Q3 2021 Instructure Holdings Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the instructors third quarter 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. Please be advised today's conference is being recorded.
I would now like to turn the conference over to your first Speaker Apoc Investor Relations. Please.
Please go ahead.
Good afternoon, and welcome to instructors third quarter of 2021 earnings call, we will be discussing the results announced in our press release issued after the market closed today with me are in structures, Chief Executive Officer, Steve Daly, and Chief Financial Officer, Dale Boeing before we begin I'd like to remind you that today's conference call will include <unk>.
We're looking statements based on the company's current expectations. These forward looking statements are subject to a number of significant risks and uncertainties and our actual results may differ materially for a discussion of factors that could affect our future financial results and business. Please refer to the disclosure in today's earnings release, and other reports and filings we file from time to time.
With the Securities and Exchange Commission all of our statements are made as of today based on information available to us today and except as required by law, we assume no obligation to update any such statements. During the call. We will also refer to both GAAP and non-GAAP financial measures you can find a reconciliation of our GAAP to non-GAAP measures included in our press release.
<unk>, which is posted to the Investor Relations section of the website all of our non revenue financial measures. We discussed today are non-GAAP unless we state that the measure is a GAAP measure with that let me turn the call over to Steve.
Thank you April and good afternoon, everyone. Thank you all for joining us for our third quarter 2021 earnings call. During today's call Dale and I will provide details on our third quarter results and provide an update on 2020 one guidance.
As you can see in structure exhibited strong performance in Q3, which exceeded our previously communicated guidance third quarter GAAP revenue was $107 $2 million up 31% year over year, while allocated combined receipts or ACR was $108 $6 million up 24% year over year.
As a reminder, we think ACR, which adds back the impact of fair value adjustments to acquired unearned revenue is a better representation of the business as it gives investors better visibility into the underlying health of our business.
We delivered this growth while continuing to demonstrate the strength of our business model with 38% adjusted EBITDA margins in the quarter and strong unlevered free cash flow conversion.
Q3 was another strong quarter for instructor and I'm excited about the company's bright future.
Our strong Q3 results were fueled by new logo wins and the ongoing expansion of existing customer relationships I couldnt be prouder of these results, which showcased our commitment to growth while maintaining best in class margins, we have a diversified business and higher Ed.
K 12, and international with leading share in North America, and growing share across the world.
Our strong growth trajectory is underpinned by the powerful trend of digital transformation and education very favorable endurable federal funding dynamics and our mission critical platform that facilitates teaching and learning for over 30 million canvas users.
I now want to talk about five key highlights from the quarter today.
Our products continue to see high usage, even after most north American K 12, and higher Ed students return to the classroom. This fall in Q3 users of canvas continued to utilize the platform at levels that are significantly higher than pre pandemic levels. This strong usage reinforces our assessment that the LMS continues to be a.
A core platform for teaching and learning even as students and teachers returned to the classroom and is a cornerstone in the digital transformation of education.
Second in Q3, we saw strength in each of our markets given strong tailwind for digital transformation products projects and our key differentiators.
Usability reliability scalability and open a broad open platform.
We continue to win new logos and higher education, replacing incumbent legacy LMS solutions in the third quarter Johns Hopkins University announced that it will replace blackboard with canvas as the university's learning management system in advance of the 2022 'twenty 'twenty three academic school year, Miami Dade College also.
So they are moving from blackboard, Kansas for the 2022 school year.
In each case ease of use modern user interface superior mobile experience and powerful ability to integrate with third party tools were key differentiators higher education institutions continue to see in structure and Kansas as the next generation solution as they re platform for the future.
On the K 12 side, we continue to see strong momentum, including securing greenfield wins in districts that are not already using a paydown M. S.
Value of an enterprise grade LMS has become increasingly clear as this as districts recognize the importance of features uptime and our scalability.
Amidst accelerated digital transformation.
For example.
A top 10 school district in the U S with over 200000 students chose canvas as their paid LMS and Q3, even though they had access to a competitor's LMS for no cost. Despite this and their usage of the competitors' student information system known as the Sis They chose canvas because of our demonstrated success in large.
Districts are superior functionality and the appeal of our new and well received canvas K five offering.
