Where Instructure planned to go with Bridge, its learning management system for businesses and enterprises, has been an open question for more than a year, when the company was still publicly traded.
On a call with investors in October 2019, former CEO Dan Goldsmith expressed his disappointment with the company’s growth and said “nothing is ruled out” in response to speculation about a possible sale of Bridge.
Many things have changed since then. Goldsmith is no longer CEO, and the Salt Lake City-based company is now owned by private equity firm Thoma Bravo. And over the weekend, the company finally decided where Bridge was going: across the Atlantic.
Instructure has announced that it has reached an agreement to sell Bridge to Learning Technologies Group, a London, UK-based provider of digital learning and talent development tools for businesses and employees. LTG will pay $50 million for the cash acquisition, which is expected to close on February 26.
According to others financial conditions of the deal, Bridge currently serves more than 800 customers and generated $21 million in revenue last year, more than 90% of which came from repeat customers. Still, the company recorded a loss of $1.3 million.
Launched in 2015, Bridge marked Instructure’s attempt to replicate its success with Canvas, an LMS for higher education, in the corporate learning space. But the two markets are very different, as industry analysts like Michael Feldstein have pointed out. Among the challenges: LMS is not so “mission critical” companies that often reduce their training budgets during economic downturns. Corporate learning is also a large and fragmented market, with many more competing providers than in higher education.
One such competitor is LTG, which has rapidly expanded its suite of workforce learning tools since its inception in 2013. Bridge marks its seventh acquisition since LTG raised £81.8m sterling in a private placement in May 2020. These purchases include Open LMS, a Moodle LMS service provider formerly owned by Blackboard.
For 2020, LTG expects its revenues reach at least £131 million (approximately US$182 million) for and adjusted profit of £40 million (US$55.6 million)
“Bridge adds real strength and depth to our learning and talent offering for the mid-market market, which has attractive structural dynamics,” LTG CEO Jonathan Satchell said in a prepared statement. “The acquisition expands LTG’s current market coverage, allowing us to meet the needs of customers of all sizes and complexities.”
For Instructure, the transaction will mark the end of its ambitions in the corporate learning market. But that shouldn’t be surprising. When the company laid off about 100 employees last January ahead of its eventual sale to Thoma Bravo, the majority of those laid off worked on Bridge.
A spokesperson for Instructure said the sale will allow the company to focus exclusively on K-12 and higher education, and continue to pursue acquisition opportunities in those markets. To date, Instructure has acquired four companies, the most recent of which was Certica Solutions, a provider of K-12 assessment and analysis tools that it picked up in a transaction last December.