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Why Instructure Stock Climbed 20.6% in October

By Keith Noonan - Nov 10, 2019 at 11:56AM

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The provider of learning-management systems trades near a lifetime high after last month's earnings beat.

What happened

Shares of Instructure ( INST ) gained 20.6% in October, according to data from S&P Global Market Intelligence. The education technology company marched higher in conjunction with market momentum and then posted steeper gains following its third-quarter earnings release.

INST Chart

INST data by YCharts.

Instructure published third-quarter earnings on Oct. 28, recording sales and earnings that topped the market's expectations. The company recorded a non-GAAP (adjusted) loss per share of $0.11 on revenue of $68.34 million, while the average analyst estimate projected a loss per share of $0.19 on sales of $68.08 million.

A person using a laptop.

Image source: Getty Images.

So what

Instructure's adjusted operating loss narrowed from $5.67 million in the third quarter of 2018 to roughly $3.68 million in this year's quarter, and revenue climbed 24% year over year. Despite pairing its third-quarter release with a lowered full-year sales target, the company narrowed its projected loss on the year, and the earnings beat combined with projections for less-than-expected red ink helped the stock post double-digit gains last month.

Now what

Instructure is guiding for fourth-quarter sales between $67.8 million and $68.8 million, representing year-over-year growth of 21.4% at the midpoint of the target. The company expects to post an adjusted loss per share between $0.14 and $0.17, expanding from the adjusted loss per share of $0.01 that it recorded in last year's quarter. 

For the full-year period, Instructure expects sales to be between $257.1 million and $258.1 million -- down from its previous target between $258 million and $260 million. Adjusted losses per share on the year are now expected to be between $0.53 and $0.56 -- a significant improvement from the previous target for an annual loss per share between $0.58 and $0.65.

Instructure is valued at roughly seven times this year's expected sales.

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