- Earnings call transcript Q3 2022

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Operator

Thank you for standing by. This is the conference operator. Welcome to the PowerSchool Third Quarter 2022 Earnings Conference Call.

As a reminder, all participants are in listen-only mode. And the conference is being recorded. will opportunity there ask presentation, the be to an questions. After to I Vice conference Relations. would Instructions] turn President now Investor Senior [Operator Harrison, like the Shane over of to ahead. go Please

Shane Harrison

conference we that Welcome the section to call, ended operator. On Investor PowerSchool’s XX, wanted that Relations you I accompanies of Hardeep here. Gulati; first XXXX. the today's slide we you, Thank posted September PowerSchool's earnings a our third CEO, call remarks everyone, have CFO, quarter let know website Shander. Eric to our for deck to and

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

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

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

turn Hardeep. Let the to now call over me

Hardeep Gulati

Shane. you, today. time And us Thank thank join you, the everyone, taking to for

model. how to testament market-differentiated teams business our a and was well executed quarter third Our strategy our on

ongoing revenue challenges. and to solutions our organizations drive demand growth for We of mission-critical their comprehensive and effectively strong continue provides breadth manage and help the that to ARR with power platform the K-XX

providing diverse us line meaningful to captive quarter, ramp profitability. to on to the large our is significant installed in a top our portfolio market-leading of solutions allows this our while leverage the As continue deliver operating base growth, cross-sell opportunity demonstrated of

coming in QX million me results, line quarter. financial last with quarter, Slide we guidance reached for total summary $XXX revenue review the on a X on provided Let of the begin and of a our with

reaffirm We record quarter. full highest continue adjusted see year revenue guidance from This to expansion pipeline last our In our to margin meaningful from EBITDA the grew XX% last IPO since drove gives guidance QX, and quarter. XX%. we represents reaching our us the our increased confidence and year-over-year margin exceeds that the

year Additionally, we our million. to are $XXX double-digits profitability. and raising grew further support for full revenue Subscription guidance year-over-year

Our ARR year-over-year increased strength and in XX% retention, new our with cross-sell business.

from market recessionary differentiated are testament K-XX with to also, Our highly performance streams expectations durable to our a increased diverse, model operate materially growing market, consistent largely showcase the business insulated in and macro our metrics it's broader predictable profitability. that inflationary revenue compelling highly of stable a and And and and factors.

us Slide that the quarter these help Let you growth on each deliver more me X share with vectors of of for some customer different this the will consistent shows performance. our details successes in vectors.

fiscal year. only administrators is third quarter starting busiest office their time and time not the also it back staff The new a is us it to back is school, as where for but are generally

as system means months few as us, and implementation. that For product the renewals heavy of well

the Our higher you incremental drove record prior and renewal and our compare a from bookings team existing customer sales customer success it new had quarter teams when to year.

best revenue basis sequential XXX XX net XXXX. to since XX the points Our rate increased of retention September ended QX months for improvement our XXX.X%,

of we retention aspects saw in great in year-over-year. increases quarter, particular growth ARR the all improvement cross-sell During and with

our Stride, largest base. to booking expand our customer large is one Speaking we of to expansion, of at saw add customers and to that example entire PowerSchool selected modernize with the wanted K-XX customer Already of back online their student wallet student well population, our system their platform logos information user homegrown They over our the with activities XXX,XXX a online online schools deal Stride of as our office product entire existing solution K-XX grew for small and market private enrollments. great and continue cross-sell student for their a provider, learning and that needs enrollment public system Naviance global we and broad-based share for assessment Inc. continued for infrastructure. A new and

the this with schooling the With in a virtual global to Stride partner are online long-term very grow large with growth companies expected excited space in globally further. coming we TAM, like years to

the is factor education and headlines portfolio attendance There the shortage, system is us we growth data social that shortfalls, equity feature of most capabilities about the emotional of for diverse security. support, stresses K-XX for have key other around and no learning comprehensive ecosystem. shortage The education our mission-critical required gaps, solutions provide in