This is a great example of the continued traction that we're seeing in the K 12 market and a great proof point of how we continue to invest for innovation.
We also continue to see outstanding growth in our international markets with revenue growth in excess of 30% during the third quarter.
Third we continue to see demand building for our products and this was very evident in our successful.
In structure Con customer event last month.
We had attendees from over 5000 institutions join us it and structure con more than five times pre pandemic levels at.
At the conference, we introduced new commercial partnerships and several significant new features to our learning platform, including mastery views simplified assessments, which utilize scoring algorithms that enables shorter more effective assessments and canvas for K, five which add eight age appropriate features to canvas for our youngest learners.
More than half of these attendees will need prospects highlighting the magnitude of the opportunity ahead of us.
Our existing customers continue to adopt additional project products beyond just the LMS demonstrating that we have a large opportunity in our installed base and our platform strategy is working.
As a result, a growing percentage of new bookings continues to come from cross sell opportunities and a growing percentage of new logo wins include more than one product.
One area, we see success in cross selling is our assessment management solutions or Ams.
For example, the Vermont virtual learning cooperative one of our existing statewide deals purchased our assessment product this quarter.
A key factor in their decision was the integration of the learning management system with these assessment management system. This.
This is not a singular event in another example, a large district in Tennessee chose our Ams for the same reasons the need to address the significant learning loss created by the pandemic and are more iterative approach to assessments will continue to fuel the digital transformation of assessment solutions.
We believe we are well positioned to help our customers address this very serious issue and our platform will continue to drive enduring growth through cross sell especially as we add more products through organic and inorganic innovation and integrate them within the learning platform.
Finally, we continue to use strategic M&A to increase our Tam and rapidly expand our learning platform capabilities.
I'm very excited to say that earlier today, we announced the acquisition of kimono, the leading cloud based provider of education data integration solutions and one of our key partners Kimonos integration platform enables different applications used in the classroom to share data with and connect to the schools applications. We believe the value of our plot.
Form increases as our partners and customers seamlessly share data between disconnected applications.
I'm also excited to mention that the easy soft integration now called the impact is on track and performing well earlier. This month, we announced the availability of impact for the K 12 market.
Opening up the addressable market for solution previously only available in higher Ed.
Both easy soft anchor mono are great examples of our ability to use strategic M&A to accelerate our product roadmap and expand the addressable market to drive durable growth.
As we look forward, our M&A pipeline remains strong and we continue to focus on acquiring companies that will expand our tam enhance our platform and create opportunities for cross sell entity, our expansive customer base.
In summary, I am confident and optimistic about our business.
We believe we are well positioned for durable growth and expanding profitability as a leading platform for teaching and learning in both higher education and K 12, I will now turn the call over to Dale to talk about our financial results and the exciting momentum we are seeing in the business.
Thank you Steve.
And thanks again to everyone for joining us today.
Before discussing detailed financial results I'd like to point out that in addition to our GAAP results I'll be discussing certain non-GAAP results.
Our GAAP financial results along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release, which is posted in the Investor Relations section of our website.
In the third quarter, we continue to show a combination of durable top line growth expanding adjusted EBITDA margins and strong unlevered free cash flow conversion.
Year to date, we remain a rule of 60, plus company with 30% ACR growth and 35% adjusted EBITDA margins.
Further validating the underlying quality of our business.
As Steve mentioned, we generated third quarter 2021, total GAAP revenue of $107 $2 million up 31% year over year, and ACR of $108.6 million up 24% year over year.
Subscription and support revenue accounted for 90% of our third quarter revenue at $96 $2 million up 31% year over year, primarily as a result of the continued momentum within our core canvas LMS product both domestically and internationally. In addition to strong upsell and cross sell of our other.
Especially assessments.
Professional services and other revenue accounted for 10% of our third quarter revenue at $11 $1 million up 31% year over year, driven by strong implementation and training services delivery across both our K 12, and higher Ed businesses.
<unk> revenue at the end of the third quarter was $287.1 million up 38% from the third quarter of 2020.
Remaining performance obligations or RP O were $684 million in the third quarter up 16% year over year.
And we expect to recognize revenue on approximately 77% of our RP O over the next 24 months.
