Q1 2024 Instructure Holdings Inc Earnings Call

May 8, 2024

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

Ladies and gentlemen, thank you for standing by and welcome to instructors first quarter 'twenty 'twenty four earnings call. At this time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session. Please be advised that this conference is being recorded I would now like to turn the conference over to your first Speaker Matthew Wells Senior Vice President Investor Relations. Matthew. Please go ahead.

Matthew Wells: Good afternoon, and welcome to Instructure's first quarter 2024 earnings conference call. We will be discussing first quarter results and updated guidance as announced in our press release published earlier today. And to accompany the discussion, we've uploaded an earnings presentation to our investor relations website. I encourage you to review this presentation alongside our prepared remarks. On the call today, we have Instructure's Chief Executive Officer, Steve Daly, and Chief Financial Officer, Peter Walker.

Matthew Wells: Good afternoon, and welcome to infrastructure first quarter 2024 earnings conference call, we will be discussing first quarter results and updated guidance as announced in our press release published earlier today.

To accompany the discussion we've uploaded an earnings presentation to our Investor Relations website.

Matthew Wells: Encourage you to review this presentation alongside our prepared remarks on the call today, we Havent structures, Chief Executive Officer, Steve Daly, Chief Financial Officer, Peter Walker before we begin I'd like to remind you that todays conference call and earnings presentation will include forward looking statements. These statements.

Matthew Wells: Before we begin, I'd like to remind you that today's conference call and earnings presentation will include forward-looking statements. These statements are subject to risks and uncertainties that may cause our results to differ materially from listed expectations. For a discussion of factors that could affect our future financial results in business, please refer to the disclosure in today's earnings press release and our Form 10-Q and other reports and filings we file with the Securities and Exchange Commission.

Matthew Wells: <unk> are subject to risks and uncertainties.

Matthew Wells: Yeah.

Matthew Wells: May cause our results to differ materially from listed expectations for a discussion of factors that could affect our future financial results and business. Please refer to the disclosure in today's earnings press release, and our Form 10-Q, and other reports and filings we file with the Securities and Exchange Commission.

Matthew Wells: All statements are made as of today based on information available to us as of today, and we assume no obligation to update any such statements except as required by law. During the call, we will also refer to both GAAP and non-GAAP financial measures. You can find a reconciliation of our GAAP to non-GAAP measures in our earnings press release, which is posted in the investor relations section of our website. And with that, I will turn the call over to Steve. Thank you, Matt.

Matthew Wells: All statements are made as of today based on information available to us as of today and we assume no obligation to update any such statements except as required by law.

Matthew Wells: 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 in our earnings press release, which is posted to the Investor Relations section of our website and with that let me turn the call over to Steve.

Stephen M. Daly: Thank you, Matt. And thank you all for joining our first quarter 2024 earnings call. I'd also like to thank everyone who attended our Investor Day earlier this year. For those that did attend, I hope that our team's passion for the business, the opportunity ahead of us to grow, and our commitment to educators and lifelong learners resonated. Kicking it off on slide four, as shared during Investor Day, our vision is to be the ecosystem that powers learning for a lifetime and turns that learning into opportunity. As the vertical software leader in education, we are well positioned to connect learners across their lifelong learning journey. Anchoring the ecosystem is Canvas LMS, the market share leader in North America.

Stephen M. Daly: Matt and thank you all for joining our first quarter 2024 earnings call I'd also like to thank everyone, who attended our Investor day earlier this year for.

For those that did attend I hope that our team's passion for the business the opportunity ahead of us to grow and.

Matthew Wells: And our commitment to educators and lifelong learners resonated kicking it off on slide four as shared during Investor day.

Stephen M. Daly: Our vision is to be the ecosystem that powers learning for a lifetime and turns out learning into opportunities.

Stephen M. Daly: As the vertical software leader in education, we are well positioned to connect learners across their lifelong learning journey anchoring the ecosystem is the canvas LMS the market share leader in North America.

Stephen M. Daly: We are invested in a mission to create real outcomes for learners, whether they are a traditional degree seeker or a nontraditional learner. We believe the investments we are making across the Instructure platform, our go-to-market structure, and partner ecosystem position us as a company to deliver long-term, durable growth. And I'm excited by the plan we have set to become a $1 billion revenue company by 2028. Turning to slide five, I'll discuss the first quarter highlights.

Stephen M. Daly: We are invested in our mission to create real outcomes for learners, whether they are traditional degrees seeker or a nontraditional learner. We believe the investments we are making across the instruction platform. Our go to market structure and partner ecosystem position us as a company to deliver long term durable growth and I'm excited by the plan, we set to become a $1 billion revenue.

Stephen M. Daly: Company by 2028.

Stephen M. Daly: Total revenue of $155.5 million increased 20.7% year over year, including 6.8% organic constant currency revenue growth. Subscription and support revenue of $144.7 million increased 22.1%, including 7.6% organic constant currency subscription and support revenue growth. As a reminder, organic constant currency growth rates exclude the impact of our acquisition of parts.

Stephen M. Daly: Turning to slide five I'll discuss first quarter highlights total revenue of $155.5 million increased 27% year over year, including six 8% organic constant currency revenue growth.

Stephen M. Daly: Subscription and support revenue of $144 $7 million increased 22, 1%, including 7.6% organic constant currency subscription and support revenue growth as a reminder, organic constant currency growth rates exclude the impact of our acquisition of parchment.

Stephen M. Daly: Parchment revenue exceeded our expectations and grew double digits year over year. In the first quarter, pro forma annual recurring revenue for the combined Instructure and Parchment business grew in the high single digits year over year. In addition, annual recurring revenue growth from our core and growth solutions was in line with our medium-term target. As we move to discuss profitability, adjusted EBITDA of $64.9 million grew 34.6% year-over-year, and adjusted EBITDA margin expanded significantly to 41.8% this quarter, as we benefited from continued scale in the business and a shift in our spending to later this year.

Stephen M. Daly: Parchment revenue exceeded our expectations and grew double digits year over year in the first quarter pro forma annual recurring revenue for the combined <unk> structure and parchment business grew in the high single digits year over year. In addition annual recurring revenue growth from our core and growth solutions was in line with our medium term targets.

Stephen M. Daly: As we move to discuss profitability adjusted EBITDA of $64 $9 million grew 34, 6% year over year and adjusted EBITDA margin expanded significantly to 41, 8%. This quarter as we benefited from continued scale in the business and a shift in our spending to later this year.

Stephen M. Daly: We exceeded the high end of our guidance ranges across all guided metrics, and we are positively revising our fiscal year 2024 outlook accordingly. Peter will take you through the details of our quarterly performance and full year outlook shortly.

Stephen M. Daly: We exceeded the high end of our guidance ranges across all guided metrics and we are positively revising our fiscal year 'twenty 'twenty four outlook Accordingly, Peter will take you through the details of our quarterly performance and full year outlook shortly.

Stephen M. Daly: We also continue to innovate in areas that will have the highest impact for teachers, students, and educators. As early leaders in the LMS space, customer-centric innovation is at our DNA. And we are taking a similar approach to refining the AI-enabled solutions that we highlighted during our investor day. Early indications from beta customers have been positive, and we continue to engage our community around how to best enhance their day-to-day work while driving positive student outcomes.

Stephen M. Daly: We also continue to innovate in areas that will have the highest impact for teachers students and educators as early leaders in the LMS space Khatri customer centric innovation is that our DNA.

Stephen M. Daly: And we are taking a similar approach to refining the AI enabled solutions that we highlighted during our Investor day early indications from beta customers had been positive and we continue to engage our community around how to best enhance their day to day, while driving positive student outcomes. We are excited to showcase our innovation it and structure Con 'twenty 'twenty four taken place July.

Stephen M. Daly: We are excited to showcase our innovation at InstructureCon 2024, taking place July 9th through the 12th in Las Vegas. During the event, we will share customer success stories, highlight product enhancements, and spotlight some of our most impactful student outcomes. Turning to slide six, as a scaled vertical software company, we are in the enviable position of having a large, loyal, and referenceable customer base. These customers are asking us to solve more problems for them, and our investment in our growth businesses has created a massive cross-sell opportunity that we are only just starting to monetize.

Stephen M. Daly: Ninth through the 12th in Las Vegas during the event, we will share customer success stories highlight product enhancements and spotlight some of our most impactful student outcomes.

Stephen M. Daly: Turning to slide six as a scaled vertical software company. We are in the enviable enviable position of having a large loyal and reference book customer base. These.

Stephen M. Daly: These customers are asking us to solve more problems for them and our investment in our growth businesses has created a massive cross sell opportunity that we are only just starting to monetize our expertise and laser focus on the needs of our education customers have contributed to our world class margins as we remain focused on operational excellence, we have created a business model.

Stephen M. Daly: Our expertise and laser focus on the needs of our education customers have contributed to our world-class margins as we remain focused on operational excellence. We have created a business model that allows us great flexibility to invest in growth opportunities both organically and through M&A. In summary, we believe that the mission-critical nature of the Instructure platform, our diversified product portfolio, our world-class business model, and the large markets that we operate in position us to grow durably and profitably. Flipping to slide seven, throughout the quarter, in conversations with customers and partners, we continue to pick up on recurring themes that underpin the value we deliver.

Stephen M. Daly: It allows us great flexibility to invest in growth opportunities, both organically and through M&A. In summary, we believe that the mission critical nature of the instructor platform, our diversified product portfolio, our world class business model in the large markets that we operate and position us to grow Durably and profitably.

Stephen M. Daly: Flipping to slide seven throughout the quarter and conversations with customers and partners. We continue to pick up on recurring themes that underpin the value we deliver for.

