PWSC - Earnings call transcript Q2 2022 | PowerSchool Holdings, Inc.

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Operator

Good afternoon and evening, everyone, and welcome to PowerSchool's Second Quarter 2022 Earnings Call.

As a reminder, today's call is being recorded, and your participation implies consent to such recording. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] With that, I would like to turn the call over to Shane Harrison, Senior Vice President of Investor Relations. ahead. go Please

Shane Harrison

we Thank accompanies conference operator. XX, joining for of know us I the deck Thank Relations remarks Investor for you here. the earnings section that you let call to website June a second PowerSchool's slide wanted to that you, our first for posted our quarter XXXX. ended

On Shander. and CFO, the call Eric today, we have PowerSchool CEO, Hardeep Gulati;

to call, the started, I'd future forward-looking forward-looking like including this the get that include therefore Q&A we our Before statements for emphasize related expected results are company may portion, to and statements.

materially Our other actual uncertainties results our SEC will also filings. are described to to may and to risks subject differ a risks number Today's financial and remarks uncertainties. in are The measures. references from of include our and due release non-GAAP statements forward-looking that projections earnings

both non-GAAP the Additional information presentation, in corresponding information, also press financial release is to this be website call replay to will of website. the are PowerSchool's reconciliations definitions results provided and financial information at investors.powerschool.com. the posted posted including and A same Investor Relations between GAAP which

now over turn the Hardeep. me to Let call

Hardeep Gulati

new to showcase momentum growth quarter was you, you, afternoon. acceleration second Thank joining wins. see customer success quarter for was logo record-setting with the a and we the that continue us in a strategy, thank for of have we PowerSchool's been resounding It this Shane, everyone, and building. base cross-sell our our

the to increased as our financial for Our reflected expectations, our of we strong performance exceeded year guidance. continue this and the rest expect momentum in

and insulation external of secular tailwinds, strong sources economic factors. including that digital provide to ongoing from K-XX Our continues funding target transformation education, and stable market shift large, see the

footprint market momentum our both Our of when are and Unified their expanding testament target to continued value platform. customers growth see the strong the and

reflect by success results, saw themes I on mind. to We in QX. as are excited come we the key And the three

growth. expanding momentum margins financial saw and in we First, strong

the further momentum million financial product we I'll customer ARR $XXX our momentum to opportunities cross-sell quarter. total We momentum of with our strongest on the great QX. begin And $XXX X saw also we support and on of a grew in revenue in XX% adjusted we lastly, year-over-year. our comprehensive platform representing expand subscriptions with X% of in IPO. and our increased capitalizing million, XX%, continued Second, of have achieved reached Slide basis, the resulting ever on we suite. and margin which $XX revenue improved highest a Profitability XX% a sequentially. sequential EBITDA margin year-over-year have quarter full ARR since by million,

COVID a technologies the our the margins. product compelling our highest continue customer visibility of growth cross-sell We ARR in you to deliver even a with ever with combination the saw tremendous will spiked. X, higher Slide see levels quarter. the we We profit was in than of portfolio. momentum growth by demand driven high onset reached On for This Classroom at quarter, success across strong

expand For XXX,XXX an districts with customer that including our District us system. in of student students largest example, in to Peel the adding Ontario is products, Canada, with chose School one additional existing six by K-XX information Board,

added Assessment LMS Another with Tennessee, replaced of to support good in of and solution already System our the a take recognizing the a platform they've behavior is suite. SIS, County our completing classroom Clarksville-Montgomery value advantage a new example of integrated for customer Talent, customer Naviance full School Schoology and also products,

to that platform efficiencies, student and administrators, wins. in embrace we our new increase another drive logo powerful On data success and see quarter insights families. This XX% base advance the XX,XXX operational over great districts we over customer technologies year-over-year of expansion increasingly front, to our growth provide customer integrated had helped as and teachers with future school

Corporation School Vanderburgh Evansville including like customers students. new Talent who XX,XXX Naviance in large bought their nine SIS, for products, Indiana, seeing and are We

frame. large Additionally, Unified that growing Maarif Classroom Education, key Saudi internationally, customer bringing best-in-class reason and XX% behind the suite. success these ARR customer in sequential seen new the PowerSchool one we the suite. decision platform, A best only all a who This even Arabia, since sequentially full international purchased ARR the have The growth growth SIS growth and in mid-XXXX another win was including sequential is of with team shows was provider of and our our had the administration COVID-driven our our organic capabilities year-over-year in comprehensive NRR. time X%

