Cover Page
Cover Page - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Jan. 31, 2024 | Jun. 30, 2023 | Dec. 31, 2022 | |
Cover [Abstract] | ||||
Document Type | 10-K | |||
Document Annual Report | true | |||
Document Period End Date | Dec. 31, 2023 | |||
Current Fiscal Year End Date | --12-31 | |||
Document Transition Report | false | |||
Entity File Number | 001-40684 | |||
Entity Registrant Name | PowerSchool Holdings, Inc. | |||
Entity Incorporation, State or Country Code | DE | |||
Entity Tax Identification Number | 85-4166024 | |||
Entity Address, Address Line One | 150 Parkshore Drive | |||
Entity Address, City or Town | Folsom | |||
Entity Address, State or Province | CA | |||
Entity Address, Postal Zip Code | 95630 | |||
City Area Code | 877 | |||
Local Phone Number | 873-1550 | |||
Title of 12(b) Security | Class A Common Stock, par value $0.0001 per share | |||
Trading Symbol | PWSC | |||
Security Exchange Name | NYSE | |||
Entity Well-known Seasoned Issuer | Yes | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | Yes | |||
Entity Interactive Data Current | Yes | |||
Entity Filer Category | Large Accelerated Filer | |||
Smaller Reporting Company | false | |||
Emerging Growth Company | false | |||
ICFR Auditor Attestation Flag | true | |||
Entity Shell Company | false | |||
Entity Public Float | $ 1,099,600 | |||
Entity Common Stock, Shares Outstanding | 202,593,355 | |||
Documents Incorporated by Reference | The information called for by Part III of this Form 10-K is hereby incorporated by reference from the definitive Proxy Statement for our annual meeting of stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2023. | |||
Entity Central Index Key | 0001835681 | |||
Document Fiscal Year Focus | 2023 | |||
Document Fiscal Period Focus | FY | |||
Amendment Flag | false | |||
Document Information [Line Items] | ||||
Entity Public Float | $ 1,099,600 | |||
Entity Common Stock, Shares Outstanding | 202,593,355 | |||
ICFR Auditor Attestation Flag | true | |||
Entity Well-known Seasoned Issuer | Yes | |||
Class B common stock | ||||
Document Information [Line Items] | ||||
Common stock, shares outstanding (in shares) | 37,654,059 | 39,928,472 | ||
Class A common stock | ||||
Document Information [Line Items] | ||||
Common stock, shares outstanding (in shares) | 164,939,296 | 159,596,001 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Firm ID | 34 |
Auditor Name | DELOITTE & TOUCHE LLP |
Auditor Location | Sacramento, California |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 39,054 | $ 137,471 |
Accounts receivable—net of allowance of $7,930 and $4,712 respectively | 76,618 | 54,296 |
Prepaid expenses and other current assets | 40,449 | 36,886 |
Total current assets | 156,121 | 228,653 |
Property and equipment - net | 5,003 | 6,173 |
Capitalized product development costs - net | 112,089 | 100,861 |
Goodwill | 2,740,725 | 2,487,007 |
Intangible assets - net | 710,635 | 722,147 |
Other assets | 36,311 | 29,677 |
Total assets | 3,776,882 | 3,583,395 |
Current Liabilities: | ||
Accounts payable | 13,629 | 5,878 |
Accrued expenses | 116,271 | 84,270 |
Deferred revenue, current | 373,672 | 310,536 |
Current portion of long-term debt | 8,379 | 7,750 |
Total current liabilities | 516,909 | 413,697 |
Noncurrent Liabilities: | ||
Other liabilities | 2,178 | 2,099 |
Deferred taxes | 275,316 | 281,314 |
Tax Receivable Agreement liability | 396,397 | 410,361 |
Deferred revenue—net of current | 6,111 | 5,303 |
Long-term debt, net | 811,325 | 728,624 |
Total liabilities | 2,021,595 | 1,849,451 |
Commitments and contingencies (Note 13) | ||
Stockholders' Equity: | ||
Additional paid-in capital | 1,520,288 | 1,438,019 |
Accumulated other comprehensive loss | (2,094) | (2,122) |
Accumulated deficit | (218,387) | (187,250) |
Total stockholders'/members’ equity attributable to PowerSchool Holdings, Inc. | 1,299,827 | |
Non-controlling interest | 455,460 | |
Total stockholders'/members’ equity | 1,755,287 | 1,733,944 |
Total stockholders'/members’ equity attributable to PowerSchool Holdings, Inc. | 1,248,667 | |
Non-controlling interest | 485,277 | |
Total stockholders'/members’ equity | 1,733,944 | |
Total liabilities and stockholders'/members' equity | 3,776,882 | 3,583,395 |
Operating Lease, Liability, Current | 4,958 | 5,263 |
Increase in operating lease, right-of-use assets | 15,998 | 8,877 |
Operating Lease, Liability, Noncurrent | 13,359 | 8,053 |
Less allowance | $ (7,930) | $ (4,712) |
Class A common stock | ||
Stockholders' Equity: | ||
Common stock, shares outstanding (in shares) | 159,596,001 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock | $ 16 | $ 16 |
Common stock, shares issued (in shares) | 164,796,626 | 159,596,001 |
Class B common stock | ||
Stockholders' Equity: | ||
Common stock, shares outstanding (in shares) | 39,928,472 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock | $ 4 | $ 4 |
Common stock, shares issued (in shares) | 39,928,472 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jan. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Accounts receivable, allowance for credit losses | $ 7,930 | $ 4,712 | $ 4,964 | $ 7,869 | |
Class A common stock | |||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | |||
Common stock, shares issued (in shares) | 164,796,626 | 159,596,001 | |||
Common stock, shares outstanding (in shares) | 164,939,296 | 159,596,001 | |||
Class B common stock | |||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | |||
Common stock, shares issued (in shares) | 39,928,472 | ||||
Common stock, shares outstanding (in shares) | 37,654,059 | 39,928,472 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue: | |||
Total revenue | $ 697,651 | $ 630,683 | $ 558,598 |
Cost of revenue: | |||
Depreciation and amortization | 66,198 | 58,252 | 50,708 |
Total cost of revenue | 283,873 | 272,347 | 240,858 |
Gross profit | 413,778 | 358,336 | 317,740 |
Operating expenses: | |||
Research and development | 105,901 | 107,498 | 92,740 |
Selling, general, and administrative | 214,807 | 178,337 | 149,167 |
Acquisition costs | 4,280 | 2,630 | 7,299 |
Depreciation and amortization | 64,470 | 63,967 | 62,818 |
Total operating expenses | 389,458 | 352,432 | 312,024 |
Income from operations | 24,320 | 5,904 | 5,716 |
Interest expense—net | 66,722 | 40,013 | 58,935 |
Related Party Tax Expense Effect of Change in Allocation Methodology | (3,264) | 7,788 | |
Loss on modification and extinguishment of debt | 96 | 0 | 12,905 |
Other (income) expenses—net | 314 | (1,341) | (644) |
Loss before income taxes | (39,548) | (40,556) | (65,480) |
Income tax benefit | (476) | (12,815) | (22,415) |
Net loss | (39,072) | (27,741) | (43,065) |
Less: Net loss attributable to non-controlling interest | (7,935) | (6,954) | (9,296) |
Net loss attributable to PowerSchool Holdings, Inc. | (31,137) | (20,787) | (33,769) |
Net Income (Loss) Available to Common Stockholders, Basic | (31,137) | (20,787) | (33,769) |
Net Income (Loss) Available to Common Stockholders, Diluted | $ (31,137) | $ (26,807) | $ (33,769) |
Net loss attributable to the PowerSchool Holdings, Inc. per share of Class A common stock - basic (in dollars per share) | $ (0.19) | $ (0.13) | $ (0.21) |
Net loss attributable to the PowerSchool Holdings, Inc. per share of Class A common stock - diluted (in dollars per share) | $ (0.19) | $ (0.13) | $ (0.21) |
Weighted average shares of Class A common stock outstanding - basic (in shares) | 162,957,390 | 158,664,189 | 157,576,056 |
Weighted average shares of Class A common stock outstanding - diluted (in shares) | 162,957,390 | 198,592,661 | 157,576,056 |
Foreign currency translation | $ 25 | $ (1,903) | $ (554) |
Unrealized Gain (Loss) on Investments | 3 | (3) | |
Total other comprehensive income (loss) | 28 | (1,906) | (554) |
Less: Other comprehensive income (loss) attributable to non-controlling interest | 5 | (382) | (55) |
Comprehensive loss attributable to PowerSchool Holdings, Inc. | (31,114) | (22,311) | (34,268) |
Subscriptions and support | |||
Revenue: | |||
Total revenue | 600,189 | 543,444 | 477,296 |
Cost of revenue: | |||
Cost of revenue, excluding depreciation and amortization | 154,021 | 151,374 | 135,963 |
Service | |||
Revenue: | |||
Total revenue | 72,555 | 70,402 | 61,976 |
Cost of revenue: | |||
Cost of revenue, excluding depreciation and amortization | 55,866 | 59,027 | 51,803 |
License and other | |||
Revenue: | |||
Total revenue | 24,907 | 16,837 | 19,326 |
Cost of revenue: | |||
Cost of revenue, excluding depreciation and amortization | $ 7,788 | $ 3,694 | $ 2,384 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’/ MEMBERS’ EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment [Member] | Class A common stock | Class B common stock | Members investment | Common stock Class A common stock | Common stock Class B common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit | Accumulated deficit Cumulative Effect, Period of Adoption, Adjustment [Member] | Non-controlling interest |
Member's investment, beginning balance at Dec. 31, 2020 | $ 1,677,873 | $ 1,855,730 | $ 441 | $ (178,298) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Repurchase of management incentive units | (448) | (448) | ||||||||||
Management incentive unit and stock-based compensation | 3,204 | 3,204 | ||||||||||
Foreign currency translation | (283) | (283) | ||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (1,509) | (1,509) | ||||||||||
Member's investment, ending balance at Jul. 30, 2021 | 1,678,837 | 1,858,486 | $ 0 | 158 | (179,807) | $ 0 | ||||||
Stockholder's equity, ending balance (in shares) at Jul. 30, 2021 | 0 | 0 | ||||||||||
Stockholder's equity, ending balance at Jul. 30, 2021 | 1,678,837 | $ 0 | $ 0 | 0 | 158 | (179,807) | 0 | |||||
Member's investment, beginning balance at Dec. 31, 2020 | 1,677,873 | 1,855,730 | 441 | (178,298) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Other Comprehensive Income (Loss), Net of Tax | (554) | |||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (43,065) | |||||||||||
Member's investment, ending balance at Dec. 31, 2021 | 0 | |||||||||||
Stockholder's equity, ending balance (in shares) at Dec. 31, 2021 | 158,034,000 | 39,928,000 | ||||||||||
Stockholder's equity, ending balance at Dec. 31, 2021 | 1,722,958 | $ 16 | $ 4 | 1,399,967 | (216) | (165,026) | 488,213 | |||||
Member's investment, beginning balance at Jul. 30, 2021 | 1,678,837 | 1,858,486 | 0 | 158 | (179,807) | 0 | ||||||
Stockholder's equity, beginning balance (in shares) at Jul. 30, 2021 | 0 | 0 | ||||||||||
Stockholder's equity, beginning balance at Jul. 30, 2021 | 1,678,837 | $ 0 | $ 0 | 0 | 158 | (179,807) | 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Management incentive unit and stock-based compensation | 23,414 | 23,414 | ||||||||||
Foreign currency translation | (374) | (374) | ||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (41,556) | (32,260) | (9,296) | |||||||||
Issuance of common stock (in shares) | 157,918,000 | 39,928,000 | ||||||||||
Issuance of common stock | $ 754,391 | $ 4 | $ 16 | $ 4 | 754,375 | |||||||
Effects of organizational transactions | 0 | (1,858,486) | 1,370,041 | 488,445 | ||||||||
Allocation of equity to non-controlling interests | 0 | (51,700) | 47,041 | 4,659 | ||||||||
Establishment of tax receivable agreement liability | (404,394) | (404,394) | ||||||||||
Adjustment to deferred taxes | (287,364) | (287,364) | ||||||||||
Issuance of common stock upon vesting of Restricted Stock Awards (in shares) | 116,000 | |||||||||||
Allocation of equity to non-controlling interests | 0 | (4,405) | 4,405 | |||||||||
Member's investment, ending balance at Dec. 31, 2021 | 0 | |||||||||||
Stockholder's equity, ending balance (in shares) at Dec. 31, 2021 | 158,034,000 | 39,928,000 | ||||||||||
Stockholder's equity, ending balance at Dec. 31, 2021 | 1,722,958 | $ 16 | $ 4 | 1,399,967 | (216) | (165,026) | 488,213 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Management incentive unit and stock-based compensation | 53,389 | 53,389 | ||||||||||
Other Comprehensive Income (Loss), Net of Tax | (1,906) | (1,906) | ||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (27,741) | (20,787) | (6,954) | |||||||||
Adjustment to deferred taxes | 163 | 163 | ||||||||||
Issuance of common stock upon vesting of Restricted Stock Awards (in shares) | 1,562,000 | |||||||||||
Allocation of equity to non-controlling interests | 0 | (4,018) | 4,018 | |||||||||
Member's investment, ending balance at Dec. 31, 2022 | 1,248,667 | 0 | ||||||||||
Stockholder's equity, ending balance (in shares) at Dec. 31, 2022 | 159,596,000 | 39,928,000 | ||||||||||
Stockholder's equity, ending balance at Dec. 31, 2022 | 1,733,944 | $ (1,437) | $ 16 | $ 4 | 1,438,019 | (2,122) | (187,250) | $ (1,437) | 485,277 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | 11,187 | (11,187) | ||||||||||
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | (295) | (295) | ||||||||||
Management incentive unit and stock-based compensation | 64,077 | 64,077 | ||||||||||
Other Comprehensive Income (Loss), Net of Tax | 28 | 28 | ||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (39,072) | (31,137) | (7,935) | |||||||||
Adjustment to deferred taxes | (2,086) | (2,086) | ||||||||||
Issuance of common stock upon vesting of Restricted Stock Awards (in shares) | 2,926,000 | |||||||||||
Allocation of equity to non-controlling interests | (5,760) | 5,760 | ||||||||||
Stock Issued During Period, Value, Conversion of Units | $ (2,274) | $ 2,274 | 27,642 | (27,642) | ||||||||
Member's investment, ending balance at Dec. 31, 2023 | $ 0 | |||||||||||
Stockholder's equity, ending balance (in shares) at Dec. 31, 2023 | 164,796,000 | 37,654,000 | ||||||||||
Stockholder's equity, ending balance at Dec. 31, 2023 | 1,755,287 | $ 16 | $ 4 | 1,520,288 | $ (2,094) | $ (218,387) | $ 455,460 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | $ 1,604 | $ (1,604) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net Cash Provided by (Used in) Operating Activities [Abstract] | |||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (39,072) | $ (27,741) | $ (43,065) |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] | |||
Gain (Loss) on Extinguishment of Debt | 96 | 0 | 12,905 |
Depreciation, Depletion and Amortization | 130,667 | 122,219 | 113,479 |
Share-based Payment Arrangement, Noncash Expense | 61,147 | 50,267 | 25,137 |
Operating Lease, Right-of-Use Asset, Periodic Reduction | 3,584 | 6,050 | |
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | (273) | (4,886) | |
Amortization of Debt Issuance Costs | 4,215 | 3,552 | 9,097 |
Accounts Receivable, Credit Loss Expense (Reversal) | 4,537 | 1,098 | 1,119 |
Gain (Loss) on Termination of Lease | (455) | ||
Gain (Loss) on Disposition of Property Plant Equipment | 129 | (8,837) | (97) |
Increase (Decrease) in Operating Capital [Abstract] | |||
Increase (Decrease) in Accounts Receivable | (12,318) | (5,975) | 7,299 |
Increase (Decrease) in Prepaid Expense and Other Assets | (2,353) | 1,664 | (1,099) |
Increase (Decrease) in Other Noncurrent Assets | (5,079) | (2,792) | (1,576) |
Increase (Decrease) in Accounts Payable | 4,581 | (6,052) | 2,265 |
Increase (Decrease) in Accrued Liabilities | (711) | 9,938 | 3,381 |
Increase (Decrease) in Other Noncurrent Liabilities | (5,591) | (12,137) | (271) |
Increase (Decrease) in Deferred Income Taxes | (3,297) | (15,269) | (429,258) |
Increase (Decrease) in Tax Receivable Agreement Liability | (2,338) | 7,788 | 404,394 |
Increase (Decrease) in Contract with Customer, Liability | 33,125 | 12,448 | 39,199 |
Net Cash Provided by (Used in) Operating Activities, Total | 170,594 | 149,009 | 143,103 |
Net Cash Provided by (Used in) Investing Activities [Abstract] | |||
Payments to Acquire Property, Plant, and Equipment | (2,168) | (3,651) | (3,988) |
Proceeds from Sale of Property, Plant, and Equipment | 39 | 0 | 0 |
Payments to Develop Software | (38,521) | (41,460) | (35,920) |
Payments to Acquire Software | 259 | ||
Payments to Acquire Businesses, Net of Cash Acquired | (300,046) | (31,143) | (333,593) |
Payment for Contingent Consideration Liability, Investing Activities | (3,528) | (1,392) | |
Net Cash Provided by (Used in) Investing Activities, Total | (344,483) | (77,646) | (373,501) |
Net Cash Provided by (Used in) Financing Activities [Abstract] | |||
Proceeds from Issuance of Debt | 99,256 | 0 | 0 |
Payment, Tax Withholding, Share-based Payment Arrangement | (1,604) | (11,187) | 0 |
Proceeds from Long-term Lines of Credit | 40,000 | 70,000 | 55,000 |
Proceeds from loans | 0 | 0 | 315,200 |
Payments for Repurchase of Member Units | 0 | 0 | (448) |
Underwriting discounts and commissions | 0 | (295) | (11,753) |
Payment of debt issuance costs | (15,708) | 0 | (2,823) |
Repayment of capital leases | (27) | ||
Proceeds from Issuance Initial Public Offering | 0 | 0 | 766,075 |
Net Cash Provided by (Used in) Financing Activities, Total | 75,870 | (19,232) | 264,699 |
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | (408) | (1,141) | (556) |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect, Total | (98,427) | 50,990 | 33,745 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning Balance | 137,981 | 86,991 | 53,246 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Ending Balance | 39,554 | 137,981 | 86,991 |
Supplemental Cash Flow Information [Abstract] | |||
Interest Paid, Excluding Capitalized Interest, Operating Activities | 61,660 | 28,948 | 51,438 |
Income Taxes Paid, Net | 3,409 | 2,103 | 2,452 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | |||
Capital Expenditures Incurred but Not yet Paid | 255 | 126 | 765 |
Interest Costs Capitalized | 1,954 | 936 | 403 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | |||
Cash and cash equivalents | 39,054 | 137,471 | 86,479 |
Restricted Cash and Cash Equivalents | 500 | 510 | 512 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Total | 39,554 | 137,981 | 86,991 |
Bridge Loan | |||
Net Cash Provided by (Used in) Financing Activities [Abstract] | |||
Repayment of loans | 0 | 0 | (320,000) |
Second Lien | |||
Net Cash Provided by (Used in) Financing Activities [Abstract] | |||
Repayment of loans | 0 | 0 | (365,000) |
Revolving Credit | |||
Net Cash Provided by (Used in) Financing Activities [Abstract] | |||
Repayments of lines of credit | (40,000) | (70,000) | (95,000) |
First Lien Debt | |||
Net Cash Provided by (Used in) Financing Activities [Abstract] | |||
Repayments of lines of credit | (6,074) | (7,750) | (7,750) |
Incremental Facility | |||
Net Cash Provided by (Used in) Financing Activities [Abstract] | |||
Repayments of lines of credit | $ 0 | $ 0 | $ (68,775) |
BUSINESS
BUSINESS | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS | BUSINESS Background and Nature of Operations PowerSchool Holdings, Inc. (the “Company,” “PowerSchool,” “we,” “us,” or “our” ) was formed as a Delaware corporation on November 30, 2020 for the purpose of completing an initial public offering (“IPO”) and a series of transactions in order to carry on the business of PowerSchool Holdings LLC (“Holdings LLC”), formerly known as Severin Holdings, LLC . Our Principal Stockholders are Onex Partners Managers LP (“Onex”) and Vista Equity Partners (“Vista”). The transactions included amendments to the Company’s operating agreement to modify its capital structure by replacing the membership interests then held by its existing owners with a new class of membership interests (“LLC Units”) held initially by Severin Topco LLC (“Topco LLC”), a portion of which have a participation threshold (the “Participation Units”) and appointing the Company as the sole managing member of Holdings LLC; issuance of unrestricted and restricted Class A common stock in exchange for vested and unvested pre-IPO share-based awards, issuance of 39,928,472 shares of Class B common stock, par value $0.0001 per share to Topco LLC, on a one-to-one basis with the number of LLC Units (other than Participation Units), restructuring of certain entities (“Blocker Entities”) associated with the Principal Stockholders, and execution of an exchange agreement (the “Exchange Agreement”) with Topco LLC. Pursuant to the Exchange Agreement, Topco LLC is entitled to exchange LLC Units (other than Participation Units), together with an equal number of shares of Class B common stock, for shares of Class A common stock on a one-for-one basis or, at its election, for cash from a substantially concurrent public offering or private sale. Participation Units may be exchanged for a number of shares of Class A common stock based on an exchange formula that takes into account the current value of a share of Class A common stock and a pre-determined participation threshold. Additionally, the Company entered into a tax receivable agreement (the “TRA”) with Topco LLC, and the Principal Stockholders that provides for the payment by the Company to Topco LLC and the Principal Stockholders, collectively, of 85% of the amount of cash savings, if any, in U.S. federal, state and local income taxes. Collectively, these transactions are referred to as “Organizational Transactions”. The Company’s cloud platform is an integrated, enterprise-scale suite of solutions purpose-built for the K-12 education market. The Company’s platform is embedded in school workflows and is used by educators, students, administrators, and parents. Its cloud-based technology platform helps schools and districts efficiently manage state reporting and related compliance, special education, finance, human resources, talent, registration, attendance, funding, learning, instruction, grading, assessments, communications, and analytics in one unified platform. The Company’s integrated technology approach streamlines operations, aggregates disparate data sets, and develops insights using predictive modelling and machine learning. The Company is headquartered in Folsom, California, and together with its subsidiaries has locations in the United States (“U.S.”), Canada, India, and the United Arab Emirates. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated balance sheets as of December 31, 2023 and December 31, 2022, the consolidated statements of operations and comprehensive loss, statements of stockholders’/members’ equity, and statements of cash flows for the years ended December 31, 2023, 2022, and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates Use of estimates is required in the preparation of the consolidated financial statements in conformity with GAAP. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that it believes are reasonable under the circumstances. The estimates the Company evaluates include, but are not limited to: • the fair value of assets acquired and liabilities assumed in business combinations, including acquired intangible assets, goodwill, contingent consideration, and liabilities associated with deferred revenue and deferred taxes; • the average period of benefit related to contract cost assets; • the allowance for doubtful accounts; • the fair value of certain stock awards; • the useful lives and recoverability of long-lived assets, including capitalized product development costs • the recognition, measurement, and valuation of deferred income taxes • the actual amounts and timing of payments under the Tax Receivable Agreement; and Actual results could differ from those estimates under different assumptions or conditions. Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosure. This update enhances the disclosures for income tax rate reconciliation whereby entities are required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items which meet a certain qualitative threshold. The guidance is effective for the Company beginning on January 1, 2024. The accounting pronouncement is not expected to have a material impact on our Consolidated Financial Statements and related disclosures. Accounting Pronouncements Recently Adopted On January 1, 2023, we prospectively adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This update changes the accounting for recognizing impairments of financial assets, such that credit losses for certain types of financial instruments will be estimated based on expected losses. The update also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination. The adoption of the accounting pronouncement did not have a material impact on the valuation of our financial instruments. Revenue Recognition The Company generates revenue from the following sources: (i) software-as-a-service (“SaaS”) offerings in cloud and hosted environments; (ii) professional services including implementation, consulting, training, and data migration services; (iii) software license; (iv) software maintenance; and (v) reseller arrangements. Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: 1. Identify the contract(s) with a customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognize revenue when (or as) the Company satisfies a performance obligation The Company identifies enforceable contracts with a customer when the agreement is signed and has determined that contract terms are generally three years. However, the contract may be in 12-month increments as customers are generally permitted to terminate after 12 months due to non-appropriation of funds. The Company also evaluates whether any optional periods represent a material right. Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. Transaction price includes both fixed and variable consideration. However, the Company only includes variable consideration in the transaction price to the extent that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling price based on its overall pricing objectives, taking into consideration discounts which can vary based on the value of contracts, products sold, the number and types of users within the contracts, and the market conditions within a geographic location of the customer . Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental entities (e.g., sales and other indirect taxes). The following describes the nature of the Company’s primary types of revenue and related revenue recognition policies: SaaS Offerings The Company offers SaaS-based solutions to customers that purchase remote access to its software and its functionality. For the Company’s SaaS offerings, the nature of its promise to the customer is to provide continuous access to its application platforms. Accordingly, the Company’s SaaS offerings are generally viewed as stand-ready performance obligations comprised of a series of distinct daily services. The Company typically satisfies its SaaS performance obligations over time as the services are provided. A time-elapsed output method is used to measure progress because its efforts are expended evenly throughout the period and customers benefit consistently throughout the contract term. As such, for fixed-fee contracts, revenue is recognized ratably over the contract period and classified as Subscriptions and Support revenue in the consolidated statements of operations and comprehensive loss. Professional Services Professional services revenue is comprised of implementation, consulting, training, and data migration services associated with the Company’s SaaS offerings and licensed software. These services are generally recognized when services are rendered, with service durations spanning from several weeks to several months, depending on the scope and complexity of the work. Payment terms for professional services may be based on a fixed fee or charged on a time and materials basis. Professional services are typically considered distinct performance obligations. The Company’s professional services that are billed on a fixed fee basis are typically satisfied as services are rendered, and the Company generally uses efforts expended (labor hours) to measure progress toward completion as this is considered a faithful representation of the transfer of control of the services given the nature of the performance obligation. For professional services that are billed on a time and materials basis, the Company applies the ‘as-invoiced’ practical expedient. Accordingly, revenue is generally recognized based on the amount that the Company has a right to invoice, as this amount corresponds directly with the value to the customer of the Company’s performance completed to date and is classified as Service revenue in the consolidated statements of operations and comprehensive loss. Software License The Company licenses software that is distinct and has significant stand-alone functionality (i.e., functional IP). Revenue attributable to such arrangements is typically recognized at the point in time when the customer is able to use and benefit from the software, which is generally upon delivery to the customer or upon the commencement of the renewal term. Software license revenue is classified as License and Other revenue in the consolidated statements of operations and comprehensive loss. Software Maintenance Software maintenance is comprised of stand-ready services including technical support services and unspecified software updates and upgrades, which are provided on a when-and-if-available basis. Software maintenance is transferred evenly using a time-elapsed output method over the contract term given it is a stand-ready obligation and there is no discernible pattern of performance. Software maintenance revenue is generally based on fixed fees. Payments are typically required annually in advance of the Company’s performance of the relevant services and recognized as revenue ratably over the maintenance term. This revenue is classified as Subscriptions and Support revenue in the consolidated statements of operations and comprehensive loss. Reseller Arrangements The Company has reseller arrangements with several third-party partners. For certain reseller arrangements, the Company does not control the products or services prior to when they are transferred to the customer. Revenue from these arrangements is recorded on a net basis. Reseller revenue is recognized at a point in time when the products or services are resold to the end customer as there are no outstanding performance obligations under these arrangements after the resale. The revenue for these arrangements is classified as License and Other revenue in the consolidated statements of operations and comprehensive loss. Principal vs. Agent From time to time the Company enters into arrangements with third parties to offer their products both as integrated into the Company’s offerings as well as add-ons for specific configurations with separate pricing. The Company considers the terms of our arrangements and the economics of the transactions with the third parties to determine the nature of our promise to the customer and whether or not the Company has control of the products or services prior to the transfer to the customer. Where we determine that the Company has control and the nature of our promise is to provide the underlying good or service, we recognize revenue on a gross basis (as the principal) and where the nature of the promise is primarily to facilitate the sale, we recognize revenue on a net basis (as the agent). Contract Acquisition Costs Contract and customer acquisition costs, consisting primarily of sales commissions, are incremental and recoverable costs of obtaining a contract. These costs are capitalized using the portfolio approach and are amortized over the expected period of benefit, which is the estimated life of the technology (determined to be approximately 7 years) provided in the underlying contract. The amortization is determined on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. Deferred commissions that will amortize within the next 12-month period are classified as current and included in prepaid expenses and other current assets. The remaining balance is classified as noncurrent and are included in other assets. The Company also applies the practical expedient to expense certain costs as incurred when the amortization period of the underlying asset is expected to be one year or less. The practical expedient typically applies to the Company’s professional services offerings. Deferred Revenue The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when it can contractually invoice a customer and payment will become due solely based on the passage of time, a contract asset when revenue is recognized prior to invoicing and payment is contingent upon transfer of control of another separate performance obligation, or deferred revenue (contract liability) when consideration is received from or amounts are billed to customers which precedes its performance to fully satisfy the associated performance obligation(s). Deferred revenue primarily results from the revenue from our SaaS offerings that is billed in advance of when such services are provided by the Company. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days for net new contracts. For renewal invoices, the due date is generally the start date of the renewal. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that contracts generally do not include a significant financing component. Fair Value Measurements GAAP guidance for fair value measurements clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels. These levels are determined based on the lowest-level input that is significant to the fair value measurement. Levels within the hierarchy are defined as follows: Level 1 —Unadjusted quoted prices in active markets for identical assets and liabilities; Level 2 —Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable, either directly or indirectly; and Level 3 —Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The estimated fair value of our investments are based on quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. Other than our money market funds, we classify our fixed income investments as having Level 2 inputs. The valuation techniques used to measure the fair value of our investments having Level 2 inputs are determined by third-party pricing services and are derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques. As of December 31, 2023, we do not hold any investments valued with Level 2 or 3 inputs. Additionally, the Company had recognized contingent consideration liability related to the acquisition of Chalk (defined below) which was classified as an accrued expense on the Company’s consolidated balance sheet. In addition, the Company has assumed a contingent consideration liability from the acquisition of SchoolMessenger of $0.6 million, which is classified as a noncurrent liability on the Company’s consolidated balance sheet. The fair value of the contingent consideration liability is based on unobservable inputs, including management estimates and assumptions about future revenues and share price, and therefore, classified as Level 3. See Note 10 for further information regarding the fair value of the contingent consideration liability from Chalk. The recorded amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and accrued expenses and other liabilities approximate the fair values principally because of their short-term nature. Short-term and long-term debt are reported at amortized costs in the Company’s consolidated balance sheets. The remaining financial instruments are reported in the Company’s consolidated balance sheets at amounts that approximate current fair values. Concentration of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents and accounts receivable. Cash equivalents consist primarily of money-market funds and are considered high investment grade. We place the majority of our cash and cash equivalents with financial institutions that management believes to have high-quality credit. Certain of our cash balances held with a financial institution are in excess of Federal Deposit Insurance Corporation limits. Our investment portfolio consists of investments diversified among security types, industries and issuers. Our investments were held and managed by recognized financial institutions that followed our investment policy with the main objective of preserving capital and maintaining liquidity. The Company maintains an allowance for doubtful accounts receivable based on various factors, including the Company’s review of credit profiles of its customers, contractual terms and conditions, historical payments, and current economic trends. The Company had no customers who accounted for more than 10% of accounts receivable as of December 31, 2023 and December 31, 2022. Since most of these receivables were satisfied in subsequent periods, the Company believes that this does not pose an undue concentration of credit risk on the Company. The Company had no customers accounting for more than 10% of total revenue for all periods presented. Cash and Cash Equivalents The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents. Cash equivalents included $5.0 million of money-market funds. The fair value of money-market funds, which was consistent with their carrying value, was determined using unadjusted prices in active, accessible markets for identical assets, and as such, they were classified as Level 1 assets in the fair value hierarchy. Accounts Receivable Accounts receivable primarily includes trade accounts receivable from the Company’s customers. Allowances for doubtful accounts are established based on various factors, including, but not limited to, credit profiles of the Company’s customers, contractual terms and conditions, historical payments, and current economic trends. Accounts receivable are written off or credited on a case-by-case basis, net of any amounts that may be collected. Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of software, equipment, and furniture and fixtures which is generally three Significant improvements that substantially extend the useful lives of assets are capitalized. Expenditures for maintenance and repairs are charged to expense as they are incurred. Intangible Assets Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values using the straight-line method designed to match the amortization to the benefits received. Leases Leases arise from contractual obligations that convey the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company determines whether an arrangement is or contains a lease at inception, based on whether there is an identified asset and whether it controls the use of the identified asset throughout the period of use. At lease commencement date, the Company determines lease classification between finance and operating and recognizes an ROU asset and corresponding lease liability. An ROU asset represents our right to use an underlying asset and a lease liability represents our obligation to make payments during the lease term. The lease liability is initially measured as the present value of the remaining lease payments over the lease term. The discount rate used to determine the present value is the Company’s incremental borrowing rate (“IBR”) because the interest rate implicit in the Company’s leases is not readily determinable. The Company estimates its IBR based on the information available at lease commencement date for borrowings with a similar term. The ROU asset is initially measured as the present value of the lease payments, adjusted for initial direct costs, prepaid lease payments to lessors and lease incentives. The operating lease ROU assets and liabilities recognized at January 1, 2022, the adoption date of ASC 842, were based on the present value of lease payments over the remaining lease term as of that date, using the IBR as of that date. The Company elected the practical expedients to not recognize ROU assets and liabilities for leases with a term of less than twelve months and to not separate non-lease components from the associated lease components. The total consideration includes fixed payments and contractual escalation provisions. The Company is responsible for maintenance, insurance, property taxes, and other variable payments, which are expensed as incurred. Some leases include options to renew or terminate. The Company includes the option to renew or terminate in its determination of the lease term when the option is deemed to be reasonably assured to be exercised. The Company accounts for changes in the expected lease term as a modification of the original contract. Operating leases are classified in "Operating lease right-of-use assets", "Operating lease liabilities, current", and "Operating lease liabilities—net of current" on our consolidated balance sheets. Capitalized Product Development Costs The Company’s software development costs are accounted for under the guidance for internal use software. The costs in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs are capitalized if: (1) the costs are direct and incremental and (2) management has determined that it is probable that the project will be completed and the software will be used to perform the function intended. These costs are capitalized until the application is substantially complete and ready for its intended use. Capitalized software development costs are being amortized to cost of revenue on a straight-line basis over five years. Useful lives are reviewed at least annually and adjusted if appropriate. Capitalized Cloud Computing Arrangement Implementation Costs The Company capitalizes certain qualifying costs to implement cloud computing hosting arrangements that are service contracts. Such qualifying costs include direct costs for third-party consulting services, and do not include software maintenance and training costs, which are expensed as incurred. Capitalization of these costs ceases once the software of the hosting arrangement is ready for its intended use. Capitalized costs, net of accumulated amortization, are included in prepaid expenses and non-current assets on the Company’s consolidated balance sheets and amortized to operating expense on a straight-line basis over the expected term of the associated arrangement, including periods that are reasonably expected to be renewed. The amount capitalized is included as a component of net cash used in operating activities in the statements of cash flows. Capitalized Interest Interest is capitalized on the Company’s software and website development. Interest capitalization is based on rates applicable to borrowings outstanding during the period and the balance of qualified assets under development during the period. Capitalized interest is amortized over the useful lives of such assets and the amortization is reported as cost of revenue. Goodwill Assets Goodwill is the excess of the purchase price in a business combination over the fair value of identifiable net assets acquired. Goodwill is subject to periodic testing for impairment. Goodwill is assessed at least annually, but also whenever events or changes in circumstances indicate the carrying values may not be recoverable. Factors that could trigger an impairment review, include (a) significant underperformance relative to historical or projected future operating results; (b) significant changes in the manner of or use of the acquired assets or the strategy for the Company’s overall business; and (c) significant negative industry or economic trends. The Company conducts an impairment assessment on December 31 of each year taking a qualitative and quantitative evaluation approach to determine if there are any adverse market factors or changes in circumstances indicating that the carrying value of goodwill may not be recoverable. If it is more likely than not that an impairment exists, the Company performs a quantitative test that compares the fair value to the net carrying value and records an impairment of goodwill to the extent that the net carrying value exceeds the fair value equal to the excess amount. There was no goodwill impairment recorded by the Company in any of the periods presented. Recoverability of Long-Lived and Intangible Assets The Company evaluates the recoverability of its long-lived assets, including amortizable intangible and tangible assets in accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets. Long-lived assets are evaluated for impairment at the asset group level, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets or an asset group by determining whether the carrying value of such assets will be recovered through their undiscounted expected future cash flow. If the future undiscounted cash flow is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets No long-lived asset impairment losses were recorded by the Company during any of the periods presented. Debt Issuance Costs and Debt Discount The Company records debt issuance costs as a reduction to the carrying value of the related debt and such amounts are being amortized over the term of the related debt using the straight-line method of amortization, which approximates the effective interest method. Amortization of debt issuance costs are included in interest expense - net on the consolidated statements of operations and comprehensive loss. The Company accounts for the discounts as an adjustment to the carrying amount and then amortizes the discounts over the terms using the effective interest method. Business Combinations The Company accounts for acquisitions under the purchase method of accounting in accordance with ASC 805, Business Combinations. The consolidated statements of operations and compreh ensive loss include the results of operations of the acquirees since the date of acquisition. The net assets of the acquisition with the exception of contract assets and contract liabilities (i.e., deferred revenue) and leases were recorded at their estimated fair values as of the acquisition date. The fair value of the intangible assets is determined using valuation techniques which include the use of a discounted cash flow model in an income or market based valuation approach. Such valuation approaches require management to make significant estimates and assumptions. Significant estimates in valuing certain intangible assets include, but are not limited to, forecasted revenue and expenses, customer attrition rates, useful lives, royalty rates, and discount rates. Contract assets and contract liabilities acquired in a business combination are recognized and measured on the acquisition date in accordance with ASC 606, as if the Company had originated the contracts. Leases acquired in a business combination are recognized and measured on the acquisition date in accordance with ASC 842. The provisional fair values may change as the Company obtains additional information. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent that we identify adjustments to the preliminary purchase price allocation. Share-Based Compensation Prior to the IPO, certain employees were granted unit-based awards by the Company’s predecessor entity, Holdings LLC, as profit interests based on the estimated fair value of the awards at the date of grant. Holdings LLC utilized the Black-Scholes pricing model for determining the estimated fair value of the unit-based awards on the date that the awards are granted. Given the absence of any active market for the shares underlying the awards, the fair value of the awards was determined with input from management and third-party valuations. In connection with the Organizational Transactions, certain of these outstanding unit-based awards were converted into restricted and unrestricted shares and restricted stock units (“RSUs”) of PowerSchool Holdings, Inc. After the IPO, the Company uses the publicly quoted price as reported on the NYSE as the fair value of the restricted shares, unrestricted shares and its RSUs on their respective grant dates. For service based awards, compensation expense is recognized on a straight-line basis over the respective requisite service periods of the awards. For performance-based awards where vesting is contingent upon both a service and a performance condition or both a service and market condition, compensation expense is recognized over the respective derived service period of the award when achievement of the performance or market condition is considered probable. Share-based compensation expense is recognized within cost of revenue; research and development; and selling, general, and administrative expense on the consolidated statements of operations and comprehensive loss based on the function of the employees receiving awards. Any forfeitures are accounted for as they occur. Income Taxes As a result of the Organizational Transactions and the IPO, the Company holds an economic interest in Holdings LLC and consolidates its financial position and results. The remaining ownership of Holdings LLC not held by the Company is considered a non-controlling interest. Holdings LLC is treated as a partnership for income tax reporting purposes. Its members, including the Company, are liable for federal, state, and local income taxes based on their share of Holdings LLC’s taxable income. In addition, the Company is subject to U.S. federal, state, local, and foreign income taxes on the taxable income or loss of certain operating subsidiaries of Holdings LLC that are taxed at the entity level. We account for income taxes under the asset and liability method of accounting. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. We reduce the measurement of a deferred tax asset, if necessary, by |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS We completed two acquisitions in fiscal year 2023 and three acquisition in fiscal year 2022. The purchase price allocation for these acquisitions, discussed in detail below, reflects various fair value estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, income taxes and goodwill. Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined. The measurement period is one year from the acquisition date. The fair value of the assets and liabilities acquired are based on valuations using the Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The valuation techniques include the use of a discounted cash flow model in an income or market based valuation approach. The results of operations of these business combinations have been included in the Company’s consolidated financial statements from their respective acquisition dates. Fiscal 2023 Acquisitions Jarulss Software Solutions Private Limited (“Neverskip”) On August 9, 2023, the Company acquired all of the equity interests of Neverskip. Neverskip is a leading provider of school solutions software in India. The purpose of the acquisition was to enhance and expand PowerSchool’s product offerings. The total purchase price for Neverskip was $10.0 million, which was paid in cash. Transaction costs of $0.7 million are recorded in acquisition costs in the consolidated statements of operations and comprehensive loss. The Company has accounted for this acquisition as a business combination and recognized net tangible liabilities of $2.4 million and recognized $6.6 million of intangible assets consisting of developed technology of $1.8 million customer relationships of $4.9 million and $0.01 million of trademarks. The Company recorded goodwill of $5.7 million arising from the acquisition, none of which is expected to be deductible for U.S. income tax purposes. The goodwill is a result of the growth expected from continuing to create a comprehensive education technology portfolio. SchoolMessenger On October 2, 2023, the Company acquired all of the equity interests of SchoolMessenger. SchoolMessenger is a leading provider of K-12 communication tools in North America. The purpose of the acquisition was to enhance and expand PowerSchool’s product offerings. The total purchase price for SchoolMessenger was $300.3 million, which included cash of $290.3 million and deferred consideration of $10.0 million. Transaction costs of $2.3 million were incurred in the year-ended December 31, 2023 related to this acquisition and are recorded in acquisition costs in the consolidated statements of operations and comprehensive loss. The Company has accounted for this acquisition as a business combination. The consideration and the acquisition date fair values of the assets acquired and liabilities assumed are as follows (in thousands): Accounts receivable $ 14,027 Prepaid expenses and other assets 1,128 Property and equipment 63 Right of use asset 409 Intangible asset - developed technologies 26,500 Intangible asset - customer relationships 43,600 Intangible asset - trademarks 8,100 Total assets acquired 93,827 Accounts payable (2,326) Accrued expenses (5,693) Lease liability (409) Other liabilities (539) Deferred revenue (30,240) Deferred taxes (2,169) Net assets acquired 52,451 Goodwill 247,815 Total consideration $ 300,266 The acquired net assets assumed were recorded at their estimated fair values. The estimated values of the intangible assets were determined by the assistance of valuation specialists and estimates made by management. The Company recorded $247.8 million of goodwill arising from the acquisition of SchoolMessenger, the majority of which is expected to be deductible for tax purposes. The goodwill is a result of the growth expected by creating a comprehensive education technology portfolio. Historical results of operations for Neverskip and SchoolMessenger were not material. Therefore, historical results of operations subsequent to the acquisition date and pro forma results of operations have not been presented. Fiscal 2022 Acquisitions Kinvolved, Inc. On February 1, 2022, the Company acquired all of the equity interests of Kinvolved, Inc. (“Kinvolved”). Kinvolved is a leading provider of K-12 communications, attendance, and engagement solutions software. The purpose of the acquisition was to enhance and expand PowerSchool’s product offering. The total purchase price for Kinvolved was $23.3 million, which included $16.2 million of cash and additional contingent cash consideration, payable based on the achievement of certain performance conditions. The acquisition-date fair value of the contingent consideration was $7.1 million. Transaction costs of $1.2 million are recorded in acquisition costs in the consolidated statements of operations and comprehensive loss. The Company has accounted for this acquisition as a business combination and recognized intangible assets of $4.5 million and net tangible assets of $0.2 million. The Company recorded $18.6 million of goodwill arising from the acquisition, none of which is expected to be deductible for tax purposes. The goodwill is a result of the growth expected by creating a comprehensive education technology portfolio. Chalk.com Education ULC On May 2, 2022, the Company acquired all of the equity interests of Chalk.com Education ULC (“Chalk”). Chalk is an integrated curriculum planning and analytics platform for K-12 schools. The purpose of the acquisition was to enhance and expand PowerSchool’s product offering. The total purchase price for Chalk was $13.5 million, which included $10.4 million of cash and additional contingent cash consideration payable based on the achievement of certain performance conditions. The acquisition-date fair value of the contingent consideration was $3.1 million. Transaction costs of $0.9 million are recorded in acquisition costs in the consolidated statements of operations and comprehensive loss. The Company has accounted for this acquisition as a business combination and recognized intangible assets of $3.6 million and net tangible liabilities of $0.2 million. The Company recorded goodwill of $10.0 million arising from the acquisition, all of which is expected to be deductible for U.S. income tax purposes. The goodwill is a result of the growth expected by creating a comprehensive education technology portfolio. Headed2, LLC On June 1, 2022, the Company acquired all of the equity interests of Headed2, LLC (“Headed2”). Headed2 is a career path planning platform that delivers state-level support for college, career, military, and life readiness to students of all ages by providing a more complete approach to researching and preparing for future success. The purpose of the acquisition was to enhance and expand PowerSchool’s product offering. The total purchase price for Headed2 was $5.8 million, which was paid in cash. Transaction costs of $0.5 million are recorded in acquisition costs in the consolidated statements of operations and comprehensive loss. The Company has accounted for this acquisition as a business combination and recognized intangible assets of $2.3 million and net tangible assets of $0.2 million. The Company recorded goodwill of $3.3 million arising from the acquisition, all of which is expected to be deductible for U.S. income tax purposes. The goodwill is a result of the growth expected by creating a comprehensive education technology portfolio. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer | REVENUE Disaggregation of Revenue The following table depicts the disaggregation of revenue according to the Company’s revenue streams. The Company believes this depicts the nature, amount, timing and uncertainty of revenue and cash flows consistent with how we evaluate our financial statements (in thousands): Year Ended December 31, 2023 2022 2021 SaaS $ 485,913 $ 433,643 $ 368,105 Professional services 72,555 70,402 61,976 Software maintenance 114,276 109,801 109,191 License and other 24,907 16,837 19,326 Total revenue $ 697,651 $ 630,683 $ 558,598 Revenue recognized for the year ended December 31, 2023 and 2022 from performance obligations satisfied in the prior periods was immaterial. Revenue by principal geographic areas based on where the customer is located was as follows (in thousands): Year Ended December 31, 2023 2022 2021 United States $ 648,599 $ 585,253 $ 515,043 Canada 36,271 35,439 35,447 Other 12,781 9,991 8,108 Total revenue $ 697,651 $ 630,683 $ 558,598 Deferred Revenue The changes in the deferred revenue balance were as follows (in thousands): December 31, 2023 December 31, 2022 Balance at beginning of period $ 315,839 $ 301,157 Decrease from revenue recognized (311,189) (289,328) Increase from acquisitions 20,526 1,586 Increase from current year net deferred revenue additions 354,607 302,424 Balance at end of period $ 379,783 $ 315,839 As of December 31, 2023, the Company expects to recognize revenue on approximately 98% of these remaining performance obligations over the next 12 months, with the balance recognized thereafter. The estimated revenues from the remaining performance obligations do not include uncommitted contract amounts such as (i) amounts that are cancellable by the customer without significant penalty, (ii) future billings for time and material contracts, and (iii) amounts associated with optional renewal periods. Contract Cost Assets Contract cost assets are included in prepaid expenses and other current assets and other assets, respectively, on the consolidated balance sheets as follows (in thousands): December 31, 2023 December 31, 2022 Contract costs, current $ 7,695 $ 6,103 Contract costs, noncurrent 28,473 23,843 Total contract costs $ 36,168 $ 29,946 For the years ended, December 31, 2023, 2022, and 2021, amortization expense for contract cost assets was $6.5 million, $4.7 million and $3.4 million, respectively. There was no impairment of contract cost assets during the periods presented. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2023 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE Accounts receivable, net, is as follows (in thousands): December 31, 2023 December 31, 2022 Accounts receivable $ 84,548 $ 59,008 Less allowance (7,930) (4,712) Accounts receivable—net $ 76,618 $ 54,296 The following tables presents the changes in the allowance for doubtful accounts (in thousands): Year Ended December 31, 2023 2022 2021 Allowance for doubtful accounts, beginning balance $ 4,712 $ 4,964 $ 7,869 Additions to (removals from) allowance for doubtful accounts 5,691 131 (2,857) Write-offs of bad debt expense (2,473) (383) (48) Allowance for doubtful accounts, ending balance $ 7,930 $ 4,712 $ 4,964 |
PROPERTY AND EQUIPMENT_NET
PROPERTY AND EQUIPMENT—NET | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT—NET | PROPERTY AND EQUIPMENT—NET Property and equipment by category are as follows (in thousands): December 31, 2023 December 31, 2022 Computer and software 16,073 16,272 Furniture and fixtures 1,641 1,563 Leasehold improvements 2,387 2,377 Property and equipment 20,101 20,212 Less accumulated depreciation (15,098) (14,039) Property and equipment—net $ 5,003 $ 6,173 |
CAPITALIZED PRODUCT DEVELOPMENT
CAPITALIZED PRODUCT DEVELOPMENT COSTS—NET | 12 Months Ended |
Dec. 31, 2023 | |
Research and Development [Abstract] | |
CAPITALIZED PRODUCT DEVELOPMENT COSTS—NET | CAPITALIZED PRODUCT DEVELOPMENT COSTS—NET Capitalized product development costs and related accumulated amortization consist of the following (in thousands): December 31, 2023 December 31, 2022 Gross capitalized product development costs $ 194,341 $ 152,663 Less accumulated amortization (82,252) (51,802) Capitalized product development costs—net $ 112,089 $ 100,861 Future estimated amortization expense on capitalized product developments projects is expected to be as follows as of December 31, 2023 (in thousands): Year Ending December 31, 2024 32,561 2025 26,028 2026 20,126 2027 12,560 2028 5,261 Thereafter 15,553 Total $ 112,089 Amortization of capitalized product development costs, included in the cost of revenue section of the consolidated statements of operations and comprehensive loss, were $30.4 million, $23.2 million, and $15.7 million for the year ended December 31, 2023, 2022, and 2021, respectively. Intangible assets are amortized using the straight-line method based on the expected useful lives of the assets. The carrying values of acquired amortizing intangible assets are as follows (in thousands): December 31, 2023 Weighted- Average Useful Life December 31, 2022 Weighted- Average Useful Life Intangible Assets—Gross Developed technology $ 321,957 8 years $ 293,599 8 years Customer relationships 791,253 14 years 742,600 14 years Trademarks 61,595 9 years 53,474 9 years Other 259 3 years — $ 1,175,064 $ 1,089,673 Accumulated Amortization Developed technology $ (169,777) $ (134,691) Customer relationships (266,473) (210,120) Trademarks (28,092) (22,715) Other (87) — $ (464,429) $ (367,526) Intangible Assets—Net Developed technology $ 152,180 $ 158,908 Customer relationships 524,780 532,480 Trademarks 33,503 30,759 Other 172 — $ 710,635 $ 722,147 Amortization of developed technology is recorded in cost of revenue, while the amortization of trademarks, customer relationships and other intangibles is included in operating expense on the Company’s consolidated statements of operations and comprehensive loss. The following table summarizes the classification of amortization expense of intangible assets (in thousands): Year Ended December 31, 2023 2022 2021 Cost of revenue $ 35,077 $ 33,989 $ 33,283 Operating expense 61,814 60,246 58,067 Total amortization of acquired intangible assets $ 96,891 $ 94,235 $ 91,350 The estimated future amortization of intangible assets as of December 31, 2023, is as follows (in thousands): Year Ending December 31, 2024 $ 101,889 2025 101,700 2026 90,546 2027 74,264 2028 72,009 Thereafter 270,227 Total $ 710,635 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL The changes in the carrying amounts of goodwill were as follows (in thousands): Balance—December 31, 2021 $ 2,454,692 Additions due to acquisitions 31,937 Other adjustments 1 378 Balance—December 31, 2022 $ 2,487,007 Additions due to acquisitions 253,486 Other adjustments 1 232 Balance—December 31, 2023 $ 2,740,725 _____________ 1 Includes adjustments of acquisition-date fair value within the one-year measurement period and effects of foreign currency translation. |
OTHER INTANGIBLE ASSETS_NET
OTHER INTANGIBLE ASSETS—NET | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
OTHER INTANGIBLE ASSETS—NET | CAPITALIZED PRODUCT DEVELOPMENT COSTS—NET Capitalized product development costs and related accumulated amortization consist of the following (in thousands): December 31, 2023 December 31, 2022 Gross capitalized product development costs $ 194,341 $ 152,663 Less accumulated amortization (82,252) (51,802) Capitalized product development costs—net $ 112,089 $ 100,861 Future estimated amortization expense on capitalized product developments projects is expected to be as follows as of December 31, 2023 (in thousands): Year Ending December 31, 2024 32,561 2025 26,028 2026 20,126 2027 12,560 2028 5,261 Thereafter 15,553 Total $ 112,089 Amortization of capitalized product development costs, included in the cost of revenue section of the consolidated statements of operations and comprehensive loss, were $30.4 million, $23.2 million, and $15.7 million for the year ended December 31, 2023, 2022, and 2021, respectively. Intangible assets are amortized using the straight-line method based on the expected useful lives of the assets. The carrying values of acquired amortizing intangible assets are as follows (in thousands): December 31, 2023 Weighted- Average Useful Life December 31, 2022 Weighted- Average Useful Life Intangible Assets—Gross Developed technology $ 321,957 8 years $ 293,599 8 years Customer relationships 791,253 14 years 742,600 14 years Trademarks 61,595 9 years 53,474 9 years Other 259 3 years — $ 1,175,064 $ 1,089,673 Accumulated Amortization Developed technology $ (169,777) $ (134,691) Customer relationships (266,473) (210,120) Trademarks (28,092) (22,715) Other (87) — $ (464,429) $ (367,526) Intangible Assets—Net Developed technology $ 152,180 $ 158,908 Customer relationships 524,780 532,480 Trademarks 33,503 30,759 Other 172 — $ 710,635 $ 722,147 Amortization of developed technology is recorded in cost of revenue, while the amortization of trademarks, customer relationships and other intangibles is included in operating expense on the Company’s consolidated statements of operations and comprehensive loss. The following table summarizes the classification of amortization expense of intangible assets (in thousands): Year Ended December 31, 2023 2022 2021 Cost of revenue $ 35,077 $ 33,989 $ 33,283 Operating expense 61,814 60,246 58,067 Total amortization of acquired intangible assets $ 96,891 $ 94,235 $ 91,350 The estimated future amortization of intangible assets as of December 31, 2023, is as follows (in thousands): Year Ending December 31, 2024 $ 101,889 2025 101,700 2026 90,546 2027 74,264 2028 72,009 Thereafter 270,227 Total $ 710,635 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES The following table presents the detail of accrued expenses (in thousands): December 31, 2023 December 31, 2022 Accrued compensation $ 43,075 $ 38,966 Accrued interest 12,654 9,094 Accrued taxes 1,530 2,130 TRA liability, current 21,957 1,862 Other accrued expenses 37,055 32,218 Total accrued expenses $ 116,271 $ 84,270 |
