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After Instructure's Mixed Quarterly Print, Guidance Miss, Oppenheimer Waits For More Clarity

INST | February 20, 2019

Instructure Inc (NYSE: INST) reported mixed fourth-quarter results Tuesday and announced below-consensus 2019 guidance.

Although Instructure has several 2019 growth initiatives in place, the guidance seems appropriate in view of the leadership and operational changes at the company, according to Oppenheimer.

The Analyst

Oppenheimer’s Brian Schwartz maintains a Perform rating on Instructure.

The Thesis

Instructure reported total fourth-quarter revenue of $56.3 million, representing 28-percent year-on-year growth and beating the consensus estimate by around $500,000. Subscription revenue also came in higher than expected.

The company’s bookings were hit by “one large slipped Bridge deal and consistent ed tech headwinds,” and margin expansion was achieved on the back of cost savings, Schwartz said in a Wednesday note.

The company announced mixed first-quarter guidance, with total revenue guidance of $56.9-$57.5 million missing the prior consensus estimate of $59.4 million. The total revenue guidance for 2019 came in at $256-$260 million, with the midpoint missing the consensus forecast of $259 million.

Although Instructure is undertaking initiatives to boost its business — and “a lurking private equity buyer in SaaS also provides valuation support" — investors may want to stay away until there are clearer signs of improvement, Schwartz said.