Stephen M. Daly: First, there continues to be a level of uncertainty in our markets as schools and universities are developing strategies to retain and attract more learners in an environment that has changing funding commitments and regulatory pressure. As our customers are grappling with these challenges, they continue to come to Instructure to help them navigate their important digital transformation. RFP activity remains high even as decision-making remains elongated, which gives us confidence that these macro headwinds are temporary.

Stephen M. Daly: First there continues to be a level of uncertainty in our markets as schools and universities are developing strategies to retain and attract more learners in an environment that has changing funding commitments and regulatory pressure.

Stephen M. Daly: As our customers are grappling with these challenges they continue to come to and structure to help them navigate their important digital transformations.

Stephen M. Daly: Activity remains high even as decision making remains elongated this gives us confidence that these macro headwinds are temporary.

Stephen M. Daly: Second, the consolidation and optimization of technology resources continues to be a high priority, and the LMS is the natural place for consolidations to happen. Customers are pulling us into more broad-based digital transformation discussions and seeing Instructure as a platform for consolidating their tech stack. This is a long-term trend, and we believe our expanding portfolio of products, especially our ed-tech effectiveness solutions, as well as the extensive reach of our partner ecosystem, position us as the partner of choice for consolidation.

Stephen M. Daly: Second the consolidation and optimization of technology resources continues to be a high priority in the LMS is the natural place for consolidations to happen customer.

Stephen M. Daly: Customers are pulling us into more broad based digital transformation discussions and seeing structure as the platform for consolidating their tech stack. This is a long term trend and we believe our expanding portfolio of products, especially our Ed Tech effectiveness solutions as well as the extensive reach of our partner ecosystem position us as the partner of choice for consolidation.

Stephen M. Daly: Third.

Stephen M. Daly: The continued shift to nontraditional and certification programs is increasing the addressable market of learners that we and our customers can reach. We continue to see traction with our existing customers adopting our nontraditional solutions, and I'm particularly pleased with the progress we are seeing from our newly created professional learning customer teams. With the addition of Parchment, we believe we are the only edtech platform that can provide a complete end-to-end solution for both traditional and nontraditional learners.

Stephen M. Daly: The continued shift to non traditional and certification programs is increasing the addressable market of learners that we and our customers can reach we continue to see traction with our existing customers adopting our non traditional solutions and are particularly pleased with the progress we are seeing from our newly created professional learning customer teams with the addition of <unk>.

Stephen M. Daly: We believe we are the only did a tech platform that can provide a complete end to end solution for both traditional and non traditional learners.

Stephen M. Daly: Turning to customer highlights in the quarter on slide eight, I'm excited to share a handful of standout wins to demonstrate the breadth of our offering and the diversity of our customer base. While the decision-making environment in our core North American LMS markets remains elongated, customers are turning to us as a key strategic partner. Despite these near-term headwinds, we continue to win significant new logos, such as the University of Alberta and a competitive win-back at Tampa Union High School District.

Stephen M. Daly: Turning to customer highlights in the quarter on slide eight I'm excited to share a handful of standout wins that demonstrate the breadth of our offering and the diversity of our customer base.

Stephen M. Daly: While the decision making environment in our core North American LMS markets remains elongated customers are turning to us as a key strategic partner. Despite these near term headwinds we continue to win significant new logos, such as the University of Alberta, and a competitive win back at Tampa Union High School District, the University of Alberta selected struck.

Stephen M. Daly: The University of Alberta selected Instructure as the learning management system of the future. Canvas LMS, Studio, Credentials, and additional platform solutions will power the university's education footprint across over 40,000 learners. This was a notable win for our team as we displaced the legacy competitor in the Canadian market. Tempe Union High School District, a district that left us in 2020-2019, decided to return to Instructure as its LMS platform after a lackluster experience with another provider.

Stephen M. Daly: <unk> is the learning management system of the future.

Stephen M. Daly: Canvas LMS studio credentials and additional platform solutions will power the universities education footprint across over 40000 learners. This was a notable win for a team as we displace the legacy competitor in the Canadian market Tampa.

Stephen M. Daly: Tampa Union High School District is a district that left us in 'twenty 'twenty 2019.

Stephen M. Daly: Decided to return to its structure as its LMS platform. After a lackluster experience with another provider canvas LMS stood out based on an improved user experience and excellent services and support across the platform.

Stephen M. Daly: Across the growth areas of our business, we continue to see positive momentum internationally in parchment and non traditional and professional learning.

Stephen M. Daly: Canvas LMS stood out based on an improved user experience and excellent services and support across the platform. In the growth areas of our business, we continue to see positive momentum internationally in parchment and non-traditional and professional learning. Adelaide University, located in Australia, selected Canvas LMS, Studio, and Credentials as a platform to power learning across more than 50,000 learners. Our platform offerings were aligned with Adelaide's ambitious mission focused on preparing students for a skills-focused future and meeting their students where they are in their educational journey.

Stephen M. Daly: Adelaide University, located Australia selected canvas LMS studio and credentials as a platform to power learning across more than 50000 learners. Our platform offerings were aligned with Adelaide ambitious mission focused on preparing students for skills focus future and to meet their students where they are in their educational journey.

Stephen M. Daly: The value of Instructure's broad portfolio, including the addition of Parchment, is evident with the University of Notre Dame. Already a Canvas, LMS, and Parchment customer, they selected Parchment's Comprehensive Learner Record to support a more comprehensive and accessible learner record to help students and staff better manage their credentials and their learning during. And, as I mentioned earlier, I'm encouraged by the traction our professional learning teams are gaining The Indiana Association of Realtors selected Canvas LMS and Studio to power the training and education of realtors in the state of Indiana.

Stephen M. Daly: The value of instructions broad portfolio, including the addition of parchment is evident with the University of Notre Dame already a canvas LMS and parchment customer they selected parts of its comprehensive learner record to support a more comprehensive and accessible learner record to help students and staff better manage their credentials and their learning journey.

Stephen M. Daly: And as I mentioned earlier I'm encouraged by the traction our professional learning teams are gaining in this new focus market.

Stephen M. Daly: Indiana assertion association of Realtors selected canvas LMS and studio to power training and education of Reorders in the state of Indiana.

Peter Walker: Past experience and familiarity with the Instructure platform strongly resonated with the more than 15,000 members of the association. Moving to slide nine, our Q1 results demonstrate the durability of our business model and the breadth of our platform offering. As a leader in the LMS space, we are well positioned to serve as the educational platform of the future while delivering growth and profitability at scale. And, as Peter will explain, we feel confident in our ability to deliver continued margin expansion while making investments in growth in the second half of the year.

Stephen M. Daly: Past experience and familiarity with the instruction platform strongly resonated with the more than 15000 members of the association.

Peter Walker: Moving to slide nine our Q1 results demonstrate the durability of our business model and the breadth of our platform offerings as a leader in the LMS space, we are well positioned to serve as the educational platform of the future, while delivering growth and profitability at scale and as Peter will explain we feel confident in our ability to deliver.

Peter Walker: Continued margin expansion, while making investments in growth in the second half of the year in.

Peter Walker: In summary, I'm excited about the business as we enter the prime Buying Season. Our ecosystem of educators, partners, and students is unparalleled. And with the addition of Parchment, we have further enhanced our position as the platform of choice for modern learning. We also continue to thoughtfully innovate across our ecosystem by engaging educators and partners to deliver the most impactful solutions. All of this is done while continuing to drive world-class margins. I'm really proud of our team across the world that makes this all possible. With that, I will now turn the call over to Peter to discuss the financials in more detail. Thanks, Steve, and good afternoon.

Peter Walker: In summary, I'm excited about the business as we enter the prime buying season, our ecosystem of educators partners and students is unparalleled and with the addition of parchment. We have further enhanced our position as the platform of choice for modern learning. We also continue to thoughtfully innovate across our ecosystem by engaging educators and partners to deliver that.

Peter Walker: Most impactful solutions all of this is done while continuing to drive World class margins I'm really proud of our team across the world that makes this all possible with that I will now turn the call over to Peter to discuss the financials in more detail.

Peter Walker: Thanks, Steve, and good afternoon, everyone. Before discussing the financial results, I'd like to remind everyone that, in addition to our GAAP results, I'll be discussing certain non-GAAP results. Our GAAP 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. Turning to slide 11, in the first quarter, we delivered a strong combination of durable revenue growth and compounding profitability, and we exceeded all quarterly guided metrics.

Peter Walker: Thanks, Steve and good afternoon, everyone before discussing financial results I'd like to remind everyone that in addition to our GAAP results I'll be discussing certain non-GAAP results. Our GAAP results along with a reconciliation between GAAP and non-GAAP results can be found in our earnings release, which is posted in the Investor Relations section of our web.

Peter Walker: Site tour.

Peter Walker: Turning to slide 11 in the first quarter, we delivered a strong combination of durable revenue growth and compounding profitability and we exceeded all quarterly guided metrics.

Peter Walker: Total revenue grew 20.7% to $155.5 million, with organic constant currency revenue growth of 6.8%, which excludes the impact of part, FX headwinds for the quarter of approximately 10 basis points were diminished. Subscription and Support Revenue outpaced Total Revenue Growth, growing 22.1% to $144.7 million with Organic Constant Currency Subscription and Support Revenue Growth of 7.6%, which excludes the impact of Partial. Subscription and support revenue accounted for 93% of total revenue in the quarter, a 110 basis point increase over the first quarter of the prior year.

Peter Walker: Total revenue grew 27% to $155 5 million with organic constant currency revenue growth of six 8%, which excludes the impact of parchment.

Peter Walker: FX headwinds for the quarter of approximately 10 basis points were de Minimis subscription and support revenue outpaced total revenue growth growing 22.1% to $144 7 million with organic constant currency subscription and support revenue growth of seven 6%, which.

