UNITED ~~STATES~~STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of ~~the~~Report ~~Securities~~(Date ~~Exchange~~of ~~Act~~earliest ofevent ~~1934~~reported): August 02, 2024

Date of Report (Date of earliest event reported): July 25, 2024

INSTRUCTURE HOLDINGS, INC.

(Exact name of ~~registrant~~Registrant as ~~specified~~Specified in ~~its~~Its ~~charter~~Charter)

Delaware	~~001-40647~~	001-40647	84-4325548
(State or Other Jurisdiction of Incorporation)	(Commission File Number)		(IRS Employer Identification No.)
(State or Other Jurisdictionof Incorporation)		(Commission File Number)	(IRS EmployerIdentification No.)
6330 SOUTH 3000 EASTSUITE 700
SALT LAKE CITY, Utah			84121
(Address of Principal Executive Offices)			(Zip Code)

6330 SOUTH 3000 EAST SUITE 700
SALT LAKE CITY, UTAH		84121
(Address of Principal Executive Offices)		(Zip Code)

    Registrant’s Telephone Number, Including Area Code: 800 203-6755

   

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	~~Trading Symbol~~TradingSymbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	INST	The New York Stock Exchange
Common Stock, par value $0.01 per share	INST	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 12.0102 ~~Entry~~Results ~~into~~of aOperations ~~Material~~and ~~Definitive~~Financial ~~Agreement~~Condition.

~~Merger~~The ~~Agreement~~following are the unaudited results of operations of Instructure Holdings, Inc. (the “Company” or “Instructure”) as of and for the three and six months ended June 30, 2024.

AsKey ~~previously reported, on July 25, 2024, Instructure Holdings, Inc., a Delaware corporation~~ Financials:(~~the~~Dollars ~~“Company”),~~in ~~entered into an Agreement and Plan of Merger (the “Merger Agreement”~~millions) with Icon Parent Inc., a Delaware corporation (“Parent”), and Icon Acquisition Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Parent and Merger Sub are each affiliates of investment funds managed by Kohlberg Kravis Roberts & Co. L.P. (“KKR”), a leading global investment firm. Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”).

The board of directors of the Company (the “Board”) has unanimously (i) determined that it is fair to, and in the best interests of, the Company and the Company’s stockholders, and declared it advisable, to enter into the Merger Agreement providing for the Merger in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), upon the terms and subject to the conditions set forth therein; (ii) approved and declared advisable the Merger Agreement, the execution and delivery of the Merger Agreement by the Company, the performance by the Company of its covenants and other obligations thereunder, and the consummation of the Merger and the other Transactions (as defined in the Merger Agreement) upon the terms and subject to the conditions set forth therein; and (iii) resolved to recommend that the Company’s stockholders adopt the Merger Agreement in accordance with the DGCL.


	Three months ended June 30,									Six months ended June 30,
	2024			2023			Year-over-Year (% or bps)			2024			2023			Year-over-Year (% or bps)

Revenue	$	170.4		$	131.1			30.0	%	$	325.9		$	259.9			25.4	%
Loss from Operations	$	(1.2	)	$	(2.1	)		(42.7	)%	$	(7.3	)	$	(8.0	)		(9.0	)%
Non-GAAP Operating Income*	$	72.0		$	50.2			43.5	%	$	135.5		$	97.3			39.2	%
GAAP Net Loss	$	(20.9	)	$	(11.0	)		90.9	%	$	(42.1	)	$	(22.8	)		84.3	%
GAAP Net Loss Margin		(12.3	)%		(8.4	)%	(390) bps				(12.9	)%		(8.8	)%	(410) bps
Adjusted EBITDA*	$	73.4		$	51.3			43.2	%	$	138.4		$	99.5			39.0	%
Adjusted EBITDA Margin*		43.1	%		39.1	%	400 bps				42.5	%		38.3	%	420 bps
Cash Flow from Operations	$	(8.2	)	$	25.1			(132.5	)%	$	(100.7	)	$	(55.8	)		(80.5	)%
Adjusted Unlevered Free Cash Flow*	$	25.7		$	37.1			(30.7	)%	$	(39.6	)	$	(26.3	)		(50.5	)%
Remaining Performance Obligations ("RPO")	$	934.9		$	853.6			9.5	%	$	934.9		$	853.6			9.5	%

~~Effect~~*See on“Non-GAAP ~~Capital~~Financial ~~Stock~~Measures” for information regarding the Company’s use of non-GAAP financial measures as well as reconciliations to the most closely comparable GAAP measures in this press release.

~~Upon~~Balance ~~the~~Sheet ~~terms~~ and ~~subject~~Cash to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), (i) each share of common stock, par value $0.01 per share, of the Company (the “Company Common Stock”) that is issued and outstanding as of immediately prior to the Effective Time (other than any shares of Company Common Stock that are held by the Company as treasury stock, held by any subsidiary of the Company or owned by Parent or any of its subsidiaries (including Merger Sub) (collectively, the “Owned Company Shares”), or any shares of Company Common Stock as to which appraisal rights have been properly exercised in accordance with Delaware law), will be automatically cancelled, extinguished and converted into the right to receive cash in an amount equal to $23.60, without interest thereon and subject to applicable withholding taxes (the “Per Share Price”), and (ii) the Owned Company Shares will automatically be cancelled and extinguished without any conversion thereof or consideration paid therefor. Flow

~~Representations~~As of June 30, 2024, cash, cash equivalents, restricted cash, and ~~Warranties~~funds held on behalf of customers were $145.2 million and ~~Covenants~~total debt was $1,240.3 million; compared to cash, cash equivalents, and restricted cash of $344.2 million and total debt of $491.3 million as of December 31, 2023. The decrease in cash, cash equivalents, restricted cash, and funds held on behalf of customers and increase in debt since December 31, 2023 is primarily driven by cash spent and debt incurred in connection with the Parchment acquisition. As of June 30, 2024, Instructure’s total leverage ratio is 4.9x (which represents Total Debt to trailing twelve month Adjusted EBITDA) and net leverage ratio is 4.3x (which represents Net Debt to trailing twelve month Adjusted EBITDA). This calculation includes twelve months of historical Instructure Adjusted EBITDA and five months of Parchment contribution to Adjusted EBITDA. Net cash used in operating activities was $8.2 million for the three months ended June 30, 2024, compared to $25.1 million net cash provided by operating activities in the prior year period. This decrease was primarily driven by higher interest expense. Adjusted Unlevered Free Cash Flow was $25.7 million for the three months ended June 30, 2024, compared to $37.1 million in the prior year period.

~~The~~Transaction ~~Company,~~with Parent and Merger Sub have each made customary representations, warranties and covenants in the Merger Agreement. Among other things, the Company has agreed, subject to certain exceptions, from the date of the Merger Agreement until the earlier to occur of the valid termination of the Merger Agreement pursuant to Article VIII of the Merger Agreement and the Effective Time, to (i) use commercially reasonable efforts to conduct its business in all material respects in the ordinary course of business, (ii) not to take certain actions without the prior written consent of Parent (which written consent shall not be unreasonably withheld, conditioned or delayed), and (iii) not to solicit or engage in discussions or negotiations regarding any alternative business combination transaction. KKR

~~Treatment~~Given the announcement made on July 25, 2024, regarding Instructure’s entry into a definitive agreement to be acquired by affiliates of ~~Company~~investment ~~Equity~~funds ~~Awards~~managed ~~and~~by ~~Company~~Kohlberg ~~Employee~~Kravis ~~Stock~~Roberts ~~Purchase~~& ~~Plan~~Co. L.P. (“~~Company ESPP~~KKR”), a leading global investment firm, Instructure will not host an earnings conference call or provide financial guidance in conjunction with this report. The Company’s previously issued guidance for full year fiscal 2024 should no longer be relied upon. For further detail on quarterly performance, please refer to Instructure’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, filed today with the SEC.

