FORWARDING LOOKING STATEMENTS & NON-GAAP MEASURES

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2 FORWARDING LOOKING STATEMENTS & NON-GAAP MEASURES This presentation and the accompanying oral commentary contain forward-looking statements, within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations and financial performance, business strategies, potential growth opportunities and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as believe, will, may, estimate, continue, anticipate, intend, should, plan, might, approximately, expect, predict, could, potentially or the negative of these terms or other similar expressions. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important risk factors including, but not limited to, risks associated with anticipated growth in our addressable market; our potential market opportunity; competitive factors, our ability to build and expand our sales efforts, risks associated with international operations and general economic and industry conditions are described more fully in the Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission (the SEC ) on February 15, 2018 and other documents filed with the SEC and could cause actual results to vary from expectations. Forward-looking statements represent our management s beliefs and assumptions only as of the date of this presentation. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons why actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. This presentation includes certain non-gaap financial measures as defined by the SEC rules. These non-gaap financial measures are in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these non-gaap financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-gaap financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-gaap financial measures as tools for comparison. As required by Regulation G, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the appendix. 2

3 SOFTWARE that makes PEOPLE SMARTER 3

4 PRODUCT OVERVIEW VIDEO 4

5 THE INSTRUCTURE STORY High Growth Subscription Revenue Backlog & Deferred Revenue 2018 Total Addressable Market Recurring (2017 ~88%) Non-recurring (2017 ~12%) +43% $158.8M Deferred Revenue Backlog $387M +51% $110.9M $289M $103M EDU +65% $73.2M $44.4M $145M $32M $113M $204M $52M $152M $76M $213M $284M CORP $9.4 Billion Headquartered in Salt Lake City with 1,000+ employees worldwide Offices in London, Sydney, Hong Kong, Brazil Flagship products Canvas & Bridge 100% native cloud >100% retention revenue >3,000 customers in 65+ countries 1 90% Customer Support Satisfaction 1 As of December 31,

6 WE ARE THE CENTER OF THE LEARNING ECOSYSTEM Content Applications Information Systems/Analytics LEARNING MANAGEMENT SYSTEMS Instructors Corporations Schools Learners 6

7 EDUCATION PRODUCTS Learning management system (LMS) for HiEd and K12 Adaptable, reliable, customizable, and 100% native cloud Used by millions of students and teachers across the globe Learning management system Integrated video platform (LMS) for HiEd and K12 for Canvas and Bridge Adaptable, reliable, Collaboration tools with time Integrated video platform for Canvas customizable, and 100% tagged and Bridge comments and Collaboration tools with time tagged comments and native annotations cloud makes learning social annotations and interactive makes learning Used by millions of students social and ineractive and teachers across the globe Powerful formative assessments within Canvas (integrated assessment management system) Main focus on K12 market, with some HiEd applications Powerful formative assessments within Canvas (integrated assessment management system) Main focus on K12 market, with some HiEd applications 7

8 CORPORATE PRODUCTS Simple, intuitive learning management system (LMS) the corporate market Build customized content or integrate with top content providers Integrates with Perform to align goals and learning in a single interface Individualized, continuous, relationship-driven career development platform Empowers employees to take control of their career paths Shifts review paradigm to continuous ongoing feedback from managers and peers Integrated video platform for Canvas and Bridge Collaboration tools with time tagged comments and annotations makes learning social and interactive Practice creates a scalable means for teams to frequently practice skills and receive meaningful, timely feedback through the power of peer-to-peer video assessment and coaching. Reinforce skills Facilitate feedback Increase collaboration Share expertise Continuous learning for the digital age 8

9 CONTINUALLY GROWING TAM, A LOT OF HEADROOM REMAINING History of Instructure TAM $25B+ $8.6B $9.4B $5.6B $3.2B $0.3B $0.6B $1.2B $1.2B Beyond Corporate Education Sources: Adapted from NCES, IDC, & internal estimates; estimates include greenfield opportunities 9

10 INT L EXPANSION JUST SCRATCHING THE SURFACE LEGEND Mature Emerging Nascent 10

11 1 OVER 3,000 CUSTOMERS ACROSS CATEGORIES Higher Ed Used by 7 Ivy League Schools K 12 Used by K-12 Schools in 49 States International Serving 65+ Countries Corporate Rapid Adoption Since As of June 30,

12 REVENUE & PROFITABILITY HISTORY Revenue Growth Non-GAAP Gross Margin 1 Non-GAAP Operating Loss as a % of Revenue 2 +43% $158.8M 71% 72% +51% 67% 68% ($35M) +65% $110.9M ($29M) ($41M) ($43M) (22%) $73.2M (39%) $44.4M (57%) (66%) Recurring (2017 ~88%) Non-recurring (2017 ~12%) 1 Non-GAAP gross margin is before stock-based compensation and payroll tax expense on secondary stock purchase transactions. 2 Operating loss before stock-based compensation, payroll tax expense on secondary stock purchase transactions and amortization of acquisition-related intangibles 12

