Instructure, Inc. revenue jumped on 30.2% and EBITDA Margin increased on 7.1 pp from -23.0% to -15.9%
02/19/2019 • About Instructure, Inc. (
$INST) • By InTwits
Instructure, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Instructure, Inc. is a fast growth stock: 2018 revenue growth was 30.2%, 5 year revenue CAGR was 51.7% at 2018 ROIC -57.5%
- The company operates at negative EBITDA Margin: -15.9%
- Instructure, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -33.2%
- Instructure, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.2%. At the same time it's a lot of higher than industry average of 5.2%.
- CAPEX is quite volatile: $11m in 2018, $16m in 2017, $7m in 2016, $7m in 2015, $2m in 2014
- The company has unprofitable business model: ROIC is -57.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 30.2%. Revenue growth showed slowdown in 18Q4 - it was 25.7% YoY. Revenue decline was accelerating on average at -10.2 pp per annum in the last 5 years. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 7.1 pp from -23.0% to -15.9% in 2018. EBITDA Margin followed a growing trend at 17.7 pp per annum in 2014-2018.
Gross Margin decreased slightly on 0.59 pp from 71.1% to 70.5% in 2018. Gross Margin followed a growing trend at 1.3 pp per annum in 2014-2018. SG&A as a % of Revenue decreased on 4.8 pp from 68.3% to 63.5% in 2018. SG&A as a % of Revenue followed a declining trend at -12.0 pp per annum in 2014-2018.
Net Income margin increased on 6.0 pp from -26.8% to -20.7% in 2018. Net Income margin grew at 19.1 pp per annum in 2014-2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 5.3% in 2018. Instructure, Inc.'s CAPEX/Revenue decreased on 3.8 pp from 9.1% in 2015 to 5.3% in 2018. It's average level of CAPEX/Revenue for the last three years was 7.1%.
Return on investment
The company operates at negative ROIC (-57.5%) and ROE (-55.9%). ROIC surged on 179 pp from -236% to -57.5% in 2018. ROE jumped on 178 pp from -233% to -55.9% in 2018.
Leverage (Debt)
The company has no debt. Cash jumped on 164%.
Management team
Instructure, Inc.'s CEO is Dan Goldsmith. Dan Goldsmith is a founder and has 0 years tenure with the company. Steven B Kaminsky "Steve" is a the company's CFO. Steven B Kaminsky "Steve" has spent 7 years at the company.
Financial and operational results
FY ended 12/31/2018
Instructure, Inc. ($INST) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 44.4 | 73.2 | 112.6 | 161.0 | 209.5 | 30.2% |
| Gross Profit | 29.2 | 49.1 | 79.6 | 114.4 | 147.7 | 29.1% |
| SG&A | 46.7 | 76.9 | 91.4 | 109.9 | 133.1 | 21.1% |
| EBITDA | -36.6 | -49.0 | -43.4 | -37.0 | -33.2 | |
| Net Income | -41.4 | -53.0 | -48.2 | -43.1 | -43.5 | |
Balance Sheet
|
|---|
| Cash | 43.9 | 90.5 | 44.5 | 35.7 | 94.3 | 164.3% |
| Short Term Debt | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 2.4 | 6.7 | 7.0 | 15.8 | 11.1 | -29.3% |
Ratios
|
|---|
| Revenue growth | 70.2% | 65.0% | 53.9% | 42.9% | 30.2% | |
| EBITDA growth | 80.6% | 33.7% | -11.4% | -14.7% | -10.3% | |
|
|---|
| Gross Margin | 65.9% | 67.1% | 70.7% | 71.1% | 70.5% | -0.6% |
| EBITDA Margin | -82.6% | -66.9% | -38.6% | -23.0% | -15.9% | 7.1% |
| SG&A, % of revenue | 105.2% | 105.1% | 81.2% | 68.3% | 63.5% | -4.8% |
| Net Income Margin | -93.4% | -72.4% | -42.8% | -26.8% | -20.7% | 6.0% |
| CAPEX, % of revenue | 5.5% | 9.1% | 6.2% | 9.8% | 5.3% | -4.5% |
|
|---|
| ROIC | -379.4% | -174.1% | -170.4% | -236.2% | -57.5% | 178.7% |
| ROE | | | -173.4% | -233.5% | -55.9% | 177.5% |
Instructure, Inc. ($INST) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 48 | 50 | 55 | 56 | | 39.2% | 29.9% | 27.9% | 25.7% |
| EBITDA | -9 | -10 | -9 | -5 | | | | | |
| Net Income | -12 | -13 | -11 | -8 | | | | | |
Balance Sheet
|
|---|
| Cash | 137 | 68 | 111 | 94 | | 383.7% | 163.9% | 89.1% | 164.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 70.9% | 70.8% | 70.8% | 69.6% | | -1.1% | -0.5% | -0.2% | -0.7% |
| EBITDA Margin | -19.5% | -19.3% | -16.2% | -9.4% | | 10.2% | 3.0% | 6.8% | 9.2% |
| Net Income Margin | -24.7% | -25.0% | -20.8% | -13.5% | | 8.9% | 1.6% | 5.8% | 8.3% |
Peers in Application Software
Below we provide Instructure, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Instructure, Inc. ($INST) | | 65.0% | 53.9% | 42.9% | 30.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Instructure, Inc. ($INST) | 65.9% | 67.1% | 70.7% | 71.1% | 70.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.2% |
|---|
| Instructure, Inc. ($INST) | -82.6% | -66.9% | -38.6% | -23.0% | -15.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Instructure, Inc. ($INST) | 5.5% | 9.1% | 6.2% | 9.8% | 5.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.3% |
|---|
| Instructure, Inc. ($INST) | -379.4% | -174.1% | -170.4% | -236.2% | -57.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