In discussing the remainder of the income statement. Please note that unless otherwise stated all references to our expenses operating results and share count are on a non-GAAP basis. Please note that when I refer to margins in the upcoming comments, we calculate our margins based upon ACR.
Our gross margin profile is very strong and we maintained healthy margins through our optimized cloud architecture and flexible support structure that is designed to scale and meet customer demands.
In the third quarter, our gross profit was $83.5 million, representing a gross margin of 76, 9%.
This is compared to a gross margin of 71.1% in the third quarter of 2020.
Turning now to operating expenses sales and marketing expenses for the third quarter were $23 million or 18, 7% of ACR down from 21, 9% in the third quarter of 2020 bookings.
Bookings per rep, and the average size of cross sell deals continued to improve as we build upon the efficiencies we introduced into our go to market efforts last fall.
Research and development expenses for the third quarter were $13.3 million or 12, 3% of ACR down from 13% in the third quarter of 2020, even though we have more engineers focusing on the development of our product roadmaps than we did a year ago.
General and administrative expenses for the third quarter were $9 $5 million or eight 8% of ACR up from seven 2% in the third quarter of 2020, driven largely by the addition of public company costs in the second half of 2021.
Non-GAAP operating income for the third quarter was $44 million, representing a 37, 2% operating margin up from 29% margin in the third quarter of 2020 in.
In the third quarter, adjusted EBITDA was $41.3 million, representing a 38, 38% adjusted EBITDA margin up from 30% in the third quarter of 2020.
This result was better than our expectations and reflective of both our strong topline growth and disciplined management of our cost structure we.
We were pleased with the over 820 basis point and over 800 basis point improvement in operating margins and adjusted EBITDA margins, respectively, demonstrating the power and efficiency of our model.
Non-GAAP net income for the third quarter was $33.7 million or net income of 25 cents per share compared to $24 $8 million or <unk> 20 per share a year ago.
Turning to the balance sheet and cash flow statement.
We ended the third quarter with $231.8 million in cash cash equivalents and restricted cash this.
This is up $157.3 million from the end of the second quarter, the entirety of the $233 $1 million of IPO net proceeds were used to pay down debt. So the increase was driven largely by cash collections, which was the highest collection quarter in the company's history.
Last week, our strong financial performance enabled us to refinance our outstanding debt facility with the new facility that has highly attractive terms as part of this refinancing we paid down approximately $31 million of principal and now have total outstanding debt of $500 million.
As a result, we expect that our annual interest expense will be reduced by approximately $18 million per year going forward.
Operating cash flow in the third quarter was $161.2 million compared to $100.3 million in the third quarter of 2020.
Free cash flow was $160 million in the third quarter compared to $99.5 million in the third quarter of 2020.
Our unlevered free cash flow was $172.2 million in the third quarter compared to $127 million in the third quarter of 2020 as a reminder, our strong free cash flow conversion is driven by our favorable billing terms low capital expenditures and our accumulated.
Tax assets, which we believe will act as a shield for the next several years.
I will now conclude the call by providing guidance for Q4 and for the full year of 2021 for ACR Unlevered free cash flow and adjusted EBITDA.
We have provided additional guidance details in our earnings press release.
For the fourth fourth quarter of fiscal 2021 we expect ACR in the range of $107.5 million to $108.5 million or a growth rate of 19.1% at the midpoint of the range.
I want to make an additional one additional point specific to ACR in Q4, we expect subscription and support revenue to increase sequentially from Q3 to Q4 and professional services revenue to decrease sequentially from Q3 to Q4. This is consistent with the historical trends.
Where we see higher services revenue in Q3.
We expect adjusted EBITDA in the range of $38 5 million to $39 $5 million, representing an adjusted EBITDA margin of 36, 1% at the midpoint of the range.
For the full fiscal year 2021 we expect ACR in the range of $410.7 million to $411 $7 million or a growth rate of 26, 6% at the midpoint of the range we expect.
Adjusted EBITDA in the range of $143 $6 million to $144.6 million, representing an adjusted EBITDA margin of 35% at the midpoint of the range.