LONG-TERM DEBT AND REVOLVING CR
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT | LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT First Lien Credit Agreement (“First Lien”) In August 2018, the Company entered into a loan agreement with a consortium of lenders which provided $775.0 million of term loans. The First Lien also provided a Revolving Credit Agreement, discussed in more detail below. On July 31, 2023, the Company entered into an incremental facility to the First Lien to borrow an additional $100.0 million aggregate principal amount of incremental term loans, increasing the principal balance outstanding under the First Lien to $840.1 million as of the date of the amendment. Debt issuance costs of $0.8 million were recorded as a reduction to the carrying value of the related debt. On October 12, 2023, the Company amended the First Lien to extend the maturity date on the agreement from July 31, 2025 to August 1, 2027. Debt issuance costs of $13.1 million were recorded as a reduction to the carrying value of the related debt. The amended First Lien was repayable in quarterly payments of $2.1 million through August 1, 2027, with all remaining outstanding principal due on August 1, 2027. As of December 31, 2023, the interest rate for the First Lien is the rate per annum equal to the Secured Overnight Financing Rate (“SOFR”), plus the applicable margin. The applicable margin is initially 3.25% per annum with a 0.25% step down based on the First Lien Net Leverage Ratio. The interest rate for the First Lien as of December 31, 2023 and 2022 was 8.38% and 7.09%, respectively. The First Lien is collateralized on a first lien basis by certain assets and property of the Company and includes covenants that among other things limit our ability to incur additional debt or issue dividends. As of December 31, 2023, we were in compliance with all covenants associated with the First Lien. Revolving Credit Agreement The First Lien provides for a Revolving Credit Agreement allowing the Company to borrow funds from time to time. In July 2021, the Revolving Credit Agreement was amended and permitted the Company to borrow up to $289.0 million. On October 12, 2023, the Revolving Credit Agreement was further amended to permit the Company to borrow up to $400.0 million and extended the maturity date from May 2, 2025 to May 2, 2027. In connection with the increase of the borrowing capacity and the extension of the maturity date, the Company paid fees of $2.0 million, which was recorded as capitalized debt issuance cost and presented within other assets on the consolidated balance sheet . The interest rate is equal to SOFR, plus the applicable margin. The applicable margin is initially 3.25% per annum with up to a 0.50% step down based on the First Lien Net Leverage Ratio. We are also required to pay a commitment fee on the unused portion of the Revolving Credit Agreement of 0.50% per annum with up to a 0.25% step down based on the First Lien Net Leverage Ratio, payable quarterly in arrears. During the year ended December 31, 2023, the Company borrowed and repaid $40.0 million on the Revolving Credit Agreement and there was no outstanding balance on the revolving credit facility as of December 31, 2023 and 2022. The Revolving Credit Agreement requires the Company to maintain a First Lien Net Leverage Ratio (as defined therein) of not more than 7.75 to 1.00 if the Company has an outstanding balance on the Revolving Credit Agreement of greater than 35% of the borrowing capacity (excluding certain letters of credit) at a quarter end. As of December 31, 2023 and 2022, the Company’s outstanding balances under the Revolving Credit Agreement were less than 35% of the borrowing capacity. The following table presents the outstanding long-term debt (in thousands): December 31, 2023 December 31, 2022 Total outstanding principal—First Lien $ 837,926 $ 744,000 Less current portion of long-term debt (8,379) (7,750) Less unamortized debt discount (4,832) (715) Less unamortized debt issuance costs (13,390) (6,911) Total long-term debt—net $ 811,325 $ 728,624 Maturities on long-term debt outstanding as of December 31, 2023 are as follows (in thousands): Year Ending December 31, 2024 $ 8,379 2025 8,379 2026 8,379 2027 812,789 Total $ 837,926 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Contractual Obligations We have contractual obligations related to, among others, data centers, cloud hosting arrangements, and other services we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us. As of December 31, 2023, the remaining aggregate minimum purchase commitment under these arrangements was approximately $201.4 million through 2028. As of December 31, 2023, our future non-cancelable minimum payments due under these contractual obligations with a remaining term of more than one year were as follows (in thousands): Year Ending December 31, 2024 $ 68,504 2025 54,716 2026 39,667 2027 38,056 2028 500 Total $ 201,443 Self-Insured Health Plan The Company is generally self-insured for losses and liabilities related to health benefits. The estimated liability for incurred, but not reported, medical claims is $1.6 million and $2.2 million as of December 31, 2023 and 2022, respectively. Indemnification The Company enters into indemnification arrangements within customer contracts as part of the ordinary course of its business. Under the Company’s standard contractual terms, these arrangements typically consist of the Company agreeing to indemnify, hold harmless and reimburse the indemnified customer(s) for losses suffered or incurred directly, in connection with any trade secret, copyright, patent, or other intellectual property infringement claim by any third-party with respect to the Company’s technology. The term of these indemnification agreements is generally concurrent with the term of the contract, but in some cases, may survive the expiration or termination of the underlying contract. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made. The Company carries Directors and Officers insurance policies pursuant to the Company’s certificate of formation, bylaws, and applicable Delaware law. Legal Proceedings From time to time, the Company is involved in disputes, litigation, and other legal actions. On a quarterly basis, the Company evaluates developments in its legal matters that could affect the amount of liability that has been previously accrued, if any, or result in the Company accruing a liability, and the matters and related ranges of possible losses disclosed, and makes adjustments and changes to our disclosures as appropriate. Significant judgment is required to determine both (i) the likelihood of loss and (ii) the estimated amount of such loss related to such legal matters. Until the final resolution of such legal matters, there may be an exposure to loss, and such amounts could be material. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), the Company has determined it does not have material exposure on an aggregate basis at this time. |
STOCKHOLDERS_ EQUITY AND NON-CO
STOCKHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST | STOCKHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST Stockholders’ Equity The Company amended and restated its certificate of incorporation effective July 27, 2021 to authorize (i) 50,000,000 shares of preferred stock, par value $0.0001 per share, (ii) 500,000,000 shares of Class A common stock, par value $0.0001 per share, and (iii) 300,000,000 shares of Class B common stock, par value $0.0001 per share. Holders of our Class A common stock and Class B common stock vote together as a single class on all matters presented to stockholders for their vote or approval, except as otherwise required by law. Each share of Class A common stock and Class B common stock entitles its holder to one vote on all matters presented to our stockholders generally. As of December 31, 2023, t he holders of our issued Class A common stock collectively represented approximately 81.4% of the economic interest and voting power in the Company and Class B common stock collectively represented approximately 18.6% of the voting power in the Company. Non-controlling interest The weighted average non-controlling interest percentage used to calculate the net loss and other comprehensive loss attributable to the non-controlling interest holders in the period from the IPO to December 31, 2023 was 18.6%. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Prior to the IPO, Holdings LLC had historically maintained equity incentive plans for purposes of retaining and incentivizing certain employees of the Company. This plan was replaced by the Company’s 2021 Omnibus Incentive Plan (“2021 Plan”), approved on July 27, 2021 in connection with the IPO. The 2021 Plan initially reserves 19,315,000 shares of the Company’s Class A common stock and provides for the granting of stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), dividend equivalents, other share-based awards, other cash-based awards, substitute awards, and performance awards to eligible employees, consultants, and directors. Market-share Units (“MSUs”) In the first quarter of fiscal year 2023 , the Company granted MSUs to certain executives. The target number of awards granted was based on the relative growth of the Company's share price over a two- and three-year performance period beginning on the date of grant and ending on the second and third anniversary of the grant date. These awards are subject to continuous employment through each individual vesting period. The fair value of the MSUs was determined using a Monte Carlo simulation approach with the following assumptions: a historical volatility of 58%, 0% dividend yield, and a risk-free interest rate of 3.7%. The historical volatility was determined based on the observed equity volatility for comparable companies. The dividend yield was 0% as the Company does not currently offer a dividend. The risk-free interest rate is based on the yield from the Treasury Constant Maturities consistent with a three-year term associated with the market condition of the awards. The fair value of the awards granted during the first quarter of 2023 was $12.6 million which is recognized on a straight-line basis over the performance periods. The share-based compensation expense of these awards was $4.0 million for the year ended December 31, 2023. MSU activity for the year-ended December 31, 2023 is as follows: Market-Share Units Weighted-Average Balance—December 31, 2022 — — Granted 474,846 26.64 Vested — — Canceled — — Balance—December 31, 2023 474,846 26.64 RSUs/RSAs The RSUs granted under the 2021 Plan vest upon the satisfaction of a service-based vesting condition, generally over a four-year period, with a 25% vesting at the end of one year and the remainder quarterly thereafter. RSU and RSA activity for the year ended December 31, 2023 is as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Restricted Stock Awards Weighted Average Grant Date Fair Value Balance—IPO (July 30, 2021) — — — — Granted 6,520,365 $ 24.66 657,661 $ 9.44 Vested — — (218,798) $ 9.20 Canceled (251,288) $ 18.83 — — Balance—December 31, 2021 6,269,077 $ 24.89 438,863 $ 9.56 Granted 5,104,575 $ 17.19 — $ — Vested (1,861,862) $ 25.00 (361,830) $ 9.39 Canceled (1,631,371) $ 21.79 (22,517) $ 15.02 Balance—December 31, 2022 7,880,419 $ 20.52 54,516 $ 8.43 Granted 3,558,873 $ 19.51 — $ — Vested (2,959,959) $ 20.39 (37,986) $ 8.53 Canceled (1,308,545) $ 19.68 — $ — Balance—December 31, 2023 7,170,788 $ 20.22 16,530 $ 8.19 The following table presents the classification of share-based compensation in the accompanying consolidated statements of operations and comprehensive income (loss) (in thousands): Year-ended December 31, 2023 2022 2021 Cost of revenue Subscriptions and support $ 6,129 $ 5,028 $ 1,634 Service 3,326 3,442 1,922 Research and development 15,350 13,102 5,198 Selling, general, and administrative 36,342 28,695 16,371 Total share-based compensation $ 61,147 $ 50,267 $ 25,125 Share-based compensation capitalized as product development costs was $2.9 million, $3.1 million, and $1.5 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, the total future compensation cost related to unvested share awards is $140.2 million, which is expected to be recognized over a weighted-average period of 2.5 years. |
EARNINGS (LOSS) PER SHARE ATTRI
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS (EPS) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS (EPS) | EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS (EPS) The table below sets forth a calculation of basic EPS based on net loss attributable to PowerSchool Holdings, Inc., divided by the basic weighted average number of Class A common stock outstanding for the corresponding periods. Diluted EPS of Class A common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to all potentially dilutive securities, using the treasury stock method. The Company excluded the shares of Class B common stock from the computation of basic and diluted EPS, as holders of Class B common stock do not have any rights to receive dividends or distributions upon the liquidation or winding up of the Company. Accordingly, separate presentation of EPS of Class B common stock under the two-class method has not been presented. Year Ended December 31, 2023 2022 2021 Basic net income (loss) per share: Numerator: Net loss $ (39,072) $ (27,741) $ (43,065) Less: net loss attributable to non-controlling interest (7,935) (6,954) (9,296) Net loss attributable to PowerSchool Holdings, Inc., basic (31,137) (20,787) (33,769) Denominator: Weighted average shares of Class A common stock, basic 162,957,390 158,664,189 157,576,056 Net loss attributable to PowerSchool Holdings, Inc. per share of Class A common stock, basic $ (0.19) $ (0.13) $ (0.21) Diluted net income (loss) per share: Numerator: Net loss attributable to PowerSchool Holdings, Inc., basic $ (31,137) $ (20,787) $ (33,769) Adjustment from LLC Units — (6,020) — Net loss attributable to PowerSchool Holdings, Inc., diluted (31,137) (26,807) (33,769) Denominator: Weighted average shares of Class A common stock, basic 162,957,390 158,664,189 157,576,056 Dilutive impact of LLC Units — 39,928,472 — Weighted average shares of Class A common stock, diluted 162,957,390 198,592,661 157,576,056 Net loss attributable to PowerSchool Holdings, Inc. per share of Class A common stock, diluted $ (0.19) $ (0.13) $ (0.21) In addition, the following securities were not included in the computation of diluted shares for the years ended December 31, 2023, 2022 and 2021 because they were antidilutive, but could potentially dilute earnings (loss) per share in the future: Year Ended December 31, 2023 2022 2021 Unvested restricted shares and RSUs 7,187,318 7,934,935 6,707,759 LLC units 37,654,059 — 39,928,472 Market share units 474,846 — — Total excluded from diluted EPS calculation 45,316,223 7,934,935 46,636,231 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The components of loss before provision for income taxes were as follows (in thousands): Year Ended December 31, 2023 2022 2021 United States $ (48,569) $ (47,342) $ (74,863) Foreign 9,021 6,786 9,383 Loss before provision for income taxes $ (39,548) $ (40,556) $ (65,480) The components of income tax expense (benefit) were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Current: Federal $ 109 $ (444) $ — State (194) 511 490 Foreign 2,604 2,166 2,142 Total current tax 2,519 2,233 2,632 Year Ended December 31, 2023 2022 2021 Deferred: Federal (1,626) (7,526) (21,341) State (137) (6,322) (2,248) Foreign (1,232) (1,200) (1,458) Total deferred tax (2,995) (15,048) (25,047) Total provision for income taxes $ (476) $ (12,815) $ (22,415) A reconciliation of the income tax expense (benefit) at the U.S. federal statutory rate to the provision for income taxes is as follows: Year Ended December 31, 2023 2022 2021 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % Earnings not subject to tax (14.8) (13.5) (4.7) State tax expense, net of federal benefit (1.2) 8.3 2.8 Foreign earnings taxed at different rate (3.4) (2.1) 0.2 Tax restructurings (13.6) 20.4 — Change in fair value of contingent consideration 1.8 (4.5) — Tax credits 11.7 2.4 — Other items (0.3) (0.4) (2.4) Change in valuation allowance — — 17.3 Effective tax rate 1.2 % 31.6 % 34.2 % The types of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are set forth below (in thousands): As of December 31, 2023 2022 Deferred tax assets: Net operating loss and credit carryforwards 107,969 99,109 Interest expense 30,992 20,058 Lease liability 1,847 731 Other 1,723 1,200 Total gross deferred tax assets 142,531 121,098 Less valuation allowance (479) (449) Total net deferred tax assets 142,052 120,649 Deferred tax liabilities: Investment in partnership (409,355) (396,090) Depreciation and amortization (5,286) (4,275) ROU asset (1,977) (776) Other (750) (822) Total gross deferred tax liabilities (417,368) (401,963) Net deferred tax liability $ (275,316) $ (281,314) Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. The Company has significant deferred tax liabilities, which are considered as a source of income to realize a majority of the deferred tax assets. Management has also considered the cumulative loss incurred by Holdings LLC over the three-year period ended December 31, 2023 . However, the negative evidence of cumulative losses is offset by the objectively-verifiable source of future taxable income represented by the deferred tax liabilities. As of December 31, 2023 , the Company has $409.8 million of federal and $20.2 million of state net operating loss carryforwards, which are expected to expire on various dates. The Company’s state net operating loss carryforwards are available to reduce future taxable income, which expire at various times through 2041. The federal net operating loss carryforwards generated in tax years after 2018 have an unlimited carryforward period, while those generated in earlier tax years have a twenty year carryforward, with expirations beginning in 2036. The Company is subject to income tax in the United States and various other foreign countries or territories in which it operates. The 2020 through 2022 tax years are open to examination by the taxing jurisdictions in which the company is subject to income taxes. In addition, certain acquired loss, credit, and basis carryforwards are open to examination by the taxing authorities beginning in 2003. A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits, excluding accrued net interest and penalties, is as follows (in thousands): As of December 31, 2023 2022 Gross unrecognized income tax benefits - beginning balance 12,464 7,228 Increase related to tax positions taken during the current year 842 3,082 Increase related to tax positions taken during prior years — 2,657 Decrease related to tax positions taken during prior years (2,400) (35) Increase related to the Organizational Transactions — — Decrease related to the lapse of applicable statute of limitations (468) (468) Gross unrecognized income tax benefits - ending balance 10,438 12,464 As of December 31, 2023 and 2022 , the Company had unrecognized tax benefits of $10.4 million and $12.5 million, respectively, which would affect the effective tax rate if recognized. The Company recognizes interest and penalties related to its unrecognized tax benefits within its provision for income taxes. The amount of interest and penalties accrued related to the Company’s unrecognized tax benefits are not material to the consolidated financial statements. The Company does not expect any changes to the unrecognized tax benefits in the next 12 months. The Company considers the excess of the amount for financial reporting over the tax basis of the investment in its foreign subsidiary to be indefinitely reinvested outside the United States. At this time, the determination of unrecognized deferred tax liability for this amount is not practicable. Tax Receivable Agreement In connection with the Organizational Transactions, the Company entered into a TRA with Topco LLC, Vista Equity Partners, and Onex. The TRA provides for the payment by the Company to Topco LLC, Vista Equity Partners, and Onex, collectively, of 85% of the amount of tax benefits, if any, that are realized, or in some circumstances are deemed to realize, as a result of (i) certain increases in the tax basis of assets of Holdings LLC and its subsidiaries resulting from purchases of LLC Units with the proceeds of the IPO or exchanges of LLC Units in the future or any prior transfers of interests in Holdings LLC, (ii) certain tax attributes of the Blocker Entities and of Holdings LLC and subsidiaries of Holdings LLC that existed prior to the IPO and (iii) certain other tax benefits related to our making payments under the TRA (collectively, the “Tax Attributes”). The payment obligations under the TRA are not conditioned upon any LLC Unit holder maintaining a continued ownership interest in us or Holdings LLC and the rights of Topco LLC under the TRA are assignable. The Company expects to benefit from the remaining 15% of the tax benefits, if any, that are actually realized. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS The Company has entered into arrangements with Vista Equity Partners for certain services, and the Vista Consulting Group for management consulting, systems implementation, and manpower support (collectively, “Vista”). These services were provided on a time and material basis and were generally related to integration of the various companies acquired by the Company. Total costs of these related party services were $0.3 million, $0.4 million, and $0.5 million for the years ended December 31, 2023, 2022, and 2021, respectively. We may continue to engage Vista from time to time, subject to compliance with our related party transactions policy. The Company also entered into arrangements with Onex Partners Manager LP (“Onex”) for general management services, acquisition advisory, and treasury services. Total costs of these related-party services were less than $0.1 million for the years ended December 31, 2023, 2022, and 2021, respectively. Total aggregate amounts due to Vista and Onex entities were less than $0.1 million as of December 31, 2023 and 2022. The Company also purchased services from entities that share common ownership with Vista and Onex. The cost was $3.4 million, $3.9 million, and $2.9 million for all other services purchased from entities with common ownership for the year ended December 31, 2023, 2022, and 2021, respectively. Substantially all of the expenses related to the Vista and Onex services are included in selling, general, and administrative expense in the consolidated statements of operations and comprehensive loss. Amounts due to entities that share common ownership were $0.2 million and $0.5 million as of December 31, 2023 and 2022, respectively, and are included in accounts payables and accrued liabilities in the consolidated balance sheet. There were no sales to or outstanding accounts receivable arising from this agreement during or as of the end of any of the periods presented. The Company has a strategic partnership with EAB Global, Inc. (“EAB”), a portfolio company of Vista, pursuant to a Reseller Agreement (the “Agreement”). Pursuant to the Agreement, EAB serves as, among other terms, the exclusive reseller of the Intersect product in the U.S. and Canada. The Agreement has a ten-year term and includes annual minimum revenue commitments from EAB. The commitment amount for the period was $36.8 million, and will increase upon the anniversary of the Agreement. The Company may begin to revoke its exclusivity with EAB after the fourth year of the Agreement or terminate the relationship upon material breach of the contract. Under the terms of the Agreement, the Company pays a fee to EAB for selling products to third party customers on the Company’s behalf. The Company recognized $14.5 million and $12.0 million in selling, general, and administrative expense and, to a lesser extent, cost of revenue, for fees owed to EAB under the Agreement for the year ended December 31, 2023 and December 31, 2022, respectively. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Defined Contribution Plan —The Company has a defined contribution plan under Section 401(k) of the Internal Revenue Code (“401(k) Plan”) covering all full-time employees who meet certain eligibility requirements. Eligible employees may defer a percentage of their pretax compensation, up to the annual maximum allowed by the Internal Revenue Service. Under the 401(k) Plan, the Company matches a portion of the employee contributions up to a defined maximum. The Company made matching contributions for the year ended December 31, 2023, 2022, and 2021, of $10.2 million, $10.0 million, and $8.8 million respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net income (loss) | $ (31,137) | $ (20,787) | $ (33,769) |
Insider Trading Arrangements
Insider Trading Arrangements | Dec. 14, 2023 | Dec. 13, 2023 |
Trading Arrangements, by Individual | ||
Rule 10b5-1 Arrangement Adopted | true | true |
Rule 10b5-1 Arrangement Terminated | true |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying consolidated balance sheets as of December 31, 2023 and December 31, 2022, the consolidated statements of operations and comprehensive loss, statements of stockholders’/members’ equity, and statements of cash flows for the years ended December 31, 2023, 2022, and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of estimates is required in the preparation of the consolidated financial statements in conformity with GAAP. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that it believes are reasonable under the circumstances. The estimates the Company evaluates include, but are not limited to: • the fair value of assets acquired and liabilities assumed in business combinations, including acquired intangible assets, goodwill, contingent consideration, and liabilities associated with deferred revenue and deferred taxes; • the average period of benefit related to contract cost assets; • the allowance for doubtful accounts; • the fair value of certain stock awards; • the useful lives and recoverability of long-lived assets, including capitalized product development costs • the recognition, measurement, and valuation of deferred income taxes • the actual amounts and timing of payments under the Tax Receivable Agreement; and |
Recent Accounting Pronouncements Not Yet Adopted and Recently Adopted | Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosure. This update enhances the disclosures for income tax rate reconciliation whereby entities are required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items which meet a certain qualitative threshold. The guidance is effective for the Company beginning on January 1, 2024. The accounting pronouncement is not expected to have a material impact on our Consolidated Financial Statements and related disclosures. Accounting Pronouncements Recently Adopted On January 1, 2023, we prospectively adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This update changes the accounting for recognizing impairments of financial assets, such that credit losses for certain types of financial instruments will be estimated based on expected losses. The update also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination. The adoption of the accounting pronouncement did not have a material impact on the valuation of our financial instruments. |
Revenue Recognition, Contract Cost Assets, Deferred Revenue | The Company generates revenue from the following sources: (i) software-as-a-service (“SaaS”) offerings in cloud and hosted environments; (ii) professional services including implementation, consulting, training, and data migration services; (iii) software license; (iv) software maintenance; and (v) reseller arrangements. Revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: 1. Identify the contract(s) with a customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognize revenue when (or as) the Company satisfies a performance obligation The Company identifies enforceable contracts with a customer when the agreement is signed and has determined that contract terms are generally three years. However, the contract may be in 12-month increments as customers are generally permitted to terminate after 12 months due to non-appropriation of funds. The Company also evaluates whether any optional periods represent a material right. Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. Transaction price includes both fixed and variable consideration. However, the Company only includes variable consideration in the transaction price to the extent that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling price based on its overall pricing objectives, taking into consideration discounts which can vary based on the value of contracts, products sold, the number and types of users within the contracts, and the market conditions within a geographic location of the customer . Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental entities (e.g., sales and other indirect taxes). The following describes the nature of the Company’s primary types of revenue and related revenue recognition policies: SaaS Offerings The Company offers SaaS-based solutions to customers that purchase remote access to its software and its functionality. For the Company’s SaaS offerings, the nature of its promise to the customer is to provide continuous access to its application platforms. Accordingly, the Company’s SaaS offerings are generally viewed as stand-ready performance obligations comprised of a series of distinct daily services. The Company typically satisfies its SaaS performance obligations over time as the services are provided. A time-elapsed output method is used to measure progress because its efforts are expended evenly throughout the period and customers benefit consistently throughout the contract term. As such, for fixed-fee contracts, revenue is recognized ratably over the contract period and classified as Subscriptions and Support revenue in the consolidated statements of operations and comprehensive loss. Professional Services Professional services revenue is comprised of implementation, consulting, training, and data migration services associated with the Company’s SaaS offerings and licensed software. These services are generally recognized when services are rendered, with service durations spanning from several weeks to several months, depending on the scope and complexity of the work. Payment terms for professional services may be based on a fixed fee or charged on a time and materials basis. Professional services are typically considered distinct performance obligations. The Company’s professional services that are billed on a fixed fee basis are typically satisfied as services are rendered, and the Company generally uses efforts expended (labor hours) to measure progress toward completion as this is considered a faithful representation of the transfer of control of the services given the nature of the performance obligation. For professional services that are billed on a time and materials basis, the Company applies the ‘as-invoiced’ practical expedient. Accordingly, revenue is generally recognized based on the amount that the Company has a right to invoice, as this amount corresponds directly with the value to the customer of the Company’s performance completed to date and is classified as Service revenue in the consolidated statements of operations and comprehensive loss. Software License The Company licenses software that is distinct and has significant stand-alone functionality (i.e., functional IP). Revenue attributable to such arrangements is typically recognized at the point in time when the customer is able to use and benefit from the software, which is generally upon delivery to the customer or upon the commencement of the renewal term. Software license revenue is classified as License and Other revenue in the consolidated statements of operations and comprehensive loss. Software Maintenance Software maintenance is comprised of stand-ready services including technical support services and unspecified software updates and upgrades, which are provided on a when-and-if-available basis. Software maintenance is transferred evenly using a time-elapsed output method over the contract term given it is a stand-ready obligation and there is no discernible pattern of performance. Software maintenance revenue is generally based on fixed fees. Payments are typically required annually in advance of the Company’s performance of the relevant services and recognized as revenue ratably over the maintenance term. This revenue is classified as Subscriptions and Support revenue in the consolidated statements of operations and comprehensive loss. Reseller Arrangements The Company has reseller arrangements with several third-party partners. For certain reseller arrangements, the Company does not control the products or services prior to when they are transferred to the customer. Revenue from these arrangements is recorded on a net basis. Reseller revenue is recognized at a point in time when the products or services are resold to the end customer as there are no outstanding performance obligations under these arrangements after the resale. The revenue for these arrangements is classified as License and Other revenue in the consolidated statements of operations and comprehensive loss. Principal vs. Agent From time to time the Company enters into arrangements with third parties to offer their products both as integrated into the Company’s offerings as well as add-ons for specific configurations with separate pricing. The Company considers the terms of our arrangements and the economics of the transactions with the third parties to determine the nature of our promise to the customer and whether or not the Company has control of the products or services prior to the transfer to the customer. Where we determine that the Company has control and the nature of our promise is to provide the underlying good or service, we recognize revenue on a gross basis (as the principal) and where the nature of the promise is primarily to facilitate the sale, we recognize revenue on a net basis (as the agent). Contract Acquisition Costs Contract and customer acquisition costs, consisting primarily of sales commissions, are incremental and recoverable costs of obtaining a contract. These costs are capitalized using the portfolio approach and are amortized over the expected period of benefit, which is the estimated life of the technology (determined to be approximately 7 years) provided in the underlying contract. The amortization is determined on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. Deferred commissions that will amortize within the next 12-month period are classified as current and included in prepaid expenses and other current assets. The remaining balance is classified as noncurrent and are included in other assets. The Company also applies the practical expedient to expense certain costs as incurred when the amortization period of the underlying asset is expected to be one year or less. The practical expedient typically applies to the Company’s professional services offerings. Deferred Revenue The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when it can contractually invoice a customer and payment will become due solely based on the passage of time, a contract asset when revenue is recognized prior to invoicing and payment is contingent upon transfer of control of another separate performance obligation, or deferred revenue (contract liability) when consideration is received from or amounts are billed to customers which precedes its performance to fully satisfy the associated performance obligation(s). Deferred revenue primarily results from the revenue from our SaaS offerings that is billed in advance of when such services are provided by the Company. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days for net new contracts. For renewal invoices, the due date is generally the start date of the renewal. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that contracts generally do not include a significant financing component. |
Fair Value Measurements | GAAP guidance for fair value measurements clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels. These levels are determined based on the lowest-level input that is significant to the fair value measurement. Levels within the hierarchy are defined as follows: Level 1 —Unadjusted quoted prices in active markets for identical assets and liabilities; Level 2 —Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable, either directly or indirectly; and Level 3 —Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The estimated fair value of our investments are based on quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. Other than our money market funds, we classify our fixed income investments as having Level 2 inputs. The valuation techniques used to measure the fair value of our investments having Level 2 inputs are determined by third-party pricing services and are derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques. As of December 31, 2023, we do not hold any investments valued with Level 2 or 3 inputs. Additionally, the Company had recognized contingent consideration liability related to the acquisition of Chalk (defined below) which was classified as an accrued expense on the Company’s consolidated balance sheet. In addition, the Company has assumed a contingent consideration liability from the acquisition of SchoolMessenger of $0.6 million, which is classified as a noncurrent liability on the Company’s consolidated balance sheet. The fair value of the contingent consideration liability is based on unobservable inputs, including management estimates and assumptions about future revenues and share price, and therefore, classified as Level 3. See Note 10 for further information regarding the fair value of the contingent consideration liability from Chalk. The recorded amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and accrued expenses and other liabilities approximate the fair values principally because of their short-term nature. Short-term and long-term debt are reported at amortized costs in the Company’s consolidated balance sheets. The remaining financial instruments are reported in the Company’s consolidated balance sheets at amounts that approximate current fair values. |
Concentration of Credit Risk | Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents and accounts receivable. Cash equivalents consist primarily of money-market funds and are considered high investment grade. We place the majority of our cash and cash equivalents with financial institutions that management believes to have high-quality credit. Certain of our cash balances held with a financial institution are in excess of Federal Deposit Insurance Corporation limits. Our investment portfolio consists of investments diversified among security types, industries and issuers. Our investments were held and managed by recognized financial institutions that followed our investment policy with the main objective of preserving capital and maintaining liquidity. The Company maintains an allowance for doubtful accounts receivable based on various factors, including the Company’s review of credit profiles of its customers, contractual terms and conditions, historical payments, and current economic trends. The Company had no customers who accounted for more than 10% of accounts receivable as of December 31, 2023 and December 31, 2022. Since most of these receivables were satisfied in subsequent periods, the Company believes that this does not pose an undue concentration of credit risk on the Company. |
Cash and Cash Equivalents | The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents. Cash equivalents included $5.0 million of money-market funds. The fair value of money-market funds, which was consistent with their carrying value, was determined using unadjusted prices in active, accessible markets for identical assets, and as such, they were classified as Level 1 assets in the fair value hierarchy. |
Accounts Receivable | Accounts receivable primarily includes trade accounts receivable from the Company’s customers. Allowances for doubtful accounts are established based on various factors, including, but not limited to, credit profiles of the Company’s customers, contractual terms and conditions, historical payments, and current economic trends. Accounts receivable are written off or credited on a case-by-case basis, net of any amounts that may be collected. |
Property and Equipment | Property and equipment is stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of software, equipment, and furniture and fixtures which is generally three Significant improvements that substantially extend the useful lives of assets are capitalized. Expenditures for maintenance and repairs are charged to expense as they are incurred. |
Intangible Assets | Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values using the straight-line method designed to match the amortization to the benefits received. |
Leases | Leases Leases arise from contractual obligations that convey the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company determines whether an arrangement is or contains a lease at inception, based on whether there is an identified asset and whether it controls the use of the identified asset throughout the period of use. At lease commencement date, the Company determines lease classification between finance and operating and recognizes an ROU asset and corresponding lease liability. An ROU asset represents our right to use an underlying asset and a lease liability represents our obligation to make payments during the lease term. The lease liability is initially measured as the present value of the remaining lease payments over the lease term. The discount rate used to determine the present value is the Company’s incremental borrowing rate (“IBR”) because the interest rate implicit in the Company’s leases is not readily determinable. The Company estimates its IBR based on the information available at lease commencement date for borrowings with a similar term. The ROU asset is initially measured as the present value of the lease payments, adjusted for initial direct costs, prepaid lease payments to lessors and lease incentives. The operating lease ROU assets and liabilities recognized at January 1, 2022, the adoption date of ASC 842, were based on the present value of lease payments over the remaining lease term as of that date, using the IBR as of that date. The Company elected the practical expedients to not recognize ROU assets and liabilities for leases with a term of less than twelve months and to not separate non-lease components from the associated lease components. The total consideration includes fixed payments and contractual escalation provisions. The Company is responsible for maintenance, insurance, property taxes, and other variable payments, which are expensed as incurred. Some leases include options to renew or terminate. The Company includes the option to renew or terminate in its determination of the lease term when the option is deemed to be reasonably assured to be exercised. The Company accounts for changes in the expected lease term as a modification of the original contract. Operating leases are classified in "Operating lease right-of-use assets", "Operating lease liabilities, current", and "Operating lease liabilities—net of current" on our consolidated balance sheets. |