~~Each~~About award of restricted stock units of the Company (“Company RSUs”) outstanding and vested as of immediately prior to the Effective Time or that vests in accordance with its terms as a result of the consummation of the Transactions (a “Vested Company RSU”) will automatically, at the Effective Time, be cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Per Share Price and (ii) the total number of shares of Company Common Stock subject to such Vested Company RSU as of immediately prior to the Effective Time. Instructure

~~Each~~Instructure ~~award of Company RSUs outstanding as of immediately prior to the Effective Time that is not a Vested Company RSU~~ (anNYSE: ~~“Unvested Company RSU”~~INST) ~~will~~is ~~automatically, at the Effective Time, be cancelled and replaced with a right to receive~~ an ~~amount~~education intechnology ~~cash~~company ~~(without~~dedicated ~~interest and subject~~ to ~~applicable~~elevating ~~withholding~~student ~~taxes)~~success, ~~equal~~amplifying to the ~~product~~power of ~~(i) the~~teaching, ~~Per Share Price~~ and ~~(ii) the~~inspiring ~~total~~everyone ~~number of shares of Company Common Stock subject~~ to ~~such~~learn ~~Unvested~~together. ~~Company~~Today ~~RSU as of immediately prior to~~ the ~~Effective~~Instructure ~~Time~~Learning ~~(the~~Platform ~~“Cash~~supports ~~Replacement~~tens ~~Company~~of ~~RSU~~millions ~~Amounts”),~~of ~~which~~educators ~~Cash~~and ~~Replacement~~learners ~~Company~~around ~~RSU Amounts will, subject to~~ the ~~holder’s~~world. ~~continued~~Learn ~~service~~more ~~through the applicable vesting dates, vest and be payable~~ at the same time as the Unvested Company RSUs for which the Cash Replacement Company RSU Amounts were exchanged would have vested and been payable pursuant to their terms, and will otherwise have the same terms and conditions as applied to the Unvested Company RSUs for which they were exchangedwww. instructure.com.

~~Each award of performance~~Non-~~based~~GAAP ~~restricted~~Financial stock units of the Company (“Company PSUs”) that is outstanding and vested as of immediately prior to the Effective Time or that vests in accordance with its terms as a result of the consummation of the Transactions (including any Company PSUs for which the applicable vesting condition is met prior to or as a result of the consummation of the Transactions) (a “Vested Company PSU”) will automatically, at the Effective Time, be cancelled and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Per Share Price and (ii) the total number of shares of Company Common Stock subject to such Vested Company PSU as of immediately prior to the Effective Time. Measures

~~Each~~Instructure ~~award~~has ofprovided ~~Company~~in ~~PSUs~~this ~~that~~press isrelease ~~outstanding~~financial asinformation ~~of immediately prior to the Effective Time~~ that ishas not abeen ~~Vested~~prepared ~~Company~~in ~~PSU~~accordance ~~(an~~with ~~“Unvested~~generally ~~Company~~accepted ~~PSU”)~~accounting ~~will~~principles ~~automatically, at the Effective Time, be cancelled and converted into the right to receive an amount~~ in ~~cash (without interest and subject to applicable withholding taxes) equal to~~ the ~~product~~United ofStates (~~i) the Per Share Price and (ii) the total number of shares of Company Common Stock subject to such Unvested Company PSU as of immediately prior to the Effective Time (the~~ “~~Cash Replacement Company PSU Amounts~~GAAP”),. ~~which~~In ~~Cash~~addition ~~Replacement Company PSU Amounts will, subject~~ to ~~the holder~~Instructure’s ~~continued~~results ~~service~~determined ~~through~~in ~~the~~accordance ~~applicable~~with ~~vesting dates~~GAAP, ~~vest~~Instructure ~~and~~believes ~~be payable at~~ the ~~same~~following ~~time~~non-GAAP asmeasures ~~the~~are ~~Unvested~~useful ~~Company~~in ~~PSUs~~evaluating ~~for~~its ~~which~~operating ~~the~~performance ~~Cash Replacement Company PSU Amounts were exchanged would have vested~~ and ~~been~~liquidity. ~~payable~~Instructure ~~pursuant~~believes tothat ~~their~~non-GAAP ~~terms;~~financial ~~provided that~~information, towhen ~~the~~taken ~~extent~~collectively, ~~any~~may ~~Unvested~~be ~~Company~~helpful ~~PSU remains outstanding and subject~~ to ~~such~~investors ~~performance~~because ~~vesting~~it ~~conditions~~provides asconsistency ofand ~~immediately~~comparability ~~prior~~with topast ~~the~~financial ~~Effective Time, the~~ performance ~~metrics~~and ofassists ~~such~~in ~~Unvested~~comparisons ~~Company~~with ~~PSU~~other ~~will~~companies, besome ~~deemed achieved at actual levels~~ of ~~performance~~which ~~effective~~use assimilar ofnon-GAAP ~~the~~financial ~~Effective~~information ~~Time,~~ to besupplement ~~measured~~their ~~with~~GAAP ~~pro-ration~~results. ~~based~~The onnon-GAAP ~~the~~financial ~~portion~~information ofis ~~the~~presented ~~performance~~for ~~period~~supplemental ~~that~~informational ~~has~~purposes ~~elapsed prior to the Effective Time~~only, inand ~~good~~should ~~faith~~not bybe ~~the~~considered ~~compensation~~a ~~committee~~substitute offor ~~the~~financial ~~Board.~~information ~~The~~presented ~~Cash~~in ~~Replacement~~accordance ~~Company~~with ~~PSU~~GAAP, ~~Amounts will otherwise have the same terms~~ and ~~conditions~~may asbe ~~applied~~different tofrom ~~the~~similarly-titled ~~Unvested~~non-GAAP ~~Company~~measures ~~PSU~~used ~~for~~by ~~which~~other ~~they were exchanged~~companies.

AsInstructure ~~soon~~has asupdated ~~practicable following July 25, 2024,~~ the ~~Company~~grouping ~~will~~of ~~take actions to ensure that (i) except for~~ the ~~offering~~presentation ~~period in effect as~~ of ~~such~~the ~~date,~~adjustments noto ~~new~~Non-GAAP ~~offering~~Operating ~~periods will be authorized or commenced under the Company ESPP~~Income, ~~(ii) no~~Adjusted ~~new participants will commence participation in the Company ESPP~~EBITDA, ~~(iii) no Company ESPP participant will be permitted to increase such participant’s payroll deduction elections or contribution rates or make separate non~~Non-~~payroll~~GAAP ~~contributions,~~Net ~~(iv) each purchase right outstanding under the Company ESPP as of July 25~~Income, ~~2024~~Adjusted ~~will~~Unlevered beFree ~~exercised~~Cash ~~no later than three business days prior to the Effective Time~~Flow, ~~with~~Non-GAAP ~~participants’~~Cost ~~accumulated contributions used to purchase shares~~ of ~~Company~~Revenue, ~~Common~~Non-GAAP ~~Stock~~Operating ~~in accordance with the terms of the Company ESPP on such final exercise date~~Expenses, and ~~(v)~~Non-GAAP ~~the~~Gross ~~Company~~Profit ~~ESPP will be terminated effective as of (and subject~~ to ~~the~~more ~~occurrence~~closely ~~of)~~conform ~~immediately prior~~ to the ~~Effective Time. All shares of~~ Company’s ~~Common~~strategies ~~Stock purchased on the final exercise date under the Company ESPP will be cancelled at the Effective Time~~ and ~~converted into the right to receive the Per Share Price in accordance with the terms of the Merger Agreement~~initiatives. AtThese ~~the~~measures ~~Effective Time, any funds credited as of such date under the Company ESPP that~~ are not ~~used~~being to purchase shares on the final exercise date within the associated accumulated payroll withholding account for each participant under the Company ESPP will be refunded to the applicable participant in accordance with the terms of the Company ESPPrecasted.

