Well, this has been an interesting season so far for the LMS market. In this month’s newsletter we summarize coverage and updates on Instructure’s announced sale agreement, cover the first annual global Moodle conference, and describe some of D2L’s recent market momentum.
Instructure Sale Agreement and Timeline
As most readers are now aware, Instructure announced on December 4th their upcoming sale to the private equity firm Thoma Bravo. I have several posts on the blog giving context to this decision:
- Instructure Considering Sale Options (Nov 14) – This post covers Instructure’s announcement that confirmed media rumors from a week earlier that they had hired an investment bank and were considering sale options.
- Why Instructure’s News Matters: Market history (Nov 18) – This post argued that this announcement is big news, and that the context of market history explains why the market should care.
- Why Instructure’s News Matters: Big Tech (Nov 22) – This post argued that the context of big tech in education, including the rise of cloud computing as well as Google Classroom, also explains why the Instructure news matters.
- Private Equity Firm Thoma Bravo to Acquire Instructure for $2 Billion (Dec 4) – This post shared the announcement about the sale agreement, including the 35-day go-shop period.
- Seven Things We Mostly Know About the Planned Instructure Acquisition and Three We Don’t (Dec 4) – This post described what we know already, including the nature of the PE firm Thoma Bravo using buy-and-build strategy. It also raised three questions where we don’t have answers yet.
What has not been covered through blog post or even in broader online discussions is that Instructure has been formally working with an investment banker and considering buy-out options since January. Their SEC filingdisclosing this history is at least partially in response to investor Rivulet Capital stating they would vote against the sale and arguing that the process was rushed. Instructure clearly lays out their long-term process in the filing.
Instructure initially signed JP Morgan as its formal advisor in January, entertained 19 separate financial firms or strategic companies “that expressed interest in a possible acquisition of, or investment in, the Company”, and received several offers before announcing the agreement with Thoma Bravo.
Beyond rebutting the shareholder complaint, this SEC filing gives some perspective on Instructure’s announcements over 2019. Note, for example, the timing of their academic market news:
- Dan Goldsmith becomes CEO – Jan 1.
- Instructure retains JP Morgan – Jan 20.
- Instructure acquires Portfolium – Feb 24.
- Instructure announces strategy to monetize data using artificial intelligence and machine learning – Mar 4.
- Instructure acquires MasteryConnect – Apr 2.
- Activist investor Praesidium takes large stake in Instructure, begins publicly pushing for company to divest its Bridge corporate learning product line – Apr 16.
- Instructure rebrands Canvas as a Learning Management Platform, with the LMS as one component – Jun 4.
- At InstructureCon the company presents contrasting messages and announces an Analytics tool – Jul 9.
- On earnings call, Instructure emphasizes domestic bookings across all products in higher ed as their key metric – Oct 29.
- Activist investor Sachem Head reportedly pushes Instructure to explore a sale – Oct 31.
- Praesidium joins Sachem Head in pushing for a sale – Nov 6.
I share this timeline as it provides some useful context to the sale, and more importantly aligns with the typical Thoma Bravo strategy of acquiring a platform and then tucking in multiple acquisitions afterwards. We don’t know exactly what will change once the acquisition goes through (expected in January), but the history of the market, and the history of Instructure moves over the past year, should give plenty of clues on the general strategy.
Last month Moodle kicked off its first annual MoodleMoot Global conference which is intended to be the primary event for the organization to share roadmaps and plans. There have long been plenty of regional MoodleMoots, some organized by the HQ company and some not, but this is the first time there is a planned, centrally-hosted event not tied to a single geography.
At the inaugural conference there were more than 350 attendees. While most came from Europe, there were representatives from most other major regions. The conference is planned to occur each year in Barcelona, which has become Moodle HQ’s second official location. No, we’re not complaining at MindWires.
I will go into more detail in an upcoming blog post, but the biggest takeaway is that Moodle is continuing its strategy that I described as “playing small ball” three years ago.
“[T]here was a strong sense of continuity and general improvements. Rather than aggressive rearchitectures and product lineup changes, the Moodle roadmap is based on hitting singles and running the bases and not worrying about getting the big hits.”
Most discussions at the conference centered on specific feature and tool additions requested or designed by the community, and the roadmap session was much more of a facilitated discussion than a presentation of long-term vision. There are no apparent plans for rearchitecture or redesign, such as adding native multi-tenant capabilities to support cloud hosting, or making significant simplifications to the user interface beyond the now-default Boost theme.
Much of the longer-term, big-ticket changes envisioned by Moodle HQ management centers not on the LMS but on broader social changes through open education practices.
D2L Brightspace Market Momentum
A lot of the media coverage of the LMS market centers on Instructure’s Canvas and Blackboard Learn, but often this coverage overlooks the company that has the best record in landing new deals in competition with Canvas. In our data and reports, we have described how D2L’s Brightspace is part of an apparent two-horse race for new LMS implementations, but over the past 3 – 6 months their market momentum has picked up considerably.
The big moves by D2L are based on improved user experience through product redesign and an aggressive move to cloud hosting. D2L recently announced (in all caps, so I guess they mean it) that they have completed their move to the cloud. One code base and one deployment model through AWS.
D2L presents a study in contrasts when compared to Moodle.
Based on the data shared with our premium investors, D2L’s win rate for new implementations in higher ed has increased from roughly 15% to 33% worldwide. From what we’re hearing in our market discussions and seeing in the data, the product redesign and move to cloud hosting strategy is paying off in the market.
Pay attention to the whole LMS market – a lot is changing, and we’re seeing changing dynamics around how schools view the main competitors.
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The MindWires Team