NRR year. grew basis a combined QX cross-selling improvement our Our with customer in XX from strong point XXX.X%, improvement to this retention of

learning the seen, management students including enter transformation and engaged gaps that excess empowering funding, features. ever environment we a With a larger have are significantly boosted we second opportunities some accelerating talent and see by we stimulus half, better help digital funding of operations, into address plans As deals. better districts for and strong insight their getting in large pipeline classroom

the will required Society platform and known products that innovative introducing you at types help connects QX, organic MTSS a annual industry-leading support X, the and for system Last boost student tuck-in As completing we by of new intervention ever-evolving Technology multitiered Slide Unified and to all as view plans support child to acquisition the districts solve MTSS for actionable an new conference, students. offers success continued challenges. and in their Education have and support, of of all see ISTE whole or strategic expansion data our month, personalized end educators. across since of align for create International levels we introduced product the to highly

rich see with students analytics organically contract of leader. Insight clear demand analytics top multimillion great traction built that the benefit a Insights strong engine continues product, has which with this that Maryland across of was are become Education to on our for In seeing will secured a dollar and we from early Unified state. state-wide the Department QX, Unified We market XXX,XXX

solution platform, schools. week for further early Connected to CCLR that career, initiatives, position for and of of schools. district pathway students portals planning for technical military are capabilities We one childhood from We able well unify education CCLR new providing carrier success supports internal solution data acquisition HeadedX, with exploration Education Having expands offering customer managed for college Innovation Pennsylvania. as ability to launching to a K-XX consecutive and lifelong all but students record-breaking data also and and futures. XX last Council of and fully states the in state-level our as contracts state-specific to our be to our setting statewide our Snowflake, very including financial adulthood the invested the will for agencies elementary connect Conference, by the and resulted solution by powered education for profitability acquisition external initial This our quarter complementary secure second us continuing tuck-in comprehensive under economic Data-as-a-Service in small differentiate half. all and QX, Intelligence success our a Naviance life readiness in analytics at and California, has expansion with up ages, strong and our fourth exceed platform well further social and all solution guidance helping data and positive Nevada first This us

of anniversary marked one-year July IPO. PowerSchool the the fact, In

continued and step to like students. world to major progress how the and a I the educates opportunity was summarize near- our would journey opportunity on redefine in PowerSchool take long-term public the K-XX Going our we a supports to growth differentiators four platform I'll with to Unified unmatched products, our Since progression personalized XX vision. XX we IPO. highlighted have start On the unique the X, our learning during key from our Slide IPO, platform. expanded towards

investment and address further our the platform support, automation, connected accelerated drive complementary and to holistic strategies, engine in curriculum management, and adoption of the of behavior MTSS needs strengthened for to unified personalization. efficiency communication, innovation Our intelligence solutions and our have districts differentiation

key Our second our is customer base. scale differentiator

since the amassed that technology XX,XXX and outside ahead We go-to-market opportunity through students of North with Tremendous IPO K-XX particularly operations nearly investments. X.X of customers America. high-return billion added still live effective having is have market us, X,XXX

U.S. are American in strategic Latin those we'll outside We feet the East, strong and investments markets. to build successes and India, are and XX already seeing accelerating Southeast X be Middle further the to with beginning We ground partnerships of capacity next channel Asia the early months. on over

India For plans with a deployment XXX,XXX representing QX new schools, partner XXX selected Schoology next students across year. for example, Channel by mid in India in

third is our education agencies. model foundation is deep enterprise-level differentiator. business The with entrenched districts with key Our model's and relationships

students We have educators. and to sizable model. operations, our are our only two for With of a their existing to our average on utilizing that runway we tenet and XX,XXX providing Cross-selling are solution enabling and cross-sell. to mission-critical an customer products, customers, central instruction supporting is our business over unique core efficiency customers'

can the differentiators, And the on in a on resulted a our our strong our example nearly In deeper is recurring This and margins dive great operating durable cash fact, a profile multiproduct of is how of strategy lastly, the since built high coupled customers and generation. IPO, of leverage. long history mix digital customers' we growing revenue, transformation needs. XX%, cross-sell into of financial with profitability profile has predictable and number

uncertain XX% these we four over opportunities momentum. for solid our our model ever sticky since system quarters We resilient forward heightened showcase EBITDA insights environment EBITDA well our school excited such of I business And execution economic expect cloud The margins adjusted various is than as to ahead see XXX of and success. our as around have IPO a profitability adjusted creating profile, of today, us solutions with differentiators strength a been in especially investments modernize, our this growth points. business. expanded in gaining the and as growing and we our basis look the more financial am enviable. Sustained continued cornerstone and to has the data coming about mission-critical tailwind as

pass Eric QX the to cover call Let financials. me to our Eric? over

Eric Shander

a the great Hardeep. continuing first quarter, second and you, delivered the quarter. We Thank from momentum business

through strategy, execute on cross-sell adding our our many power platform as Our teams continue as customers. demonstrating of well momentum unified new the the to

the very in business and investing from PowerSchool. perspective. innovation expect on well a performing from The customers delivering remained focus Our financial our value that and is

at on me time for revenue $XXX year stream as details growth with guidance get $XXX.X a our of last of of the revenue of is the quarter representing let end Subscription in over high our and the the rate for across balanced total revenue, recurring grow to saw at product revenue X. which million range was strategic Page double-digit We increase support we now million, quarter. portfolio. total quarter the an continued XX.X% and XX% the into So the ended the coming period quarter, most same exceeding

million our adopt the time closure period same higher the trend as we to rate first and solutions. demand the had deploy which quarter, our accelerated well quarter, experienced than services business projects. services XX% an revenue from last resulting to and on-site mission-critical of for in Similar in for continued $XX.X Our the continued our generating customers training more year, execute was several we engagements, saw to in we

last would revenue their L&O X.X% of million year. within which adjustment This should by prior in representing second revenue L&O XXXX. revenue relatively approximate million as point-in-time decline versus and and Our flat quarter This license $X.X of other was been down last Normalizing time an Naviance strategic year-over-year. to and being to is we contributed stream historical a our the from for in at the the revenue, $X.X them. to benefit driven us XX% period have had the which acquiring recognized ratable quarter few portfolio, determined came in revenue treatment the for have this products resulted onetime revenue was least total for quarter same primarily

be recurring of component I've same period a last a this XX% small mentioned the We year. and streams. quarter revenue before, over continue balance $XXX.X finished our variable the million, is an increase annual second of to and As with revenue representing time will