~~Closing~~A ~~Conditions~~reconciliation of Instructure’s historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

~~The~~Non-GAAP ~~closing~~Operating ofIncome; ~~the~~Non-GAAP ~~Merger~~Operating ~~(the~~Income ~~“Closing”)~~Margin. We isdefine ~~subject~~non-GAAP tooperating ~~certain~~income ~~conditions,~~as ~~including~~loss ~~(i) the~~from ~~Company’s~~operations ~~receipt~~excluding of the ~~written~~impact ~~consent~~ of ~~the~~stock-based ~~holders~~compensation, oftransaction acosts, ~~majority~~globalization ofcosts, ~~the~~restructuring ~~outstanding~~costs, ~~Company~~technology ~~Common~~modernization ~~Stock~~costs, ~~entitled~~other tonon-recurring ~~vote~~costs, onand ~~the~~amortization ~~Merger~~of ~~and~~acquisition-related ~~the~~intangibles. ~~Transactions~~We ~~adopting~~believe ~~the~~non-GAAP ~~Merger~~operating ~~Agreement~~income ~~(which~~is ~~was~~useful ~~satisfied~~in onevaluating ~~July~~our ~~25,~~operating ~~2024)~~performance ~~(the~~compared ~~“Written~~to ~~Consent”),~~that ~~(ii)~~of ~~the~~other ~~expiration~~companies orin ~~termination~~our ofindustry, ~~any~~as ~~applicable~~this ~~waiting~~metric ~~periods~~generally ~~under~~eliminates the ~~Hart-Scott-Rodino~~effects ~~Antitrust Improvements Act~~ of ~~1976, (iii)~~ certain ~~other~~items ~~approvals~~that ~~and~~may ~~clearances~~vary byfor ~~government~~different ~~authorities,~~companies ~~(iv)~~for atreasons ~~least~~unrelated 20to ~~calendar~~overall ~~days~~operating ~~have~~performance. ~~elapsed~~Although ~~since~~we ~~the~~exclude ~~Company’s mailing to~~ the ~~Company’s~~amortization ~~stockholders~~ of anacquisition-related ~~information~~intangibles ~~statement~~from ~~(as contemplated by Regulation 14C of~~ the ~~Securities~~non-GAAP ~~Exchange Act of 1934~~measure, asmanagement ~~amended~~believes ~~(the~~it ~~“Exchange~~is ~~Act”))~~important ~~and (v) other customary conditions~~ for ainvestors ~~transaction~~to ofunderstand ~~this~~that ~~type,~~ such asintangible ~~the~~assets ~~absence~~were ofrecorded ~~any~~as ~~legal~~part ~~restraint prohibiting the consummation~~ of ~~the~~purchase ~~Transactions~~accounting and ~~the~~contribute ~~absence~~to ofrevenue ~~any~~generation. ~~Company~~Non-GAAP ~~Material~~operating ~~Adverse~~income ~~Effect~~margin ~~(as~~is defined inas ~~the~~non-GAAP ~~Merger~~operating ~~Agreement).~~income divided by revenue.

~~Termination~~Adjusted ~~Rights~~EBITDA; Adjusted EBITDA Margin. EBITDA is defined as earnings before debt-related costs, including interest and loss on debt extinguishment, benefit for taxes, depreciation, and amortization. We further adjust EBITDA to exclude certain items of a significant or unusual nature, including stock-based compensation, transaction costs, globalization costs, restructuring costs, technology modernization costs, other non-recurring costs, effects of foreign currency transaction (gains) and losses, and amortization of acquisition-related intangibles. Although we exclude the amortization of acquisition-related intangibles from this non-GAAP measure, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue.

~~The~~Non-GAAP ~~Merger~~Net ~~Agreement~~Income. ~~may~~We bedefine ~~terminated~~non-GAAP bynet ~~the~~income ~~Company~~as ornet ~~Parent~~loss inexcluding the ~~following~~impact ~~circumstances:~~of ~~(i) if~~stock-based ~~the~~compensation, ~~Merger~~amortization isof ~~not~~acquisition-related ~~consummated~~intangibles, byloss ~~11:59~~on ~~p.m.,~~extinguishment ~~New~~of ~~York~~debt, ~~City~~transaction ~~time~~costs, onglobalization ~~March~~costs, 25restructuring costs, ~~2025~~technology ~~(the~~modernization ~~“Termination~~costs, ~~Date”)~~other non-recurring costs, and effects of foreign currency transaction (iigains) ifand losses that we do not believe are reflective of our ongoing operations. The tax effects of the ~~other~~adjustments ~~party~~are ~~breaches~~calculated ~~its~~using ~~representations~~the statutory tax rate, ~~warranties~~taking orinto ~~covenants~~consideration the nature of the item and the relevant taxing jurisdiction. We believe Non-GAAP net income is useful in aevaluating ~~manner~~our operating performance compared to that ~~would~~of ~~cause~~other companies in our industry, as this metric generally eliminates the effects of certain ~~conditions~~items that may vary for different companies for reasons unrelated to overall operating performance. Although we exclude the ~~Closing~~amortization ~~set~~of ~~forth~~acquisition-related inintangibles from the ~~Merger~~non-GAAP ~~Agreement~~measure, management believes it is important for investors to ~~not~~understand bethat ~~satisfied~~such intangible assets were recorded as part of purchase accounting and ~~fails~~contribute to ~~timely~~revenue ~~cure~~generation. ~~such~~Basic ~~breach~~non-GAAP ~~within~~net ~~the~~income ~~period~~per ~~provided~~common share is computed by dividing non-GAAP net income by the ~~terms~~weighted-average number of common shares outstanding for the ~~Merger~~period. ~~Agreement,~~Diluted ornon-GAAP ~~(iii) if~~net ~~any~~income ~~judgment,~~per ~~law~~common orshare ~~order~~is ~~prohibiting~~computed ~~the~~by ~~Merger~~giving ~~has~~effect ~~become~~to ~~final~~all ~~and~~potentially ~~non-appealable.~~dilutive common stock equivalents outstanding for the period.

InFree ~~addition~~Cash Flow, ~~the~~Unlevered ~~Merger~~Free ~~Agreement~~Cash ~~may~~Flow beand ~~terminated~~Adjusted ~~(i) by~~Unlevered ~~the~~Free ~~Company,~~Cash atFlow. ~~any~~We ~~time~~define ~~prior~~free tocash ~~receipt~~flow ofas ~~Written~~net ~~Consent~~cash ~~(which~~provided ~~was~~by ~~satisfied~~or onused ~~July 25, 2024),~~ in ~~order~~operating toactivities ~~enter~~less ~~into~~purchases aof ~~definitive~~property ~~agreement~~and ~~providing~~equipment ~~for~~and aintangible ~~superior proposal~~assets, ~~(ii) by~~net ~~the~~of ~~Company,~~proceeds atfrom ~~any~~disposals ~~time prior to the Effective Time, (A) if all conditions~~ of ~~Parent~~property and ~~Merger~~equipment. ~~Sub~~We todefine ~~consummate~~unlevered ~~the~~free ~~Closing~~cash ~~are~~flow ~~satisfied~~as orfree ~~waived~~cash ~~(subject~~flow toadjusted ~~customary~~for ~~exceptions),~~cash ~~(B)~~paid ~~Parent~~for ~~fails~~interest toon ~~consummate~~outstanding ~~the~~debt ~~Transactions~~and ~~two~~cash ~~business~~settled ~~days~~stock-based ~~after~~compensation. ~~the~~We ~~first~~define ~~date~~adjusted onunlevered ~~which~~free itcash isflow ~~required~~as tounlevered ~~consummate~~free ~~the~~cash ~~Closing~~flow ~~pursuant~~adjusted tofor ~~the~~transaction ~~Merger Agreement~~costs, ~~(C) the~~globalization ~~Company~~costs, ~~has~~restructuring ~~irrevocably~~costs, ~~confirmed~~technology tomodernization ~~Parent~~costs, inand ~~writing~~other ~~that~~non-recurring ~~all~~costs ~~conditions~~paid ofin ~~the~~cash. ~~Company~~We tobelieve ~~consummate~~free ~~the~~cash ~~Closing~~flow, ~~have~~unlevered ~~been~~free ~~satisfied~~cash ~~(subject~~flow ~~to customary exceptions) or that it is irrevocably waiving any such unsatisfied conditions~~ and isadjusted ~~prepared~~unlevered tofree ~~consummate~~cash ~~the~~flow ~~Closing~~facilitate ~~and (D) Parent fails~~ period-to-period ~~consummate~~comparisons ~~the Closing within three business days after the later~~ of (x) the date on which the Closing should have occurred pursuant to the Merger Agreement or (y) the date on which Parent receives the irrevocable confirmation of the Company described in the foregoing clause (C), (iii) by Parent, if the Written Consent is not provided prior to 11:50 pliquidity.~~m.,~~ ~~New~~We ~~York~~consider ~~City~~free ~~time,~~cash ~~on July 26~~flow, ~~2024~~unlevered ~~(which~~free ~~was~~cash ~~satisfied~~flow ~~on July 25, 2024)~~ and ~~(iv) by~~adjusted ~~Parent,~~unlevered iffree atcash ~~any~~flow ~~time prior~~ to ~~receipt~~be ofimportant ~~the~~measures ~~Written~~because ~~Consent~~they ~~(which~~measure ~~was~~the ~~satisfied~~amount onof ~~July~~cash ~~25,~~we ~~2024),~~generate ~~the~~and ~~Board~~reflect changes ~~its~~in ~~recommendation.~~working capital.