Peter Walker: The impact of parchment subscription.

Peter Walker: Subscription and support revenue accounted for 93% of total revenue in the quarter of 110 basis point increase over the first quarter of prior year.

Peter Walker: Professional Services and Other revenue, which now accounts for just 7% of total revenue, grew 4.2% year-over-year to $10.8 million. Deferred revenue at the end of the first quarter was $235 million, up 8.9% year over year. Remaining performance obligations of $820.4 million increased 16.6% year over year, and we expect to recognize 76% of RPO over the next 24 months.

Peter Walker: Professional services and other revenue, which now accounts for just 7% of total revenue grew four 2% year over year to $10 8 million.

Peter Walker: Deferred revenue at the end of the first quarter was $235 million up eight 9% year over year.

Peter Walker: Remaining performance obligations at $824 million increased 16, 6% year over year, and we expect to recognize 76% of RP O over the next 24 months.

Peter Walker: As discussed during Investor Day, our growth strategy is focused on our core and growth business. This strategy diversifies our growth algorithm and positions us to deliver pro forma annual recurring revenue growth in the high single digits for the combined Instructure and Parchment businesses in the first quarter. We are also positioned to deliver medium-term organic annual recurring revenue growth of 9 to 11 percent, powering our path to $1 billion in revenue by 2028 and $1 billion in annual recurring revenue exit velocity.

Peter Walker: Let's turn to slide 12.

Peter Walker: As discussed during Investor day, our growth strategy is focused on our core and growth businesses. This strategy diversifies, our growth algorithm and positions us to deliver pro forma annual recurring revenue growth in the high single digits for the combined in structure and parchment businesses in the first quarter.

Peter Walker: We are also positioned to deliver medium term organic annual recurring revenue growth of 9% to 11%.

Peter Walker: Our path to $1 billion in revenue by 2028, and 1 billion in annual recurring revenue exit velocity.

Peter Walker: In discussing the remainder of the income statement, please note that, unless otherwise stated, all references are on a non-gap basis. Turning to slide 13, our gross margin profile remains very strong, reflecting the flywheel of a greater share of recurring revenue, coupled with continued platform scale, underpinned by operational excellence and investments in our cloud platform to more efficiently deliver solutions across our customer base. In the first quarter, our non-GAAP gross profit margin expanded 103 basis points year over year to 79%.

Peter Walker: In discussing the remainder of the income statement. Please note that unless otherwise stated all references are on a non-GAAP basis.

Peter Walker: Turning to slide 13, our gross margin profile remains very strong, reflecting the flywheel of a greater share of recurring revenue coupled with continued platform scale underpinned by operational excellence and investments in our cloud platform to more efficiently deliver solutions across our customer base.

Peter Walker: In the first quarter, our non-GAAP gross profit margin expanded 103 basis points year over year to 79% subscription.

Peter Walker: Subscription and support non-GAAP gross margin expanded 60 basis points year over year to 82%. Turning to slide 14, Operating Leverage continues to grow as the organization scales. This positions us to continue expanding profitability ahead of revenue growth. In Q1, we saw some benefit from a shift in the seasonality of investments.

Peter Walker: Subscription and support non-GAAP gross margin expanded 60 basis points year over year to 82%.

Peter Walker: Turning to slide 14 operating leverage continues to grow as the organization scales. This positions us to continue expanding profitability ahead of revenue growth in.

Peter Walker: And as such, we expect to reinvest approximately half of this profitability upside in the remainder of the year. Non-GAAP operating income of $63.5 million delivered margins of 40.8%, which expanded 422 basis points year over year. And similarly, Adjusted EBITDA of $64.9 million delivered margins of 41.8%, expanding 432 basis points year over year. Non-GAAP net income of $32.7 million increased 17.2% year-over-year, driven by expanded profitability in the quarter.

Peter Walker: In Q1, we saw some benefit from a shift in the seasonality of investments and as such we expect to reinvest approximately half of this profitability upside in the remainder of the year non.

Peter Walker: non-GAAP operating income of $63 5 million delivered margins of 48% expanded 422 basis points year over year and.

Peter Walker: Similarly, adjusted EBITDA of $64 9 million delivered margins of 41, 8% expanding 432 basis points year every year.

Peter Walker: non-GAAP net income of $32 7 million increased 17, 2% year over year, driven by expanded profitability in the quarter.

Peter Walker: Operating cash flow was negative $92.6 million compared to negative $80.9 million last year, primarily due to $12 million of early collections in Q4 of last year that I discussed during our Q4 earnings call and higher interest expense from the acquisition of parts. Unlevered free cash flow of negative $79 million and adjusted unlevered free cash flow of negative $65.3 million were in line with expectations and similar to the prior year. Let's turn to slide 15 to cover the balance sheet and leverage metrics.

Peter Walker: Operating cash flow was negative $92 6 million compared to negative $80 9 million last year, primarily due to $12 million of early collections in Q4 of last year that I discussed during our Q4 earnings call and higher interest expense from the acquisition of parchment.

Peter Walker: Unlevered free cash flow of negative $79 million and adjusted Unlevered free cash flow of negative $65 3 million were in line with expectations and similar to prior year.

Peter Walker: Let's turn to slide 15 to cover the balance sheet and leverage metrics. We ended the first quarter with $89 3 million in cash cash equivalents restricted cash and funds held on behalf of customers. The decrease in cash of 255 million from year end 2023 is driven by funding of the Parkman acquisition.

Peter Walker: We ended the first quarter with $89.3 million in cash, cash equivalents, restricted cash, and funds held on behalf of customers. The decrease in cash of $255 million from year-end 2023 is driven by the funding of the Parshman Acquisition.

Peter Walker: Our first quarter net leverage ratio was 4.7 times. However, this calculation only captures two months of parchment adjusted EBITDA. If we calculate the leverage ratio using the prior 12 months of parchment adjusted EBITDA, the leverage ratio would have been lower in the first quarter. We are on track for a year-end net leverage ratio of approximately 3.4 times, consistent with the guidance we provided at Investor Day. Our capital allocation priorities have remained unchanged since our IPO, investing in organic revenue growth, pursuing M&A, and maintaining a healthy balance.

Peter Walker: Our first quarter net leverage ratio was 4.7 times. However, this calculation only captures two months apartments adjusted EBITDA, if we calculate the leverage ratio using the prior 12 months apart from its adjusted EBITDA the leverage ratio would have been lower in the first quarter.

Peter Walker: We are on track for year end net leverage ratio of approximately 3.4 times consistent with the guidance, we provided at Investor day.

Peter Walker: Our capital allocation priorities remain unchanged since our IPO investing in organic revenue growth pursuing M&A and maintaining a healthy balance sheet.

Peter Walker: I will now discuss Q2 guidance and our updated 4-year outlook. Turning to slide 16, in the second quarter, we expect revenue in the range of $166.5 to $167.5 million, growing 27.4% year-over-year at the midpoint. We expect adjusted EBITDA in the range of $67.5 to $68.5 million, resulting in margins of 40.7% of the midpoint and an expansion of 160 basis points year over year.

Speaker Change: I will now discuss Q2 guidance and our updated full year outlook.

Peter Walker: Turning to slide 16 in the second quarter, we expect revenue in the range of $166 five to 167.5 million growing 27, 4% year over year at the midpoint.

Peter Walker: We expect adjusted EBITDA in the range of 67.5 to $68 $5 million, resulting in margins of 47% at the midpoint and expansion of 160 basis points year over year.

Peter Walker: For the full year, we are raising our guidance to reflect the full Q1 revenue beat and an incremental raise. We now expect revenue in the range of $656.5 to $666.5 million, growing 24.8% year-over-year at the midpoint. This includes organic constant currency revenue growth of 5% at the midpoint, consistent with initial expectations and excluding the impact of our acquisition of parts. We also expect pro forma annual recurring revenue in the high single digits for the combined Instructure and Parchment business.

Peter Walker: Turning to slide 17 for the full year, we are raising our guidance to reflect the full Q1 revenue beat and an incremental raise we now expect revenue in the range at 656.5 to $666 5 million growing 24, 8% year over year at the midpoint.

Peter Walker: <unk>.

Peter Walker: This includes organic constant currency revenue growth of 5% at the midpoint consistent with initial expectations and excluding the impact of our acquisition of parchment.

Peter Walker: We also expect pro forma annual recurring revenue in the high single digits for the combined in structure in parchment business.

Peter Walker: Turning to Adjusted EBITDA, we expect full-year Adjusted EBITDA in the target range of $271 to $274 million, with margins of 41.2% at the midpoint, an expansion of 79 basis points year-over-year. The $3.5 million of Adjusted EBITDA raised reflects a partial flow-through of Q1 results and reinvestment and growth initiatives in the remainder of the year. We expect adjusted unlevered free cash flow in the range of $262 million to $265 million, reflecting margins of 39.8% and a raise of $1.5 million at the midpoint.

Peter Walker: Turning to adjusted EBITDA, we expect full year adjusted EBITDA in the target range of 271 to 274 million with margins of 41.2% at the midpoint and expansion of 79 basis points year over year, the $3 5 million of adjusted EBITDA raise reflects a partial.

Peter Walker: Flow through of Q1 results and reinvestment in growth initiatives and the remainder of the year.

Peter Walker: We expect adjusted Unlevered free cash flow in the range of 262 million to $265 million, reflecting margins of 39, 8% and a raise of $1.5 million at the midpoint. This represents an increase of 17% year over year at the midpoint or 29% when <unk>.

