Instructure Files IPO Paperwork to Go Public . . . Again

The Covid pandemic and its associated lock-downs and increase in remote / online learning has been a boon for the EdTech industry, as tools like the Learning Management System (LMS) have become even more important to K-12 and higher ed institutions. One apparent effect is that Instructure, maker of the Canvas LMS, has filed for an Initial Public Offering (IPO) just 16 months after private equity firm Thoma Bravo took the company private.

I’ll update soon when I have more time to fully read the S-1 document, but there are a few observations from an initial scan of the S-1 filing.

First, this is not a straightforward go-public deal, as there are a host of holding companies involved as well as Thoma Bravo itself.

Second, Thoma Bravo’s financial management of Instructure (yes, that includes significant layoffs as well as moving “a portion of our development efforts to Budapest”) as well as the pandemic spending had a significant impact on the company’s finances, but like the ownership structure it’s complicated. Revenue increased $258.5m to $302.1m from 2019 to 2020, while net losses increased from $80.8m to $234.3m; however, much of those losses are one-time charges, such that Instructure’s adjusted EBITDA grew from ($9.2m) to $71.1m.

For the first quarter of 2021, which eliminates much of the charges as well as the need to combine predecessor (public Instructure early 2020) and successor (Bravo-owned rest of 2020) company finances Instructure had a net loss of $31.0m and an adjusted EBITDA of $32.6m. In a nutshell, Instructure became profitable for the first time over the past year based on adjusted EBITDA.

Instructure now has $778.1m in debt.

Third, unlike the first IPO go-round, Instructure is focused solely on academic markets. Bridge (the corporate learning LMS) has been divested, and the markets now are Higher Ed and K-12. This focus is described as part of the improvement in corporate finances.

Well, I’ve got more reading to do. Expect updates soon.

Disclosure: Instructure is a client of our market analysis service.

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