13 RAPIDLY SCALING Non-GAAP Sales and Marketing 1 (% of Revenue) Non-GAAP Research and Development 1 (% of Revenue) Non-GAAP General and Administration 1 (% of Revenue) 72% 71% 38% 23% 22% 60% 31% 29% 21% 50% 27% 17% Non-GAAP Sales and Marketing, Research and Development and General and Administration expenses are before stock-based compensation, payroll tax expense on secondary stock purchase transactions and amortization of acquisition-related intangibles. 13

14 SEASONALLY STRONG Q3 LEADS TO 1 RAPIDLY EXPANDING CASH FLOW INST Historical Free Cash Flow (Operating cash flow, less capex) $39.7M $20.1M ($14.5M) ($21.3M) ($10.8M) ($17.3M) ($15.7M) ($31.2M) ($30.0M) Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q Free cash flow is a Non-GAAP measure and is derived by netting operating cash flow with the purchase of PP&E and intangibles, and proceeds from disposal of PP&E. 14

15 LONG-RANGE MODEL Long- Term Target Revenue 100% 100% 100% 100% 100% Cost of Revenue 1 33% 32% 29% 28% ~25% Non-GAAP Gross Margin 67% 68% 71% 72% ~75% S&M 2 72% 71% 60% 50% 26-28% R&D 2 38% 31% 29% 27% 15-17% G&A 2 23% 22% 21% 17% 9-10% Non-GAAP Operating Income/Loss (66%) (57%) (39%) (22%) 20-25% 1 Non-GAAP cost of revenue is before stock-based compensation and payroll tax expense on secondary stock purchase transactions. 2 Non-GAAP operating expenses are before stock-based compensation, payroll tax expense on secondary stock purchase transactions and amortization of acquisition-related intangibles. 15

16 APPENDIX

17 GAAP INCOME STATEMENT Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Revenue $21.8M $23.3M $25.9M $30.1M $31.5M $34.0M $38.0M $42.9M $43.8M YoY% 59% 59% 63% 44% 45% 46% 47% 42% 39% Cost of Sales $6.8 $7.3 $7.6 $8.6 $9.1 $9.6 $11.0 $12.5 $13.3 Gross Profit $15.0M $16.0M $18.3M $21.5M $22.4M $24.4M $27.1M $30.5M $30.5M GM% 69% 68% 71% 71% 71% 72% 71% 71% 70% S&M $15.2 $16.2 $18.0 $17.8 $18.0 $19.0 $21.3 $22.1 $21.3 % of Rev 70% 69% 70% 59% 57% 56% 56% 52% 49% R&D $6.7 $7.8 $8.7 $9.3 $10.1 $11.2 $11.1 $12.6 $13.5 % of Rev 31% 33% 34% 31% 32% 33% 29% 29% 31% G&A $5.0 $5.7 $6.0 $6.7 $7.1 $7.0 $7.6 $8.3 $8.3 % of Rev 23% 25% 23% 22% 23% 21% 20% 19% 19% OPEX $26.9M $29.7M $32.8M $33.8M $35.3M $37.2M $40.0M $43.0M $43.0M % of Rev 123% 127% 127% 112% 112% 109% 105% 100% 98% Operating Loss ($11.9M) ($13.8M) ($14.5M) ($12.3M) ($12.8M) ($12.8M) ($12.9M) ($12.6M) ($12.5M) % of Rev (55%) (59%) (56%) (41%) (41%) (38%) (34%) (29%) (28%) Warrant liability expense ($0.1) $0.1 $0.0 ($0.0) $0.0 ($0.0) ($0.1) ($0.0) $0.0 Other Income/Expense ($0.0) ($0.0) ($0.0) ($0.0) ($0.0) $0.1 $0.1 $0.3 $0.2 Loss before income taxes ($12.0M) ($13.7M) ($14.5M) ($12.3M) ($12.9M) ($12.7M) ($12.9M) ($12.3M) ($12.3M) Income taxes ($0.1) ($0.0) ($0.1) ($0.0) ($0.1) ($0.0) ($0.1) ($0.1) $0.6 Net Loss ($12.1M) ($13.7M) ($14.6M) ($12.3M) ($12.9M) ($12.7M) ($13.0M) ($12.4M) ($11.7M) % of Rev (56%) (59%) (56%) (41%) (41%) (37%) (34%) (29%) (27%) 17