As school of quarter the patterns. to seasonality, the the due business quarter nature our typically districts reminder budgets a is second buying of strongest and

to XXXX or the by XX% increasing of four more our at representing our X,XXX that end end X,XXX annual the cross-sell number customers continued than Our XX use more as momentum products over the of quarter at of recurring this revenue. of from of demonstrated

and sequential Our of metric we quarterly revenue point or are as the positive basis retention came The in providing mission-critical this retention, NRR, at to as that trending our of well customers. representing solutions net XXX.X%, our increase. cross-sell highlights stability the a XX

renewals our As a a third seasonality, occur our of of reminder the quarter. portion business significant in

higher a came continue we XX.X% sequential million while margin, to third in So profit to year, metric of the of of increase profit last $XXX.X same basis with revenue was XX higher may revenue, from primarily at points expect moderate. increase carries the XXX the last quarter which of contribution. by trend a components decline year, period for our basis favorably driven this for point This for level representing Adjusted year. the whereby gross the quarter and other quarterly decline and the license a we proportion a slight year-over-year a mix had nonstrategic gross

expense R&D turning revenue, to XX.X% market operating quarter, are was of second R&D investments XX.X% million, expenses. same the $XX.X to development research at expenses, to came highlighting and Now representing of total revenue, In our our the XX.X% which Including period last making year. adjusted deliver investment in differentiating capitalized in in the compares we innovations.

million, personalized our the long-term same continued development learning costs on Adjusted organic the on connected Hardeep Unified second XX.X% various on earlier, compares SG&A period MTSS, towards have year, that with was primarily in which XX.X% we is expense revenue, Insights quarter strategy. delivering of and last intelligence our related announced As in our aligns the $XX.X IPO. focus to public we've taken projects time which representing mentioned which our to company since

was EBITDA $XX.X range guidance margin, our XX.X% high exceeding the adjusted quarter the for or of end quarter. Second million

continued The as well topline on both reflects quarter as profitability. was margin the second outstanding and we focus have growth driving

past, objectives. drive innovation within operational teams I've mentioned achieve the will and as as invest financial in continue in the long-term we go-to-market to business As to well engine our our leverage

fully to income diluted $X.XX it non-GAAP net a was While reference, per we do share. guide not as

reflecting to balance the ended million sheet. seasonality and moving our the with business. equivalents, $XX.X in quarter We the cash of Now

invoicing of substantial reminder, cash the portion activity a lower a of represents with on see quarter higher a annual customers and on the year, an collections July second period as a As while collections. quarter of new operate typically fiscal the and our level period our therefore, a quarter combined renewal elevated we in third cross-sell increased

funding remain the ability long high our cash Non-GAAP ahead well and free in seasonality cash $XX.X driven quarter. We we point this stability delevering drew our of to are the to million Also, of a to our repaid an this pay cash we our for quarter expect second of the the plan and Given already quarter, paid of the from increase is as rates this $X.X the to for facility we the by $XX balance impact activity in and increase, leverage approximate quarter. third had credit result interest pre-IPO This the The metric. million the during seasonality, the continue an debt given environment, the the quarter, by million of K-XX service revolver expected of revolver our due X.Xx net first flow was revolving we a end seasonality, end have is this over quarter. confident the education of was ratio from business additional negative which we million interest down collections. $XX and our remaining to for cash to the term.

Now turning outlook and year on third X. our full to Page quarter

range $XXX at year-over-year to For $XX third $XX total quarter, $XXX expect to the margin rate revenue the we XX.X% representing at growth the a and deliver X.X% of to the midpoint a million adjusted million, representing million, million of midpoint. EBITDA in

is million guidance end revenue momentum, ranges business. business adjusted $XXX million, of the the representing year, EBITDA to revenue not resiliency total we $XXX range midpoint in acquisitions, contribute and reflecting growth and million which with the expect XX.X% million, adjusted recent and at This $XXX the year-over-year EBITDA, continued profitability We adjusted representing inclusive the XXXX. are midpoint. materially a XX% for full raising top to now tuck-in revenue our bottom expected are a collectively margin guidance to the in $XXX and the of For in both of stability to or rate

expense and million the to shares of For $X Fully of expenditures, the the we in platform to meaningful continues share-based modeling quarter. our a year. million diluted year for million million end $XX Overall, XXX Demand drive solutions excluding are compensation and full range great million by capital the purposes, we remain approach capitalized approximately software delivered of for Unified approximately $XX XXX expect value expected our for to our customers. strong, shares. of be second to

consistent long-term in demonstrated us will front long-term and differentiators has focus and continue excited we opportunities compelling team execution, the to Our strategic profit. key open are generate create scale We're for growth that for the the Q&A. questions. our for growth on of to about open please leverage operational employees. to Operator, that, our happy we customers, as call line now With will shareholders we're the and value you and

Operator

you. Thank

now first a question-and-answer will Kalia question comes conducting Your be with Instructions] session. Saket Barclays. We [Operator from

Saket Kalia

Hardeep. great. Eric Hi, Shane. Okay, Hi, are doing? you and How

Hardeep Gulati

Nice, Saket.