~~Termination~~Non-GAAP ~~Fees~~Cost of Revenue and Non-GAAP Operating Expenses. We define non-GAAP cost of revenue and non-GAAP operating expenses as GAAP cost of revenue and GAAP operating expenses, respectively, excluding the impact of stock-based compensation, transaction costs, globalization costs, restructuring costs, technology modernization costs, other non-recurring costs, and amortization of acquisition-related intangibles that we do not believe are reflective of our ongoing operations. Although we exclude the amortization of acquisition-related intangibles from the non-GAAP measures, management believes it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

IfNon-GAAP ~~(i) the~~Gross ~~Merger~~Profit; ~~Agreement~~Non-GAAP isGross ~~validly~~Profit ~~terminated by Parent (A) because the Effective Time has not occurred by the Termination Date, (B) due to the Company’s failure to deliver the Written Consent to Parent by 11:50 p~~Margin.~~m.,~~ ~~New~~We ~~York~~define ~~City~~non-GAAP ~~time,~~gross onprofit ~~July~~as ~~26,~~gross ~~2024~~profit ~~(which~~excluding ~~was satisfied on July 25, 2024) or (C) due to~~ the ~~Company’s~~impact ~~breach or failure to perform any~~ of ~~its~~stock-based ~~representations~~compensation, warranties or covenants contained in the Merger Agreement in a manner that causes certain conditions to Closing to not be satisfied (subject to the cure period set forth in the Merger Agreement), (ii) prior to such termination, a third party publicly announced or disclosed to the Board (and did not withdraw or otherwise abandon) an alternative control transaction ~~for the acquisition of the Company and (iii) concurrently or within 12 months following such termination~~costs, ~~either~~globalization ~~any alternative control transaction is consummated or the Company enters into a definitive agreement providing for the consummation of an alternative control transaction~~costs, ~~the~~restructuring ~~Company will be required to pay Parent a termination fee equal to $109~~costs,~~000,000~~ ~~(the~~technology ~~“Company~~modernization ~~Termination Fee”). The Company was also required to pay the Company Termination Fee if~~costs, atand ~~any~~amortization ~~time prior to receipt~~ of ~~the~~acquisition-related ~~Written~~intangibles. Consent (which was satisfied on July 25, 2024), (i) Parent terminated the Merger Agreement because the Board changed its recommendation regarding the Merger or (ii) the Company terminated the Merger Agreement to enter into a definitive agreement providing for a superior proposal, and the Company had complied in all material respects with its nonNon-~~solicitation~~GAAP ~~covenant~~Gross ~~with~~Profit ~~respect~~Margin tois ~~such~~defined ~~superior proposal~~ as ~~set~~Non-GAAP ~~forth~~gross inprofit ~~the~~divided ~~Merger~~by ~~Agreement~~revenue.

~~Parent~~Subscription ~~will~~and beSupport ~~required~~Non-GAAP toGross ~~pay~~Profit; ~~the~~Subscription ~~Company~~and aSupport ~~termination~~Non-GAAP ~~fee~~Gross ~~equal~~Profit toMargin. ~~$218,000,000~~We ~~(the~~define ~~“Parent~~subscription ~~Termination~~and ~~Fee”)~~support ifNon-GAAP ~~(i) the~~gross ~~Company~~profit ~~terminates~~as ~~the~~subscription ~~Merger~~and ~~Agreement~~support ~~due~~gross toprofit ~~Parent’s~~excluding orthe ~~Merger~~impact ~~Sub’s breach~~ of orstock-based ~~failure~~compensation, totransaction ~~perform any of its respective representations~~costs, ~~warranties~~globalization ~~or covenants contained in the Merger Agreement in a manner that causes certain conditions to Closing to not be satisfied (subject to the cure period set forth in the Merger Agreement)~~costs, ~~(ii)~~restructuring ~~the Company terminates the Merger Agreement (A) if all conditions of Parent and Merger Sub to consummate the Closing have been satisfied or waived (subject to customary exceptions)~~costs, ~~(B)~~technology ~~Parent~~modernization ~~fails to consummate the Transactions two business days after the first date on which it is required to consummate the Closing pursuant to the Merger Agreement~~costs, ~~(C) the~~and ~~Company~~amortization ~~has irrevocably confirmed to Parent in writing that all conditions~~ of ~~the~~acquisition-related ~~Company~~intangibles. toSubscription ~~consummate~~and ~~the~~support ~~Closing~~non-GAAP ~~have~~gross ~~been~~profit ~~satisfied~~margin ~~(subject to customary exceptions) or that it~~ is ~~irrevocably~~defined ~~waiving~~as ~~any~~subscription ~~such unsatisfied conditions~~ and issupport ~~prepared~~non-GAAP togross ~~consummate~~profit ~~the~~divided Closing and (D) Parent fails to consummate the Closing within three business days after the later of (x) the date on which the Closing should have occurred pursuant to the Merger Agreement or (y) the date on which Parent receives the irrevocable confirmation of the Company described in the foregoing clause (C) or (iii) Parent terminates the Merger Agreement because the Effective Time has not occurred by ~~the~~subscription ~~Termination Date~~ and, atsupport ~~such time, the Company could have terminated the Merger Agreement pursuant to the foregoing clauses (i) and (ii)~~revenue.

~~Financing~~Net ~~Commitments~~Debt; Net Leverage Ratio. We define net debt as total outstanding debt, less cash, cash equivalents, restricted cash, and funds held on behalf of customers. Management uses this supplemental non-GAAP measure to evaluate the Company’s leverage. Net leverage ratio is computed by dividing net debt by adjusted EBITDA.

~~Parent~~Forward-Looking and Merger Sub have secured committed financing, consisting of a combination of equity financing to be provided by an investment fund affiliated with KKR, on the terms and subject to the conditions set forth in an equity commitment letter provided by such fund and debt financing to be provided by certain lenders, on the terms and subject to the conditions set forth in a debt commitment letter. Statements

~~The~~This ~~investment~~report ~~fund~~contains ~~affiliated~~“forward-looking” ~~with~~statements, ~~KKR~~which ~~has~~are ~~also~~subject ~~provided~~to athe ~~limited~~safe ~~guarantee~~harbor ~~(the~~provisions ~~“Limited~~of ~~Guarantee”)~~the ~~with~~Private ~~respect~~Securities toLitigation ~~the~~Reform ~~payment~~Act of ~~the~~1995, ~~termination~~including ~~fee~~statements ~~payable~~regarding bythe ~~Parent~~Company’s inexpectations relating to the ~~event~~proposed itmerger ~~becomes~~and ~~payable~~related transactions, asthe ~~well~~Company’s asgrowth, ~~certain~~customer ~~reimbursement~~demand ~~obligations~~and ~~that~~application ~~may~~adoption, bethe ~~owed~~Company’s byresearch ~~Parent~~and ~~pursuant~~development toefforts and future application releases, the ~~Merger~~Company’s ~~Agreement~~business strategy, ~~subject~~statements toabout ~~the~~artificial ~~terms~~intelligence and ~~conditions~~the ~~set~~Company’s ~~forth~~expectations inregarding ~~the~~future ~~Merger~~revenue, ~~Agreement~~expenses, cash flows and ~~the~~net ~~Limited~~income ~~Guarantee~~or loss.

