Limited Integration
• Unreliable
• Low Utilization
• Not Mobile
TECHNOLOGY EXPERIENCE
C:\>C:\>
6
INDUSTRY FORCES ARE CHANGING HOW PEOPLE WANT TO LEARN
Consumerized Collaborative
Mobile Engaging
7
OUR WINNING SOLUTION
Collaborative 99.9% Uptime Guarantee
Data Driven
Customer Support
Native Cloud Ease of Use
8
SUBSTANTIAL MARKET OPPORTUNITY With Numerous Adjacencies
2015
2018
Learning Management
Performance Management Workforce Management Recruiting Compensation Management
$7.8 Billion1
$6.4 Billion2
$4.1 Billion1
$5.1 Billion2
1 Learning Management System Market. Source: MarketsandMarkets, October 2013. 2 Represents market opportunity for Performance Management, Workforce Management, Recruiting and Compensation Management. Source: IDC, June 2015. These additional markets may present opportunities for Instructure.
9
THE CENTER OF THE LEARNING ECOSYSTEM
Institutions
Information Systems/Analytics Content Applications
LEARNING MANAGEMENT SYSTEMS
Instructors Learners
12
OUR EXTENSIBLE PLATFORM
Education Corporate
White-label Course Catalog MOOC Analytics
+
Highly Extensible
Designed to Scale
Open Modern Architecture
INSTRUCTURE CLOUD-BASED PLATFORM
11
OVER 1,600 CUSTOMERS ACROSS CATEGORIES
Hig
her E
d K
– 1
2 In
tern
atio
nal
Cor
pora
te
City University of Hong Kong
Used by 7 Ivy League
Schools
Used by K-12 Schools in 48 States
Serving 25
Countries
Used by Businesses
and Academia
TRINITY GRAMMAR SCHOOL
1As of September 30, 2015.
12
ONE CUSTOMER = MANY USERS
84 Schools in the District
9,200 Faculty and Staff Users in the District
68,000 Student Users in the District
{ 1 CUSTOMER }
13
LMS
LMS
CUSTOMER CASE STUDIES
EDU
K12
CORP
LMS
Customer since 2014
Uses: Bridge
Developed 43 courses, enrolled ~1,600 employees
Needed: Centralized platform for training a growing team
Clearlink found the following benefits:
• Easy to navigate • Intuitive user experience • Easy creation of programs and quizzes • Efficient interaction with Instructure team • Significant cost savings • Efficiency and sales number improvements
Customer since 2012
Uses: Canvas, Canvas Data
12 colleges serving 61,000 students
38% of credit hours delivered online Needed: An extensible system to distribute online learning
UCF found the following benefits:
• A customized platform • Expanded capacity with custom integrations • Continual updates • High usage and user adoption
14
OUR USER’S EXPERIENCE
15
OUR GROWTH STRATEGY
Grow US Customer Base
Expand with Existing Customers New Offerings International
Expansion
16
INSIDE INSTRUCTURE
POWERFUL MISSION OPEN CULTURE CUTTING EDGE TECH
17
CUSTOMER CONFERENCE
INNOVATIVE MANAGEMENT
Josh Coates EMC Corp • Mozy.com • Scale Eight CEO
Steve Kaminsky Radisphere • TriZetto • Ernst & Young • McDonald’s Corporation
CFO
SVP People and Places Jeff Weber
Ancestry • The Russell Group • Shell Oil Company
FamilySearch • Microsoft
David Burggraaf SVP Engineering
Vmware • InfoTrax Systems • GE
Mitch Macfarlane SVP Customer Experience
Marc Maloy HireRight • Certico EVP Worldwide Sales
Misty Frost Datamark • Critical Mass • Sumus Interactive• Dahlin Smith White
SVP Marketing
SVP/General Counsel and Secretary
18
Matt Kaminer Collective • Epocrates • MediMedia USA • WebMD
SVP General Counsel and Secretary
Giorgio Vanzini SVP Product DirecTV • Microsoft • What You Want Computer Resource International • DEC
FINANCIAL HIGHLIGHTS
Solid Revenue Growth
Net Revenue Retention Greater than 100%1 100%
Investing for Continued Growth
Attractive Long Range Model
Strong Unit Economics $
Enhanced Visibility Through Multi-Year Contracts
1 Net revenue retention rate is calculated by dividing the total revenue obtained from a particular customer in a given month by the total revenue from that customer from the same month in the immediately preceding year.