Eric Shander

Saket. Nice,

Saket Kalia

start quarter. cross-sell, for said maybe to on best and nice taking there thanks I my cross-sell with just you great the Hey, questions Hardeep, activity. you, to see quarter ever think

you're So wondering deeper think it? little I with And dig most could parts bit into of just cross-selling? if what having was do driving the the just business you is a success you what

Hardeep Gulati

Sure, Saket.

very area demand, just you and guess, but management. we're of seeing key operations, all product of across tailwinds pretty end is be in not to our right? look at also it talent And seeing seems a can cross-sell demand much classroom I strong our stable pretty of First, I some examples, for from looking transformation business, things market, And we we are when in categories. at give our much districts as one are every the are

accelerate you're reasons seeing strategy really growth to is is cross-sell what talked always one platform about, the we've Now the of key. why

for students to point another don't system. their pandemic talent want to They're with areas looking these multiple or try whether looking need. trying are and for to put niche environments solutions, management learning gaps having system districts to address They or they're looking system parents. and integrated address providing deal it's and as to As for post teachers

I That's XX%. products, number So differentiate. our more that's shared who who to by than that than mentioned to have one customers that increased have again, why X-plus continues Eric by of product XX% XX%. since customers have more increasing

very cross-sell seeing pretty much we're So really, robust.

Maryland, also like definitely tremendous give biggest Insights are Unified growth. mentioned about or is we Insights quarter one the let's area two, the our Insights. example but an with of deal an for in our of Now seeing I

kind a how students are of and can imagine, better can of are them. where that they help need districts of you understanding As lot they their realizing

that lot a also for strong growth That's is definitely We're teacher recruitment, the management sales a area for big area So The products. huge growth retention, cross-sell. professional our seeing development. for the shortage, We're talent demand with lot seeing there. the they a school modules special tremendous are for growth. of student of investment information or seeing we're ed, districts. core seeing of also But also a now system

hold. Some of we Don't in. pandemic really are coming doing of now But projects the under were on about were projects talked we kind initially put prepared seeing the remarks. the SIS Peel

We for also our territory. U.S. choice vendor of entire got just a

definitely seeing we're some these demand core on modules well. very So as strong

Saket Kalia

great. you. Got maybe That's it. it. Eric, Got for

bit year? net that K-XX you ARR you think And half little ARR, do look some we like quarter? new the played of to how the that clearly at on ARR, into And here but net a budget seasonality as to guide directionally, the just this cycle. we touched remind directionally, new new Can understanding given again, You you don't about us I different of guide seasonality don't the net know just how some back metrics NRR. but

Eric Shander

to period. as biggest my our we've adding the QX in just Typically, terms QX everybody, net seasonality And this $XX.X ARR the QX your to Saket. a QX, you opportunity said, had reminder remarks, I to able a of That's base. it is Hardeep continue And best million we'll net remind add as in go as our from as quarter for of just highest question, prepared was ARR. be to cross-sell the I a renewal the see business. great just everybody to appreciate had then

going extent see see happen kind that in QX. churn to of we that's So to the you any may

modeling So assume year's, we purposes, ARR can all at what encourage typically, look the think to and to about for of you kind would of, would net you I last new up again, go continue you'll QX. to essentially flat from from as it the really be we bookings then to QX see pick back And once to you build. QX, QX see

that context quarter. think the around you really, helpful I we're some since improvement with XX then the certainly second ahead from a that. trend And be see you'll as up brought on to NRR, relatively impact metric to when again, we'd you going assume really also that's hopefully, would year really to again quarter go QX, QX would in first say, where flat, And So about sequentially basis I thrilled it point into the we again, from you pick good end and up. it's we're then thought be. of

So helpful everybody. for hopefully, that's

Saket Kalia

I in Yes, back super helpful. queue. Thanks guys. will get

Hardeep Gulati

Thank you.

Eric Shander

Thanks, Saket.