Peter Walker: This represents an increase of 17% year-over-year at the midpoint, or 29% when adjusted for $12 million of early collections in Q4 of last year. Turning to slide 19, we are reaffirming our medium-term target shared at Investor Day. As the business evolves toward our medium-term targets, we view annual recurring revenue and subscription and support revenue as the growth engine that will power our target of $1 billion in revenue by 2028 and $1 billion in annual recurring revenue exit velocity. We believe as the platform scales, we are well positioned to continue expanding margin. This concludes our prepared remarks. At this time, operator, please open up the line for questions.

Peter Walker: Adjusted for 12 million of early collections in Q4 of last year.

Peter Walker: Turning to slide 19, we are reaffirming our medium term targets shared at Investor day, as the business evolves toward our medium term targets, we view annual recurring revenue and subscription and support revenue is the growth engine that will power our target of $1 billion in revenue by 2028, and 1 billion in annual.

Peter Walker: Recurring revenue exit velocity, we believe is the platform scales, we are well positioned to continue expanding margins there.

Peter Walker: This concludes our prepared remarks at this time operator, please open up the line for questions.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. And your first question comes from the line of Brian Peterson with Raymond James. Please go ahead.

Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the team if he would like to withdraw your question simply press Star one again.

Brian Christopher Peterson: If you are called upon to ask a question in our listening via loud speaker on your device.

Brian Christopher Peterson: Pick up your handset and ensure that your phone is not on mute when asking your question.

Operator: Again press star one to join the team and your first question comes from the line of Brian Peterson with Raymond James. Please go ahead.

Unknown Attendee: Hi, this is Jessica on for Bonnie today. So just want to start off with, with the end of the 2023-2024 school year, what budget priorities are you hearing from so far for school districts and higher education institutions for next school year, like outside of the core elements, what products are responding with schools looking to address pain points?

Operator: Hi, This is jessica on the buying today. So I just wanted to start off with the end of a 2023 'twenty 'twenty four school year, what budget priorities are you hearing.

Unknown Attendee: Philip offer school districts in higher education institutions for next school year like outside of the core LMS what products are resonating with schools looking to address pinpoints.

Unknown Attendee: Okay.

Speaker Change: Thanks Jessica.

Stephen M. Daly: Thanks Jessica. It's as we go into the, you know, the budgeting process within within us specifically about higher ed, I think it's very similar to what we've been talking about, right? They're looking at what their long-term strategy from a digital transformation perspective is? How are they going to address more learners than just the traditional matriculating students that are coming to campus to get a degree? And what are some of the, you know, some of the key investments that they're going to have to make in order to effectively address that population?

Unknown Attendee: It's as we as we go into the you know the the budgeting process within within you asked specifically about higher Ed I think.

Stephen M. Daly: The.

Stephen M. Daly: It's very similar to what we've been talking about right. There they're looking at what is their long term strategy from a digital transformation perspective, how are they going to address more learners than just the traditional matriculating students that are coming on campus to get a degree.

Stephen M. Daly: And what are some of the the you know.

Stephen M. Daly: Some of the key investments that youre going to have to make in order to effectively address that population. So we see you know.

Stephen M. Daly: So we see, you know, we see continued investment in tech consolidation. We see, you know, we see them evaluating where which budgets they are going to tap into to improve and increase their tech investments. You heard it, our investor day to move some of that money from kind of physical locations into the tech funds. And then they're looking at, you know, what is the impact of enrollment trends?

Stephen M. Daly: We see continued investment in tech.

Stephen M. Daly: Tech consolidation we see.

Stephen M. Daly: We see them evaluating where which budgets are going to tap into to improve and increase their tacky value their tech investments.

Stephen M. Daly: You heard at our Investor day to moving some of that money from kind of physical locations.

Stephen M. Daly: Locations into the into the tech funds.

Stephen M. Daly: And then they're looking at what is the impact of of enrollment trends and again, how do we how do we reach more learners as part of the those enrollment trends that we're seeing so very similar conversations that we've been having over the last less six to nine nine months.

Stephen M. Daly: And again, how do we reach more learners as part of those enrollment trends that we're seeing? So very similar conversations that we've been having over the last 6 to 9, 9 months.

Unknown Attendee: Got it. Thanks for that.

Speaker Change: Got it thanks for that.

Stephen M. Daly: Also then double clicking on parchment, what milestones are you focusing on for integrating parchment into the overall structure of business. During 'twenty two before like how is parkman, but integrating into go to market and cross sell and what our customers interested in Wisconsin. So far early responses. Thanks.

Unknown Attendee: And also, um, then double clicking on parchment, what milestones are you focusing on for integrating parchment into the overall Instructure business during 2024? Like how has parchment been integrated into go to market and cross sell? And what are customers interested in with parchment so far? Early responses? Thanks. Yeah, yes, it's

Stephen M. Daly: Yeah, yes, it's a it's an area that we're very focused on. And just to be clear, there are ongoing integration efforts, particularly in the back office. And so g&a integration is happening where we're very focused on bringing them on to our systems. This year, our plan has been to run the go-to-market separately as a way to understand the buying centers and understand where the synergies are. I'm encouraged.

Unknown Attendee: Yeah.

Speaker Change: Yes, it's it's a it's an area that we're very focused on.

Stephen M. Daly: And just to be clear there is there are ongoing integration efforts, particularly in the back office and so G&A integrations happening where.

Stephen M. Daly: We're very focused on bringing them onto our systems this year.

Stephen M. Daly: Our plan has been to run the go to market separate as a way to understand the buying centers understand where the synergies are I'm encouraged.

Stephen M. Daly: You know, anecdotally, as I've been out talking with customers, they, you know, they've been very positive about bringing the two companies together. We've, you know, I was with one of our consortia just about two or three weeks ago. And we were having conversations, and it was sparking interest where they were, they were wanting to introduce our parts, you know, our parchment salespeople to the registrars because they could see some of the benefits of bringing both, you know, the delivery of learning with the evidence of learning.

Stephen M. Daly: Anecdotally as I've been out talking with with customers.

Stephen M. Daly: I've been.

Stephen M. Daly: Very positive about bringing the two companies together.

Stephen M. Daly: You know I was with one of our consortia just about two or three weeks ago, and we were having conversations and it was sparking interest where they were they were wanting to introduce our parts are apartment salespeople to their registrars because they can see some of the benefits of.

Stephen M. Daly: The bringing both you know the the delivery of learning with the evidence of learning So where we're early signals are positive.

Stephen M. Daly: So, our early signals are positive, but we're going to give ourselves the year to make some of the decisions about how those, you know, how the two teams come together and what that structure looks like going into 2025.

Stephen M. Daly: But we're going to give ourselves the year to make some of the decisions about how those.

Stephen M. Daly: The two teams come together and what that structure looks like going into 2025.

Speaker Change: Got it thanks.

Unknown Attendee: Your next question comes from the line of Noah Herman with J.P. Morgan. Please go ahead.

Stephen M. Daly: Your next question comes from the line of Noah Herman with J P. Morgan. Please go ahead.

Unknown Attendee: Yeah.

Unknown Attendee: Hey guys, thanks for taking the questions. Um, maybe first on the go to market. I know starting in January this year, you sort of rolled out a new sales organization to two different motions, both land and expand teams. Just curious to see what the progress has been there on that front. And maybe, you know, what sort of state are we in in terms of this go to market transition?

Noah Ross Herman: Hey, guys. Thanks for taking the questions.

Unknown Attendee: Just maybe first one to go to market I know starting in January of this year, you sort of rolled out a new sales organization two different motions, both land and expand teams just curious to see what the progress has been narrowing that wrong and maybe what sort of any are we in terms of this go to market transition.

Stephen M. Daly: Yeah, thanks, Noah. It's good to hear from you. I'm very pleased with the progress that we're seeing. I have seen a level of collaboration. I've seen a level of engagement, particularly in what we call drive teams, which are the expansion teams within the existing customers. We're seeing a lot more lead generation from our CSMs and from the teams that are in very close contact with the customers. We've seen a lot more collaboration between sales and customer experience.

Speaker Change: Yeah. Thanks, Thanks, Bill good to hear from you.

Stephen M. Daly: From I'm I'm very pleased with the progress that we're seeing I have seen a level of collaboration I've seen the level of engagement, particularly in the what we call drive teams, which are the expand teams within the existing.

Stephen M. Daly: Within the existing customers.

Stephen M. Daly: We're seeing a lot more.

Stephen M. Daly: Lead generation from our C. S EMS and from the teams that are in very close with the customers. We've seen a lot more collaboration between sales and customer experience. So.

Stephen M. Daly: It is I'm encouraged you know Q1 is is not usually.

Stephen M. Daly: So I'm encouraged. Q1 is not usually a very predictive quarter for us as the buying season starts to really crank up in Q2 and Q3. But I'm encouraged by what I see from a pipeline build. I'm encouraged by the feedback that I'm getting from our customers about the unified approach that we're taking with the customer. So, still early innings, but I'm pleased with the progress.

Stephen M. Daly: A very predictive quarter for us right as the buying season starts to really crank up in Q2, and Q3, but I'm encouraged by by what I see from a pipeline build I'm encouraged from the feedback that I'm getting from our customers about the unified approach that we're taking with the customer so.

Stephen M. Daly: Still early innings, but we should you know we are.

Stephen M. Daly: I am pleased with the progress.

Unknown Attendee: Yeah, no, that's great to hear. In your prepared remarks, you also called out that you were actually able to realize some additional savings in the quarter and you plan to incrementally invest in different areas going forward. Just curious, what are some of those incremental investments you're making as we approach the bulk of the buying season? Thanks.

Speaker Change: That's great to hear.

Unknown Attendee: Your prepared remarks, you also called out that you were actually able to realize some additional savings in the quarter and you plan to incrementally invest in different areas going forward just curious.

Unknown Attendee: What are some of those incremental investments, you're making as we approach the bulk of the buying season.