19
Non-GAAP Operating Loss as a % of Revenue2 Revenue Growth
REVENUE & PROFITABILITY HISTORY 2012 – Q3 2015
1Non-GAAP gross margin is before stock-based compensation and payroll tax expense on secondary stock purchase transactions. 2Operating loss before stock-based compensation, payroll tax expense on secondary stock purchase transactions and amortization of acquisition-related intangibles 3Last twelve months (LTM) includes October 1, 2014 through September 30, 2015.
Non-GAAP Gross Margin1
LTM3 2014 2013 2012 2012 2014 LTM3 2013
$(16)M
$(18)M $(29)M +70%
$44.4M
LTM3 2012 2014
+197%
$8.8M
$65.1M
2013
$26.1M
$(41)M
20
19%
59%
67% 67%
(68)%
(186)%
(66)% (62)%
Recurring (2014 ~86%)
Non-recurring (2014 ~14%)
Non-GAAP General and Administration1
(% of Revenue) Non-GAAP Sales and Marketing1
(% of Revenue)
INVESTING FOR GROWTH
1Non-GAAP operating expenses are before stock-based compensation, payroll tax expense on secondary stock purchase transactions and amortization of acquisition-related intangibles. 2Last twelve months (LTM) includes October 1, 2014 through September 30, 2015.
Non-GAAP Research and Development1
(% of Revenue)
LTM2 2013 2014 2012 LTM2 2014 2013 2012 2014 2013 2012 LTM2
21
130%
72% 73%
48%
36% 38%
27%
33% 19%
23% 23%
72%
FREE CASH FLOW
Non-GAAP Gross Margin2 %
2014 – Q3 2015
1Free cash flow is a Non-GAAP measure and is derived by netting operating cash flow with capital expenditures and proceeds from disposal of property and equipment.
$(8.3)M $(7.4)M
$(14.5)M $(14.8)M $(15.0)M
$20M
$10M
$0M
-$10M
-$20M
$7.5M
Q2-14 Q1-14 Q3-14 Q3-15
$18.4M
Q2-15 Q1-15 Q4-14
Free Cash Flow1
+145%
22
ENHANCED VISIBILITY INTO FUTURE PERIODS 2013 – Q3 2015 Backlog1 Deferred Revenue
9/30/2015
$143M
12/31/2014
$113M
$73M
12/31/2013 12/31/2013 9/30/2015
$32M
12/31/2014
$58M
$19M
1Backlog represents future non-cancellable amounts to be invoiced under our agreements.