Operator

Jefferies. Next question Brent with Thill

Brent Thill

afternoon. Good

You just it I'm what that unpack what macro in out record There's are as catalysts seen curious everyone's as worried the drivers kind schools that and to with mentioned pipeline. Is headwinds seeing the of you're night. about there helped you've well. some the been if that there. relates you funding can that's

kind half? Just overall up in in anticipating pipeline the and what the back frame seeing you're what you're of

Hardeep Gulati

$XXX legacy. during they're pandemic either except macro what tailwinds pandemic. things the than market, have seeing when is and at the alone, data that K-XX are that broader And gets look systems you year. a U.S. the increased very the that's – that housing in as XX% we earnings Well, a the relies funding recession. factor first, We guess, when a K-XX especially perspective in from from shared just and you've of K-XX got automation of every the the of last or on of Sure, environment, fact strong largely one of or for you much shared in of more that's around a happy insulated in pretty spent very crisis, billion funding. out the emphasized inflation manual or I XX-year Brent, call districts the it it's about tailwinds large And to. at coming has And you're look lack

in So what what And the that opportunity seeing that's pipeline. demand huge you're we seeing. are

are I information on we some seeing coming excited have really K-XX pipeline vendor mentioned our well, seeing just the international entire some we're We're whole the had. also We not not to only as got picture that ever large seeing where deals of we've largest territories well. kind demand student improve choice infrastructure. the including of who forward system, of kind at about of as of of countries are to their entire looking

So is we interest analytics. excited The was could balanced, more earlier. Saket as lot not be a about. to pipeline mentioning I largely on very There's of

our So imagine. as that is highest you growth area, can

We talent are management also seeing demand products. in

well. products classroom Take do management continue to Our system. example, learning exceptionally

of do retain a of which in districts assessment We the those platform, manage now, that exciting with needs just do entire project and to there. operations. not learning our very is comes you pieces our small of platform pretty and you students, midsize dealing management product all most a entire demand important right onto seeing how in or really bringing on really their as customers, management, one critical how the specialist teachers are large engage across But are also or to playing help we're them behavior lot new a territory Guam or much

Eric Shander

we half year, period the the guidance just and reinforcement the renewal are for just we which of. we And terms took positive I up the just of that – busiest of the have, we see that would how just the another obviously, second entering activity middle in in we're in right is the add, that

Brent Thill

Is – from generally on and Or you Hardeep, Just other can enterprise quick long XX% those internationally, XX%, a zealous? anything term front. a to like over feels that's the like markets? to believe software you that feel companies that have follow-up. getting prohibiting you looks time from you international anything stream split do

Hardeep Gulati

definitely in And a I this international think would the within expect to become that be I fact, years, No, material. next couple in position. we of

like we've seen with we always points platform, Schoology talked entire have still been think XXX,XXX in proof but and North has focus about Paraguay America, country students. of with Philippines tremendous I our our

of India. attention on with Middle started boots have and East lot We in the ground paying a actually

call some very that already Maarif we this and [indiscernible]. about are So on seeing about I shared last successes. call good

have We students putting Schoology XXX,XXX-plus on India, we're partnered our platform. about

definitely on going platform. two to just actually the or seeing across a of but not the We – these of demand interest one are see products, we're gain entire

of their their so we the transformation looking parents. you state country lot a multiple experience lot actually international And offers aspects, to of any They're more at want would experience that's if a in teachers not full imagine, for can a excitement can best-in-class. billion as they integrated transformation, want environment. the to going with in kids imagine no them one new district X.X getting fragmented suite, holistic look where of lot a vendor have a or And they're for one other putting and you of any they differentiate. or integrated put any is to As experience for student, at who systems. this We're which about all one

we are So expecting international demand.

to be ground. there going increasing are on on boots We as well as our channels definitely investment

of matter years, few become expect would next material So contribution to a a I revenue. our in this do

Brent Thill

you. Thank

Operator

Bank Ikeda question, Next Koji with of America.

Koji Ikeda

for the Hi, guys. Thanks taking questions.

out thinking follow to the business, seeing up are to of Brent's vendors get out of question get from pipeline. sales just And wanted year? by record eventual a quarter sort pushed what for whole deals that all? Do perspective? something or you month a pushed of if elongating any of about prior cycles. you And elongated if software thinking an kind calling are, are seasonality other out does on Just the cycles, mean could at sales the bookings a And potentially it about some or cycles gets your pushed,

Hardeep Gulati

Koji. Hi,

of seeing lot there. seeing I coming of to the demand million million think our are We're as saw added classroom management great products the A pandemic, on out the shared have during of almost adoption reverse pandemic. sales students question. huge cycles – We have just accelerated learning we you that. actually X actually X and our and of

can they're talent you've and shortage, about the to of of holistic a which help pandemic which top transformation, the professional the mind. lot out definitely around is critical districts of further look areas across exploration driving of As how efficiently, solution teachers, a manage of is those like recruit districts as trying have written as pies we seen a the feature lot management, have substitute well at teachers, very them more come teachers onboard development some

of intervention, of each the our and add-on well, what as talked that as we we we're the and in of of of are connecting around have and But for innovation us able kind just we lot needs, MTSS about like both interest customers. we emotional, with these cycles faster. to have demand their larger more curriculum, mind drive mentioned, of holistic lot more our even we're helping communication districts, sales small top our social to are meet that's that key seeing efficient done data understanding not customers, child of support be look even attendance intelligence, the actually And seeing at core and a as you have So the well seen there. I some aspects and as when platform tuck-ins the some the and

biggest months. I opportunity state closed a Unified and few of developed a the matter mentioned Insights in which literally one is of our and some deal of like So Maryland,

Koji Ikeda

outcomes like It to Got post-high it. one I help Thanks, guys school. you Hardeep. better drive I for may, follow-up to acquired HeadedX during just sounds going if And saw the it's here, quarter. Eric.

So that's to great really hear.