~~Description~~These statements are not guarantees of ~~Merger~~future ~~Agreement~~performance, ~~Not~~but ~~Complete~~are based on management’s expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: the risk that the proposed merger may not be completed in a timely manner or at all, which may adversely affect the Company’s business and the price of the common stock, the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement related to the proposed merger, including in circumstances requiring the Company to pay a termination fee, the ability to obtain the necessary financing arrangements set forth in the commitment letters received in connection with the proposed merger, potential litigation relating to the proposed merger that could be instituted against the parties to the merger agreement related to the proposed merger or their respective directors, managers or officers, including the effects of any outcomes related thereto, certain restrictions during the pendency of the merger that may impact the Company’s ability to pursue certain business opportunities or strategic transactions, uncertainty as to timing of completion of the proposed merger, risks that the benefits of the proposed merger are not realized when and as expected, risks associated with the continued economic uncertainty, including persistent inflation, labor shortages, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession, reduced spending by customers and geopolitical instability; failure to continue our recent growth rates; the effects of increased usage of, or interruptions or performance problems associated with, our learning platform; the impact on our business and prospects from health pandemics and epidemics; our history of losses and expectation that we will not be profitable for the foreseeable future; or ability to acquire new customers and successfully retain existing customers; failure of the markets for our applications to develop at anticipated rates; failure to manage our growth effectively; and changes in the spending policies or budget priorities for government funding of Higher Education and K-12 institutions.

~~The~~These ~~foregoing description of the Merger Agreement~~ and ~~the~~other ~~Transactions~~important isrisk ~~only~~factors aare ~~summary,~~described ~~does~~more ~~not~~fully ~~purport to be complete and is subject to, and qualified~~ in ~~its entirety by reference to,~~ the ~~full~~Company’s ~~text~~most ofrecent ~~the~~Annual ~~Merger Agreement, which is attached as Exhibit 2.1 to this Current~~ Report on Form 810-K and issubsequent ~~incorporated~~Quarterly byReports ~~reference~~on ~~herein.~~Form ~~The~~10-Q ~~Merger Agreement~~ and ~~the~~other ~~above~~documents ~~description~~filed ~~have been included to provide investors and security holders~~ with ~~information regarding~~ the ~~terms~~Securities ofand ~~the~~Exchange ~~Merger~~Commission ~~Agreement.~~and ~~They~~could ~~are~~cause ~~not~~actual ~~intended~~results to ~~provide~~vary ~~any~~from ~~other~~expectations. ~~factual~~All information ~~about~~provided ~~the Company, Parent or Merger Sub. The representations, warranties, covenants and other agreements contained~~ in ~~the~~this ~~Merger~~press ~~Agreement~~release ~~were~~is ~~made only for purposes of that agreement and~~ as of ~~specific dates; were solely for~~ the ~~benefit~~date ofhereof ~~the parties to the Merger Agreement;~~ and ~~may~~Instructure beundertakes ~~subject~~no toduty ~~limitations agreed upon by the parties, including being qualified and modified by confidential disclosures made by each contracting party~~ to ~~the~~update ~~other~~this for the purposes of allocating contractual risk between them. Investors should be aware that the representations, warranties, covenants and other agreements or any description thereof may not reflect the actual state of facts or condition of the Company, Parent or Merger Sub. Moreover, information ~~concerning~~except ~~the~~as ~~subject~~required ~~matter~~by ~~of the representations, warranties, covenants and other agreements may change after the date of the Merger Agreement~~law. Further, investors should read the Merger Agreement not in isolation, but only in conjunction with the other information that the Company includes in reports, statements and other filings it makes with the Securities and Exchange Commission (the “SEC”).

Item 5.07 Submission of Matters to a Vote of Security Holders.


INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
	June 30, 2024			December 31, 2023
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	137,743		$	341,047
Funds held on behalf of customers		6,470			—
Accounts receivable—net		223,220			67,193
Prepaid expenses		53,752			12,082
Deferred commissions		15,085			13,705
Other current assets		6,658			4,797
Total current assets		442,928			438,824
Property and equipment, net		14,905			13,479
Right-of-use assets		9,161			9,002
Goodwill		1,858,136			1,265,316
Intangible assets, net		611,788			399,712
Noncurrent prepaid expenses		2,841			4,182
Deferred commissions, net of current portion		13,350			13,816
Deferred tax assets		6,564			6,739
Other assets		4,530			6,908
Total assets	$	2,964,203		$	2,157,978
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	20,075		$	23,589
Customer fund deposits		6,470			—
Accrued liabilities		40,470			23,760
Lease liabilities		6,076			7,513
Long-term debt, current		76,525			4,013
Deferred revenue		330,429			291,784
Total current liabilities		480,045			350,659
Long-term debt, net of current portion		1,140,139			482,387
Deferred revenue, net of current portion		9,574			10,876
Lease liabilities, net of current portion		10,806			9,246
Deferred tax liabilities		46,191			14,420
Other long-term liabilities		5,747			4,898
Total liabilities		1,692,502			872,486
Stockholders’ equity:
Common stock		1,465			1,452
Additional paid-in capital		1,647,290			1,619,020
Accumulated deficit		(377,054	)		(334,980	)
Total stockholders’ equity		1,271,701			1,285,492
Total liabilities and stockholders’ equity	$	2,964,203		$	2,157,978

On July 25 2024, the holders of a majority of the outstanding Company Common Stock entitled to vote thereon executed a written stockholder consent approving and adopting the Merger Agreement and the Transactions.


INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(unaudited)			(unaudited)			(unaudited)
Revenue:
Subscription and support	$	157,569		$	118,569		$	302,226		$	237,049
Professional services and other		12,875			12,501			23,673			22,864
Total revenue		170,444			131,070			325,899			259,913
Cost of revenue:
Subscription and support		49,427			38,377			95,739			77,187
Professional services and other		9,013			6,912			17,054			13,934
Total cost of revenue		58,440			45,289			112,793			91,121
Gross profit		112,004			85,781			213,106			168,792
Operating expenses:
Sales and marketing		60,970			52,159			120,226			103,009
Research and development		31,240			21,482			58,776			45,184
General and administrative		20,985			14,218			41,375			28,591
Total operating expenses		113,195			87,859			220,377			176,784
Loss from operations		(1,191	)		(2,078	)		(7,271	)		(7,992	)
Other income (expense):
Interest income		509			320			3,017			1,661
Interest expense		(26,413	)		(10,289	)		(49,009	)		(19,774	)
Other income (expense)		(518	)		402			(2,353	)		478
Loss on extinguishment of debt		—			—			(189	)		—
Total other income (expense), net		(26,422	)		(9,567	)		(48,534	)		(17,635	)
Loss before income tax benefit		(27,613	)		(11,645	)		(55,805	)		(25,627	)
Income tax benefit		6,664			672			13,731			2,797
Net loss and comprehensive loss	$	(20,949	)	$	(10,973	)	$	(42,074	)	$	(22,830	)
Net loss per common share, basic and diluted	$	(0.14	)	$	(0.08	)	$	(0.29	)	$	(0.16	)
Weighted-average common shares used in computing basic and diluted net loss per common share		146,107			143,647			145,781			143,381

Pursuant to rules adopted by the SEC under the Exchange Act, a Schedule 14C information statement will be filed with the SEC and mailed or provided to the stockholders of the Company.


INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
	(unaudited)			(unaudited)			(unaudited)
Operating Activities:
Net loss	$	(20,949	)	$	(10,973	)	$	(42,074	)	$	(22,830	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment		1,399			1,092			2,742			2,295
Amortization of intangible assets		42,898			35,744			86,224			71,493
Amortization of deferred financing costs		1,426			295			2,452			589
Stock-based compensation		15,552			11,676			27,997			21,311
Deferred income taxes		(6,777	)		(1,347	)		(14,628	)		(4,406	)
Right-of-use assets		860			1,312			216			2,303
Other		768			(82	)		2,127			184
Changes in assets and liabilities:
Accounts receivable, net		(171,532	)		(144,963	)		(147,183	)		(137,334	)
Prepaid expenses and other assets		13,679			12,877			(38,782	)		(26,680	)
Deferred commissions		(2,806	)		878			(914	)		1,822
Accounts payable and accrued liabilities		14,008			5,459			3,562			(1,718	)
Deferred revenue		105,003			115,016			19,865			41,358
Lease liabilities		(1,750	)		(1,839	)		(307	)		(3,751	)
Other liabilities		61			(72	)		(1,958	)		(396	)
Net cash provided by (used in) operating activities		(8,160	)		25,073			(100,661	)		(55,760	)
Investing Activities:
Purchases of property and equipment		(1,865	)		(1,573	)		(3,746	)		(2,900	)
Proceeds from sale of property and equipment		14			29			22			35
Business acquisitions, net of cash acquired		—			—			(821,739	)		—
Net cash used in investing activities		(1,851	)		(1,544	)		(825,463	)		(2,865	)
Financing Activities:
Proceeds from issuance of common stock from employee equity plans		—			—			3,228			3,295
Shares repurchased for tax withholdings on vesting of restricted stock units		(1,682	)		(1,709	)		(3,250	)		(2,988	)
Proceeds from issuance of term debt, net of discount		(427	)		—			663,892			—
Repayments of long-term debt		(2,993	)		(1,250	)		(5,986	)		(2,500	)
Advances from revolving credit facility		70,000			—			70,000			—
Payments for financing costs		—			(84	)		—			(84	)
Changes in customer fund deposits		1,184			—			389			—
Net cash provided by (used in) financing activities		66,082			(3,043	)		728,273			(2,277	)
Foreign currency impacts on cash, cash equivalents, restricted cash, and funds held on behalf of customers		(159	)		241			(1,190	)		457
Net increase (decrease) in cash, cash equivalents, restricted cash, and funds held on behalf of customers		55,912			20,727			(199,041	)		(60,445	)
Cash, cash equivalents, restricted cash, and funds held on behalf of customers, beginning of period		89,255			109,094			344,208			190,266
Cash, cash equivalents, restricted cash, and funds held on behalf of customers, end of period	$	145,167		$	129,821		$	145,167		$	129,821
Supplemental cash flow disclosure:
Cash paid for taxes	$	2,033		$	1,638		$	3,048		$	1,819
Cash paid for interest on outstanding debt	$	24,678		$	9,578		$	40,124		$	17,674
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid	$	43		$	138		$	43		$	138

~~Cautionary~~The ~~Statement~~following ~~Regarding~~provides ~~Forward-Looking~~a ~~Statements~~reconciliation of cash, cash equivalents, restricted cash, and funds held on behalf of customers to the amounts reported on the consolidated balance sheets. Restricted cash has been disclosed in Other assets as it is associated with letters of credit obtained to secure office space from our various lease agreements and other contractual cash collateral arrangements.

This Current Report on Form 8-K contains and the Company’s other filings and press releases may contain forward-looking statements. All statements other than statements of historical fact, including statements about the proposed acquisition of the Company, are forward-looking statements. Forward-looking statements give the Company’s current expectations relating to the Merger and the Transactions, the Company’s financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, the Company.


INSTRUCTURE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
	As of June 30,
	2024		2023
Cash and cash equivalents	$	137,743	$	126,003
Restricted cash		954		3,818
Funds held on behalf of customers		6,470		—
Total cash, cash equivalents, restricted cash, and funds held on behalf of customers	$	145,167	$	129,821

~~Because~~RECONCILIATIONS ~~such~~OF ~~statements~~GAAP ~~are~~MEASURES ~~based~~TO on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including: (i) the risk that the proposed Merger may not be completed in a timely manner or at all, which may adversely affect the Company’s business and the price of the Company Common Stock; (ii) the failure to satisfy any of the conditions to the consummation of the proposed Transactions, including the receipt of certain regulatory approvals; (iii) the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement, including in circumstances requiring the Company to pay a termination fee; (iv) the effect of the announcement or pendency of the proposed Transactions on the Company’s business relationships, operating results and business generally; (v) risks that the proposed Transactions disrupts the Company’s current plans and operations; (vi) the Company’s ability to retain, hire and integrate skilled personnel including the Company’s senior management team and maintain relationships with key business partners and customers, and others with whom it does business, in light of the proposed Transactions; (vii) risks related to diverting management’s attention from the Company’s ongoing business operations; (viii) unexpected costs, charges or expenses resulting from the proposed Transactions; (ix) the ability to obtain the necessary financing arrangements set forth in the commitment letters received in connection with the Merger; (x) potential litigation relating to the Merger that could be instituted against the parties to the Merger Agreement or their respective directors, managers or officers, including the effects of any outcomes related thereto; (xi) the impact of adverse general and industryNON-~~specific~~GAAP economic and market conditions; (xii) certain restrictions during the pendency of the Merger that may impact the Company’s ability to pursue certain business opportunities or strategic transactions; (xiii) risks caused by MEASURES

delays in upturns or downturns being reflected in the Company’s financial position and results of operations; (xiv) the impact of inflation, rising interest rates, and global conflicts; (xv) uncertainty as to timing of completion of the proposed Merger; (xvi) risks that the benefits of the Merger are not realized when and as expected; and (xvii) other factors described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and the Company’s subsequent Quarterly Reports on Form 10-Q, each filed with the SEC. The Company cautions you that the important factors referenced above may not contain all of the factors that are important to you. In addition, the Company cannot assure you that the Company will realize the results or developments expected or anticipated or, even if substantially realized, that they will result in the consequences or affect the Company or the Company’s operations in the way the Company expects. The forward-looking statements included in this Current Report on Form 8-K are made only as of the date hereof. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME
(in thousands)
(unaudited)
	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Loss from operations	$	(1,191	)	$	(2,078	)	$	(7,271	)	$	(7,992	)
Stock-based compensation		15,552			11,856			27,997			21,866
Transaction costs(1)		6,264			2,317			11,879			6,153
Globalization costs(2)		3,481			83			4,371			92
Restructuring costs(3)		2,724			1,514			7,654			4,741
Technology modernization costs(4)		2,246			695			4,512			910
Other non-recurring costs(5)		22			24			124			80
Amortization of acquisition-related intangibles		42,898			35,744			86,224			71,492
Non-GAAP operating income	$	71,996		$	50,155		$	135,490		$	97,342

GAAP operating margin		(0.7	)%		(1.6	)%		(2.2	)%		(3.1	)%
Non-GAAP operating margin		42.2	%		38.3	%		41.6	%		37.5	%

Additional Information and Where to Find It


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Net loss	$	(20,949	)	$	(10,973	)	$	(42,074	)	$	(22,830	)
Interest on outstanding debt and loss on debt extinguishment		26,495			10,287			49,280			19,772
Income tax benefit		(6,664	)		(672	)		(13,731	)		(2,797	)
Depreciation		1,399			1,092			2,742			2,295
Amortization		—			—			—			2
Stock-based compensation		15,552			11,856			27,997			21,866
Transaction costs(1)		6,264			2,317			11,879			6,153
Globalization costs(2)		3,481			83			4,371			92
Restructuring costs(3)		2,724			1,520			7,654			4,848
Technology modernization costs(4)		2,246			695			4,512			910
Other non-recurring costs(5)		22			24			124			80
Effects of foreign currency transaction (gains) and losses		515			(397	)		2,347			(748	)
Amortization of acquisition-related intangibles		42,898			35,744			86,224			71,492
Interest income		(563	)		(316	)		(2,962	)		(1,617	)
Adjusted EBITDA	$	73,420		$	51,260		$	138,363		$	99,518

Net loss margin		(12.3	)%		(8.4	)%		(12.9	)%		(8.8	)%
Adjusted EBITDA margin		43.1	%		39.1	%		42.5	%		38.3	%

This Current Report on Form 8-K is being made in respect of the pending Merger involving the Company, Parent and Merger Sub. The Company will prepare an information statement for its stockholders, containing the information with respect to the Merger specified in Schedule 14C promulgated under the Exchange Act and describing the pending Merger. When completed, a definitive information statement will be mailed or provided to the Company’s stockholders. This Current Report on Form 8-K is not a substitute for the information statement, or any other document, that the Company may file with the SEC or send to its stockholders in connection with the Merger.


