Instructure Holdings, Inc.

Thank you for standing by and welcome to Instructure's first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that this conference is being recorded. I would now like to turn the conference over to your first speaker, Matthew Wells, Senior Vice President, Investor Relations. Matthew, please go ahead.

Good afternoon and welcome to Instructure's first quarter 2024 earnings conference call. We will be discussing first quarter results and updated guidance as announced in our press release published earlier today. And to accompany the discussion, we've uploaded an earnings presentation to our investor relations website. I encourage you to review this presentation alongside our prepared remarks. On the call today, we have Instructure's chief executive officer, Steve Daley. and Chief Financial Officer Peter Walker. Before we begin, I'd like to remind you that today's conference call and earnings presentation will include forward-looking statements. These statements are subject to risks and uncertainties that may cause our results to differ materially from listed expectations. For discussion of factors that could affect our future financial results in business, Please refer to the disclosure in today's earnings press release and our Form 10-Q and other reports and filings we file with the Securities and Exchange Commission. All statements are made as of today based on information available to us as of today, and we assume no obligation to update any such statements except as required by law. During the call, we will also refer to both GAAP and non-GAAP financial measures. You can find a reconciliation of our gap to non-gap measures in our earnings press release, which is posted to the investor relations section of our website. And with that, let me turn the call over to Steve.