We anticipate unlevered free cash flow to be roughly $152 million for the year and adjusted Unlevered free cash flow of roughly $164 million, which adjust for the impact of restructuring transaction and sponsor cost paid in cash.
With that Steve and I are happy to take any of your questions.
Oh, Yeah, Sorry reminder, to ask a question you will need to press Star then the number one on your telephone keypad again, Beth let me start and then number one on your telephone keypad.
Your first question comes from the line of Brian Peterson from Raymond James Your line is open.
Thanks for taking the questions and congrats on a strong quarter.
I wanted to start out on some of the wins you mentioned John Hopkins at a pretty good sized waned at Miami Dade.
Maybe an update on how your customer conversations are going at it just with potential prospects I know some of your legacy competitors have had some strategic transactions any thoughts about how that pipeline looks as we head into 2022.
Yes, Thanks, Brian and thanks.
We're really really pleased with Q3, yes, the conversations with customers.
Our pretty consistent what we've talked about in the Paas.
Some people really just hunkered down during the during the pandemic now theyre looking at what they wanted their platform to look like for the future and recognizing that the digital transformation of education is it.
Is in full force.
So we're seeing.
A lot of conversations around renewals for our competitors that are coming up next year and the year. After starting those evaluations now really looking for something that scales.
Particularly as they felt some of the pain during the pandemic.
Our user interface, a much better user interface and.
And a platform that has you know is open in the market and so a lot of the key value propositions continue to resonate really strongly with the.
With customer base, and we're seeing in Rfps or are in our pipeline are up for 'twenty, two and 'twenty three.
Great. That's good to hear and maybe just a follow up on the kimono acquisition, maybe talk about that.
That gives us strategically and how some of it maybe overlapping customers use it today in India, all I'd be curious any impact on the financials either for 2021 or 2022, thanks guys.
Yeah, I'll take the kimono tomorrow I'm really excited about kimono, yeah. As we said in our press release. They were they were a partner with US. We've worked really closely with them have great relationships. The cultural fit is really strong between the two the two companies.
What this really does for US Bryan is is two things one is it allows us.
It has technology that we can now have in our control to be able to make sure that all of our integrations with <unk>.
Student information systems across the industry are seamless and.
Tight so that we can pass information between those systems.
We also will continue to expand the capabilities of the platform to include other data. Besides just this data but.
And combine that with some technologies that we have so really it it strengthens what we can offer to our customers. The other pieces is it it becomes a a bus if you will or an integration platform much more robust integrations with our partners and so the 500 plus partners that we have now now have access to a lot of that data that's that's running.
On that on their technology ours, as well as other partners and so it really does.
Strengthen our value proposition to our partners on our platform going forward.
And Brian in terms of kimono and the acquisition is it's just a very small tech tuck in with Fantastic technology. It has a de minimis contribution to our Q4 financials.
Great. Thanks, guys.
Thanks, Brian.
Thank you next up we have Sterling Auty from J P. Morgan Your line is open.
Hi, This is Mike I'll comment on first Sterling and I was hoping you could just talk a little bit about the pipeline of state deals for cancer trials.
If I might.
Oh sure.
So as we look at the pipeline.
I'll talk more broadly about K 12 in general right. We're seeing we're still seeing really good pull through.
Seeing the digital transformation that really was ignited.
With the pandemic really continues in in the in the K 12 space and Theres a lot of money chasing.
You know that's chasing technology to accelerate those digital transformations stimulus funding of.
For K 12 alone is $190 billion and so we're seeing a lot of interest from our customers from into two areas. One is we're still seeing continued LMS traction as we go from.
60% of the market was unfunded as they're moving to paid.
Ellen masses, as well as really strong pickup in the assessment side of the business as we come back in person really institute or districts are really concerned with learning loss with understanding and helping teachers to help students get back on track and closer to the standards and our technologies.
In the assessment space are resonating strongly so pipeline is building nicely that business is up pretty.
Very strong faster faster than our average growth rate and the assessment space.
Yeah.
Okay got it that makes sense. Thank you.
If I could just us.
A follow up can you just give an update on the higher education landscape.
How that how that's fine for the business.
Yeah.
And thank you for asking that question, because I know theres been a lot of.
Noise out there about about enrollments this isn't a new trend. This is something that you know.