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Net loss	$	(20,949	)	$	(10,973	)	$	(42,074	)	$	(22,830	)
Stock-based compensation		15,552			11,856			27,997			21,866
Amortization of acquisition-related intangibles		42,898			35,744			86,224			71,492
Loss on extinguishment of debt		—			—			189			—
Transaction costs(1)		6,264			2,317			11,879			6,153
Globalization costs(2)		3,481			83			4,371			92
Restructuring costs(3)		2,724			1,520			7,654			4,848
Technology modernization costs(4)		2,246			695			4,512			910
Other non-recurring costs(5)		22			24			124			80
Effects of foreign currency transaction (gains) and losses		515			(397	)		2,347			(748	)
Tax effects of adjustments(6)		(18,309	)		(12,895	)		(36,103	)		(26,013	)
Non-GAAP net income	$	34,444		$	27,974		$	67,120		$	55,850
Non-GAAP net income per common share, basic	$	0.24		$	0.19		$	0.46		$	0.39
Non-GAAP net income per common share, diluted	$	0.23		$	0.19		$	0.46		$	0.39
Weighted average common shares used in computing basic Non-GAAP net income per common share		146,107			143,647			145,781			143,381
Weighted average common shares used in computing diluted Non-GAAP net income per common share		146,656			145,150			146,461			144,979

INVESTORS ARE URGED TO CAREFULLY READ THE INFORMATION STATEMENT REGARDING THE PENDING MERGER AND ANY OTHER RELEVANT DOCUMENTS IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PENDING MERGER.


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP GROSS PROFIT
(in thousands)
(unaudited)
	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Gross profit	$	112,004		$	85,781		$	213,106		$	168,792
Stock-based compensation		1,735			1,096			2,944			1,889
Transaction costs(1)		264			495			436			675
Globalization costs(2)		1,027			—			1,267			—
Restructuring costs(3)		372			17			1,290			241
Technology modernization costs(4)		1,096			491			2,350			606
Amortization of acquisition-related intangibles		18,625			16,265			36,463			32,338
Non-GAAP gross profit	$	135,123		$	104,145		$	257,856		$	204,541

GAAP gross margin		65.7	%		65.4	%		65.4	%		64.9	%
Non-GAAP gross margin		79.3	%		79.5	%		79.1	%		78.7	%

The Company’s stockholders may obtain free copies of the documents the Company files with the SEC from the SEC’s website at www.sec.gov or through the Investor Relations page of the Company’s website at https://ir.instructure.com under the link “Financials” or by contacting the Company’s Investor Relations by e-mail at investors@instructure.com.


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP SUBSCRIPTION AND SUPPORT GROSS PROFIT
(in thousands)
(unaudited)
	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Subscription and support gross profit	$	108,142		$	80,192		$	206,487		$	159,862
Stock-based compensation		792			474			1,357			853
Transaction costs(1)		195			487			323			647
Globalization costs(2)		675			—			675			—
Restructuring costs(3)		230			11			764			30
Technology modernization costs(4)		1,094			491			2,272			606
Amortization of acquisition-related intangibles		18,625			16,265			36,463			32,338
Non-GAAP subscription and support gross profit	$	129,753		$	97,920		$	248,341		$	194,336

GAAP subscription and support gross margin		68.6	%		67.6	%		68.3	%		67.4	%
Non-GAAP subscription and support gross margin		82.3	%		82.6	%		82.2	%		82.0	%

No Offer


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF FREE CASH FLOW, UNLEVERED FREE CASH FLOW & ADJUSTED UNLEVERED FREE CASH FLOW
(in thousands)
(unaudited)
	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023

Net cash provided by (used in) operating activities	$	(8,160	)	$	25,073		$	(100,661	)	$	(55,760	)
Purchases of property and equipment		(1,865	)		(1,573	)		(3,746	)		(2,900	)
Proceeds from disposals of property and equipment		14			29			22			35
Free cash flow	$	(10,011	)	$	23,529		$	(104,385	)	$	(58,625	)
Cash paid for interest on outstanding debt		24,678			9,578			40,124			17,674
Cash settled stock-based compensation		—			183			—			557
Unlevered free cash flow	$	14,667		$	33,290		$	(64,261	)	$	(40,394	)
Transaction costs(7)		3,098			1,611			10,313			8,370
Globalization costs(7)		3,415			83			4,941			92
Restructuring costs(7)		3,809			2,000			6,661			5,309
Technology modernization costs(7)		662			46			2,647			231
Other non-recurring costs(7)		33			32			118			95
Adjusted unlevered free cash flow	$	25,684		$	37,062		$	(39,581	)	$	(26,297	)

No person has commenced soliciting proxies in connection with the proposed Transactions referenced in this Current Report on Form 8-K, and this Current Report on Form 8-K is neither an offer to purchase nor a solicitation of an offer to sell securities.


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NET DEBT
(in thousands)
(unaudited)
	June 30, 2024			December 31, 2023
Long-term principal, current	$	11,972		$	5,000
Long-term principal, net of current portion		1,158,292			486,250
Borrowings under revolving credit facility		70,000			—
Cash, cash equivalents, restricted cash, and funds held on behalf of customers		(145,167	)		(344,208	)
Net debt	$	1,095,097		$	147,042

Gross leverage ratio		4.9			2.3
Net leverage ratio		4.3			0.7

Item 9.01 Financial Statements and Exhibits.


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF TRAILING TWELVE MONTHS NON-GAAP ADJUSTED EBITDA
(in thousands)
(unaudited)
	Three months ended June 30,			Three months ended March 31,			Three months ended December 31			Three months ended September 30,
	2024			2024			2023			2023
Net loss	$	(20,949	)	$	(21,125	)	$	(5,767	)	$	(5,481	)
Interest on outstanding debt and loss on debt extinguishment		26,495			22,785			11,382			10,868
Income tax (benefit) expense		(6,664	)		(7,067	)		459			(1,920	)
Depreciation		1,399			1,343			1,305			1,186
Stock-based compensation		15,552			12,445			10,575			11,755
Transaction costs(1)		6,264			5,615			5,857			3,502
Globalization costs(2)		3,481			890			54			381
Restructuring costs(3)		2,724			4,930			2,085			541
Technology modernization costs(4)		2,246			2,266			817			543
Other non-recurring costs(5)		22			102			34			31
Effects of foreign currency transaction (gains) and losses		515			1,832			(3,343	)		2,420
Amortization of acquisition-related intangibles		42,898			43,326			35,731			35,744
Interest income		(563	)		(2,398	)		(2,716	)		(1,346	)
Adjusted EBITDA	$	73,420		$	64,944		$	56,473		$	58,224

(d) Exhibits.