Thank you, Matt. And thank you all for joining our first quarter 2024 earnings call. I'd also like to thank everyone who attended our investor day earlier this year. For those that did attend, I hope that our team's passion for the business, the opportunity ahead of us to grow, and our commitment to educators and lifelong learners resonated. Kicking it off on slide four, as shared during Investor Day, our vision is to be the ecosystem that powers learning for a lifetime and turns that learning into opportunities. As the vertical software leader in education, we are well positioned to connect learners across their lifelong learning journey. Anchoring the ecosystem is the Canvas LMS, the market share leader in North America. We are invested in a mission to create real outcomes for learners, whether they are a traditional degree seeker or a non-traditional learner. We believe the investments we are making across the Instructure platform, our go-to-market structure, and partner ecosystem position us as a company to deliver long-term, durable growth. And I'm excited by the plan we set to become a $1 billion revenue company by 2028. Turning to slide five, I'll discuss first quarter highlights. Total revenue of $155.5 million increased 20.7% year over year, including 6.8% organic constant currency revenue growth. Subscription and support revenue of $144.7 million increased 22.1%, including 7.6% organic constant currency subscription and support revenue growth. As a reminder, organic constant currency growth rates exclude the impact of our acquisition of Parchment. Parchment revenue exceeded our expectations and grew double digits year over year. In the first quarter, pro forma annual recurring revenue for the combined and structure and parchment business grew in the high single digits year over year. In addition, annual recurring revenue growth from our core and growth solutions was in line with our medium term targets. As we move to discuss profitability, adjusted EBITDA of $64.9 million grew 34.6% year over year, and adjusted EBITDA margin expanded significantly to 41.8% this quarter, as we benefited from continued scale in the business and a shift in our spending to later this year. We exceeded the high end of our guidance ranges across all guided metrics, and we are positively revising our fiscal year 2024 outlook accordingly. Peter will take you through the details of our quarterly performance and full year outlook shortly. We also continue to innovate in areas that will have the highest impact for teachers, students, and educators. As early leaders in the LMS space, customer-centric innovation is at our DNA, and we are taking a similar approach to refining the AI-enabled solutions that we highlighted during our Investor Day. Early indications from beta customers have been positive, and we continue to engage our community around how to best enhance their day-to-day while driving positive student outcomes. We are excited to showcase our innovation at InstructureCon 2024, taking place July 9th through the 12th in Las Vegas. During the event, we will share customer success stories, highlight product enhancements, and spotlight some of our most impactful student outcomes. Turning to slide six, as a scaled vertical software company, we are in the enviable position of having a large, loyal, and referenceable customer base. These customers are asking us to solve more problems for them and our investment in our growth businesses has created a massive cross-sell opportunity that we are only just starting to monetize. Our expertise and laser focus on the needs of our education customers have contributed to our world-class margins as we remain focused on operational excellence. We have created a business model that allows us great flexibility to invest in growth opportunities both organically and through M&A. In summary, We believe that the mission-critical nature of the Instructure platform, our diversified product portfolio, our world-class business model, and the large markets that we operate in position us to grow durably and profitably. Flipping to slide seven, throughout the quarter in conversations with customers and partners, we continue to pick up on recurring themes that underpin the value we deliver. First, there continues to be a level of uncertainty in our markets as schools and universities are developing strategies to retain and attract more learners in an environment that has changing funding commitments and regulatory pressure. As our customers are grappling with these challenges, they continue to come to Instructure to help them navigate their important digital transformations. RFP activity remains high, even as decision making remains elongated. This gives us confidence that these macro headwinds are temporary. Second, the consolidation and optimization of technology resources continues to be a high priority, and the LMS is the natural place for consolidations to happen. Customers are pulling us into more broad-based digital transformation discussions and seeing Structure as a platform for consolidating their tech stack. This is a long-term trend, and we believe our expanding portfolio of products, especially our EdTech effectiveness solutions, as well as the extensive reach of our partner ecosystem, position us as the partner of choice for consolidation. Third, the continued shift to nontraditional and certification programs is increasing the addressable market of learners that we and our customers can reach. We continue to see traction with our existing customers adopting our non-traditional solutions, and I'm particularly pleased with the progress we are seeing from our newly created professional learning customer teams. With the addition of Parchment, we believe we are the only edtech platform that can provide a complete end-to-end solution for both traditional and non-traditional learners. Turning to customer highlights in the quarter on slide eight, I'm excited to share a handful of standout wins that demonstrate the breadth of our offering and the diversity of our customer base. While the decision-making environment in our core North American LMS markets remains elongated, customers are turning to us as a key strategic partner. Despite these near-term headwinds, we continue to win significant new logos such as the University of Alberta and a competitive win back at Tampa Union High School District. The University of Alberta selected Instructure as the learning management system of the future. Canvas LMS, studio credentials, and additional platform solutions will power the university's education footprint across over 40,000 learners. This was a notable win for our team as we displaced the legacy competitor in the Canadian market. Tempe Union High School District is a district that left us in 2019, decided to return to Instructure as its LMS platform after a lackluster experience with another provider. Canvas LMS stood out based on an improved user experience and excellent services and support across the platform. Across the growth areas of our business, we continue to see positive momentum internationally in Parchment and non-traditional and professional learning. Adelaide University, located in Australia, selected Canvas LMS studio and credentials as a platform to power learning across more than 50,000 learners. Our platform offerings were aligned with Adelaide's ambitious mission focused on preparing students for a skills-focused future, and to meet their students where they are in their educational journey. The value of Instructure's broad portfolio, including the addition of Parchment, is evident with the University of Notre Dame. Already a Canvas LMS and Parchment customer, they selected Parchment's comprehensive learner record to support a more comprehensive and accessible learner record to help students and staff better manage their credentials and their learning journey. And as I mentioned earlier, I'm encouraged by the traction our professional learning teams are gaining in this new focus market. The Indiana Association of Realtors selected Canvas LMS and Studio to power training and education of realtors in the state of Indiana. Past experience and familiarity with the instructor platform strongly resonated with the more than 15,000 members of the association. Moving to slide nine, our Q1 results demonstrate the durability of our business model. and the breadth of our platform offerings. As a leader in the LMS space, we are well positioned to serve as the educational platform of the future while delivering growth and profitability at scale. And as Peter will explain, we feel confident in our ability to deliver continued margin expansion while making investments in growth in the second half of the year. In summary, I'm excited about the business as we enter the prime buying season. Our ecosystem of educators, partners, and students is unparalleled. And with the addition of Parchment, we have further enhanced our position as the platform of choice for modern learning. We also continue to thoughtfully innovate across our ecosystem by engaging educators and partners to deliver the most impactful solutions. All of this is done while continuing to drive world-class margins. I'm really proud of our team across the world that makes this all possible. With that, I will now turn the call over to Peter to discuss the financials in more detail.