Peter Walker: Yeah, hey, Noah, thanks for the question. So specifically, there's program spend and some technology infrastructure spend that we shifted into the back half of the year, particularly on the program spend. We just believe there'll be a higher ROI on executing that in the back half of the year.

Speaker Change: Yeah, Hey, thanks for the question so specifically there.

Peter Walker: Program spend and said technology infrastructure spend that we shifted into the back half of the year, particularly on the program spend we just believe there'll be a higher ROI on executing that in the back half of the year.

Unknown Attendee: Your next question comes from the line of Josh Baer with Morgan Stanley. Please go ahead.

Peter Walker: Your next question comes from line of Josh Baer with Morgan Stanley. Please go ahead.

Unknown Attendee: Great, thanks for the question. Just in regard to all the breakouts as far as the growth businesses that we have, thinking about ARR for 2023 and the growth keggers looking ahead, it doesn't necessarily paint the picture of like what's really contributing this year or next year versus three or four years. So I was hoping for a little bit of color.

Joshua Phillip Baer: Great. Thanks for the question just in regard to all.

Unknown Attendee: All the breakouts as far as the growth businesses that we have thinking.

Unknown Attendee: Thinking about <unk> for 2023, and the growth CAGR is looking ahead.

Unknown Attendee: It doesn't necessarily paint the picture of like Whats really contributing this year or next year versus in three or four years. So I was hoping for a little bit of color obviously parchment is.

Unknown Attendee: Obviously, parchment is one of the bigger assets within the growth businesses growing double digits, so that's going to be a big contributor. But maybe you could walk through the platform ecosystem, the non-traditional, like assessments, international, what's really going to help move the needle this year versus maybe in a few years.

Unknown Attendee: It was one of the bigger assets.

Unknown Attendee: Within the growth businesses growing double digits. So that's going to be a big contributor, but maybe you could walk through platform ecosystem. The nontraditional like assessments international what's what's really going to help move the needle this year versus maybe in a few years.

Peter Walker: Yeah, Josh, thanks for the question. So, you know, we're really pleased with Q1 performance and Proforma ARR growth in the high single digits, in line with our expectations. And then ARR growth from our core and our growth businesses was in line with our medium-term targets. So I'd say kind of everything that we shared at Investor Day, we're on track. We've obviously made a big effort to improve disclosure at Investor Day and even during today's call.

Speaker Change: Yeah, Josh Thanks for the question. So we're really pleased with Q1 performance and pro forma AOR growth in the high single digits in line with our expectations.

Peter Walker: And then a or our growth from our core in our growth businesses were in line with our medium term target. So I'd say kind of everything that we shared at Investor day. We're.

Peter Walker: We're on track with we've obviously made a big effort to improve disclosure at Investor day, and even in todays call.

Peter Walker: So, you know, we're not going to comment on each of the individual areas beyond the client wins that we spoke about today, etc. But over time, we'll continue to look to improve disclosure even further.

Peter Walker: We're not going to comment on each of the individual areas beyond the client wins that we spoke about today et cetera, but over time, we'll continue to look to improve disclosure even further.

Unknown Attendee: Okay, got it. I was just wondering if you have any update on the gross retention rates. Just wondering, you know, how that's trending at this point. Thanks.

Speaker Change: Okay got it was just wondering.

Unknown Attendee: If you have any.

Unknown Attendee: Update on the gross retention rates just wondering how that's trending at this point.

Unknown Attendee: Okay.

Peter Walker: Yeah, so we do not provide that metric on a quarterly basis. And our main selling season, right, really kicks in in Q2, Q3, etc. when all of our renewals happen, etc. So, you know, I would say we go into the year feeling very positive about our gross retention.

Speaker Change: Yeah. So we do not provide that metric on a quarterly basis and our main selling season right really kicks in in Q2, Q3 et cetera, when all of our renewals happen et cetera. So I would say we go into the year feeling.

Peter Walker: Very positive about our gross retention rates.

Speaker Change: Great. Thanks.

Unknown Attendee: Your next question comes from the line of Stephen Sheldon with William Blair. Please go ahead.

Speaker Change: Your next.

Peter Walker: <unk> comes from the line of Stephen Sheldon with William Blair. Please go ahead.

Unknown Attendee: Hey, thanks for taking my questions. I wanted to follow up on Noah's earlier question and ask about some other changes you've made to the sales process. I think you started doing more bundling and packaging this year. I'd be curious how impactful that change has been. I know, firstly, as you've said, the first quarter isn't a massive sales quarter. But as we think about the key selling season coming up over the next couple months, how impactful do you think this change could be to the breadth of solutions you're including in contracts, given what you've seen so far this year?

Stephen Hardy Sheldon: Hey, Thanks for taking my questions I wanted to follow up on Noah's earlier question asked about some other changes you've made to the sales process. I think you started doing more bundling and packaging. This year and just curious how impactful that change has been I know firstly as we've said more clients first quarter isn't a massive sales quarter, but as we think about the key.

Unknown Attendee: Key selling season coming up over the next couple of months.

Unknown Attendee: How impactful do you think this change could be the breadth of solutions you are including in contracts given what you've seen so far this year.

Stephen M. Daly: Yeah, you know, Steven, to your point, it is it is early. And, you know, Q1 is not the big selling season for us. But what I can give you some color commentary is, we feel good about the pipeline that's building around those around those, those bundles. As you may have noticed in the prepared remarks, those wins were multiple product wins. So in some cases, those were the bundles that we sold.

Speaker Change: Yes, Steve.

Speaker Change: Stephen to your point.

Stephen M. Daly: It is it is early and you know Q1 is not the big selling season for us, but what I would I can color commentary I can give you is.

Stephen M. Daly: We feel good about the pipeline that's building around those around those.

Stephen M. Daly: Bundles as you may have noticed in the prepared remarks.

Stephen M. Daly: Those wins that were multiple product wins. So in some cases those were the bundles that we sold in some cases they were.

Stephen M. Daly: In some cases, they were a mix of products, but we're finding encouraging success in our conversations about being able to walk into a sales opportunity, and rather than just having a conversation about what LMS we're going to use, it is about the bigger, full platform solution. And so we feel good. We've been able to still have world-class win rates. And we've done a number of deals that, again, are multi-product. They give me, again, a good trend with Q2 and Q3 will be more predictive for us.

Stephen M. Daly: Our mix of products, but we are finding.

Stephen M. Daly: We're finding encouraging success in our conversations about.

Stephen M. Daly: Being able to walk in to a.

Stephen M. Daly: Our sales opportunity and rather than just having a conversation about you know what what what LMS or we're going to use it is about the bigger full platform.

Stephen M. Daly: Solution and so we feel good we've been able to you know still have world class win rates and we've and we've done a number of deals that again are multi product.

Stephen M. Daly: They give me.

Stephen M. Daly: Again, good good trend with Q2, and Q3 will be more the predictive for us.

Unknown Attendee: Got it. Yeah, that's helpful. And this is a follow-up. It sounds like you're continuing to see elongated sales cycles in higher ed. So curious if that's gotten any better or worse relative to what you've been seeing in recent quarters. And generally, what do you think it could take for that pressure in the ecosystem? Yes, you know...

Speaker Change: Got it yes, that's helpful.

Speaker Change: And then as a follow up it sounds like Youre, continuing to see elongated sales cycles and higher Ed. So I'm curious if that has gotten any better or worse relative to what you've been seeing in recent quarters and generally what do you what could it take for that pressure in the ecosystem to east.

Unknown Attendee: Yeah.

Stephen M. Daly: Yes, you know, we haven't seen any material change, Stephen, in the kind of the length of the cycle and those types of things. Again, Q1's not a great predictive quarter for us. One of the, you know, institutions are just starting to get their budgets for next year, and as they start to digest what that looks like and what they have left for this year, that I believe that's going to be a catalyst for some of these decisions to be made again. Time will tell, but you know I'm cautiously optimistic.

Speaker Change: Yes, we haven't seen any material change.

Stephen M. Daly: Steven in the Ah.

Stephen M. Daly: In the kind of the length of cycle on those types of things again Q1 is not a great predictive quarter for us.

Stephen M. Daly: One of the you know.

Stephen M. Daly: Our institutions are just starting to get their budgets for next year and as they start to digest, what that looks like and what they have left for this year.

Stephen M. Daly: That's that's I believe that's going to be a catalyst for some of these decisions to be made.

Stephen M. Daly: Again, what we you know time will tell but.

Stephen M. Daly: Cautiously optimistic.

Speaker Change: Alright, great. Thank you.

Unknown Attendee: Your next question comes from the line of Joe Vruwink with Baer. Please go ahead.

Stephen M. Daly: Next question comes from the line of Joe for zinc with Baird. Please go ahead.

Unknown Attendee: Great. Hi everyone.

Joseph D. Vruwink: Great Hi, everyone I wanted to ask about some of the big wins in the high growth areas and specifically the non traditional opportunities.

Joseph D. Vruwink: Are those a byproduct of some of the go to market changes in having dedicated sales coverage there or are we actually seeing still that your product is well suited for those opportunities. So the product is currently speaking for itself.

Joseph D. Vruwink: The go to market coverage is going to drive benefits more later on perhaps.

Unknown Attendee: Okay.

Unknown Attendee: I wanted to ask about some of the big wins and high growth areas, and specifically the non-traditional opportunities. Are those a byproduct of some of the go-to-market changes and having dedicated sales coverage there? Or are we actually just seeing that your product is well-suited for those opportunities? So the product is currently speaking for itself, and the go-to-market coverage is going to drive benefits more later on, perhaps?

Joseph D. Vruwink: It's it's a good question Joe I would say we are seeing I'm I'm encouraged right. So the fact that we have now have a sales team we have a marketing and CSM team that are that are 100% focused on this part of the market for us.