Our classroom. with that products even platform to with district essential initiatives across XX-plus talent, and help more is these operations, and deal differentiated becoming span challenges

platform management of all continued Customers solutions. existing select talent Independent platform We at vendor and seeing MTSS Adding continue enrollment, our to to our is and A Plano, boxes. are not several only ERP, proven talent products in for School improve implementation will their insights student management teachers these students. high outcomes internal solution, XX,XXX drive better growth efficiency their all products as looking of They and example already win critical of their demand District capabilities, our an with is our checks replace our but our students. their also that this to platform great over behavior Texas SIS and insights integrated only data operational PowerSchool existing solution. for and the sizes were of SIS,

see to Miami-Dade, City another in success students at districts Baltimore product excited Fairfax, in district, on our Schoology USD, LMS and proven XX,XXX-plus wins we providing their Insights, solutions Naviance transactions including this are solution quarter, We quarter. for SIS, large about Unified nearly as like large with L.A. Building cross-sell products. demand Talent, the selecting classroom and recorded logos several are XXX We new sizable portfolio. Classroom across our continuing balanced

PowerSchool Schoology to Talent With forward the their district, furthering the addition products our at within look we footprint Baltimore Naviance the and solutions district. exceeding and expectations City’s of to

vectors newest our growth we international expansion. one of is our As shared,

of level to ours schools to similar comprehensive critical local help various world. even seeing are of international, platform capabilities geographies need like provide in around private unified and We the

in from Middle School of to another and education started their Aldar the opportunity Our in an year has success provide able earlier UAE dedicated this logo Education, platform I’ve to the regions. Egypt, initiative already solutions, very have an a East for we operations. new the or to proves gained view systems, multiple model School Abu manages Public we and a sales to Education region. platform Blueprint system several including at shown integrated decided Similarly, Elite extend schools and strong students that The charter purchased of Aldar’s and that strategic in Dhabi-based ISEE. win the share and public in Schoology International SIS new win PowerSchool other

assessments platform. driving field, terms assignments and the experience, development had across One our which X.X courses support of and professional us formative in in delivered key that courier school aspects the position XXX,XXX XXX,XXX-plus urgent XX million-plus X million-plus aspects scale, allows of back-to-school the is teacher of our substitute million taken, meet the most different collagen leveraging customer jobs record might our completed posted, impact operations. to our critical experience quarter, and and most is growth quickly needs box have. We successful districts proven track the

to the communicated line continue given we to go operational adjusted are while In growing of top the third our our I the in Our the coupled end going EBITDA expand expansion experiencing, we it to range quarter, levels into more targets let will of with do our very also rigors ahead year. guidance is beginning momentum profitability. we and details. EBITDA exceeded expect scale XXXX forward. profitability adjusted margins compelling, at continue applied, of have our the high But the the we well increasing continued we we of Eric our

also to share business. responsibility and role, built President Eric Having this assume G&A scale very me bring news. announced CFO. Eric our of our In experience this customer and critical renewals infrastructure, new public and promotion to will our Let successfully growth excited exciting of part reporting expanded company Eric’s his to I’m Today, we some have operations.

addition and and prior FinancialForce our Officer. expertise years Chief We of building, as new Tony XX-plus Oracle. CRO Revenue the that, optimizing of as global scaling sales and are SVP at Tony as at Kender announcing to organization, in has also an recently most GM

add contribution to new excited We for our wish endeavors. our to him and him moves as to the PowerSchool are his he current meaningful want best team Craig and CRO, thank to his to Greenseid, exec

year into very strong. seeing We the with are are we continued finishing forward fourth business momentum to the the heading quarter and look happy

continues cross-sell velocity many sales year-over-year, very new very strong great Our In customer seeing are continues to funnel, overall. the of to growth prospects, which sales be we the in with a opportunities large and improve XX% are pole and position win. abundant we mix logos, to of pipeline

years. is value district comprehensive confidence over for the us funding to being next than a spend funding X/X a are strong further clear platform by in in Our is the market, which further supported our niche resonating still available differentiated environment, puts continued that It reinforced of ESSER position the proposition by better few providers. and

performance the call pass quarter. me financial the detail the to for and Eric Eric? Let over