If pricing couple what Just from added of any contribution this Thanks it? to was guys. And HeadedX model what a year, the revenue is for business? that questions. there's

Eric Shander

Yes.

$X So I'll revenue. million. under the Revenue is take well

technical exciting them, companies but technology into again, we So then not platform. it's times, lot it into very are insignificant to of of further this little we of, revenue only and can A tuck-ins been that This we've the our And acquired that then part but technology. have is invest technology. saying what just build the base off year. bolt good these

So in no that revenue XXXX. material contributed

Hardeep Gulati

point the to And drivers. your add, if strategic can of one about I tree Koji, some of

amount huge the solution, it. USA exploration of and HeadedX XX% As which on has readiness in even the to American school just an carrier seen of in XX% we've number and last already been not and But just district XX-plus one career, done something interest, state almost portals elementary around access hearing how from access that's well. way that. the one but to college just HeadedX but high of you state which the level. the life year are a seeing has key actually students of actually strategic platform, prompted is customers, the that It And earlier, the were both school. increase has provide elementary lot really into we school, for know, and states as needs our entire districts, Naviance in from we a have exceptional things, North not the with at middle addressing applications. already is us whole And all college,

training options their So carrier and we to are believe very we success, this excited base, have. overall area, college but about the just not and from different they can in this add also path student the really

Koji Ikeda

so much. Excellent. Thanks, Thanks Eric. Hardeep. Thanks,

Hardeep Gulati

you. Thank

Eric Shander

thanks, Yes, Koji.

Operator

question, Next William Sheldon Blair. with Stephen

Stephen Sheldon

and the nice work quarter. thanks Hi, really in

I Roughly a you strong year? at normal commentary actually wanted you perspective all some maybe potential purchasing to that? happening from context And pipeline funding purchasing any First, much pipeline of during shift signs then more ending year? quarter. stimulus how to the on could provide actual up the with could if is behavior the the Are than timing more relative ask school the seeing last

Hardeep Gulati

Thanks, Stephen, and great questions.

we but in the so it's is on the iterate mix I it's what pipeline, also large I not have tremendous of pipeline far, that. would deals think that just again, highest seen only actually

So on largest in some the have ever we the pipeline. worked deals we of have

a we a So Similarly, well. excited about had internationally interest about very bit little a vendor as that. choice. territory we're strong of mentioned definitely I

kind the not spend. I gives stimulus, So deal through we progresses context definitely a question, actually the when IT role, free buying positive we'd you is stimulus for directly that that to think up additional helping of that it's of a for Even these so. or big more about some share kind been the enough playing it funding, happy a quarter patterns? about pipeline has your broader providing is second supporting are which changing dollars K-XX of as industry. a When part – the the to next in opportunities and be is of stimulus

a not the for years that have lot we will right? of environment, or A and to could we into talked also better based that. But biggest about, largely especially of see funding the we the we quarter. see be look – universally, QX you of three the they that's to going district midsize, So very four as for next as through where QX, there's if as districts, to funding lack the larger QX go in a and continue do a they that's ability. lot are we on times, patterns prepare readiness, where So be back-to-school buying always are

see busy to QX which pretty QX we good with healthy. be bit is definitely back-to-school. and start always is a to little are one the districts quarter, also So because

to think of always we looking a live as large where districts the not that They I of change to at But – go historically, well. stuff. and implement. your be that So kind buying deals, are some to that somewhat want expect newer could then point, quarter with of get

definitely short to, potentially quarter. would we put be looking but to our in going to be QX not still seasonality half strong, That second I change So the largest term. to the QX, is are again,

Stephen Sheldon

it. That's Got helpful. really

– lots As encouraging of a seems like lots here. follow-up, of announcements there's it product

when for personalized demand Unified So on the for need like focus this, students there falling MTSS, behind. could Insights more given on are high and the interventions seems big a learning be

Or your school lot on automation them a standpoint, insights student? sophisticated of sophistication how for end district they these to need find be a act each is on there solutions actually these help So from do useful? to to

Hardeep Gulati

Stephen. question, Great

they a of one of layer terms top really MTSS on first, stuff. irrespective coordinated manual implemented they're a sophistication, of systems what irrespective can of and whatever more how we or whether So it are technologies, the our advantage is take in plan of of beauties that actually, of MTSS intervention use have using, providing they as

go MTSS in you if customers we a double [indiscernible] customers' website. of including about plan. manage a matter third-party of we almost the so, a as uses So Vincent them but still ST a stories console like to that help our on education entire dozen talk some – or you our intervention that month over more shared with at there, and, and actually customer MTSS – and of who than also our we leveraging of The have last see a to will this selected kind And just is of we presentations innovation. actually available MTSS already LMS our our of SaaS but capability, customer, shared

analytics it interventions automating more really an that entire districts it's show them that coordination, were give required the areas still they spend This better. impacted. would even could kids the it. as the of be to the And of and So going tracking have are manual, but and how interventions as to important improving are actually by ability process the meetings, is to XX% of around in be to providing even funding support the that still underlying the to

high, for and demand great this So be see this we area – to successes. we already some early already have seen very

Stephen Sheldon

hear. to guys. Thanks Good

Hardeep Gulati

Thank you.

