INST - Instructure: Growing Platform With Large ARR And Buyout Potential
2024-06-12 11:42:47 ET
Summary
- Instructure stock is down YTD, even after jumping recently on potential buyout rumors.
- Instructure, the maker of the Canvas LMS platform, recently entered the educational records space with its purchase of Parchment, adding more than $100 million in ARR.
- The acquisition plus growth opportunities overseas are potential catalysts for growth acceleration.
- The company firmly passes the "Rule of 40" test, with pro forma operating margins of 40%+ on top of high single digit organic growth.
- I'm initiating Instructure at a buy rating, but am mindful of the stock's relatively rich revenue/EBITDA multiples.
Instructure Holdings ( INST ), the educational software company, has long been a private equity fan-favorite. The stock initially went public in 2015 and got taken private by Thoma Bravo in 2020. In 2021, the company underwent its second IPO (performance has lagged other software companies since then, with a ~20% cumulative gain), and now there are reports that Thoma Bravo is looking to sell the company off to private buyers again....
Instructure: Growing Platform With Large ARR And Buyout Potential