Eric Shander

Hardeep. you, Thank

revenue, the our outstanding, strong recurring retention third in by Our quarter net performance highlighted was profitability. revenue sequential and improvement annual

on execute by the and increasing both existing and delivering sales to growth new service. best-in-class teams strategy Our customers, support customer continue to while

business same end our the The internal see controlling personalized analytics new our our long-term our in through better, us and product to At of financial continuing the to the and development, model in product invest focused the portfolio while our international been product expansion of time, behavior resilience expansion, tremendous by streamlining demand remain in strength opportunities financial continued international market, ahead confident growth has across we’ve been learning. processes offerings. and health key and of continue other and SIS, our on We the integrations never costs and functions strong durability we initiatives. of with

Slide me with see detail, quarterly into the dive results Now you more will let which on X.

in point revenue stream, revenue million, period over accounted is guidance same quarter, second revenue, recurring have revenue a and XXX basis line on with XX% overall a call, X% $XXX.X year-over-year. for most the grew Subscription the support we basis time at strategic and year-over-year which year a total the improvement the earnings revenue our was was XX.X% Third of in provided in ago. quarter range quarter up and

to which revenue fees related year-over-year implementation, product business, of X% events. revenue of and our representing university $XX.X driven services customer higher increase Our an implementations, generates by customization PowerSchool training and customization through new in-person delivered million, training,

at Ian by our renewals the driven all Hurricane Our that school there few revenue the and services that quarter. few also of quarter, of for a internal services to closed projects, The been team end product subscription a came slightly back-to-school and expectations impacted a were in below fourth were prepared the already season helped year. districts drive the X,XXX schools XXXX-XXXX with which over in go-lives have by successful new

training several hosted events also had PowerSchool We attendance. great that university onsite

better is customer continued customer to success cross-sell dedication translating consistent Our and to momentum. retention, higher satisfaction,

Finally, representing period least the an place other, time X% continued XX% revenue last $X.X quarter, revenue $XXX.X last retention. performance license We million, revenue focus of total to slight most was million a gross stream and relationships. The recurring our an we revenue strong by period variable with balance third of as and strong the based increase coupled same continued partner higher representing representing ended annual subscription at year. more from quarter the over $XXX,XXX strategic with from time of for in decline the same year cross-sell driven on came

a primarily higher basis our this price a in representing NRR XXX.X%, strong was or gross points well retention LTM increases. as annual of driven our Our metric basis points. and retention The sequential net improvement key improvement of with cross-sell as came XXX sequential significant revenue coupled XXX at improvement year-over-year contractual in by

a level place. As the renewals of the seasonality, significant in take reminder of quarter which our typically a third quarter is our business

exciting. So NRR seeing the in improvement strong in was such a quarter

moderate slightly to fourth metric in this the expect We quarter.

year point a of value million quarter XX and driven validation around of power our in is XX.X% our the our a by representing on increase strong cost basis customers for and Adjusted our the continued ending of a the was The platform. focus expectations came $XXX.X basis anticipate XXX%, gross we However, ahead improvement. point efficiencies. which place quarterly margin, at with the a profit performance sequential year-over-year XX on

period with same innovation and customers. highlighting revenue Now invested XX.X% insurance same In XXX third R&D last for facilities compared to turning compared million, our third XX.X% D&O margin operating various basis year. quarter, of XX% revenue XX.X% expenses, to in [ph] non-GAAP with in differentiating savings efficiencies representing last year. This of SG&A from time XX.X% Non-GAAP R&D compared came period quarter. investments revenue lower premiums at G&A our expenses. SG&A the of in representing Including the from our in $XX a totaled reflects making total XX.X% development commitment the research time continued market with our in savings cost in $XX.X point last in and consolidation, our non-GAAP was the expense expense capitalized million, driven and improvement in QX our quarter the of year,