Unknown Attendee: Is starting to pay pay dividends for us even now I do think that you know it.

Stephen M. Daly: It's a good question, Joe. I would say we are seeing. I'm encouraged, right? So the fact that we now have a sales team, and we have a marketing and CSM team that is 100% focused on this part of the market for us, is starting to pay dividends for us even now. I do think that this is our first quarter with that dedicated sales team. And so I do think that there's more to come there, but I'm happy with the progress that we've made so far.

Stephen M. Daly: This is our first quarter with that dedicated sales team.

Stephen M. Daly: And so I do I do think that.

Stephen M. Daly: There's more to come there, but I'm happy with the is the progress that we've made so far now.

Stephen M. Daly: Now, the product fit, as we mentioned in our investor day, there were a lot of inbound requests prior to having a dedicated sales team that we've just been kind of catching up on. And so we do believe we have a good product fit here. But I am encouraged by the focus that's there and the team that's executing on that.

Stephen M. Daly: Product fifth as we as we mentioned at our Investor Day, we've been there's been a lot of inbound requests prior to having a dedicated sales teams that we've just been kind of catching and so we do believe we have a good product fit here, but you know I.

Stephen M. Daly: I do I am I am encouraged by the focus that's there and the team that's executing on that.

Unknown Attendee: Okay, that's helpful. And then the bridge between reported and organic growth and earnings release. That's great. That should be a best practice. I'm wondering if you can parse out the M&A contribution within RPO in the quarter.

Speaker Change: Okay. That's helpful and then.

Unknown Attendee: The bridge between reported and organic growth.

Unknown Attendee: Really it's that's great that should be a best practice.

Unknown Attendee: I'm wondering if you can parse out the M&A contribution within our Po in the quarter.

Unknown Attendee: Okay.

Peter Walker: Yeah, so appreciate the question. So taking a look at RPO, we obviously had a strong growth rate of 17% year over year. The Instructure business growth rate was double digits, and the remaining portion is from Parchment. But I think it's important to remind you that about a third of Parchment's business is subscription, so it impacts RPO, and two thirds is transactional. Okay.

Speaker Change: Yeah. So I appreciate the question so taking a look at <unk>, we obviously had a strong growth rate of 17% year over year. The in structure business growth rate was double digits. The remaining portion is from parchment, but I think it's important to remind you that about a third apartments business is subscription.

Peter Walker: So it would impact our P O and two thirds is transactional.

Peter Walker: Okay.

Unknown Attendee: Okay, that's great. Thank you very much.

Speaker Change: Okay. That's great. Thank you very much.

Unknown Attendee: Your next question comes from the line of Ryan MacDonald with Needham. Please go ahead.

Unknown Attendee: Your next question comes from the line of Ryan Macdonald with Needham. Please go ahead.

Unknown Attendee: Yeah.

Unknown Attendee: Hey, this is Matt Shea. I'm for Ryan.

Unknown Attendee: Hey, this is Matt Shea on for Ryan Thanks for taking the question.

Matthew Wells: I think our biggest takeaway coming out of the recent ASU GSV conference was just this rationalization of AV vendors sprawl that the K 12 market in particular is going to have to go through post asset funding. So just curious I know it's early in the selling season, but just curious if you guys are starting to see that demand for your learn platform products or.

Matthew Wells: If you ultimately changing kind of how you position that this selling season, just with that that funding cliff and rationalization coming and then would love just an update with the learn platform in the higher Ed side, you guys are still on pace to roll out that data.

Matthew Wells: In the second half for those institutions and any early signs of demand.

Unknown Attendee: Thanks for taking the question. I think our biggest takeaway coming out of the recent ASU GSB conference was just this rationalization of vendor sprawl that the K-12 market in particular is going to have to go through post ESSER funding. So just curious, I know it's early in the selling season, but just curious if you guys are starting to see that demand for your learn platform products, or if you're ultimately changing kind of how you position that this selling season, just with that, that funding cliff and rationalization coming and then would love just an update with the learn platform on the higher ed side, if you guys are still on pace to roll out that beta in the second half for those institutions and any early signs of demand.

Unknown Attendee: Yes.

Matthew Wells: I heard the same thing at ASU, GSV, Matt and and we saw it.

Unknown Attendee: And we've seen it in the in the market are.

Stephen M. Daly: Yeah, I heard the same thing at ASU GSV, Matt, and we saw, and we've, we've, we've seen it in the market. In fact, every conversation that I, you know, anecdotally, that I've had, it's an easy conversation to have with the superintendent or, you know, a leader within, because there is still a massive sprawl of apps in, particularly in the K-12 And so it is, it is responding; the value proposition is responding.

Unknown Attendee: In fact every conversation that anecdotally again that I've had it's an easy conversation to have with the superintendent or.

Stephen M. Daly: You know a leader within because there is a there is still massive sprawl of apps in particularly in the K 12 space and so it is it is resonating the value proposition is resonating we have a dedicated team that's.

Stephen M. Daly: We have a dedicated team that continues to work on positioning and ensure that we've got the best opportunity to penetrate those opportunities. From a higher education perspective, that is one of those, you know, unrealized opportunities that we're working on. We are securing design partners right now and working, so we are on track to be in beta for the second half of the year and, you know, expect that to be a long-term growth driver for us, particularly in the ed tech effectiveness space.

Stephen M. Daly: This continues to work on positioning and and ensure that we we've got the best opportunity to to.

Stephen M. Daly: Penetrate those opportunities from a.

Stephen M. Daly: From a higher Ed perspective that is one of those unrealized opportunities that we're working on.

Stephen M. Daly: We are securing design partners right now and working so we are on track to be in beta for the second half of the year.

Stephen M. Daly: And I expect that to be a.

Stephen M. Daly: You know our long term growth driver for us, particularly in the AD Tech.

Stephen M. Daly: Fact of this space.

Stephen M. Daly: Got it. That's good to hear. And then maybe just thinking about higher education enrollment over the next 6, 12, 18 months. Obviously, we have this FAFSA fiasco going on, but we did just cross the quote-unquote National College Decision Day. So just curious if you guys are starting to hear anything from your college partners on what their enrollment looks like for the next, you know, 6, 12 months or any other signals that are kind of informing your outlook there. It's a little bit early for us to get that feedback. As you said, we're just kind of getting past that deadline. And, you know, there's, there is a lot.

Speaker Change: Got it that's good to hear.

Stephen M. Daly: And then maybe just thinking about higher Ed enrollments over the next 612 18 months. Obviously, we have this fast fiasco going on but we did just crossed the quote unquote National College decision day. So just curious if you guys are starting to hear anything from your college partners on what their enrollment looks like for the next six months 12 months or any other signals that are.

Stephen M. Daly: Kind of informing your outlook there.

Stephen M. Daly: Okay.

Stephen M. Daly: It's a little bit early for us to get that feedback. As you said, we're just kind of getting past that deadline. And, you know, FASFA is causing some vibration, if you will, some uncertainty, but at the same time, it feels like they're getting that fixed. I would say the trends, we saw a little bit of a firming of trends this last year, and so as we talk to our higher ed institutions, they are, one, focused on that, but also focused on how do we reach more and more learners? The long-term trend is still, how do we bring more learners into our institution and reach more of the world, if you will?

Stephen M. Daly: It's a little bit early for us to get that feedback as you said, we're just kind of getting past that deadline.

Stephen M. Daly: And there.

Stephen M. Daly: There is a lot of you know.

Stephen M. Daly: First is causing some.

Stephen M. Daly: Vibration, if you will some uncertainty, but but at the same time it feels like they are getting that fixed.

Stephen M. Daly: I would say the trends, we saw a little bit of a firming of trends. This last year and so as we talk to our higher Ed institutions.

Stephen M. Daly: They are one focused on that but also focused on how do we reach more and more learners.

Stephen M. Daly: The long term trend is still how do we bring more learners onto our into our institution.

Stephen M. Daly: And and reach more of the World If you will.

Speaker Change: Thanks, guys.

Stephen M. Daly: Yeah.

Stephen M. Daly: Operator.

Stephen M. Daly: Yeah.

Stephen M. Daly: Operator.

Unknown Attendee: Your next question, yes, ma'am?

Speaker Change: Your next question yes.

Operator: We're ready for our next question. All right.

Speaker Change: So we're ready for our next question.

Unknown Attendee: Alright.

Unknown Attendee: Your next question comes from the line of... George Kurosawa with Citi. Please go ahead.

Speaker Change: Your next question comes from the line of.

Unknown Attendee: George Kurosawa with Citi. Please go ahead.

Unknown Attendee: Hi, I'm on for Steve Enders. Thanks for thanks for taking the question here. You called out some, you know, parts were coming in a little better than expected. Maybe just double click on that kind of what seemed to be working early on here.

Unknown Attendee: Hi, I'm on for Steve Enders. Thanks for taking the question here. You called out some parts that were coming in a little better than expected. Maybe just double click on that kind of what seemed to be working early on here.

George Michael Kurosawa: Hi, I'm on for Steve Enders. Thanks for thanks for taking the question here you called out some.

Unknown Attendee: Parchment coming in a little better than expected, maybe just double click on that kind of what seem to be working early on here.

Stephen M. Daly: Yeah, you know, Well, there's a couple things. I think that the need for their products is just as important as it has been for their traditional awards products. So we saw some good traction at awards. In addition, the Pathways products are gaining more and more traction. We see there are some conversations that we're able to open up as a combined company that give me some encouragement for the pipeline build in the future that's coming.

Unknown Attendee: Yeah.

George Michael Kurosawa: Well, there's a couple of things I think that the need for their products is is just is just as important as it's been for their traditional awards products. So we saw some good.

