Instructure (INST)

Risks

• Failure to complete, or delays in consummating the pending Offer and our subsequent Merger with Purchaser could materially and adversely affect our results of operations and our stock price.
• Our executive officers and directors may have interests in the pending Offer and subsequent Merger that are different from, or in addition to, those of our stockholders generally.
• Until the completion of the Merger or the termination of the Merger Agreement in accordance with its terms, in consideration of the agreements made by the parties in the Merger Agreement, we are prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to us and our stockholders.
• Additional lawsuits may be filed against us and the members of our board of directors arising out of our acquisition by Thoma Bravo, which may delay or prevent the proposed transaction.
• Each of the parties may terminate the Merger Agreement if the Closing of the Offer has not occurred by the outside date specified in the Merger Agreement.
• We have a limited operating history, which makes it difficult to evaluate our prospects and future operating results.
• We have a limited history with our subscription and pricing models and changes in our models could adversely affect our revenue, gross profit and financial position.
• We may experience quarterly fluctuations in our operating results due to a number of factors, which makes our future results difficult to predict and could cause our operating results to fall below expectations.
• Our business is subject to seasonal sales and customer growth fluctuations which could result in volatility in our operating results.
• We could lose revenue if there are changes in the spending policies or budget priorities for government funding of colleges, universities, schools and other education providers.
• Because we generally recognize revenue from subscriptions ratably over the term of the agreement, near term changes in sales may not be reflected immediately in our operating results.
• If we fail to effectively develop and expand our sales and marketing capabilities, our ability to increase our customer base and increase the market share of our learning management platform and applications could be harmed.
• We face significant competition from both established and new companies offering learning assessment, development and engagement systems, which may harm our ability to gain new customers, retain existing customers and grow our business.
• The length and unpredictability of the sales cycle for our platform and applications could delay new sales and cause our revenue for any given quarter to fail to meet our estimates or market expectations.
• Our business outside the United States exposes us to risks associated with international operations.
• If we fail to offer high-quality professional services and support, our business and reputation may suffer.
• If we fail to manage our growth effectively or our business does not grow as we expect, our operating results may suffer.
• We rely on our management team and other key employees, and the loss of one or more key employees could harm our business.
• If we fail to attract and retain additional qualified personnel, we may be unable to execute our business strategy.
• If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to our success and our business may be harmed.
• If we do not maintain the compatibility of our applications and platform with third-party applications that our customers use in their businesses or schools, our revenue will decline.
• Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results.
• Our use of “open source” software could negatively affect our ability to offer our platform and applications and subject us to possible litigation.
• We make a substantial portion of the source code for Canvas available under the terms of an open source license, and accept contributions of modifications to that source code, each of which could negatively affect our ability to offer our platform and applications and subject us to possible litigation.
• We rely upon Amazon Web Services to operate certain aspects of our service and any disruption of or interference with our use of Amazon Web Services could impair our ability to deliver our platform and applications to our customers, resulting in customer dissatisfaction, damage to our reputation, loss of customers and harm to our business.
• We are dependent on the continued availability of the internet and third-party computer and communications systems.
• Real or perceived errors, failures, or bugs in our platform or applications could adversely affect our operating results and growth prospects.
• We are subject to governmental laws, regulation and other legal obligations, particularly related to privacy, data protection and information security, and any actual or perceived failure to comply with such obligations could harm our business.
• We are subject to contractual clauses that require us to comply with certain provisions of the Family Educational Rights and Privacy Act and we are subject to the Children’s Online Privacy Protection Act, and if we fail to comply with these laws, our reputation and business could be harmed.
• The success of our business depends in part on our ability to protect and enforce our intellectual property rights.
• We could face liability, or our reputation might be harmed, as a result of the activities of our customers or users, the content in our platform or the data they store on our servers.
• We may be subject to additional obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales, which could harm our business.
• Changes in tax laws or regulations that are applied adversely to us or our customers could increase the costs of learning management software and adversely impact our business.
• We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions.
• Future sales of shares by stockholders could cause our stock price to decline.
• The concentration of our stock ownership will likely limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring stockholder approval.
• If we do not continue to develop effective internal controls, we may not be able to accurately report our financial results and our business could be harmed.
• Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and under Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.