Operator

question, with Next Baird. Joe Vruwink

Joe Vruwink

everyone. Hi Great.

kind call, at function be and vice growth sort Does FY strong and in – forward? said been digesting ARR been then bookings FY least seems risks that XXXX back very everything of an than discussing of the input stepping the on it assumptions given better versa, what the that's Just just sounds some reasonable XXXX. some to seem that or pipeline we've might to the going is plausible faster or currently tonight kind offset of as consider of the that of

Eric Shander

we of start. hearing exited – everything the QX, pipeline to momentum me business QX, the we obviously, continued us terms just But I into you I in strength it. from let are results. the don't it obviously, guide Yes, seeing in think mean, as you're guys of the

doing, So, get up I and come certainly tuck-ins and of as we customers, and as year, as setting situation next in sure, to mean, these our those some what through of these provide And double the in be have it of yes, that could, really we've that's for. this year where pushing seen things really a said we market to we we're we've products derisks especially additional low capabilities we're start could digit technical growth. our we I end the then past, mean, organic double-digit – all for

view as up and I quarter, the fourth half. going to a optimistic super start set we you certainly, and super, well. focused strong, will Obviously, on really we as But following as sure. we're So positive. the to on and year focus will we're year finishing certainly, guys better executing very for then the this second think have And positive

Joe Vruwink

of different improvement? at margin of profitability annual suppose clarity. a expansion? investment just need initial in the changed great. thinking just driving different I on framework similar for of execution margin What business think any have how then basis, sitting any invest later, an areas That's a Or is trajectory about driving maybe Okay. communications of point where more here to the just you And that We're you might change with that year things and from kind the the sequential question, gains IPO. now a

Eric Shander

Yes.

on growth. to basis we've XX been an points So saying, what XXX annual is Joe, basis, expecting of

still construct. a I good think that's

we well well. of in is plans and some the strategic are had, we quite team at that's ahead noted, not But the just investing of you of executing cost us these areas. IPO As the not

mentioned, continue learning We're going continue going Hardeep on. international XX as, additional area well. over we're that us personalized months to months mission opportunities invest as we As to the is an look XX we're as well next that those capabilities in strategically opportunistically as that gets to the for along to

opportunities. there of in there's exciting out growth think lot I a terms things So of

– is valid. operational having said points the and drive to of expansion to still So going still annual that, but of the framework we're leverage XXX basis XX

Joe Vruwink

much. very you Thank Okay.

Operator

Fred Next question, Havemeyer Macquarie. with

Fred Havemeyer

congratulations stimulus, to I backdrop constructive the to quite that's what's record pipeline trends, in seems word results generally just school think throughout there some some leading you're – quarter. topics using the been these Is deals strong throughout PowerSchool on wanted I'd but discussed for Hi, this? you're cross-sell say and in on on sounds thank just trends in market emphasizing bit. transformation just throughout, I potentially you've record asked with quarter, a to driving hit responses like it seeing? again want you're going record about certainly with you and the a and cross-sell to questions, such It I consumption like there. digital your discussions something with really a that ask to fiscal like record-setting you've

Hardeep Gulati

stimulus to portfolio is differentiated, I well we which even good, So back priorities areas the they pretty a needs is pipeline working very up that's to from that we different respect are good. the is that transformation COVID are address diversified new to to as good Fred, have are, digital advantage have and right, such been able platform to why think varying in logos got as what we all cross-sell to their their good partner. of we are And further. has it's able in even actually to be right, as well be see both to market, you of be The the COVID coming be And that right? which above, the a then all stable strategy funding required. our have very to out strong, prior as the tailwinds

So great very a stable. always we've about, we and market a have offering talked much business it's a is very as differentiated pretty in which

all about execution of towards excited more be couldn't we that. performance our So and

Fred Havemeyer

Thank you, And Eric, then, you. for perhaps Hardeep.

a interest wanted interest thought a rate how around circle to in environment. rising As back and about it rising its positioning about leverage both we're PowerSchool's rate just consider I environment, would in

sort that So just also leverage generally, – the commentary understanding any you any for impact of about power provide preferred be Thank could rates. updated school's view profile? of you. would And rising helpful

Eric Shander

still they've we is paid the X.XX, relatively capital. rate was quarter, this cheap risen with which rates as the of cost Even

our know, all you as think I debt variable. instrument is So

a if full for will, $X.X So of year. rate it's point, for expense increase, you every million interest about full XXX of interest

debt company. in capital of balance increases view in we've think attractive stream the for the rates. still this year, going to extremely expected we our the interest the of even continue watch it's changed have of we're terms as haven't of we structure in So the some to Obviously, to there. But factored out

Fred Havemeyer

Thank you.