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Three Months Ended June 30, 2024
(in thousands)
(unaudited)
	GAAP		Stock-based compensation expense			Transaction Costs			Globalization costs			Restructuring costs			Technology Modernization costs			Amortization of acquired intangibles			Non-GAAP
Cost of Revenue:
Subscription and support	$	49,427	$	(792	)	$	(195	)	$	(675	)	$	(230	)	$	(1,094	)	$	(18,625	)	$	27,816
Professional services and other		9,013		(943	)		(69	)		(352	)		(142	)		(2	)		—			7,505
Total cost of revenue	$	58,440	$	(1,735	)	$	(264	)	$	(1,027	)	$	(372	)	$	(1,096	)	$	(18,625	)	$	35,321

Exhibit No.	Description of Exhibit
INSTRUCTURE HOLDINGS, INC.
2.1	Agreement and Plan of Merger, by and among Instructure Holdings, Inc., Icon Parent Inc. and Icon Acquisition Sub Inc., dated July 25, 2024.*
RECONCILIATION OF NON-GAAP COST OF REVENUE
104	Cover Page Interactive Data file (embedded within the Inline XBRL document).
Three Months Ended June 30, 2023
(in thousands)
(unaudited)
	GAAP		Stock-based compensation expense			Transaction Costs			Globalization costs		Restructuring costs			Technology Modernization costs			Amortization of acquired intangibles			Non-GAAP
Cost of Revenue:
Subscription and support	$	38,377	$	(474	)	$	(487	)	$	—	$	(11	)	$	(491	)	$	(16,265	)	$	20,649
Professional services and other		6,912		(622	)		(8	)		—		(6	)		—			—			6,276
Total cost of revenue	$	45,289	$	(1,096	)	$	(495	)	$	—	$	(17	)	$	(491	)	$	(16,265	)	$	26,925

* Schedules and exhibits to the Merger Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Six Months Ended June 30, 2024
(in thousands)
(unaudited)
	GAAP		Stock-based compensation expense			Transaction Costs			Globalization costs			Restructuring costs			Technology Modernization costs			Amortization of acquired intangibles			Non-GAAP
Cost of Revenue:
Subscription and support	$	95,739	$	(1,357	)	$	(323	)	$	(675	)	$	(764	)	$	(2,272	)	$	(36,463	)	$	53,885
Professional services and other		17,054		(1,587	)		(113	)		(592	)		(526	)		(78	)		—			14,158
Total cost of revenue	$	112,793	$	(2,944	)	$	(436	)	$	(1,267	)	$	(1,290	)	$	(2,350	)	$	(36,463	)	$	68,043


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP COST OF REVENUE
Six Months Ended June 30, 2023
(in thousands)
(unaudited)
	GAAP		Stock-based compensation expense			Transaction Costs			Globalization costs		Restructuring costs			Technology Modernization costs			Amortization of acquired intangibles			Non-GAAP
Cost of Revenue:
Subscription and support	$	77,187	$	(853	)	$	(647	)	$	—	$	(30	)	$	(606	)	$	(32,338	)	$	42,713
Professional services and other		13,934		(1,036	)		(28	)		—		(211	)		—			—			12,659
Total cost of revenue	$	91,121	$	(1,889	)	$	(675	)	$	—	$	(241	)	$	(606	)	$	(32,338	)	$	55,372


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Three Months Ended June 30, 2024
(in thousands)
(unaudited)
	GAAP		Stock-based compensation expense			Transaction costs			Globalization costs			Restructuring costs			Technology Modernization costs			Other non-recurring costs			Amortization of acquired intangibles			Non-GAAP		GAAP % of revenue			Non-GAAP % of Revenue
Operating expenses:
Sales and marketing	$	60,970	$	(4,328	)	$	(893	)	$	(578	)	$	(1,103	)	$	—		$	—		$	(24,269	)	$	29,799		35.8	%		17.5	%
Research and development		31,240		(4,738	)		(625	)		(1,603	)		(203	)		(1,150	)		—			(4	)		22,917		18.3	%		13.4	%
General and administrative		20,985		(4,751	)		(4,482	)		(273	)		(1,046	)		—			(22	)		—			10,411		12.3	%		6.1	%
Total operating expenses	$	113,195	$	(13,817	)	$	(6,000	)	$	(2,454	)	$	(2,352	)	$	(1,150	)	$	(22	)	$	(24,273	)	$	63,127		66.4	%		37.0	%


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Three Months Ended June 30, 2023
(in thousands)
(unaudited)
	GAAP		Stock-based compensation expense			Transaction costs			Globalization costs			Restructuring costs			Technology Modernization costs			Other non-recurring costs			Amortization of acquired intangibles			Non-GAAP		GAAP % of revenue			Non-GAAP % of Revenue
Operating expenses:
Sales and marketing	$	52,159	$	(3,469	)	$	(1,139	)	$	—		$	(471	)	$	—		$	—		$	(19,475	)	$	27,605		39.8	%		21.1	%
Research and development		21,482		(3,480	)		(552	)		(74	)		(689	)		(99	)		—			(4	)		16,584		16.4	%		12.7	%
General and administrative		14,218		(3,811	)		(132	)		(8	)		(338	)		(104	)		(24	)		—			9,801		10.8	%		7.5	%
Total operating expenses	$	87,859	$	(10,760	)	$	(1,823	)	$	(82	)	$	(1,498	)	$	(203	)	$	(24	)	$	(19,479	)	$	53,990		67.0	%		41.3	%


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Six Months Ended June 30, 2024
(in thousands)
(unaudited)
	GAAP		Stock-based compensation expense			Transaction costs			Globalization costs			Restructuring costs			Technology Modernization costs			Other non-recurring costs			Amortization of acquired intangibles			Non-GAAP		GAAP % of revenue			Non-GAAP % of Revenue
Operating expenses:
Sales and marketing	$	120,226	$	(7,442	)	$	(1,634	)	$	(768	)	$	(2,436	)	$	—		$	—		$	(49,753	)	$	58,193		36.9	%		17.9	%
Research and development		58,776		(8,578	)		(1,774	)		(1,746	)		(1,282	)		(1,825	)		—			(8	)		43,563		18.0	%		13.4	%
General and administrative		41,375		(9,033	)		(8,035	)		(590	)		(2,646	)		(337	)		(124	)		—			20,610		12.7	%		6.3	%
Total operating expenses	$	220,377	$	(25,053	)	$	(11,443	)	$	(3,104	)	$	(6,364	)	$	(2,162	)	$	(124	)	$	(49,761	)	$	122,366		67.6	%		37.6	%


INSTRUCTURE HOLDINGS, INC.
RECONCILIATION OF NON-GAAP OPERATING EXPENSES
Six Months Ended June 30, 2023
(in thousands)
(unaudited)
	GAAP		Stock-based compensation expense			Transaction costs			Globalization costs			Restructuring costs			Technology Modernization costs			Other non-recurring costs			Amortization of acquired intangibles			Non-GAAP		GAAP % of revenue			Non-GAAP % of Revenue
Operating expenses:
Sales and marketing	$	103,009	$	(5,997	)	$	(1,767	)	$	—		$	(1,602	)	$	—		$	—		$	(39,145	)	$	54,498		39.6	%		20.9	%
Research and development		45,184		(6,654	)		(2,793	)		(83	)		(1,978	)		(130	)		2			(9	)		33,539		17.4	%		12.9	%
General and administrative		28,591		(7,326	)		(919	)		(8	)		(921	)		(173	)		(82	)		—			19,162		11.0	%		7.4	%
Total operating expenses	$	176,784	$	(19,977	)	$	(5,479	)	$	(91	)	$	(4,501	)	$	(303	)	$	(80	)	$	(39,154	)	$	107,199		68.0	%		41.2	%

FOOTNOTES

(1)

Represents expenses incurred with third parties as part of the Company’s merger and acquisition activity, including the transaction with KKR, due diligence, closing and post-closing integration activities.

(2)

Represents one-time expenses incurred in the Company's recent efforts to develop and mobilize a global workforce to better support its broadening customer base and expanding international operations.

(3)

Consists of restructuring-related costs, including executive recruiting, severance charges, and other workforce realignment costs. In addition to lease termination costs and disposal of fixed asset charges related to the Company's real estate consolidation efforts. The Company continues to execute a remote-first strategy, closing offices, inclusive of those acquired in merger and acquisition activity, and reducing office space globally. Beginning in 2023, the Company began restructuring its executive team.

(4)

Includes costs that are one-time in nature related to technology modernization to allow the Company's customers and users to have a more cohesive experience on its learning platform as a result of the various technologies acquired from historical acquisitions.

(5)

Represents expenses incurred for services provided by Thoma Bravo and their affiliates.

(6)

The table above includes the tax effects of the adjustments calculated by using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction.

(7)

Represents the cash impacts of transaction costs, globalization costs, restructuring costs, technology modernization costs, and other non-recurring costs, as previously defined above.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Instructure Holdings, Inc.

~~Instructure Holdings, Inc.~~

Date: July 25, 2024

/s/ Matthew A. Kaminer

August 2, 2024

/s/ Matthew A. Kaminer

Matthew A. Kaminer

Matthew A. KaminerChief Legal Officer

Chief Legal Officer

Filing Compare · INSTRUCTURE HOLDINGS, INC.