Stephen M. Daly: Some good traction within awards. In addition, the pathways program products are gaining.

Stephen M. Daly: Gaining more and more traction we see there's.

Stephen M. Daly: There are some some conversations that we were able to open up as a combined company there.

Stephen M. Daly: That gives me some.

Stephen M. Daly: Some encouragement for the pipeline build in the future that that are coming so I do feel good about.

Stephen M. Daly: So I do feel good about bringing these two companies together, being able to be the only one that can marry the delivery of learning with the evidence of learning, and then how that can become a much richer experience. And then a record that will follow the student, their comprehensive learner record. That message is really resonating and is holding more power as the combined companies than either of us could have standalone.

Stephen M. Daly: Bringing these two companies together being able to be the only.

Stephen M. Daly: You know the only one that can marry the delivery of learning with the evidence of learning and then how that can become a much more rich experience and then the Ah <unk>.

Stephen M. Daly: Record that will followed the student their comprehensive learn a record that message is really resonating and it's holding more power as the combined companies.

Stephen M. Daly: Than either of us could have standalone.

Unknown Attendee: That's great color. And I think you've alluded a few times on the call to, you know, next quarter being the start of the, you know, bigger selling season, maybe you could kind of, you know, compare and contrast what you're seeing on the pipeline side relative to last year and you know, how that informs your confidence going into the season.

Speaker Change: That's great color and I think you've alluded a few times on the call to next quarter.

Unknown Attendee: When it started.

Unknown Attendee: Bigger selling season, maybe if you could kind of compare and contrast, what you're seeing in the pipeline.

Unknown Attendee: Klein side relative to last year, and how that informs your confidence going into the season.

Stephen M. Daly: Yeah, you know, as we look at the pipeline for, for this quarter, and for Q3, as we keep track of that, we are, you know, trending as expected. So with our overall new business, we're seeing, we're seeing the growth that we expected in the pipeline. And then we, you know, from a renewal perspective, we feel very confident about the renewals that we've, we've highlighted in our guide.

Speaker Change: Yeah, as we look at the pipeline for for this quarter and for Q3 as we keep track of that.

Stephen M. Daly: We are you know we're trending as as was expected so with our overall new business. We're seeing we're seeing the growth that we expected in the pipeline.

Stephen M. Daly: And then we you know from a renewal perspective, we feel very confident about the renewals that we've we've highlighted in our guidance.

Stephen M. Daly: Yeah.

Unknown Attendee: Great, thanks for taking the questions.

Speaker Change: Great. Thanks for taking the questions.

Unknown Attendee: Your next question comes from the line of Devin Au with KeyBank Capital Markets. Please go ahead.

Unknown Attendee: Your next question comes from the line of Kevin <unk> with Keybanc capital markets. Please go ahead.

Unknown Attendee: Great, thanks for taking my questions. First one I have is on the on the windback. Congrats on that one. I know you talked about you guys winning there mainly on the customer service perspective, but I just want to get a little more context on that deal. You know, what solutions did they tack on and I'm just kind of curious if there are more of these windback deals in the pipeline in the near term.

Unknown Attendee: Great, thanks for taking my questions. The first one I have is on the windback. Congratulations on that one. I know you talked about you guys winning there mainly on the customer service perspective, but I just want to get a little more context on that deal. You know, what solutions did they tack on, and I'm just kind of curious if there are more of these windback deals in the pipeline in the near term.

Devin Au: Great. Thanks for taking my questions first one I have is on the on the win back congrats on that one I know you talked about you guys, winning they're mainly on the customer service perspective, but I just wanted to get a little more context on that deal what solutions do they tack on and I'm just kind of curious.

Unknown Attendee: There are more of these went back deals in the pipeline in the near term.

Unknown Attendee: Yeah.

Stephen M. Daly: Yeah, it was a nice win for us. It's always good when you can bring somebody back into the fold who has left. So, as I mentioned in my remarks, they left us in 2019. They were enticed away from us, and after their experience over the last three or four years, they came back, and the feedback that they gave us was that the usability and the experience that they had with Canvas wasn't matched by the other solutions, as well as the level of service and support that they got was a differentiator for us against our competition.

Unknown Attendee: Yeah. It was a it was a nice it was a nice win for US. It's always good when when you can bring somebody back into the fold that left so as I mentioned in my remarks they.

Stephen M. Daly: They had left us in 2019.

Stephen M. Daly: They were enticed away.

Stephen M. Daly: From us and after their experience over the last three or four years they.

Stephen M. Daly: They came back and the feedback that they gave US was the usability and the experience that they are.

Stephen M. Daly: That they have with Kansas.

Stephen M. Daly: Wasn't matched with the other solutions as well as the level of service and support that they got was a differentiator for us.

Stephen M. Daly: Against.

Stephen M. Daly: Against our competition.

Stephen M. Daly: It is a sweet feeling to have those wins back. And just to be clear, that is nice. Our biggest opportunity is there's still quite a bit of green field out there with Canvas, and still a big part of the market that's still kind of cobbling together free tools, and that's where we believe the biggest growth opportunity for us is over the next several years.

Stephen M. Daly: It is a it is a it is a suite.

Stephen M. Daly: Sweet feeling to have those those win backs.

Stephen M. Daly: And just to be clear.

Stephen M. Daly: That is nice our biggest opportunity is there's still quite a bit of a greenfield out there with canvas and still a big part of the.

Stephen M. Daly: A big part of the market, that's still kind of Cobbling together free tools, and that's where we believe the biggest growth opportunity for us is.

Stephen M. Daly: Over the next several years.

Unknown Attendee: Got it, appreciate the context there. And then a quick one for Peter, macro seems to have a downtick in the past 90 days with rates looking to remain elevated longer, but sounds like the headwinds we are facing in higher ed are quite consistent from the prior quarter. So my question here is, any changes around the macro assumptions being built into your full-year guide versus when you initially set the outlook a quarter ago? Just any changes there?

Speaker Change: Got it appreciate the context, there and then a quick one for Peter macro seem to have a downtick in the past 90 days with rates looking to remain elevated longer but sounds like the headwinds you're facing in higher Ed is quite consistent.

Unknown Attendee: From prior quarter. So my question here any changes around the macro assumptions being built into your full year guide versus when you initially set the outlook a quarter ago, just any change there okay. Thanks.

Peter Walker: Yeah, I appreciate the question. You know, our view is there's been no material changes to the macro environment since we last spoke. So there have been no changes in our guide as a result of that. We really need to get into, you know, our core buying season. And that'll tell us if there's a change in that.

Peter Walker: Yeah. Appreciate it appreciate the question our view is there's been no material changes to the macro environment. Since we last spoke so theres been no changes in our guide as a result of that we really need to get into our core buying season and that will tell us if there's a change in the macro.

Unknown Attendee: Okay, thank you. I would add there, George, that, you know, again, this market is less sensitive to the bigger economic macro trends that are out there, right? The macro backdrop is more related to enrollments and some of these, you know, tuition and those types of things than it is the big economic macro. But the nice thing is, because we are a trusted partner, because we're talking the long, longer term, that this is part of a bigger, longer term digital transformation strategy, we get visibility pretty early on in those macro trends. So that's why you kind of see that consistent, you know, consistently, we're talking about the same trends is because we got an early, early view into those, into those changes that were happening.

Speaker Change: Okay. Thank you.

Speaker Change: I would add there George that you know again. This this market is less sensitive to the bigger economic macro trends that are out there right. These these the macro backdrop is more related to enrollments in some of these are you know tuition.

Unknown Attendee: And those types of things than it is the big economic macro but the nice thing is because we are a trusted partner because we're we're in talking long longer term is that this is part of a bigger longer term digital transformation strategy, we get visibility pretty early in in those macro trends. So that's why you kind of see.

Unknown Attendee: That consistent.

Unknown Attendee: Consistently we are talking about the same trends as because we got early early view into those.

Unknown Attendee: Into those.

Unknown Attendee: Those changes that were happening.

George: Thanks, I appreciate the color.

Unknown Attendee: Your next question comes from Terry Tillman with Three Wheels Securities. Please go ahead.

Unknown Attendee: Your next question comes from Terry Tillman with Twilio.

Terrell Frederick Tillman: Ladies please go ahead.

Unknown Attendee: Great, thanks. This is Connor Passarella for Terry.

Terrell Frederick Tillman: Great. Thanks, Scott our Bachelor of law on for Terry I. Appreciate you taking the questions. Steve you mentioned the partner ecosystem a few times in the prepared remarks, you are at 900 or so partners. Now can you maybe just give us an update on their ability to either directly or indirectly influence business revenue for French structure.

Unknown Attendee: Appreciate you taking the questions. Steve, you mentioned the partner ecosystem a few times in the prepared remarks. You're at 900 or so partners now. Could you just give us an update on their ability to either directly or indirectly influence business revenue for Instructure?

Unknown Attendee: Okay.

Stephen M. Daly: Sure, yes, it is a good to hear from you, Connor.

Steve: Sure Yes.

Unknown Attendee: Is a.

Speaker Change: And it's good to hear from you Conor it's good it is a.

Speaker Change: It is a nice.

Steve: Our competitive mode. If you will because of the size.

Steve: Does have the breadth whenever we walk into an opportunity.

Steve: We're seeing it as a competitive advantage for us in the selling process. So for instance.

Unknown Attendee: It is a, it is a nice competitive mode, if you will, because of the size, because of the breadth, whenever we walk into an opportunity, we see it as a competitive advantage for us in the selling process. So, for instance, I think we talked about it a quarter or two ago when we won Montana University System. That was because of some technology that was integrated just into Canvas that allowed us to learn to win that deal.

Stephen M. Daly: We talked about it.