18 NON GAAP INCOME STATEMENT Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Revenue $21.8M $23.3M $25.9M $30.1M $31.5M $34.0M $38.0M $42.9M $43.8M YoY% 59% 59% 63% 44% 45% 46% 47% 42% 39% Cost of Sales $6.7 $7.2 $7.4 $8.4 $8.9 $9.4 $10.6 $12.1 $12.8 Gross Profit $15.1M $16.1M $18.5M $21.8M $22.7M $24.6M $27.4M $30.9M $31.1M GM% 69% 69% 72% 72% 72% 72% 72% 72% 71% S&M $14.7 $15.5 $17.3 $17.0 $17.2 $18.0 $20.4 $20.9 $20.3 % of Rev 67% 67% 67% 56% 54% 53% 54% 49% 46% R&D $6.2 $7.0 $7.9 $8.3 $9.0 $10.0 $9.8 $10.9 $11.8 % of Rev 28% 30% 30% 27% 29% 29% 26% 25% 27% G&A $4.6 $5.1 $5.4 $5.9 $6.3 $6.0 $6.6 $7.3 $7.3 % of Rev 21% 22% 21% 20% 20% 18% 17% 17% 17% OPEX $25.5M $27.7M $30.6M $31.2M $32.5M $34.0M $36.8M $39.1M $39.4M % of Rev 117% 119% 118% 104% 103% 100% 97% 91% 90% Operating Loss ($10.4M) ($11.5M) ($12.1M) ($9.5M) ($9.9M) ($9.4M) ($9.4M) ($8.3M) ($8.3M) % of Rev (48%) (49%) (47%) (31%) (31%) (28%) (25%) (19%) (19%) Net Loss ($10.5M) ($11.6M) ($12.1M) ($9.5M) ($10.0M) ($9.4M) ($9.4M) ($8.1M) ($8.2M) % of Rev (48%) (50%) (47%) (32%) (32%) (28%) (25%) (19%) (19%) Non GAAP Net Operating Loss excludes change in fair value warrant liability. 18

19 GAAP TO NON-GAAP RECONCILIATION GAAP Operating Loss ($21.8M) ($38.7M) ($52.0M) ($53.4M) ($50.8M) Amortization of Acquisition Related Intangibles Cost of Sales $- $- $- $- $0.1M S&M R&D G&A Total - $0.0M $0.0M $0.0M $0.2M Stock Compensation Expense Cost of Sales $0.0M $0.3M $0.3M $1.0M $1.4M S&M R&D G&A Total $3.6M $8.2M $9.2M $10.7M $15.7M Payroll Tax on Secondary Stock Purchase Cost of Sales $- $0.0M $- $- $- S&M (0.1) (0.3) R&D (0.1) (0.3) G&A (0.1) (0.0) Total $0.5M $1.2M $1.3M ($0.2M) ($0.5M) Non GAAP Operating Loss ($17.7M) ($29.3M) ($41.4M) ($42.9M) ($35.5M) 19

20 GAAP TO NON-GAAP RECONCILIATION Revenue $26.1M $44.4M $73.2M $110.9M $158.8M GAAP Gross Margin $15.4M $29.2M $49.1M $78.1M $112.4M Amortization of Acquisition Related Intangibles Stock Compensation Expense Payroll Tax on Secondary Stock Purchase Non GAAP Gross Margin $15.5M $29.6M $49.5M $79.1M $113.9M Non GAAP Gross Margin% 59% 67% 68% 71% 72% GAAP Sales & Marketing $20.7M $35.4M $53.5M $70.0M $83.7M Amortization of Acquisition Related Intangibles Stock Compensation Expense Payroll Tax on Secondary Stock Purchase (0.1) (0.3) Non GAAP Sales & Marketing $18.8M $32.1M $52.2M $67.0M $79.6M Non GAAP Sales & Marketing % 72% 72% 71% 60% 50% GAAP Research & Development $11.2M $21.3M $24.2M $36.0M $48.3M Amortization of Acquisition Related Intangibles Stock Compensation Expense Payroll Tax on Secondary Stock Purchase (0.1) (0.3) Non GAAP Research & Development $9.4M $16.7M $22.7M $32.2M $42.5M Non GAAP Research & Development % 36% 38% 31% 29% 27% GAAP General & Administrative $5.3M $11.3M $23.5M $25.5M $31.2M Amortization of Acquisition Related Intangibles Stock Compensation Expense Payroll Tax on Secondary Stock Purchase (0.1) (0.0) Non GAAP General & Administrative $4.9M $10.1M $15.9M $22.8M $27.3M Non GAAP General & Administrative % 19% 23% 22% 21% 17% 20

21 FREE CASH FLOW RECONCILIATION Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Net Cash Provided by Operating Activities Purchase of PP&E & Intangibles, Net of Disposals ($12.3M) ($18.9M) ($9.5M) $21.7M ($14.9M) ($27.7M) ($11.9M) $43.6M ($25.1M) ($2.2) ($2.4) ($1.3) ($1.5) ($2.5) ($3.4) ($3.8) ($3.9) ($4.9) Free Cash Flow ($14.5M) ($21.3M) ($10.8M) $20.1M ($17.3M) ($31.2M) ($15.7M) $39.7M ($30.0M) 21

22 2017 GAAP STATEMENT OF OPERATIONS AS IF REPORTED UNDER ASC Consolidated Statements of Operations Data Q1 Q2 Q3 Q Revenue Subscription and support $31.6M $33.7M $38.3M $40.6M $144.1M Professional services and other $2.9M $4.8M $4.9M $4.2M $16.9M Total revenue $34.5M $38.5M $43.2M $44.7M $161.0M Cost of revenue Professional services and other $2.6M $3.1M $3.2M $3.3M $12.2M Operating expenses Sales and marketing $18.2M $19.0M $21.4M $20.1M $78.7M Loss from operations ($11.6M) ($10.2M) ($11.6M) ($10.4M) ($43.8M) Net loss ($11.6M) ($10.2M) ($11.4M) ($9.7M) ($42.8M) 22