XXX last end the of basis period range or EBITDA our adjusted the guidance year. time representing of was from points an quarter, quarter Third $XX.X million increase margin, for the same exceeding XX.X% high

continued reflects expense quarter was The gross margin improvement have the driven third and by was profitable we The margin operating and the margin on focus driving strong growth. improvements.

for XX% to continue higher identify innovation compared will investing $X.XX additional year. We last per fully fuel growth. line $X.XX income top rationalization was which will that in to still is areas while net Non-GAAP share, diluted our cost

we debt a the busiest account $XX $XXX.X at first QX. of with of quarter and ended the In times times same million the Now third third receivable XX% in of strong best that drew Cash cash million leverage seasonally during quarter were ever. sheet. we half of Net meaningful profile the period at end paid was balance quarter quarter, a the increase earlier and times year. equivalents, off third over moving X.X the aged collections to ear. X.X the and improvement time the the We the in the end revolver X.X over is our the year last an the

the X% a Third measure from up a was cash quarter time same non-GAAP flow, earlier. free $XXX.X period year million,

I a and collections our season we As successful did mentioned, renewal had a job. team very fantastic

our Now on outlook full fourth financial and turning quarter X. year to Slide

range For deliver to the the of an $XXX quarter, to midpoint. expect the we fourth in year-over-year revenue growth million million, representing at total XX.X% $XXX

training revenue a a in services implementations of we sequential fourth the decline expect our As seasonality reminder, activity, the in and quarter.

we expect $XX to margin EBITDA, quarter finish to adjusted $XX For fourth at XX.X% representing at million, a million the midpoint.

range and the bottom full of our end revenue while top adjusted raising of year, the the raising our range. guidance For we’re bottom EBITDA

for of million, revenue EBITDA growth total the million year at expect of $XXX representing the midpoint. We $XXX a $XXX margin the full midpoint $XXX to million in XX.X% with range to XX.X% adjusted a year-over-year EBITDA representing adjusted rate. million the An

shares. the purposes, and compensation million expenditures approximately in excluding of year. XXX software expected approximately million by fantastic capitalized $X end to Overall, full to shares Fully $XX quarter. for diluted of modeling delivered expect of share-based XXX we third capital a range the are expense million of year For the the million we be

which our continued business are with very pleased As customers platform. targets our that momentum Hardeep mission is on the the and and of critical our demonstrating we value are ahead stated, placing our performance,

teams finishing Our go-to-market line and efficiencies. year driving growth investment Q&A? operational concludes please strategies. Operator, and you well operational on in We executing the to This performed our the strong open our look continued for will remarks. prepared focus extremely forward and

Operator

Sheldon is with Instructions] William ahead. We’ll [Operator begin Certainly. go the now Please Stephen first question Our from session. question-and-answer Blair.

Stephen Sheldon

and new thanks Hey, And congrats promotional you, on Eric. the guys. the to responsibilities

Eric Shander

Thank you.

Stephen Sheldon

I kind some ask, you’re your and cycles curious out and sales with First knowing issues now, think right a what seen the and K-XX districts on as customers that being you shortage elongation I season, coming of guys distracted have in talk and other there’s teacher other of of one there selling such variety I with to know cycles, guess, school peak issues. sales of been but

at all? So that activities we you quarters? about bigger have on few the seen could that impact sales have next you And as think think a

Hardeep Gulati

question. the cycle. any you again, thank Hardeep, Stephen, this actually is not seeing for We sales

contrary, think and more I because plus differentiation diversified of XX almost And cycles the platform with broader So to over a to on the continue are much the lot improvement as level year. a we fact XX% see sales almost is based in of have we it products. to improving the last market in XX% to we

there’s address need the students. and about you the comes lot to it teachers, If If emotional, help with analytics that. when about they they engage these today think facing need to learning are need of social management it. they to tools a challenges about of and it’s management recruiting teachers, talent and well, that districts our If with talent help solution loss, classroom keeping behavior to understand

So selling critical. mission actually a is lot of what we

been address actually help having the it’s needs them being today. more beneficial So are to they