Enrollments in higher Ed had been kind of flattish to down ish for several years.
And I think the way I would love you to think about this as you know we're a very different business from most of the businesses in Ed Tech and that for a number for three reasons really one is first of all we sit at the center of teaching and learning and so teachers and students are on our platform multiple hours every day and we're at the hub that connects teachers students.
Parents administrators.
So we're not exposed to you know one of the users you know changes in usage patterns from just one of the users.
Whether that's number of students or number of teachers for instance.
And we are critical infrastructure for delivering on teaching so what we're seeing is on our platform the.
The utilization on a per user basis of our platform last quarter and higher Ed.
Within a few percentage points of utilization last year and was significantly higher than pre pandemic levels. So again, because we have such a diverse user base, we're less susceptible to changes in one type of use of the second is we also are much more diversified business. So over half of our revenue comes from K 12 in international So we're much less.
Susceptible to changes in a single market like higher education.
We have a much more predictable stable and enduring revenue stream and then finally.
Our relationships with those higher education institutions is more of a business to business where directly contracting with you with the universities the institutions not business to consumer business to students.
So we signed multi year deals we maintain relationships that are not affected is affected by a transient changes and any you know in any.
You know in any given year and as I look at our Q3 renewal cycle, which is our largest quarter of the year. There was no material deviation in churn or downgrades from historical and so because we are an integral part of the the whole pedagogy and the critical infrastructure in digital and digital transformation of education, where more.
<unk> insulated so all these factors make us more predictable stable and durable and less susceptible to.
Some of these kind of transient changes that may affect others in the market.
I don't know if its renaissance. Thank you.
Thank you.
Thank you next up we have Josh Baer from Morgan Stanley. Your line is open.
Great. Thanks for the question and congrats on a nice quarter.
Wanted to double click on the competitive environment, but certainly seeing the strength in your results and your guidance and competitive wins, but wanted to just check in on how the blackboard anthology merger might impact the competitive landscape.
And then any other changes that you're seeing.
Yeah.
Thanks, Josh.
Great question.
I'll tell you what we're seeing from our side as people are trying to digest what this means.
Our experience and what our customers are telling us is.
You know the buying motions are very different for the two.
The two different technologies.
Ones that are focused on the classroom versus ones that are focused on the administration side of the business.
And so our customers are are.
Really.
I don't necessarily see this as an advantage and they're just trying to understand what does it mean long term for <unk>.
For our competitors for blackboard and in the market and what does that mean from an investment perspective, and those types of things so.
It's we haven't seen any significant change in the competitive landscape because of that acquisition.
Great and one on margins and investments I mean operating.
Operating margin is 37% anything.
Onetime or anything to call out this quarter or is this the right base level of operating expenses upon which to grow and.
Maybe it would be helpful just to pick.
Quick reminder of some of the largest source of leverage from here at these levels. Thank you.
Yeah, It's a great question Josh so.
So we're running on all cylinders right now as we've talked in the past we spent 2020.
Refining the business model and we're not we're not doing anything differently now. The we've also talked about being a rule of 50 company and operating within those boundaries.
Allowing us to invest at different places within the P&L. We think we're in a good spot here and we think the business is operating at a good healthy pace and a good mix of both topline growth and.
And profitability so.
Let's say, where we're operating right, where we want to be.
Thank you Josh next.
Yeah.
Okay.
Go ahead, operator into next as we have Fred have Meyer from Macquarie. Your line is open Sir.
Hey, Thank you and I'd just like to reiterate I think the thought of congratulations on a very strong quarter here.
So I think going back to some blackboard related items I hope I hope I'm not going to bore you guys with this but you highlighted a number of blackboard wins and we all saw recently that the SUNY system left blackboard.
Your perspective is there sort of a disruption going on in the industry or perhaps like a pickup in the cadence of new higher education, LMS replacements or valuations with this with this event.
Well first of all thanks, Fred we're Super happy with the results. So what we're seeing we haven't seen a hiccup.
And in evaluations, we've seen continued.
It's not a hiccup or pick up I'm sorry.
I think you said hiccup I'm like Oh Wow.
No no.
I think what we what we have seen is that.