Operator

Hedberg RBC Markets. question, Capital with Matt Next

Matthew Hedberg

record strong new this and is for Hardeep, you taking sort Great, on guys. Congrats of how yes. largely guidance. Or my vendors? and me other of suspect that is from as business Thanks cross-sell, districts? within consolidation maybe do I'm results from the of opportunity much questions curious these well

Hardeep Gulati

paper question. at the Good replacement what of look either we legacy. Matt. When Thanks, do actually or majority you of is business

putting other an our seven it's to moving [indiscernible] along example, take products. they're whether don't almost new they whether or – analytics system. environment, that, a that's deal, a probably with that, they're So platform six have any which very Peel and is they where They're SIS like legacy on bought

like So half those see is or white with a legacy done we pencil code, and is replacements actually replacing whether but majority – So a largely, Clarks of processes were replacement very that manually good it's do large There's it paper, a right? environment. of custom space. the is example, or deals, yields small few your

Matthew Hedberg

I helpful. Got then to the to back it. wanted go analytics And That's side.

those saw anything it they just said benefits? they convince yes, these you're and of that are using – that other data sales the all lights some that maybe having. some turned new sort the that more a you've in there think districts or your interesting they are knew and you've It's on they what opportunity. saying districts? who like see guess like – there are initiatives it and of districts huge to great I'm funding owned sort from had we when went on hear I of some the since tangible I you're success curious, as maybe either of Are points to gotten

Hardeep Gulati

district. but how of district and entire drive also lot State. Unified to I they Alabama districts Mobile you check their LA Great students, of part a County the We, to was interest set their talent in where Innovation how the on the presentation this me holistic ability look had some fact, help encourage presented in the entire at Modesto, website. of of on really with the – analytics of along of operations Council question. about out keynote and area. the engage in the talked core Education way not a And they with our like kind with

So of subsidy. there's a lot

graduation terms have you've well got improvements, in of improving on concrete, in measurable of website actions, our And of We benefit. rates. better analytics as reducing in engagement KPIs studies attendance of our tons related terms terms case as the disciplinary to

metrics. interest on the the seeing the strategic board we're that's analytics all across on different So these why

Matthew Hedberg

Thanks, Congrats Hardeep. again.

Hardeep Gulati

Thank you.

Operator

Sachs. Borges Goldman Gabriela with Next question

Unidentified Analyst

the seems Connected talk about then? Congrats that the customer Kelly as product view is you quarter. willingness to this This game valuable. you adoption It initial with a do super in with changer second. on How opportunity for about for And I'll is a Hi. Gabriela. schools? Can on how Intelligence. for conversations engage start

Hardeep Gulati

Kelly. Great,

of other the really coming just our actually whether about PowerSchool talking not you Intelligence that's it's from district, and much outside outside the our systems the K-XX some all product outside almost As organization, you or we data, to Unified launched and connection view about crimes week longitudinal areas or data the we – analytics this whether opportunity Snowflake together, so social at had or only view. other a how to last including services bring student, to juvenile even the more up Insights have that with present we able we're Connected know, talked about leverages us how product, the open conference entire of the the we're with

that have We level analytics and states, well. some implemented platform full counties county just a on from the including as exciting interest not have as lot who our districts at of well but

customers leveraging We based our at XXX going XX take on seeing. Connected are have Insights the who advantage of least year-end we're our Intelligence to expect to we're Unified the by demand

Unidentified Analyst

Low hiring, to then I see as out internationally. And you've budgets you especially a if any fairly as impact insulated seen school follow-up. on wanted build to from impacts. tend just these macro Great. be

Hardeep Gulati

In question? terms own that is our of hiring company, for your

Unidentified Analyst

Thank Yes, you. exactly.

Hardeep Gulati

Yes.

are you especially have the all we I we across to lately other strategy that multiple working center is, have the way have can be would think with seen U.S. the imagine, excellence kind remote I say our of broader talent better, market environment and much companies. the of we're one, given seeing it, as we Though seen

to of international. lot folks We a the have have industry, joining we also excited this to them from education And allows because that bigger we a who seeing are very bringing be times impact. are actually are about

at excellence, that have year we almost we If people actually itself. India a have of our by last in just where you the look big grown hiring set XXX

an talent. attractive the to that where So given right mission-driven, we we and are attract continue see really helps us actually

Unidentified Analyst

Congrats Okay, thank so much. on the you quarter again.

Hardeep Gulati

Thanks, Kellly.

Operator

remarks. We I come Q&A to for like have the floor over end our of Gulati turn session. to closing the would Hardeep to

Hardeep Gulati

ARR. second an operator, I by closing, Thank cross-sell improvements earnings to day talked outcomes. some highlighted We joined customers as everyone I'd pretty globally would of We I thank as what up things education X,XXX-plus much XX,XXX well drive and and thank over you, a call. highlight again, these chance every the again the partners key In we you who the our to, like employees and ever to have team impact some about. had of highest exceptional quarter. who

our strong have momentum customer on products. We board the across a entire

expansion platform as balanced further to by even profitability well. solutions, differentiation that continues profile and Our innovative even strong create new a very with

pressures. and mission-critical. this operations They're perform So us noncyclical, markets our products the to to school our stable end sticky well to macroeconomic very which allows are to continue very in as even and is very as

next Eric Thanks us, to the again we and quarters. coming we ahead everyone, massive love optimistic the we the and will you forward – runway in about to for it share talking very of in to are mentioned, about to more look quarter. As again

Operator

today's teleconference. concludes This

for your lines thank disconnect may you time You your at participation and this

PowerSchool (PWSC) 14 Aug 222022 Q2 Earnings call transcript