Capitalized Product Development Costs | The Company’s software development costs are accounted for under the guidance for internal use software. The costs in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs are capitalized if: (1) the costs are direct and incremental and (2) management has determined that it is probable that the project will be completed and the software will be used to perform the function intended. These costs are capitalized until the application is substantially complete and ready for its intended use. Capitalized software development costs are being amortized to cost of revenue on a straight-line basis over five years. Useful lives are reviewed at least annually and adjusted if appropriate. |
Capitalized Cloud Computing Arrangement Implementation Costs | The Company capitalizes certain qualifying costs to implement cloud computing hosting arrangements that are service contracts. Such qualifying costs include direct costs for third-party consulting services, and do not include software maintenance and training costs, which are expensed as incurred. Capitalization of these costs ceases once the software of the hosting arrangement is ready for its intended use. Capitalized costs, net of accumulated amortization, are included in prepaid expenses and non-current assets on the Company’s consolidated balance sheets and amortized to operating expense on a straight-line basis over the expected term of the associated arrangement, including periods that are reasonably expected to be renewed. The amount capitalized is included as a component of net cash used in operating activities in the statements of cash flows. |
Capitalized Interest | Interest is capitalized on the Company’s software and website development. Interest capitalization is based on rates applicable to borrowings outstanding during the period and the balance of qualified assets under development during the period. Capitalized interest is amortized over the useful lives of such assets and the amortization is reported as cost of revenue. |
Goodwill Assets | Goodwill is the excess of the purchase price in a business combination over the fair value of identifiable net assets acquired. Goodwill is subject to periodic testing for impairment. Goodwill is assessed at least annually, but also whenever events or changes in circumstances indicate the carrying values may not be recoverable. Factors that could trigger an impairment review, include (a) significant underperformance relative to historical or projected future operating results; (b) significant changes in the manner of or use of the acquired assets or the strategy for the Company’s overall business; and (c) significant negative industry or economic trends. |
Recoverability of Long-Lived and Intangible Assets | The Company evaluates the recoverability of its long-lived assets, including amortizable intangible and tangible assets in accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets. Long-lived assets are evaluated for impairment at the asset group level, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets or an asset group by determining whether the carrying value of such assets will be recovered through their undiscounted expected future cash flow. If the future undiscounted cash flow is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets No long-lived asset impairment losses were recorded by the Company during any of the periods presented. |
Debt Issuance Costs and Debt Discount | The Company records debt issuance costs as a reduction to the carrying value of the related debt and such amounts are being amortized over the term of the related debt using the straight-line method of amortization, which approximates the effective interest method. Amortization of debt issuance costs are included in interest expense - net on the consolidated statements of operations and comprehensive loss. The Company accounts for the discounts as an adjustment to the carrying amount and then amortizes the discounts over the terms using the effective interest method. |
Business Combinations | The Company accounts for acquisitions under the purchase method of accounting in accordance with ASC 805, Business Combinations. The consolidated statements of operations and compreh ensive loss include the results of operations of the acquirees since the date of acquisition. The net assets of the acquisition with the exception of contract assets and contract liabilities (i.e., deferred revenue) and leases were recorded at their estimated fair values as of the acquisition date. The fair value of the intangible assets is determined using valuation techniques which include the use of a discounted cash flow model in an income or market based valuation approach. Such valuation approaches require management to make significant estimates and assumptions. Significant estimates in valuing certain intangible assets include, but are not limited to, forecasted revenue and expenses, customer attrition rates, useful lives, royalty rates, and discount rates. Contract assets and contract liabilities acquired in a business combination are recognized and measured on the acquisition date in accordance with ASC 606, as if the Company had originated the contracts. Leases acquired in a business combination are recognized and measured on the acquisition date in accordance with ASC 842. The provisional fair values may change as the Company obtains additional information. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent that we identify adjustments to the preliminary purchase price allocation. |
Share-Based Compensation | Prior to the IPO, certain employees were granted unit-based awards by the Company’s predecessor entity, Holdings LLC, as profit interests based on the estimated fair value of the awards at the date of grant. Holdings LLC utilized the Black-Scholes pricing model for determining the estimated fair value of the unit-based awards on the date that the awards are granted. Given the absence of any active market for the shares underlying the awards, the fair value of the awards was determined with input from management and third-party valuations. In connection with the Organizational Transactions, certain of these outstanding unit-based awards were converted into restricted and unrestricted shares and restricted stock units (“RSUs”) of PowerSchool Holdings, Inc. After the IPO, the Company uses the publicly quoted price as reported on the NYSE as the fair value of the restricted shares, unrestricted shares and its RSUs on their respective grant dates. |
Income Taxes and Tax Receivable Agreement | As a result of the Organizational Transactions and the IPO, the Company holds an economic interest in Holdings LLC and consolidates its financial position and results. The remaining ownership of Holdings LLC not held by the Company is considered a non-controlling interest. Holdings LLC is treated as a partnership for income tax reporting purposes. Its members, including the Company, are liable for federal, state, and local income taxes based on their share of Holdings LLC’s taxable income. In addition, the Company is subject to U.S. federal, state, local, and foreign income taxes on the taxable income or loss of certain operating subsidiaries of Holdings LLC that are taxed at the entity level. We account for income taxes under the asset and liability method of accounting. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. We reduce the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that we will not realize some or all of the deferred tax asset. Significant judgment is required in determining the accounting for income taxes. In the ordinary course of business, many transactions and calculations arise where the ultimate tax outcome is uncertain. Our judgments, assumptions and estimates relative to the accounting for income taxes take into account current tax laws, our interpretation of current tax laws, and possible outcomes of future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from our assumptions and estimates used when determining the accounting for income taxes. Such differences, if identified in future periods, could have a material effect on the amounts recorded in our consolidated financial statement . Interest and penalties related to unrecognized tax benefits are recorded as income tax expense. In connection with the Organizational Transactions, the Company entered into a Tax Receivable Agreement (“TRA”) with Topco LLC, Vista Equity Partners, and Onex whereby the Company agreed to pay 85% of the amount of certain tax benefits to such pre-IPO owners. Payments to be made under the TRA will vary depending on several factors, including applicable tax rates and the timing and amount of our future income. The Company accounts for amounts payable under the TRA in accordance with ASC Topic 450, Contingencies. As such, subsequent changes in the fair value of the TRA liability between reporting periods are recognized in the consolidated statement of operations. See Note 17, Income Taxes, for additional information on the TRA. |
Cost of Revenue | The Company includes costs directly related to revenue as a component of cost of revenue. Personnel costs associated with cost of revenue consist of salaries, benefits, bonuses, payroll taxes, and stock-based compensation expense. Subscriptions and support Subscriptions and support cost of revenue consists of costs directly related to subscription services, including personnel costs related to operating data centers and customer support operations, hosting and data center related costs, third-party software licenses, and allocated facilities and overhead costs. Service Service cost of revenue consists of personnel costs related to the delivery of the Company’s service offerings, software, equipment, and information technology related expenses, third-party contractor costs, as well as travel and allocated facilities and overhead costs. License and other License and other cost of revenue consists primarily of personnel costs associated with delivering licenses, hardware, reseller arrangements, and allocated facilities and overhead costs. Depreciation and amortization Depreciation and amortization cost of revenue includes allocated depreciation of its computer and software equipment related to the Company’s customer support operations, hosting and data center related costs, and amortization of the Company’s capitalized product development costs and technology intangible assets. |
Research and Development | Research and development expenses consist primarily of personnel costs and the related overhead costs to support our staff, software and hardware costs, third-party professional fees, and allocated facilities and overhead costs. |
Selling, General, and Administrative | S elling, ge neral, and administrative expenses consist primarily of personnel costs and the related overhead costs to support the Company’s staff across the corporate functions of sales, executive, finance, human resources, information technology, internal operations, and legal, as well as sales commissions, third-party professional fees, bad debt expense, marketing and promotional activities, travel, and allocated costs for facilities and overhead costs. |
Depreciation and Amortization | Depreciation and amortization costs include allocated depreciation of the Company’s property and equipment and amortization of customer relationship and trademark intangible assets. |
Advertising Expense | Advertising costs are expensed as they are incurred. During the years ended December 31, 2023, 2022, and 2021, the Company incurred advertising costs of $9.5 million, $4.9 million, and $4.1 million, respectively. Advertising costs are included within sales, general, and administrative expenses on the consolidated statements of operations and comprehensive loss. |
Foreign Currencies | The functional currency of our foreign entities is the local currency. Monetary assets and liabilities and transactions denominated in currencies other than an entity’s functional currency are remeasured into its functional currency using current exchange rates, whereas non-monetary assets and liabilities are remeasured using historical exchange rates. The gains and losses resulting from such remeasurements are classified within other (income) expenses – net in the Company’s consolidated statements of operations and comprehensive loss in the period of occurrence. The assets and liabilities of our foreign entities are translated into the Company’s reporting currency, U.S. dollars, at exchange rates in effect on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. Equity transactions are translated using the historical exchange rates. Adjustments resulting from translating a foreign entity’s financial statements into U.S. dollars are included in accumulated other comprehensive loss as a separate component of stockholders’/members’ equity. |
Comprehensive Income (Loss) | Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to certain changes that are recorded as an element of stockholders’/members’ equity but are excluded from net loss. The Company’s other comprehensive loss consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency and changes in unrealized loss from investment securities. The Company has disclosed accumulated comprehensive income (loss) as a component of stockholders’/members’ equity. |
Segment Information | Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has one operating and reportable segment. The Company does not have material long-lived assets in geographic areas outside of the United States. |
Earnings (Loss) Per Share Attributable to Common Stockholders ("EPS") | Basic earnings (loss) per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of Class A common stock outstanding during each period. The Company does not consider the shares of Class B common stock to be participating securities as the holders of Class B of common stock do not have any right to receive dividends or distributions upon the Company’s liquidation or winding up. Diluted net income (loss) per share attributable to common stockholders is computed by giving effect to all potential shares of common stock, including shares issuable upon conversion of our LLC Units and unvested RSUs and restricted stock awards to the extent they are dilutive. |
Non-Controlling Interest | The Organizational Transactions described in Note 1 were executed concurrently with the IPO. As such, the net effect of these transactions along with accumulated net parent investment balance as of the IPO date was allocated pro rata based on the underlying ownership of shares. Further, due to the Company’s majority economic interest in Holdings LLC and status as its sole manager, the Company consolidates the financial results of Holdings LLC and reports a non-controlling interest on its consolidated statements of operations and comprehensive income (loss), representing the portion of net income (loss) and comprehensive income (loss) attributable to the holders of the minority interest in Holdings LLC subsequent to the IPO. |
Leases, Codification Topic 842
Leases, Codification Topic 842 (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Costs Associated with Exit or Disposal Activities or Restructurings, Policy | 0.3 million |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The Company believes this depicts the nature, amount, timing and uncertainty of revenue and cash flows consistent with how we evaluate our financial statements (in thousands): Year Ended December 31, 2023 2022 2021 SaaS $ 485,913 $ 433,643 $ 368,105 Professional services 72,555 70,402 61,976 Software maintenance 114,276 109,801 109,191 License and other 24,907 16,837 19,326 Total revenue $ 697,651 $ 630,683 $ 558,598 |
Revenue by Geographical Area | Revenue by principal geographic areas based on where the customer is located was as follows (in thousands): Year Ended December 31, 2023 2022 2021 United States $ 648,599 $ 585,253 $ 515,043 Canada 36,271 35,439 35,447 Other 12,781 9,991 8,108 Total revenue $ 697,651 $ 630,683 $ 558,598 |
Schedules of Deferred Revenue | The changes in the deferred revenue balance were as follows (in thousands): December 31, 2023 December 31, 2022 Balance at beginning of period $ 315,839 $ 301,157 Decrease from revenue recognized (311,189) (289,328) Increase from acquisitions 20,526 1,586 Increase from current year net deferred revenue additions 354,607 302,424 Balance at end of period $ 379,783 $ 315,839 |
Contract Cost Assets | Contract cost assets are included in prepaid expenses and other current assets and other assets, respectively, on the consolidated balance sheets as follows (in thousands): December 31, 2023 December 31, 2022 Contract costs, current $ 7,695 $ 6,103 Contract costs, noncurrent 28,473 23,843 Total contract costs $ 36,168 $ 29,946 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable, Net | Accounts receivable, net, is as follows (in thousands): December 31, 2023 December 31, 2022 Accounts receivable $ 84,548 $ 59,008 Less allowance (7,930) (4,712) Accounts receivable—net $ 76,618 $ 54,296 |
Accounts Receivable, Allowance for Credit Loss | The following tables presents the changes in the allowance for doubtful accounts (in thousands): Year Ended December 31, 2023 2022 2021 Allowance for doubtful accounts, beginning balance $ 4,712 $ 4,964 $ 7,869 Additions to (removals from) allowance for doubtful accounts 5,691 131 (2,857) Write-offs of bad debt expense (2,473) (383) (48) Allowance for doubtful accounts, ending balance $ 7,930 $ 4,712 $ 4,964 |
PROPERTY AND EQUIPMENT_NET (Tab
PROPERTY AND EQUIPMENT—NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment by Category | Property and equipment by category are as follows (in thousands): December 31, 2023 December 31, 2022 Computer and software 16,073 16,272 Furniture and fixtures 1,641 1,563 Leasehold improvements 2,387 2,377 Property and equipment 20,101 20,212 Less accumulated depreciation (15,098) (14,039) Property and equipment—net $ 5,003 $ 6,173 |
CAPITALIZED PRODUCT DEVELOPME_2
CAPITALIZED PRODUCT DEVELOPMENT COSTS—NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Research and Development [Abstract] | |
Schedule of Capitalized Product Development Costs | Capitalized product development costs and related accumulated amortization consist of the following (in thousands): December 31, 2023 December 31, 2022 Gross capitalized product development costs $ 194,341 $ 152,663 Less accumulated amortization (82,252) (51,802) Capitalized product development costs—net $ 112,089 $ 100,861 December 31, 2023 Weighted- Average Useful Life December 31, 2022 Weighted- Average Useful Life Intangible Assets—Gross Developed technology $ 321,957 8 years $ 293,599 8 years Customer relationships 791,253 14 years 742,600 14 years Trademarks 61,595 9 years 53,474 9 years Other 259 3 years — $ 1,175,064 $ 1,089,673 Accumulated Amortization Developed technology $ (169,777) $ (134,691) Customer relationships (266,473) (210,120) Trademarks (28,092) (22,715) Other (87) — $ (464,429) $ (367,526) Intangible Assets—Net Developed technology $ 152,180 $ 158,908 Customer relationships 524,780 532,480 Trademarks 33,503 30,759 Other 172 — $ 710,635 $ 722,147 |
Schedule of Estimated Future Amortization of Intangible Assets | Future estimated amortization expense on capitalized product developments projects is expected to be as follows as of December 31, 2023 (in thousands): Year Ending December 31, 2024 32,561 2025 26,028 2026 20,126 2027 12,560 2028 5,261 Thereafter 15,553 Total $ 112,089 The estimated future amortization of intangible assets as of December 31, 2023, is as follows (in thousands): Year Ending December 31, 2024 $ 101,889 2025 101,700 2026 90,546 2027 74,264 2028 72,009 Thereafter 270,227 Total $ 710,635 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amounts of goodwill were as follows (in thousands): Balance—December 31, 2021 $ 2,454,692 Additions due to acquisitions 31,937 Other adjustments 1 378 Balance—December 31, 2022 $ 2,487,007 Additions due to acquisitions 253,486 Other adjustments 1 232 Balance—December 31, 2023 $ 2,740,725 _____________ 1 Includes adjustments of acquisition-date fair value within the one-year measurement period and effects of foreign currency translation. |
OTHER INTANGIBLE ASSETS_NET (Ta
OTHER INTANGIBLE ASSETS—NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Carrying Values of Acquired Intangible Assets | Capitalized product development costs and related accumulated amortization consist of the following (in thousands): December 31, 2023 December 31, 2022 Gross capitalized product development costs $ 194,341 $ 152,663 Less accumulated amortization (82,252) (51,802) Capitalized product development costs—net $ 112,089 $ 100,861 December 31, 2023 Weighted- Average Useful Life December 31, 2022 Weighted- Average Useful Life Intangible Assets—Gross Developed technology $ 321,957 8 years $ 293,599 8 years Customer relationships 791,253 14 years 742,600 14 years Trademarks 61,595 9 years 53,474 9 years Other 259 3 years — $ 1,175,064 $ 1,089,673 Accumulated Amortization Developed technology $ (169,777) $ (134,691) Customer relationships (266,473) (210,120) Trademarks (28,092) (22,715) Other (87) — $ (464,429) $ (367,526) Intangible Assets—Net Developed technology $ 152,180 $ 158,908 Customer relationships 524,780 532,480 Trademarks 33,503 30,759 Other 172 — $ 710,635 $ 722,147 |