People were out looking at what is what are the options there theyre not theyre not clear what the.
What the future holds.
And that's kind of what I'm seeing a little more about uncertainty.
And just trying to understand what the futures I wouldn't I wouldn't say it.
There's a.
A meaningful uptick.
Or pick up in the in the business, yet, but a lot of conversations is how I would characterize it.
Thank you and then.
With respect to your M&A philosophy, how would you consider your appetite for technology tuck ins versus larger transactions and is there a way that we should understand how you might balance your pipeline for these two types of transactions.
Yeah, that's a good question.
The we have a pretty.
<unk> disciplined approach to M&A right and we evaluated both from a financial as well as the strategic fit.
Uh huh.
I wouldn't read anything into the fact, Fred that we've done you know kind of two more tuck in type acquisitions in the last two quarters I would I'd.
Just read it as though that's what came available that's what.
We had to work with.
I would I would just think of it as we've got the machine machines available.
When when opportunities come available and we can find those will we'll act on them and we're not biased one way or the other towards you know.
More.
More meaty ones are or more of the tech tuck in.
Thank you.
Thanks, Brett.
Thank you next up we have Brent Thill from Jefferies. Your line is open.
Hi, guys. Thanks for the question. This is David on for Brent.
Talked a little bit about the momentum in K through 12, I was hoping you could talk a little bit more and maybe specifically around the new product that's targeting the case through five users.
And then maybe to add on to that can you discuss how how you're allocating resources between K through 12, and higher Ed and maybe how you're thinking about international into that mix.
Sure.
Thanks, Thanks for thanks Brent.
So K 12 is we have seen grew.
Great.
Seeing continued interest in our solutions, we highlighted the fact that our.
Our.
Are we signed a customer who could have gotten one of our competitors for free right and chose to pay for for canvas.
'cause of the power of our solutions included in that was the fact that we have a very.
You know a very differentiated approach to how we how we interact with the K five students right in the early learners and so.
We're seeing that as a great.
Advantage and the selling process, we're seeing it as a great advantage when we're talking about renewals and retaining customers and is a chance for us to up sell to some of those grades that may not have adopted us early in the in the buying cycle. So so it's helping us across all aspects of our business.
When we look at allocating resources.
We have you know we have dedicated sales teams that are assigned to K 12.
And within that we assign them to the EMS products as well as the learning management products and and.
And we again, we we go through a rigorous process of looking at opportunities for.
To spend our engineering dollars.
Where are we think where the opportunity is with the return on investment is on those investments and then we prioritize them against against all of those investments and so.
A lot of what we do frankly.
Place to both higher Ed and K 12, and international frankly.
So it really is just a dynamic process for allocating between those kind of three opportunities for us.
Got it thanks, Scott Thanks, guys.
Thanks, David. Thank you next we have Joe very little Lake from Baird. Your line is open.
Great I agree on.
And maybe wanted to go back to the comment that usage is still higher year over year.
Instruction moves back to an in person setting.
Is that at all surprising to portions of your customer base, maybe just in comparison to how do they plan for the fall semester to go and if it is surprising are you seeing any re prioritization of spending initiatives that might now going forward have to better align with US you know how.
Educators are actually approaching the return to in person instruction.
Yeah, It's a good it's a good question Joe.
If you'll recall when we kind of when we were going through the road show. We had some primary research that we had done asking that very question you know how do you expect the usage of <unk>.
The instructor technology post pandemic and and it's playing out about what the research showed us so from that perspective that was what customers were telling us that they expected that they were still going to use the LMS even after the pandemic that would become a critical part of their infrastructure.
And critical to their delivery on teaching and learning and so not not that they were surprised.
Per se.
We are seeing a good pick up in the assessment side of the business.
And we're seeing dollars allocated to.
<unk>.
But primarily it's coming from kind of manual pen to paper now implementing automated systems to be able to do assessments.
And so that digital transformation is probably accelerated a little bit.
From what we had heard during the pandemic.
And in.
Theyre moving budgets around to be able to fund those types of projects.
Okay, that's great and maybe my follow up just thinking about the SaaS Matt.
Well I was hoping to maybe just get this split like you provided last quarter between K through 12 and higher Ed growth.