23
BUSINESS MODEL
Cum
ulat
ive
Con
trib
utio
n
24
Lifetime Customer Acquisition Costs
Breakeven
Customer Lifetime Value
ACQUIRE RETAIN RENEW
• Contribution Margin: gross margin less sales, direct marketing, and account management
• Allocation Methodologies: o Subscription cost allocation based on usage
o Customer support cost allocation based on service tickets
o Sales and direct marketing cost allocated to current period (2015) except commissions related to upsells for prior cohorts
o Account management cost allocation based on customer count
CUSTOMER COHORT ANALYSIS 2015 Contribution Margin by customer cohort; based on Q1 – Q3 2015 revenue and expenses
CM %
2015 2014 2013 2012 2011 Customer Start Date
25
57% 65% 65% 53%
(182)%
LONG-RANGE MODEL
Revenue 100% 100% 100% 100%
Cost of Revenue2 41% 33% 33% ~25%
Non-GAAP Gross Margin 59% 67% 67% ~75%
S&M3 72% 72% 73% 26-28%
R&D3 36% 38% 33% 15-17%
G&A3 19% 23% 23% 9-10%
Non-GAAP Operating Income/Loss
(68)% (66)% (62)% 20-25%
2013 2014 LTM1 Target
1Last twelve months (LTM) includes October 1, 2014 through September 30, 2015. 2Non-GAAP cost of revenue is before stock-based compensation and payroll tax expense on secondary stock purchase transactions 3Non-GAAP operating expenses are before stock-based compensation, payroll tax expense on secondary stock purchase transactions and amortization of acquisition-related intangibles. 26
INVESTMENT HIGHLIGHTS
Market Ripe for Disruption
Rapid and Widespread Customer Adoption
Substantial Market Opportunity
Native, Cloud-Based Platform
Focused on User-Experience and Simplicity
Solid Revenue Growth
Enhanced Visibility Through Multi-Year Contracts
27
APPENDIX
29
(in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Revenue $8,610 $9,566 $12,440 $13,736 $14,625 $15,877 $20,895 YoY% 76% 69% 71% 67% 70% 66% 68%
Cost of Sales $2,933 $3,249 $4,081 $4,523 $4,863 $5,464 $6,700
Gross Profit $5,677 $6,317 $8,359 $9,213 $9,761 $10,413 $14,195 GM% 66% 66% 67% 67% 67% 66% 68%
S&M $6,189 $7,899 $8,072 $9,891 $10,899 $13,808 $12,826 % of Rev 72% 83% 65% 72% 75% 87% 61%
R&D $3,460 $4,189 $4,225 $4,786 $5,030 $5,356 $6,178 % of Rev 40% 44% 34% 35% 34% 34% 30%
G&A $1,740 $2,239 $2,584 $3,572 $3,260 $3,760 $4,278 % of Rev 20% 23% 21% 26% 22% 24% 20%
OPEX $11,389 $14,327 $14,881 $18,249 $19,189 $22,924 $23,282 % of Rev 132% 150% 120% 133% 131% 144% 111%
Operating Loss $(5,712) $(8,010) $(6,522) $(9,036) $(9,428) $(12,512) $(9,087) % of Rev (66)% (84)% (52)% (66)% (64)% (79)% (43)%
Net Operating Loss1 $(5,718) $(8,019) $(6,568) $(9,175) $(9,566) $(12,534) $(9,187) % of Rev (66)% (84)% (53)% (66)% (65)% (79)% (44)%
NON GAAP INCOME STATEMENT
1Non GAAP Net Operating Loss excludes change in fair value warrant liability.
GAAP INCOME STATEMENT
(in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Revenue $8,610 $9,566 $12,440 $13,736 $14,625 $15,877 $20,894 YoY% 70% 66% 68%
Cost of Sales $2,941 $3,263 $4,106 $4,803 $4,911 $5,532 $6,794
Gross Profit $5,669 $6,303 $8,334 $8,933 $9,714 $10,345 $14,100 GM% 66% 66% 67% 65% 66% 65% 67%
S&M $6,231 $7,960 $8,144 $13,055 $11,081 $14,050 $13,172 % of Rev 72% 83% 65% 95% 76% 88% 63%
R&D $3,506 $4,306 $4,372 $9,106 $5,271 $5,645 $6,525 % of Rev 41% 45% 35% 66% 36% 36% 31%
G&A $1,823 $2,360 $2,707 $4,378 $10,046 $3,923 $4,506 % of Rev 21% 25% 22% 32% 69% 25% 22%