Schedule of Amortization Expense of Intangible Assets | The following table summarizes the classification of amortization expense of intangible assets (in thousands): Year Ended December 31, 2023 2022 2021 Cost of revenue $ 35,077 $ 33,989 $ 33,283 Operating expense 61,814 60,246 58,067 Total amortization of acquired intangible assets $ 96,891 $ 94,235 $ 91,350 |
Schedule of Estimated Future Amortization of Intangible Assets | Future estimated amortization expense on capitalized product developments projects is expected to be as follows as of December 31, 2023 (in thousands): Year Ending December 31, 2024 32,561 2025 26,028 2026 20,126 2027 12,560 2028 5,261 Thereafter 15,553 Total $ 112,089 The estimated future amortization of intangible assets as of December 31, 2023, is as follows (in thousands): Year Ending December 31, 2024 $ 101,889 2025 101,700 2026 90,546 2027 74,264 2028 72,009 Thereafter 270,227 Total $ 710,635 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | The following table presents the detail of accrued expenses (in thousands): December 31, 2023 December 31, 2022 Accrued compensation $ 43,075 $ 38,966 Accrued interest 12,654 9,094 Accrued taxes 1,530 2,130 TRA liability, current 21,957 1,862 Other accrued expenses 37,055 32,218 Total accrued expenses $ 116,271 $ 84,270 |
LONG-TERM DEBT AND REVOLVING _2
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Long-Term Debt | The following table presents the outstanding long-term debt (in thousands): December 31, 2023 December 31, 2022 Total outstanding principal—First Lien $ 837,926 $ 744,000 Less current portion of long-term debt (8,379) (7,750) Less unamortized debt discount (4,832) (715) Less unamortized debt issuance costs (13,390) (6,911) Total long-term debt—net $ 811,325 $ 728,624 |
Schedule of Maturities of Long-Term Debt | Maturities on long-term debt outstanding as of December 31, 2023 are as follows (in thousands): Year Ending December 31, 2024 $ 8,379 2025 8,379 2026 8,379 2027 812,789 Total $ 837,926 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments Under Operating Leases | Future minimum lease payments under non-cancelable operating lease agreements as of December 31, 2023 are as follows (in thousands): Year Ending December 31, 2024 $ 5,966 2025 2,607 2026 1,990 2027 1,916 2028 1,907 Thereafter 9,674 Total undiscounted cash flows $ 24,060 Less imputed interest 5,744 Present value of lease liabilities $ 18,316 Weighted average remaining term (years) 7.1 Weighted average discount rate 6.9 % |
Schedule of Other Contractual Obligations | As of December 31, 2023, our future non-cancelable minimum payments due under these contractual obligations with a remaining term of more than one year were as follows (in thousands): Year Ending December 31, 2024 $ 68,504 2025 54,716 2026 39,667 2027 38,056 2028 500 Total $ 201,443 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Unit Activity | RSU and RSA activity for the year ended December 31, 2023 is as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Restricted Stock Awards Weighted Average Grant Date Fair Value Balance—IPO (July 30, 2021) — — — — Granted 6,520,365 $ 24.66 657,661 $ 9.44 Vested — — (218,798) $ 9.20 Canceled (251,288) $ 18.83 — — Balance—December 31, 2021 6,269,077 $ 24.89 438,863 $ 9.56 Granted 5,104,575 $ 17.19 — $ — Vested (1,861,862) $ 25.00 (361,830) $ 9.39 Canceled (1,631,371) $ 21.79 (22,517) $ 15.02 Balance—December 31, 2022 7,880,419 $ 20.52 54,516 $ 8.43 Granted 3,558,873 $ 19.51 — $ — Vested (2,959,959) $ 20.39 (37,986) $ 8.53 Canceled (1,308,545) $ 19.68 — $ — Balance—December 31, 2023 7,170,788 $ 20.22 16,530 $ 8.19 |
Schedule of Share-based Compensation Expense | The following table presents the classification of share-based compensation in the accompanying consolidated statements of operations and comprehensive income (loss) (in thousands): Year-ended December 31, 2023 2022 2021 Cost of revenue Subscriptions and support $ 6,129 $ 5,028 $ 1,634 Service 3,326 3,442 1,922 Research and development 15,350 13,102 5,198 Selling, general, and administrative 36,342 28,695 16,371 Total share-based compensation $ 61,147 $ 50,267 $ 25,125 |
EARNINGS (LOSS) PER SHARE ATT_2
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS (EPS) (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings (Loss) per Share | Year Ended December 31, 2023 2022 2021 Basic net income (loss) per share: Numerator: Net loss $ (39,072) $ (27,741) $ (43,065) Less: net loss attributable to non-controlling interest (7,935) (6,954) (9,296) Net loss attributable to PowerSchool Holdings, Inc., basic (31,137) (20,787) (33,769) Denominator: Weighted average shares of Class A common stock, basic 162,957,390 158,664,189 157,576,056 Net loss attributable to PowerSchool Holdings, Inc. per share of Class A common stock, basic $ (0.19) $ (0.13) $ (0.21) Diluted net income (loss) per share: Numerator: Net loss attributable to PowerSchool Holdings, Inc., basic $ (31,137) $ (20,787) $ (33,769) Adjustment from LLC Units — (6,020) — Net loss attributable to PowerSchool Holdings, Inc., diluted (31,137) (26,807) (33,769) Denominator: Weighted average shares of Class A common stock, basic 162,957,390 158,664,189 157,576,056 Dilutive impact of LLC Units — 39,928,472 — Weighted average shares of Class A common stock, diluted 162,957,390 198,592,661 157,576,056 Net loss attributable to PowerSchool Holdings, Inc. per share of Class A common stock, diluted $ (0.19) $ (0.13) $ (0.21) |
Schedule of Antidilutive Shares | In addition, the following securities were not included in the computation of diluted shares for the years ended December 31, 2023, 2022 and 2021 because they were antidilutive, but could potentially dilute earnings (loss) per share in the future: Year Ended December 31, 2023 2022 2021 Unvested restricted shares and RSUs 7,187,318 7,934,935 6,707,759 LLC units 37,654,059 — 39,928,472 Market share units 474,846 — — Total excluded from diluted EPS calculation 45,316,223 7,934,935 46,636,231 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | The components of loss before provision for income taxes were as follows (in thousands): Year Ended December 31, 2023 2022 2021 United States $ (48,569) $ (47,342) $ (74,863) Foreign 9,021 6,786 9,383 Loss before provision for income taxes $ (39,548) $ (40,556) $ (65,480) |
Schedule of Components of Income Tax Expense (Benefit) | The components of income tax expense (benefit) were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Current: Federal $ 109 $ (444) $ — State (194) 511 490 Foreign 2,604 2,166 2,142 Total current tax 2,519 2,233 2,632 Year Ended December 31, 2023 2022 2021 Deferred: Federal (1,626) (7,526) (21,341) State (137) (6,322) (2,248) Foreign (1,232) (1,200) (1,458) Total deferred tax (2,995) (15,048) (25,047) Total provision for income taxes $ (476) $ (12,815) $ (22,415) |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the income tax expense (benefit) at the U.S. federal statutory rate to the provision for income taxes is as follows: Year Ended December 31, 2023 2022 2021 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % Earnings not subject to tax (14.8) (13.5) (4.7) State tax expense, net of federal benefit (1.2) 8.3 2.8 Foreign earnings taxed at different rate (3.4) (2.1) 0.2 Tax restructurings (13.6) 20.4 — Change in fair value of contingent consideration 1.8 (4.5) — Tax credits 11.7 2.4 — Other items (0.3) (0.4) (2.4) Change in valuation allowance — — 17.3 Effective tax rate 1.2 % 31.6 % 34.2 % |
Schedule of Deferred Tax Assets and Liabilities | The types of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are set forth below (in thousands): As of December 31, 2023 2022 Deferred tax assets: Net operating loss and credit carryforwards 107,969 99,109 Interest expense 30,992 20,058 Lease liability 1,847 731 Other 1,723 1,200 Total gross deferred tax assets 142,531 121,098 Less valuation allowance (479) (449) Total net deferred tax assets 142,052 120,649 Deferred tax liabilities: Investment in partnership (409,355) (396,090) Depreciation and amortization (5,286) (4,275) ROU asset (1,977) (776) Other (750) (822) Total gross deferred tax liabilities (417,368) (401,963) Net deferred tax liability $ (275,316) $ (281,314) |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits, excluding accrued net interest and penalties, is as follows (in thousands): As of December 31, 2023 2022 Gross unrecognized income tax benefits - beginning balance 12,464 7,228 Increase related to tax positions taken during the current year 842 3,082 Increase related to tax positions taken during prior years — 2,657 Decrease related to tax positions taken during prior years (2,400) (35) Increase related to the Organizational Transactions — — Decrease related to the lapse of applicable statute of limitations (468) (468) Gross unrecognized income tax benefits - ending balance 10,438 12,464 |
BUSINESS (Details)
BUSINESS (Details) - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 12 Months Ended | ||||
Sep. 30, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 31, 2024 | Jul. 30, 2021 | |
Class of Stock [Line Items] | ||||||
Underwriting discounts and commissions | $ 0 | $ 295 | $ 11,753 | |||
Class A common stock | ||||||
Class of Stock [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||
Common stock, shares outstanding (in shares) | 159,596,001 | 164,939,296 | ||||
Percentage of voting power | 81.40% | |||||
Class A common stock | IPO | ||||||
Class of Stock [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ 0.0001 | |||||
Class B common stock | ||||||
Class of Stock [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||
Common stock, shares outstanding (in shares) | 39,928,472 | 37,654,059 | ||||
Percentage of voting power | 18.60% |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | |||||
Increase in operating lease, right-of-use assets | $ 15,998 | $ 8,877 | $ 15,998 | $ 8,877 | |
Increase in operating lease liabilities | 18,316 | 18,316 | |||
Decrease in equity | (1,299,827) | (1,299,827) | |||
Goodwill impairment | 0 | 0 | 0 | 0 | |
Finite lived intangible asset impairment losses | $ 0 | $ 0 | 0 | 0 | |
Underwriting discounts and commissions | $ 0 | 295 | $ 11,753 | ||
Payments to affiliates, as a percentage of total tax benefits | 85% | 85% | |||
Advertising expenses | $ 9,500 | 4,900 | 4,100 | ||
Foreign currency exchange gains (losses) | $ 300 | $ 1,100 | $ 200 | ||
Number of operating segments | segment | 1 | ||||
Number of reportable segments | segment | 1 | ||||
Money Market Funds, at Carrying Value | $ 5,000 | $ 5,000 | |||
Technology | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives | 7 years | 7 years | |||
Building | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives | 20 years | 20 years | |||
Software Development | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives | 5 years | 5 years | |||
Minimum | Software, Equipment and Site Improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives | 3 years | 3 years | |||
Minimum | Leasehold Improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives | 1 year | 1 year | |||
Maximum | Software, Equipment and Site Improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives | 10 years | 10 years | |||
Maximum | Leasehold Improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful lives | 9 years | 9 years |
BUSINESS COMBINATIONS - Narrati
BUSINESS COMBINATIONS - Narrative (Details) $ in Thousands | 12 Months Ended | ||||||||||
Jan. 12, 2024 USD ($) | Oct. 02, 2023 USD ($) | Aug. 09, 2023 USD ($) | May 02, 2022 USD ($) | Feb. 01, 2022 USD ($) | Dec. 31, 2023 USD ($) acquisition | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 acquisition | Jun. 01, 2022 USD ($) | Mar. 03, 2021 USD ($) | |
Business Acquisition [Line Items] | |||||||||||
Number of acquisitions | acquisition | 2 | 3 | |||||||||
Acquisition costs | $ 4,280 | $ 2,630 | $ 7,299 | ||||||||
Goodwill | $ 2,740,725 | $ 2,487,007 | $ 2,454,692 | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 3,600 | $ 2,300 | |||||||||
Customer relationships | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 43,600 | ||||||||||
Trademarks | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 8,100 | ||||||||||
Technology-Based Intangible Assets | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 26,500 | ||||||||||
Hobsons, Inc. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Consideration transferred | $ 10,000 | ||||||||||
Acquisition costs | 700 | ||||||||||
Goodwill | 5,700 | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | $ (2,400) | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 6,600 | ||||||||||
Hobsons, Inc. | Customer relationships | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 4,900 | ||||||||||
Hobsons, Inc. | Trademarks | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 10 | ||||||||||
Hobsons, Inc. | Technology-Based Intangible Assets | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 1,800 | ||||||||||
Headed2, LLC | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Consideration transferred | 5,800 | ||||||||||
Acquisition costs | $ 500 | ||||||||||
Goodwill | $ 3,300 | ||||||||||
Chalk.com Education, Inc. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Consideration transferred | 13,500 | ||||||||||
Acquisition costs | 900 | ||||||||||
Goodwill | 10,000 | ||||||||||
Contingent consideration liability | 3,100 | ||||||||||
Payments to Acquire Businesses, Gross | $ 10,400 | ||||||||||
Kinvolved, Inc. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Consideration transferred | $ 23,300 | ||||||||||
Business Combination, Consideration Transferred, Liabilities Incurred | 7,100 | ||||||||||
Acquisition costs | 1,200 | ||||||||||
Goodwill | 18,600 | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 4,500 | ||||||||||
Payments to Acquire Businesses, Gross | $ 16,200 | ||||||||||
SchoolMessenger | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Consideration transferred | $ 5,000 | 300,266 | |||||||||
Business Combination, Consideration Transferred, Liabilities Incurred | 10,000 | ||||||||||
Acquisition costs | 2,300 | ||||||||||
Goodwill | 247,815 | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | 52,451 | ||||||||||
Payments to Acquire Businesses, Gross | $ 290,300 |
BUSINESS COMBINATIONS - Assets
BUSINESS COMBINATIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jan. 12, 2024 | Oct. 02, 2023 | Aug. 09, 2023 | May 02, 2022 | Feb. 01, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Jun. 01, 2022 | Dec. 31, 2021 | Mar. 03, 2021 |
Business Acquisition [Line Items] | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net Assets | $ (200) | $ 200 | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 3,600 | 2,300 | ||||||||
Goodwill | $ 2,740,725 | $ 2,487,007 | $ 2,454,692 | |||||||
Trademarks | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 8,100 | |||||||||
Customer relationships | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 43,600 | |||||||||
Technology-Based Intangible Assets | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 26,500 | |||||||||
Kinvolved, Inc. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 23,300 | |||||||||
Payments to Acquire Businesses, Gross | 16,200 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net Assets | 200 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 4,500 | |||||||||
Goodwill | $ 18,600 | |||||||||
Chalk.com Education, Inc. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | 13,500 | |||||||||
Payments to Acquire Businesses, Gross | 10,400 | |||||||||
Goodwill | $ 10,000 | |||||||||
Headed2, LLC | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 5,800 | |||||||||
Goodwill | $ 3,300 | |||||||||
Hobsons, Inc. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | 10,000 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | $ (2,400) | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 6,600 | |||||||||
Goodwill | 5,700 | |||||||||
Hobsons, Inc. | Trademarks | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 10 | |||||||||
Hobsons, Inc. | Customer relationships | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 4,900 | |||||||||
Hobsons, Inc. | Technology-Based Intangible Assets | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 1,800 | |||||||||
SchoolMessenger | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Consideration transferred | $ 5,000 | 300,266 | ||||||||
Payments to Acquire Businesses, Gross | 290,300 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 14,027 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets | (1,128) | |||||||||
Business Combination, Recognized Identifiable Asset Acquired and Liability Assumed, Lease Obligation | (409) | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities | (539) | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Deferred Revenue | (30,240) | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | 52,451 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 63 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Assets | 409 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable | 2,326 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities | (2,169) | |||||||||
Goodwill | 247,815 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 93,827 | |||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities | $ (5,693) |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 697,651 | $ 630,683 | $ 558,598 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 648,599 | 585,253 | 515,043 |
Canada | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 36,271 | 35,439 | 35,447 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 12,781 | 9,991 | 8,108 |
SaaS | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 485,913 | 433,643 | 368,105 |
Professional services | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 72,555 | 70,402 | 61,976 |
Software maintenance | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 114,276 | 109,801 | 109,191 |
License and other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 24,907 | $ 16,837 | $ 19,326 |
REVENUE - Changes in Deferred R
REVENUE - Changes in Deferred Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2020 | |
Contract with Customer, Liability [Roll Forward] | ||
Balance at beginning of period | $ 315,839 | |
Decrease from revenue recognized | (311,189) | $ (289,328) |
Increase from acquisitions | 20,526 | 1,586 |
Increase from current year net deferred revenue additions | 354,607 | $ 302,424 |
Balance at end of period | $ 379,783 |
REVENUE - Performance Obligatio
REVENUE - Performance Obligations (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Dec. 31, 2023 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Percentage of remaining performance obligations expected to be recognized | 98% |
Performance obligations expected to be recognized, expected timing | 12 months |
REVENUE - Contract Cost Assets
REVENUE - Contract Cost Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |||
Contract costs, current | $ 7,695 | $ 6,103 | |
Contract costs, noncurrent | 28,473 | 23,843 | |
Total contract costs | 36,168 | 29,946 | |
Amortization expense for contract costs | $ 6,500 | $ 4,700 | $ 3,400 |
ACCOUNTS RECEIVABLE - Schedule
ACCOUNTS RECEIVABLE - Schedule of Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | ||||
Accounts receivable | $ 84,548 | $ 59,008 | ||
Less allowance | (7,930) | (4,712) | $ (4,964) | $ (7,869) |
Accounts receivable—net | $ 76,618 | $ 54,296 |
ACCOUNTS RECEIVABLE - Schedul_2
ACCOUNTS RECEIVABLE - Schedule of Allowance for Credit Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for doubtful accounts, beginning balance | $ 4,712 | $ 4,964 | $ 7,869 |
Additions to (removals from) allowance for doubtful accounts | 5,691 | 131 | (2,857) |
Write-offs of bad debt expense | (2,473) | (383) | (48) |
Allowance for doubtful accounts, ending balance | $ 7,930 | $ 4,712 | $ 4,964 |
PROPERTY AND EQUIPMENT_NET (Det
PROPERTY AND EQUIPMENT—NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment | $ 20,101 | $ 20,212 | |
Less accumulated depreciation | (15,098) | (14,039) | |
Property and equipment—net | 5,003 | 6,173 | |
Depreciation | 3,400 | 4,800 | $ 6,500 |
Property, Plant and Equipment, Disposals | 1,000 | ||
Computer and software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 16,073 | 16,272 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 1,641 | 1,563 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | $ 2,387 | $ 2,377 |
CAPITALIZED PRODUCT DEVELOPME_3
CAPITALIZED PRODUCT DEVELOPMENT COSTS—NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||
Gross capitalized product development costs | $ 194,341 | $ 152,663 | |
Less accumulated amortization | (82,252) | (51,802) | |
Capitalized product development costs—net | 112,089 | 100,861 | |
Capitalized Computer Software, Amortization Expense, Maturity Schedule [Abstract] | |||
45291 | 101,889 | ||
2024 | 101,700 | ||
2025 | 90,546 | ||
2026 | 74,264 | ||
2027 | 72,009 | ||
2028 | 270,227 | ||
Thereafter | 710,635 | 722,147 | |
Capitalized Product Development Projects | |||
Capitalized Computer Software, Amortization Expense, Maturity Schedule [Abstract] | |||
45291 | 32,561 | ||
2024 | 26,028 | ||
2025 | 20,126 | ||
2026 | 12,560 | ||
2027 | 5,261 | ||
2028 | 15,553 | ||
Thereafter | 112,089 | ||
Capitalized Computer Software, Amortization | $ 30,400 | $ 23,200 | $ 15,700 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 2,487,007 | $ 2,454,692 |
Additions due to acquisitions | 253,486 | 31,937 |
Other adjustments | 232 | 378 |