Specifically in K through 12, any updates on how to think about the growth contribution between what youre seeing in core allomap versus accelerated traction for SaaS meant that you just referenced.
Yeah.
Dave do you want to hit the growth rates and then we can tell.
What about assessment short so Joe we're seeing growth rates in K 12 about 20% for the quarter and then we're seeing low to mid teens growth in the high end space.
Stronger in international we're seeing international.
Is.
International is very strong it's over 30%.
Combined the APAC and EMEA regions are up 20% and we mentioned this Latam was growing almost 60% last quarter, that's consistent with what we saw in Q3.
And rather than.
We're not going to breakout product specifics, but I will say that the assessment business is growing faster than the overall K 12 business.
Okay, great. Thank you.
Thank you next up we have Matt Vanvliet from BD Ied Your line is open.
Yes, Thanks for taking my question nice job on the quarter guys.
I guess on on that last point.
The assessments wondering if you could help us think about.
What you what youre hearing from customers for selecting canvas is it the option to have the assessments to have studio to have some of these other add ons.
In the product roadmap, even if they don't buy them upfront as as key rationale for for buying or do those tend to just be kind of nice to haves, but the core product itself growing feature for feature is still winning them standalone.
Yeah.
Yeah, I like the I like that question it really gets to the competitiveness of the two solutions you know the reality is usually we will land with the LMS.
On its own and on the strength of the LMS.
And then.
The the it's usually a cross sell motion for us to win.
The Ams Vod assessment management deal.
Again.
The differentiation in that assessment management sale is the fact that it is so tightly integrated with canvas and.
And.
That's a seamless integration and the data is shared and.
It makes it really easy from for the.
For the teachers and.
And the administrators so.
That I'd say, we win strength in the LMS that integration really is helps us in the win when we when we cross sell the Ams on top of the illness.
Great and then you.
The strong the strength in the international markets and does that give you additional confidence in expanding any of.
The investments trying to sort of reach into adjacent countries or regions.
Or should we think about for another year or two maybe being very.
Focused on where you're at now really kind of ensuring that that growth continues to accelerate.
And then sort of reassess from there.
Yes.
It's a great question and Matt.
Mentioned before that international is the highest growing part of the business and we expect to continue to be that way.
We are making investments in that part of the business and are evaluating.
The best way to meet that we've been specific about the regions that we'd go into to bring us the highest ROI and within those regions, we're making investments to continue to grow those parts of the business and I would add I would say, Matt we still have there's still a lot of room to grow our share in the target the countries that we've targeted and so.
So you know our strategy will be to continue to.
The focus there make sure we put enough wood behind the arrow to.
To replicate the success we've had in the U S. In those in those specific markets.
Wonderful thank you for taking my questions.
Thank you once again in order to ask a question. Please press Star then the number one on your telephone keypad again, Doug Let me start then the number one on your telephone keypad.
Your next question comes from the line of Terry Tillman from Truest. Your line is open.
Yeah. Thanks for taking my questions Hi, Steve deal in April most of my questions have been answered.
But first I guess, congratulations on the quarter was a strong quarter.
But I do still have actually a couple of questions. So youre not going to get off that easy.
On the pricing side.
We've gotten further into kind of what was in some cases, probably a nice to have tool that was viewed that way with an LMS. Soon now with mission critical plus there's been a lot that's been added to the structure platform and some of these tuck in acquisitions add more value. What are you seeing in terms of getting out of or further through the pandemic girls uptime performance versus competitors.
On pricing from an FTE standpoint on net new deals.
Study is it increased as a down whether it's higher at our K 12, and then I have a follow up.
Yeah, No we said we.
In the higher Ed space, we still continue to see pricing improvement.
That space.
And our ability to hold price again, we've never want a deal being the low price.
Our solution and and and really coming out of the pandemic.
Our.
Institutions recognize.
Did you get what you pay for it and they were looking for the best in breed, we're seeing that same trend in K 12, we highlighted the one in the in the prepared remarks, where they could have gotten.
Canvas for free.
Through the state and they chose to invest with us and so.
The holding steady in K 12 price.
And.
And continuing to see strength from a cross sell perspective in K 12, particularly the Ams pricing.
