William Blair initiated research coverage of Instructure, Inc. (INST $19.66), a leading provider of SaaS solutions focused on the classroom in the education industry.
Analyst Stephen Sheldon estimated the company would generate revenue of $379 million in 2021 and $427 million in 2022. He is optimistic about Instructure’s growth opportunity and its ability to sustain at least double-digit organic revenue growth through 2023.
“Instructure’s flagship Canvas learning management system, or LMS, is the best-of-breed solution in the education market,” Sheldon said. “In K-12, the company continues winning against free solutions and lower-end LMS players, and the favorable funding environment over the next few years should reduce friction for a higher-priced solution. Canvas also continues to win market share in higher education against Blackboard and has a particularly sizable opportunity internationally against open-source providers. Beyond Canvas, Instructure has broadened its education portfolio to include assessment capabilities, online learning tools, and analytics, and seems well positioned to drive increased adoption across its portfolio. We believe technology spend in education was picking up prior to the pandemic, with the curve appearing to accelerate post-pandemic. In addition, Instructure has undergone numerous changes since its acquisition by Thoma Bravo in early 2020. The company now focuses solely on the education market, where it has a strong reputation and well-established relationships after divesting the corporate learning business Bridge in early 2021. Also, the company has a new CEO and CFO, a streamlined cost structure and sales focus, and a better product set with solutions like Certica’s formative assessments in K-12 that support up-selling.”
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