Ending balance | $ 2,740,725 | $ 2,487,007 |
OTHER INTANGIBLE ASSETS_NET - C
OTHER INTANGIBLE ASSETS—NET - Carrying Values of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets—Gross | $ 1,175,064 | $ 1,089,673 |
Accumulated Amortization | (464,429) | (367,526) |
Thereafter | 710,635 | 722,147 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets—Gross | 321,957 | 293,599 |
Accumulated Amortization | (169,777) | (134,691) |
Thereafter | $ 152,180 | $ 158,908 |
Weighted- Average Useful Life | 8 years | 8 years |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets—Gross | $ 791,253 | $ 742,600 |
Accumulated Amortization | (266,473) | (210,120) |
Thereafter | $ 524,780 | $ 532,480 |
Weighted- Average Useful Life | 14 years | 14 years |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets—Gross | $ 61,595 | $ 53,474 |
Accumulated Amortization | (28,092) | (22,715) |
Thereafter | $ 33,503 | $ 30,759 |
Weighted- Average Useful Life | 9 years | 9 years |
License and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets—Gross | $ 259 | |
Accumulated Amortization | (87) | |
Thereafter | $ 172 | |
Weighted- Average Useful Life | 3 years |
OTHER INTANGIBLE ASSETS_NET - A
OTHER INTANGIBLE ASSETS—NET - Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization of acquired intangible assets | $ 96,891 | $ 94,235 | $ 91,350 |
Cost of revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization of acquired intangible assets | 35,077 | 33,989 | 33,283 |
Selling, general, and administrative | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization of acquired intangible assets | $ 61,814 | $ 60,246 | $ 58,067 |
OTHER INTANGIBLE ASSETS_NET - E
OTHER INTANGIBLE ASSETS—NET - Estimated Future Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
45291 | $ 101,889 | |
2024 | 101,700 | |
2025 | 90,546 | |
2026 | 74,264 | |
2027 | 72,009 | |
2028 | 270,227 | |
Thereafter | $ 710,635 | $ 722,147 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 43,075 | $ 38,966 |
Accrued interest | 12,654 | 9,094 |
Accrued taxes | 1,530 | 2,130 |
Other accrued expenses | 37,055 | 32,218 |
Total accrued expenses | 116,271 | 84,270 |
Other Liabilities, Fair Value Disclosure | 0 | 3,801 |
Contingent Consideration, Acquisition Date Fair Value | 10,079 | |
Payment for Contingent Consideration Liability, Investing Activities | (3,528) | (1,392) |
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | (273) | (4,886) |
Tax Receivable Agreement liability, current | $ 21,957 | $ 1,862 |
Leases, Codification Topic 84_2
Leases, Codification Topic 842 (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 03, 2023 | |
Leases [Abstract] | ||||
Operating Lease, Cost | $ 4,521 | $ 13,404 | ||
Short-term Lease, Cost | 28 | 197 | ||
Variable Lease, Cost | 1,166 | 1,486 | ||
Lease, Cost | 5,715 | 15,087 | ||
Operating Lease, Payments | 5,723 | 9,577 | ||
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 10,874 | 5,484 | ||
Lessee, Operating Lease, Liability, to be Paid, Year Two | 2,607 | |||
Lessee, Operating Lease, Liability, to be Paid, Year Three | 1,990 | |||
Lessee, Operating Lease, Liability, to be Paid, Year Four | 1,916 | |||
Lessee, Operating Lease, Liability, to be Paid, Year Five | 1,907 | |||
Lessee, Operating Lease, Liability, to be Paid, after Year Five | 9,674 | |||
Lessee, Operating Lease, Liability, to be Paid | 24,060 | |||
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | 5,744 | |||
Increase in operating lease liabilities | $ 18,316 | |||
Operating Lease, Weighted Average Remaining Lease Term | 7 years 1 month 6 days | |||
Operating Lease, Weighted Average Discount Rate, Percent | 6.90% | |||
Operating Leases, Future Minimum Payments Due | $ 17,200 | |||
Rent expense | 5,500 | $ 8,200 | ||
Increase in operating lease, right-of-use assets | $ 15,998 | 8,877 | ||
Operating Lease, Impairment Loss | 7,600 | |||
Lessee, Operating Lease, Liability, to be Paid, Year One | 5,966 | |||
Rent expense | 4,600 | |||
Lessee, Lease, Description [Line Items] | ||||
Lessee, Operating Lease, Liability, to be Paid | 24,060 | |||
Increase in operating lease liabilities | 18,316 | |||
Increase in operating lease, right-of-use assets | $ 15,998 | $ 8,877 | ||
Iris lease | ||||
Leases [Abstract] | ||||
Lessee, Operating Lease, Liability, to be Paid | $ 18,000 | |||
Increase in operating lease liabilities | 12,200 | |||
Increase in operating lease, right-of-use assets | 12,300 | |||
Lessee, Lease, Description [Line Items] | ||||
Lessee, Operating Lease, Liability, to be Paid | 18,000 | |||
Increase in operating lease liabilities | 12,200 | |||
Increase in operating lease, right-of-use assets | $ 12,300 |
LONG-TERM DEBT AND REVOLVING _3
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT - Narrative (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||
Oct. 12, 2023 USD ($) | Jul. 31, 2023 USD ($) | Aug. 01, 2018 USD ($) | Jan. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Oct. 02, 2023 | Jul. 30, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 840,100 | ||||||||
Debt discounts | 4,832 | $ 715 | |||||||
Debt issuance costs | 13,390 | 6,911 | |||||||
Borrowings from revolving credit facility | $ 95,000 | ||||||||
Gain (Loss) on Extinguishment of Debt | 96 | 0 | $ 12,905 | ||||||
Debt Instrument, Periodic Payment | 2,100 | ||||||||
Payment of debt issuance costs | $ 13,100 | $ 800 | 15,708 | $ 0 | $ 2,823 | ||||
Line of Credit Facility, Increase (Decrease), Net | $ 100,000 | ||||||||
Long-Term Debt, Maturity, Year Four | $ 812,789 | ||||||||
Secured Debt | First Lien | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount | $ 775,000 | ||||||||
Percentage of principal due quarterly | 0.25% | ||||||||
Secured Debt | First Lien | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin | 3.25% | ||||||||
Interest rate | 8.38% | 7.09% | |||||||
Line of Credit | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 400,000 | $ 289,000 | |||||||
Borrowings from revolving credit facility | $ 40,000 | ||||||||
Commitment fee percentage | 0.50% | ||||||||
First lien net coverage ratio | 7.75 | ||||||||
Outstanding balance as a percentage of borrowing capacity | 35% | 35% | 35% | ||||||
Line of Credit | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin | 3.25% | ||||||||
Step-down percentage | 0.50% |
LONG-TERM DEBT AND REVOLVING _4
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT - Schedule of Outstanding Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Less current portion of long-term debt | $ (8,379) | $ (7,750) |
Less unamortized debt discount | (4,832) | (715) |
Less unamortized debt issuance costs | (13,390) | (6,911) |
Total long-term debt—net | 811,325 | 728,624 |
Secured Debt | First Lien | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 837,926 | $ 744,000 |
LONG-TERM DEBT AND REVOLVING _5
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENT - Maturities of Long-Term Debt (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Maturities of Long-term Debt [Abstract] | |
2024 | $ 8,379 |
2025 | 8,379 |
2026 | 8,379 |
Long-Term Debt, Maturity, Year Four | 812,789 |
Total | $ 837,926 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies [Line Items] | ||
Rent expense | $ 4.6 | |
Estimated liability for incurred, but not reported, medical claims | 1.6 | $ 2.2 |
Data Center, Cloud Hosting Arrangements and Other Services | ||
Commitments and Contingencies [Line Items] | ||
Remaining aggregate minimum purchase commitment | $ 201.4 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
Lessee, Operating Lease, Liability, to be Paid, Year One | $ 5,966 |
Lessee, Operating Lease, Liability, to be Paid, Year Two | 2,607 |
Lessee, Operating Lease, Liability, to be Paid, Year Three | 1,990 |
Lessee, Operating Lease, Liability, to be Paid, Year Four | 1,916 |
Lessee, Operating Lease, Liability, to be Paid, Year Five | 1,907 |
Lessee, Operating Lease, Liability, to be Paid, Total | $ 24,060 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Other Contractual Obligations (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Other Commitment, Fiscal Year Maturity [Abstract] | |
2024 | $ 68,504 |
2025 | 54,716 |
2026 | 39,667 |
2027 | 38,056 |
2028 | 500 |
Total | $ 201,443 |
STOCKHOLDERS_ EQUITY AND NON-_2
STOCKHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST (Details) - $ / shares | 2 Months Ended | ||||
Sep. 30, 2021 | Jan. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Jul. 27, 2021 | |
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized (in shares) | 50,000,000 | ||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||||
PowerSchool Holdings, LLC | |||||
Class of Stock [Line Items] | |||||
Non-controlling interest percentage | 18.60% | ||||
Class A common stock | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Common stock, shares issued (in shares) | 164,796,626 | 159,596,001 | |||
Common stock, shares outstanding (in shares) | 164,939,296 | 159,596,001 | |||
Percentage of voting power | 81.40% | ||||
Class B common stock | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |||
Common stock, shares issued (in shares) | 39,928,472 | ||||
Common stock, shares outstanding (in shares) | 37,654,059 | 39,928,472 | |||
Percentage of voting power | 18.60% |
SHARE-BASED COMPENSATION - Narr
SHARE-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 5 Months Ended | 12 Months Ended | |||
Jul. 30, 2021 | Mar. 31, 2023 | Dec. 31, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation expense | $ 61,147 | $ 50,267 | $ 25,125 | |||
Future compensation cost related to unvested units | $ 140,200 | |||||
Future compensation cost recognition period | 2 years 6 months | |||||
Share-based Payment Arrangement, Amount Capitalized | $ 2,900 | $ 3,100 | $ 1,500 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 58% | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 3.70% | |||||
Aggregate intrinsic value (in USD) | $ 12,600 | |||||
Management Incentive Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Units granted (in shares) | 474,846 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 474,846 | 0 | ||||
Vested (in shares) | 0 | |||||
Units canceled (in shares) | 0 | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 26.64 | $ 0 | ||||
Units granted (in dollars per share) | 26.64 | |||||
Weighted-average grant date-fair value, vested (in dollars per share) | $ 0 | |||||
Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Units granted (in shares) | 6,520,365 | 3,558,873 | 5,104,575 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 0 | 6,269,077 | 7,170,788 | 7,880,419 | 6,269,077 | |
Vested (in shares) | (2,959,959) | (1,861,862) | ||||
Units canceled (in shares) | (251,288) | (1,308,545) | (1,631,371) | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 24.89 | $ 20.22 | $ 20.52 | $ 24.89 | ||
Units granted (in dollars per share) | $ 24.66 | 19.51 | 17.19 | |||
Weighted-average grant date-fair value, vested (in dollars per share) | $ 20.39 | $ 25 | ||||
Restricted Stock Units | 2021 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 4 years | |||||
Shares reserved for future issuance (in shares) | 19,315,000 | |||||
Vesting percentage | 25% | |||||
market share award | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation expense | $ 4,000 |
SHARE-BASED COMPENSATION - Sche
SHARE-BASED COMPENSATION - Schedule of MIU Activity (Details) - Management Incentive Units - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Number of Underlying Units | ||
Beginning balance (in shares) | 0 | |
Units granted (in shares) | 474,846 | |
Units canceled (in shares) | 0 | 0 |
Ending balance (in shares) | 474,846 | 0 |
Number of underlying units, vested (in shares) | 0 | |
Weighted-Average Grant-Date Fair Value | ||
Beginning balance (in dollars per share) | $ 0 | |
Units granted (in dollars per share) | 26.64 | |
Ending balance (in dollars per share) | 26.64 | $ 0 |
Weighted-average grant date-fair value, vested (in dollars per share) | $ 0 |
SHARE-BASED COMPENSATION - Sc_2
SHARE-BASED COMPENSATION - Schedule of Restricted Stock Unit and Restricted Stock Awards Activity (Details) - $ / shares | 5 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Stock Units | ||||
Restricted Stock Units | ||||
Beginning balance (in shares) | 0 | 7,880,419 | 6,269,077 | |
Granted (in shares) | 6,520,365 | 3,558,873 | 5,104,575 | |
Vested (in shares) | (2,959,959) | (1,861,862) | ||
Canceled (in shares) | (251,288) | (1,308,545) | (1,631,371) | |
Ending balance (in shares) | 6,269,077 | 7,170,788 | 7,880,419 | 6,269,077 |
Weighted Average Grant Date Fair Value | ||||
Beginning balance (in dollars per share) | $ 20.52 | $ 24.89 | ||
Granted (in dollars per share) | $ 24.66 | 19.51 | 17.19 | |
Vested (in dollars per share) | 20.39 | 25 | ||
Canceled (in dollars per share) | 18.83 | 19.68 | 21.79 | |
Ending balance (in dollars per share) | $ 24.89 | $ 20.22 | $ 20.52 | $ 24.89 |
Restricted Stock Awards | ||||
Restricted Stock Units | ||||
Beginning balance (in shares) | 0 | 54,516 | 438,863 | |
Granted (in shares) | 657,661 | 0 | 0 | |
Vested (in shares) | (218,798) | (37,986) | (361,830) | |
Canceled (in shares) | 0 | 0 | (22,517) | |
Ending balance (in shares) | 438,863 | 16,530 | 54,516 | 438,863 |
Weighted Average Grant Date Fair Value | ||||
Beginning balance (in dollars per share) | $ 0 | $ 8.43 | $ 9.56 | |
Granted (in dollars per share) | 9.44 | 0 | $ 0 | |
Vested (in dollars per share) | 9.20 | 8.53 | 9.39 | |
Canceled (in dollars per share) | 0 | 0 | 15.02 | |
Ending balance (in dollars per share) | $ 9.56 | $ 8.19 | $ 8.43 | $ 9.56 |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation | $ 61,147 | $ 50,267 | $ 25,125 |
Cost of revenue | Subscriptions and support | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation | 6,129 | 5,028 | 1,634 |
Cost of revenue | Service | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation | 3,326 | 3,442 | 1,922 |
Research and development | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation | 15,350 | 13,102 | 5,198 |
Selling, general, and administrative | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total share-based compensation | $ 36,342 | $ 28,695 | $ 16,371 |
EARNINGS (LOSS) PER SHARE ATT_3
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS (EPS) - Schedule of Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Jul. 30, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | |||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (41,556) | $ (1,509) | $ (39,072) | $ (27,741) | $ (43,065) |
Less: Net loss attributable to non-controlling interest | $ (7,935) | $ (6,954) | $ (9,296) | ||
Denominator: | |||||
Weighted average shares of Class A common stock outstanding - basic (in shares) | 162,957,390 | 158,664,189 | 157,576,056 | ||
Unvested RSAs and RSUs (in shares) | 0 | 39,928,472 | 0 | ||
Weighted average shares of Class A common stock outstanding - diluted (in shares) | 162,957,390 | 198,592,661 | 157,576,056 | ||
Net loss attributable to the PowerSchool Holdings, Inc. per share of Class A common stock - basic (in dollars per share) | $ (0.19) | $ (0.13) | $ (0.21) | ||
Net loss attributable to the PowerSchool Holdings, Inc. per share of Class A common stock - diluted (in dollars per share) | $ (0.19) | $ (0.13) | $ (0.21) | ||
Net Income (Loss) Available to Common Stockholders, Basic | $ (31,137) | $ (20,787) | $ (33,769) | ||
Participating Securities, Distributed and Undistributed Earnings (Loss), Diluted | 0 | (6,020) | 0 | ||
Net Income (Loss) Available to Common Stockholders, Diluted | $ (31,137) | $ (26,807) | $ (33,769) |
EARNINGS (LOSS) PER SHARE ATT_4
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS (EPS) - Schedule of Antidilutive Shares (Details) - shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total excluded from diluted EPS calculation (in shares) | 45,316,223 | 7,934,935 | 46,636,231 |
Unvested restricted shares and RSUs | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total excluded from diluted EPS calculation (in shares) | 7,187,318 | 7,934,935 | 6,707,759 |
LLC units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total excluded from diluted EPS calculation (in shares) | 37,654,059 | 0 | 39,928,472 |
Market Share Units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total excluded from diluted EPS calculation (in shares) | 474,846 | 0 | 0 |
INCOME TAXES - Income (Loss) be
INCOME TAXES - Income (Loss) before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 01, 2023 | |
Income Tax Disclosure [Abstract] | ||||
United States | $ (48,569) | $ (47,342) | $ (74,863) | |
Foreign | 9,021 | 6,786 | 9,383 | |
Loss before income taxes | (39,548) | (40,556) | (65,480) | |
Operating loss carryfowards, federal | 409,800 | |||
Operating loss carryfowards, state | 20,200 | |||
Unrecognized tax benefits | $ 10,438 | $ 12,464 | $ 7,228 | $ 12,464 |
INCOME TAXES - Schedule of Inco
INCOME TAXES - Schedule of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | |||
Federal | $ 109 | $ (444) | $ 0 |
State | (194) | 511 | 490 |
Foreign | 2,604 | 2,166 | 2,142 |
Total current tax | 2,519 | 2,233 | 2,632 |
Deferred: | |||
Federal | (1,626) | (7,526) | (21,341) |
State | (137) | (6,322) | (2,248) |
Foreign | (1,232) | (1,200) | (1,458) |
Total deferred tax | (2,995) | (15,048) | (25,047) |
Total provision for income taxes | $ (476) | $ (12,815) | $ (22,415) |
INCOME TAXES - Effective Income
INCOME TAXES - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
U.S. federal statutory rate | 21% | 21% | 21% |
Earnings not subject to tax | (14.80%) | (13.50%) | (4.70%) |
State tax expense, net of federal benefit | (1.20%) | 8.30% | 2.80% |
Foreign earnings taxed at different rate | (3.40%) | (2.10%) | 0.20% |
Effective Income Tax Rate Reconciliation, Acquisition, Percent | (13.60%) | 20.40% | 0% |
Effective Income Tax Rate Reconciliation, change in fair value, Percent | 1.80% | (4.50%) | 0% |
Effective Income Tax Rate Reconciliation, Tax Credit, Percent | 11.70% | 2.40% | 0% |
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent | (0.30%) | (0.40%) | (2.40%) |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | 0% | 0% | 17.30% |
Effective tax rate | 1.20% | 31.60% | 34.20% |
INCOME TAXES - Schedule of Sign
INCOME TAXES - Schedule of Significant Components of Net Deferred Tax Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Net operating loss and credit carryforwards | $ 107,969 | $ 99,109 |
Interest expense | 30,992 | 20,058 |
Operating lease liabilities | 1,847 | 731 |
Other | 1,723 | 1,200 |
Total gross deferred tax assets | 142,531 | 121,098 |
Less valuation allowance | (479) | (449) |
Total net deferred tax assets | 142,052 | 120,649 |
Deferred tax liabilities: | ||
Investment in partnership | (409,355) | (396,090) |
Depreciation and amortization | (5,286) | (4,275) |
Deferred Tax Liabilities, leases | (1,977) | (776) |
Other | (750) | (822) |
Total gross deferred tax liabilities | (417,368) | (401,963) |
Net deferred tax liability | $ (275,316) | $ (281,314) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Jan. 01, 2023 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Unrecognized tax benefits | $ 10,438 | $ 12,464 | $ 12,464 | $ 7,228 |
Payments to affiliates, as a percentage of total tax benefits | 85% | |||
Remaining percentage of tax benefits | 15% | |||
Liability recorded under tax receivable agreement | $ 22,000 | |||
Income Tax Examination, Non-Current Liability | 396,400 | |||
Related Party Tax Expense Effect of Change in Allocation Methodology | $ (3,264) | $ 7,788 |
INCOME TAXES - Schedule of Unre
INCOME TAXES - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Gross unrecognized income tax benefits - beginning balance | $ 12,464 | $ 7,228 |
Increase related to tax positions taken during the current year | 842 | 3,082 |
Gross increases – tax positions in prior period | 0 | 2,657 |
Unrecognized Tax Benefits, Decrease Resulting from Prior Period Tax Positions | (2,400) | (35) |
Increase related to the Organizational Transactions | 0 | 0 |
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | (468) | (468) |
Gross unrecognized income tax benefits - ending balance | $ 10,438 | $ 12,464 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Mar. 03, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Consulting and Implementation Services | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Purchases from related parties | $ 0.3 | $ 0.4 | $ 0.5 | |
Consulting and Implementation Services | Onex Partners Manager LP | ||||
Related Party Transaction [Line Items] | ||||
Amount of transactions with related parties | 0.1 | |||
Consulting and Implementation Services | Affiliated Entity with Common Ownership | ||||
Related Party Transaction [Line Items] | ||||
Purchases from related parties | 3.4 | 3.9 | $ 2.9 | |
Amount of transactions with related parties | (0.2) | (0.5) | ||
Reseller Agreement | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Term of related party agreement | 10 years | |||
Amount of transactions with related parties | $ 36.8 | |||
Costs and Expenses, Related Party | 14.5 | $ 12 | ||
Secondary offering | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Costs and Expenses, Related Party | $ 1.4 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |||
Employer matching contributions | $ 10.2 | $ 10 | $ 8.8 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands | 1 Months Ended | ||||
Jan. 22, 2024 | Jan. 12, 2024 | Oct. 02, 2023 | Feb. 01, 2022 | Jan. 31, 2024 | |
Subsequent Event [Line Items] | |||||
Borrowings from revolving credit facility | $ 95,000 | ||||
Kinvolved, Inc. | |||||
Subsequent Event [Line Items] | |||||
Consideration transferred | $ 23,300 | ||||
Allovue | |||||
Subsequent Event [Line Items] | |||||
Consideration transferred | $ 42,000 | ||||
SchoolMessenger | |||||
Subsequent Event [Line Items] | |||||
Consideration transferred | $ 5,000 | $ 300,266 |
Uncategorized Items - pwsc-2023
Label | Element | Value |
Contract with Customer, Liability | us-gaap_ContractWithCustomerLiability | $ 301,157,000 |