Stephen Sheldon

hear. That’s great to

And your Kinvolved a into recent they’ve what get that sales platform? follow-up, there So motions appreciate a Have thinking I in love look been more some you detail and just plugged year. both on these to others. then now you’ve that. acquisitions as existing and ramp performing, a for a how been solutions like to we’d Are Kickboard, in about your owned financial close contributions and on guess monetization seeing uptake the

Hardeep Gulati

do. actually We

of solution. actually which mentioned where think are growth. we we are at that implementing large thousands districts our There actually deal seeing Kickboard I the are remark Kickboard is Gallup-McKinley prepared like where school the we a behavior, we’ve record in of actually a is students tens

products had of even Similarly We year them district we products every Diego are our few XX and to pretty another sales that’s already communications. at County about even adopting them seeing into plus bringing deal over unified large and San motion. on Hudson a are we on starting curriculum, and quarter into in almost as going to again XX are like on these almost and start that communication deals integrating quarter our others, just the about dozen a this customers bought successful to

you they of base in strong contribution we to with them them. becoming each can momentum So install There’s were the more to start pretty road our see years. is the a do overall the numbers, small next down expect if material still few but

Eric Shander

one would out Yes, we pretty since we and lot spoken specifics we provide while that bit look as the cases single in have a and for mentioned, Hardeep pretty Stephen Every is these financial single can and time. share smaller, any you them business while what the add we do that I acquisitions. we really that just of of done of don’t a a every of well cases want tell contribution as period financially, one and you, put aggressive the Eric, we’ve business we’ve short in together we do you originally terms asked of to little accretion on together less. ahead put is of I And

this we we And with year. of benefits financial So pleased really be year next the benefits obviously, more couldn’t to into beyond. get see be and integrated more the see then we them the into some as we’ll platform

Stephen Sheldon

Got for it. on results. and strong the congrats color Thanks all the

Hardeep Gulati

Thank you.

Eric Shander

Stephen. Thanks,

Operator

Please from Jefferies. question ahead. Thill is next Brent go The with

Unidentified Analyst

teacher loss. guys. Brent. on Hey so the to being kick K-XX schools, the This facing is Maybe big David taking ones on off, shortages for and for obviously, learning questions. much Thanks issues the

higher size color like there just there, more products driving that any address Just growth, curious, be to customers to would in are some maybe of seeing fade, as these help out are adoption helpful? adoption starts issues? seeing to they maybe And you LMS you’re your flock

Hardeep Gulati

Yes, we have been sure. about kind talking few think quarters. last David, of I

loss, your strategies are about the districts innovation point one work? been much selling our we is most primarily where product, of One the is know do to which multitier the learning would talked challenges about how best facing Insights of how product MTSS. we of support loss, learning loss, and biggest our learning In new launching the Unified has a of of interventions fact, the actually even system of

now throughout year, adoption of strong Unified not seeing seeing we’re actually the growth our already are We MTSS. only Insights

We state this have year. in one deals

Christi extremely see to Unified including Plano, well large great continued our platform, including have Insights, bought example like Corpus of is districts. entire another these which districts We

Unified Insights the these help as address them learning And these loss. adopting about actually already to mentioned We’re well. talent I

plus over I creating of on deal at help all districts look the million think address in with these you helping almost the but and when working just teacher partnership to jobs level right with it’s these kind districts. XXX,XXX middle managing recruiting substitute teacher quarter, teachers, of almost actually new challenges districts not trust of with we the are and more of and the these

So platform of they’re our about. our adopting add-ons components, some including of we more talked

Unidentified Analyst

the quick maybe things and That’s be on on guys kind of that. you your provided the has good And just material level, place? international. bit as become I about a high what when and international super it can – are sounds put And Thanks start I that driver for timeline guess, remarks international that your Got revenue? in conviction maybe helpful. color Thanks. a well has follow-up a know of in can increased the going you’ve processes like you think for conviction it. a of guys, opening to some little is what to little further, expanding

Hardeep Gulati

Yes.