You said you had more than one though Terry.
Yeah, I should get off mute next time, sorry about that.
It's only 546, we have about 14 minutes left I have six more no I'm kidding.
One more for me.
Unearned structure, calling it sounded like I mean in a virtual world you don't usually see higher attendance, hopefully theyre actually participating or watching on their desktop or their screen, but I'm curious you know whether it was you talked about evolving commercial relationships. So anything more you could kind of provide there <unk> with the higher attendance did this become a bigger selling event then.
In the past in terms of driving pipeline. Thank you.
Yes no.
So from a technology perspective, some of our relationships that we've strengthened with.
Google or Microsoft where were key parts of the.
Parts of the of the interest that we saw we have some really cool technologies that we've integrated that we shared during.
During structure Con.
Company called in space for instance, so we're seeing that the part the whole ecosystem.
Theres, a big draw with our customer base around the ecosystem and the power that comes when you integrate with the infrastructure learning platform.
And.
And as I said in the prepared remarks about half of our attendees were prospects. So yes. They are.
The the importance of this also not just as a customer event, but as a as a lead generation of that.
Is much more significant than it was before the pandemic.
Can I add something to that Steve its.
Terry you've been to these before and you know that the users of our system.
Our biggest advocates and so we think only good things happen when we.
We bring people that love our product together with people who are looking at our product.
Yeah understood. Thanks.
Thanks Terry.
Thank you only having two questions.
Comes from the line of Stephen Sheldon from William Blair. Your line is open.
Hi, This is actually patent actually on for Stephen but once again nice quarter guys.
So I just wanted to go back to come Onno I understand that this has been a longtime partner and I just wanted to ask if there's any way you can quantify how much overlap there might be with with canvas and come almost 27000 schools and.
Then.
As a follow up to that if you expect this to provide additional cross selling opportunities for the remainder or just how youre thinking about that in general.
Yeah.
The.
Yes.
Kimono kimono has partnered with a number of partners. Besides us.
And some big partners out there so.
We don't.
We don't look at the value of this is bringing us necessarily a new customer base as much as what it does is it allows us to.
Seamlessly integrate with other technologies in the in the space and so.
There's a very long tail of student information systems out there in the K 12 space for instance that this technology allows us to seamlessly integrate so we.
We're agnostic to whatever student information systems being used by our customers.
And there is power in that in the selling process with us for.
From a candidate perspective being able to.
To come in with that message also.
Longer term the opportunity really presents itself and how we integrate and the value that we bring to our partners that integrate on the canvas platform.
And so again, what it does is it creates a much more sticky platform with our customers as well as.
The opportunity to partner with more more more partners longer term so.
That's how we're looking at the value and how that.
That's going to accrue to our overall overall business.
Got it that's helpful. Thank you and then one more quick one years, so on impact you've talked about this a little bit but.
Last quarter, you mentioned you were seeing kind of an early pipeline build for that solution and I. Just wanted to ask if you have any incremental updates at this point on traction feedback and.
And or attach rates, you're seeing with that solution.
Yeah.
It's still early in the sales cycle.
The pipeline continues to build yes.
As I mentioned in the prepared remarks, we we came out with a version for K 12. So we started to get a lot of pull from that segment of the market. This is historically has been a.
Easy soft was really targeted at.
At higher Ed so as the impacts.
We we made some tweaks to the product really.
Made a fit for purpose for K 12, and so again, we just announced that availability. So it's still it's still early days Pat to be able to quantify that but we're really optimistic.
About.
The opportunities it presents for 2022.
Great Great. Thank you. Thank you all and again nice quarter.
Thank you.
Thank you presenters there are no further question at this time I will turn the call over backs RSV, Mr. Steve Daly for any closing remarks, Sir.
Well, thank you operator, and thank you everybody for joining us.
I'm really excited about the momentum that we're seeing in the business. We continue to be a key part of that digital transformation of education, We've got the right products the right strategy and the right team to driving during growth. So I want also thank all of our employees for the hard work.
That they do to amplify the power of teaching and to all of those educators that are making a difference in students lives and we look forward to speaking with you all again.
And another quarter. So thank you.
Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank all for joining you may now disconnect.
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