OPEX $11,560 $14,626 $15,223 $26,539 $26,398 $23,618 $24,203 % of Rev 134% 153% 122% 193% 180% 149% 116%
Loss From Operations $(5,891) $(8,323) $(6,889) $(17,606) $(16,684) $(13,273) $(10,103) % of Rev (68)% (87)% (55)% (128)% (114)% (84)% (48)%
Change in fair value of warrant liability $(670) $(721) $(828) $(299) $(488) $(39) $(9) Other Income/Expense $(6) $(9) $(39) $(89) $(138) $(8) $(74) Loss before provision for income taxes $(6,567) $(9,053) $(7,756) $(17,994) $(17,310) $(13,320) $(10,186) Income tax expense $0 $0 $(7) $(50) $0 $(14) $(26) Net Income $(6,567) $(9,053) $(7,763) $(18,044) $(17,310) $(13,334) $(10,212) % of Rev (76)% (95)% (62%) (131)% (118)% (84)% (49)%
30
GAAP TO NON-GAAP RECONCILIATION (in thousands)
2012 2013 2014 LTM1
GAAP Operating Loss $(18,341) $(21,830) $(38,709) $(57,666)
Amortization of Acquisition Related Intangibles Cost of Sales $- $- $- $- S&M - - - - R&D - - 6 9 G&A - - - - Total Amortization of Acquisition Related Intangibles $- $- $6 $9
Stock Compensation Expense Cost of Sales $12 $36 $297 $458 S&M 473 1,597 2,877 3,471 R&D 442 1,585 3,971 4,535 G&A 910 374 1,053 6,577 Total Stock Compensation Expense $1,837 $3,592 $8,198 $15,041
Payroll Tax on Secondary Stock Purchase Cost of Sales $- $- $30 $30 S&M 57 267 461 461 R&D 57 267 653 653 G&A 104 - 81 1,408 Total Payroll Tax on Secondary Stock Purchase $218 $534 $1,225 $2,552
Non-GAAP Operating Loss $(16,286) $(17,704) $(29,280) $(40,064)
31
1Last twelve months (LTM) includes October 1, 2014 through September 30, 2015.
GAAP TO NON-GAAP RECONCILIATION (in thousands)
2012 2013 2014 LTM1
Revenue $8,774 $26,055 $44,352 $65,133
GAAP Gross Margin $1,680 $15,435 $29,239 $43,092 Amortization of Acquisition Related Intangibles - - - Stock Compensation Expense 12 36 297 458 Payroll Tax on Secondary Stock Purchase - - 30 30
Non-GAAP Gross Margin $1,692 $15,471 $29,566 $43,581 Gross Margin % 19% 59% 67% 67%
GAAP Sales & Marketing $11,912 $20,702 $35,390 $51,358 Amortization of Acquisition Related Intangibles - - - - Stock Compensation Expense 473 1,597 2,877 3,471 Payroll Tax on Secondary Stock Purchase 57 267 461 461
Non-GAAP Sales & Marketing $11,382 $18,838 $32,052 $47,426 Sales & Marketing % 130% 72% 72% 73%
GAAP Research & Development $4,698 $11,242 $21,290 $26,547 Amortization of Acquisition Related Intangibles - - 6 9 Stock Compensation Expense 442 1,585 3,971 4,535 Payroll Tax on Secondary Stock Purchase 57 267 653 653
Non-GAAP Research & Development $4,199 $9,390 $16,660 $21,350 Research & Development % 48% 36% 38% 33%
GAAP General & Administrative $3,411 $5,321 $11,268 $22,853 Amortization of Acquisition Related Intangibles - - - - Stock Compensation Expense 910 374 1,053 6,577 Payroll Tax on Secondary Stock Purchase 104 - 81 1,408
Non-GAAP General & Administrative $2,397 $4,947 $10,134 $14,877 General & Administrative % 27% 19% 23% 23%
32
1Last twelve months (LTM) includes October 1, 2014 through September 30, 2015.
FREE CASH FLOW RECONCILIATION
(in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3’15
Net cash provided by (used in) operating activities $(8,073) $(6,479) $8,084 $(13,927) $(13,915) $(12,797) $19,676
Purchase of property and equipment (264) (964) (600) (612) (927) (2,212) (1,324)
Proceeds from disposal of property and equipment 2 6 7 22 9 9 35
Free Cash Flow $(8,335) $(7,437) $7,491 $(14,517) $(14,833) $(15,000) $18,387
33