Unknown Attendee:

Unknown Attendee: A quarter or two ago for instance of when we won Montana University system that was because of.

Unknown Attendee: Because of technology that was integrated into just into canvas that allowed us to learn it to to win that one.

Unknown Attendee: We see it in some of the examples that I gave in my prepared remarks, where we had technology integrations that allowed us to differentiate against competition. So, it does continue to be one of those competitive advantages that would be really difficult for our competition to replicate as we go into a selling opportunity. I would, you know, and we did announce in the quarter as well, a collaboration with Lucid Charts, where their tools are integrated into Canvas and available to our customers for free as part of the purchase of the LMS.

Unknown Attendee: That deal.

Unknown Attendee: We see it.

Unknown Attendee:

Unknown Attendee: You know in some of the.

Unknown Attendee: Some of the examples that I gave in my prepared remarks, where we had we had technology integrations that allowed us to differentiate against the against.

Unknown Attendee: Against competition. So it does continue to be one of those competitive advantages.

Unknown Attendee: You know that that would be really difficult for our competition to replicate.

Unknown Attendee: As we go into into a selling opportunity.

Unknown Attendee: I would.

Unknown Attendee: We did announce in the quarter as well.

Unknown Attendee: Collaboration was elusive charts, where their tools are integrated into canvas and available to our customers for free.

Unknown Attendee: As part of the purchase of of the LMS and so again the the advantage that we have as being the market leader by having a huge network of users of.

Unknown Attendee: And so, again, the advantage that we have as being the market leader by having a huge network of students and teachers that are on our platform gives us some of these advantages that make us more competitive in the selling process.

Unknown Attendee: Students and teachers that are on on our platform.

Unknown Attendee: Gives us some of these advantages that make.

Unknown Attendee: It make us more competitive in our selling process.

Stephen M. Daly: Yeah, appreciate that. Maybe just as a quick follow-up, the University of Manchester win in the UK last quarter, I think you called out specifically, that would be more of a lighthouse win for the region. I'm curious how you've seen the activity play out so far post that deal. Yeah, it is. It's one of the best

Unknown Attendee: Yes.

Speaker Change: Right that maybe just as a quick follow up on the University of Manchester win in the UK last quarter I think you called out specifically that would be more of a lighthouse win for the region. Just curious how you're seeing the activity play out so.

Stephen M. Daly: So far post close that deal.

Stephen M. Daly: Yeah, it is. It's one of those institutions that, you know, other institutions, particularly in the UK, look up to. And our, you know, our MIA team is, you know, very happy with the outcome there, or we're using it as part of our, you know, as part of our selling process. We're still, you know, in our early days with them. And so we'll be able to leverage them even more going into the future. But it really does validate our international strategy and the success that we're seeing internationally.

Stephen M. Daly: Yeah. It is it's one of those institutions that other institutions, particularly in the U K look towards.

Stephen M. Daly: And our EMEA, our EMEA team there are very happy with the outcome there or we're using it as part of our you know.

Stephen M. Daly: As part of our selling process, where we're still we're early days with them and so.

Stephen M. Daly: We will be able to leverage them, even more going into the future.

Stephen M. Daly: But it really does validate our international strategy and.

Stephen M. Daly: And the success, we're seeing internationally.

Speaker Change: Great. Thank you.

Stephen M. Daly: Okay.

Unknown Attendee: Your next question comes from the line of Matt VanVliet with BTIG. Please go ahead.

Speaker Change: Your next question comes from the line of Matt Van Vliet with BTG. Please go ahead.

Unknown Attendee: Great, thanks for taking the question. I guess as there is more and more attention on the non-traditional learner, I'm curious about what the pipeline looks like for catalog and maybe even studio as universities or other programs look at how to create a tech stack that is maybe more margin-friendly to the institutions themselves, and you know how much attention you're getting on building out that type of program for them.

Matthew David VanVliet: Okay, great. Thanks for taking the question.

Unknown Attendee: I guess is there.

Unknown Attendee: As more and more attention on the the nontraditional learner curious on what the pipeline looks like for catalog it and maybe even studio as.

Unknown Attendee: Whether it's universities or other programs look at how to create a tech stack that that is maybe more margin friendly to the institutions themselves in.

Unknown Attendee: How much attention you're getting on building out that type of a program for them.

Stephen M. Daly: Yeah, that's one of the areas that I'm particularly pleased with in this last quarter. We saw good performance out of that part of the business. And it is, to your point, it's about, you know, it's about a bundle of products. It's a number of products that go into that. It's, you know, its pricing strategies, it's position, you know, positioning and marketing that we do in that space is bringing more opportunity. So, when I look at, you know, kind of the Q2, Q3 pipeline, it looks really good. We're encouraged that we can hit our, you know, that we can hit our commitments from that, from a non-traditional perspective.

Speaker Change: Yeah. That's one of the you know one of the areas that I'm, particularly pleased with in this last quarter were seeing.

Stephen M. Daly: We saw.

Stephen M. Daly: Good performance out of that part of the business and it is to your point it's about.

Stephen M. Daly: It's about a bundle of products. It's a number of products that go into that it's you know.

Stephen M. Daly: It's pricing strategies its position in our positioning and marketing that we do in that space is make is bringing more opportunity. So when I look at kind of Q2 Q3 pipeline.

Stephen M. Daly: It looks really good we're encouraged that we can hit our you know that we can hit our commitments from from that.

Stephen M. Daly: From a non traditional.

Unknown Attendee: And then as you look towards the prime selling season here coming up, how do you think about overall deal sizes, early indications from customers in terms of how much budget's available versus longer-term plans to have more of a land and expand approach? Any early thoughts on kind of what you're seeing in the pipeline from a deal size perspective?

Stephen M. Daly: And then as you look towards the prime selling season here coming up.

Unknown Attendee: How should we think about overall deal sizes are early indications from customers in terms of how much budgets available versus longer term plans to.

Unknown Attendee: Have more of a land and expand approach.

Unknown Attendee: Any early thoughts on kind of what youre seeing in the pipeline from a deal size perspective.

Unknown Attendee: Okay.

Stephen M. Daly: Yeah, the um... I would say, Matt, that what we're seeing in our discussions and part of, you know, part of the reason why some of these deals are elongating is because they're much more strategic discussions than we've had in the past. Because we are talking about, you know, overall revenue for an institution, right? How do they go track more of these non-traditional learners? It becomes what we end up calling much higher in the organization.

Unknown Attendee: Yes.

Stephen M. Daly: I would say, Matt that what what we're seeing in our discussions and part of part of the reason why some of these deals are elongated is because they're much more strategic discussions than we've had in the past because we are talking about you know.

Stephen M. Daly: So from that perspective, we are encouraged about the size of the deal when we do get into these conversations, counteracted by the fact that it takes longer to have those conversations higher up in the organization. Now, that's counteracted a little bit. The reason I was hesitating just a little bit, Matt, was because, you know, at the same time, we also created a middle market focus in our go-to market.

Stephen M. Daly: Overall revenue for an institution right how do they go attract more of these non traditional learners. It becomes we ended up calling much higher in the organization so from that perspective.

Stephen M. Daly: We are encouraged about the.

Stephen M. Daly: The size of deal when we do get do get into these conversations.

Stephen M. Daly: Counteracted by the fact that it takes longer to have those conversations higher up in the organization.

Stephen M. Daly: Now, it's counteracted a little bit the reason I always hesitate in just a little bit Matt was because at the same time, we also.

Stephen M. Daly: So, you know, we are, we are at the same time calling on a segment of the market that is, is a little bit smaller, that, you know, historically, we've been, we haven't called on, we haven't had a dedicated team to call on. And so they kind of balance each other. But I would say, when we meet when we are having these strategic discussions, they are, you know, obviously a bigger deal, it's, it ends up being a bigger sale for us. All right, very helpful, thank you.

Stephen M. Daly: <unk> created a middle market.

Stephen M. Daly: Our focus in our go to market. So we are we are at the same time, calling on a segment of the market that is is a little bit smaller that you know historically, we've been we havent called on.

Stephen M. Daly: We havent had a dedicated team to call on and so it kind of balance out each other but I would say when we hit when we are having these strategic discussions they are you know.

Stephen M. Daly: Obviously, a bigger if it ends up being a bigger sale for us.

Unknown Attendee: All right. Very helpful. Thank you.

Speaker Change: Alright very helpful. Thank you.

Unknown Attendee: Okay.

Stephen M. Daly: That concludes our Q&A session. I will now turn the conference back over to Steve Daly, CEO, for closing remarks.

Unknown Attendee: That concludes our Q&A session I will now turn the conference back over to Steve Daly CEO for closing remarks.

Stephen M. Daly: Thank you, everybody, for joining us today. You know, our exceptional first quarter and updated fiscal year guidance was driven by our increasing competitive advantage, our strong execution, and our expanding profitability. We head into the remainder of 2024 with meaningfully enhanced scale, a broader portfolio of products, and a retooled go-to-market strategy focused on delivering durable growth at scale. I personally couldn't be more excited about our ability to elevate teaching and learning for students and educators while creating value for shareholders. Thank you for joining us.

Stephen M. Daly: Well. Thank you everybody for joining US today, you know our exceptional first quarter and updated fiscal year guidance was driven by our increasing competitive advantage our strong execution in our expanding profitability, we head into the remainder of 2024 with meaningfully enhanced scale, a broader portfolio of products and a retail go to market strategy folk.

Stephen M. Daly: Just on delivering durable growth at scale I personally couldnt be more excited about our ability to elevate teaching and learning for students and educators, while creating value for shareholders. Thank you for joining us.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining me now. Please wait; the conference will begin shortly.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Operator: Please wait the conference will begin shortly.

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