uses years even platforms, and country major have Uruguay or over bringing we presence level like us. pretty American the We What XXX,XXX, we comes every are with when countries, XXX,XXX We to last education are students education country leader the much market globe few seeing, international as schools other or in across Schoology deployments Philippines, globe, well. school or the like right? American already XX across have have we school especially a it

internationally, seeing is key not we asking schools, international entire countries coming a schools, the or these is private entire strong, and there schools us schools these platform. out need international. just are seeing platform. product, countries buying been what actually Middle of COVID for especially motions, we have is with private to started these the is bring are in providing lot is government and platform And we actually now move And different on what just actually boots that that of by East, comprehensive local is nobody ground of platform. we let’s in charter who’s but not equally are proving One to they’re one the prioritizing actually to requirement What even this to else us the

actually demand, going international the next I become years, over follow part is fairly do our are we to seeing growth. good few And So to as that up mature think, we of think we is are definitely seeing signs, we schools seeing because competition some either at especially or deployment. there early the very no or even schools country level strong good public at are private

So we are going bring really our next years. it’s excited about to few what the to over growth

Eric Shander

it’s and David, Yes, I add would Eric. that. just

before, said we’ve for news to is growth international. organic double low continue got to we’ve As us good without the opportunity digit drive

extremely in So thoughtful what extremely, But very as it bullish is a it over years we I indications will But early going fashion. to going are how terms we’re said, I very do positive of us. see approach the and think and we the internationally. I be news the in to we’re Hardeep expand for see I take business of around a do good think, a fairly we’re believe in we material the metered mean, what few part next extremely

excited super it. So about

Unidentified Analyst

you Thank appreciate guys. Really it. Awesome.

Hardeep Gulati

you. Thank

Operator

Please from The go ahead. next Gabriela with Borges Goldman question is Sachs.

Unidentified Analyst

Hi, my question. Gabriela. this for Thank for on is Kelly taking you

in share? any seeing types First the the Schoology one continuing is just any you where in noticeable competitive Are trends and changes gain of landscape deals you’re to is seeing?

Hardeep Gulati

par we competitor. the look rates, large Especially, been have our you when win at have one at still competitors. they consistent we actually are with Yes, pretty –

between in We Miami, of itself. of some our are as similar kind LA win both well of at of student market students. at large share. that’s terms rate as very terms look of When you deployments two example, Take and to in million those number

number this of factor important and into is came us. and large actually even actually selecting platform shared are Talent, they you of like students, we components Baltimore use their Navion use great asides, actually district going over I process testament part but making. an when They do which decision through RFP of City when don’t So at a a

in like help really broadly So market. our further classroom win talent, in market win professional fact competitive the that at we but like par going the rates with But CIS, we not are continue areas continue to this. share is learning, see to our like to only other right now our

in getting saw shared we’ve X the we the per As million million to almost X during past, COVID, year. almost students

have to expecting, what we about what million seen million are X students X of COVID Now we kind are pre at levels we are par back we is that. to with

Unidentified Analyst

you. a thank what their us you with product then can customers your you And And Great, telling your are roadmap informing follow-up, discussions priorities? are as biggest those portfolio? organic just in gaps share the how are and M&A

Hardeep Gulati

A lot our of seeing things are the stuff, with have it we has the been which what we addressed products.

on you’ll around attendance from customers. both the if checking our messaging our, see based acquisitions think social of curriculum our I directly on and intervention around emotional feedback been have

on all MTSS, across them manage these different which innovation areas. Our of interventions the helps some

full communities [ph] their platform are not not data bring with PowerSchool, which them Intelligence, are bring in innovations data Connected differentiated. connect from partnering Our at to an sitting just deal individual – external rather this with around connect that's what system product one why their data, let’s that. data market. There We're very again, a that's actually of is are including view. where having broader, but seeing they're on longitudinal demand based looking that, directly just products. they platform adoption our that's a and more and to than of tons on we're And having not to see you're all is And not to how so security issues at actually demand you product, very across but we seeing almost a strong innovation, looking seeing what a and

Unidentified Analyst

Thank you. Congrats on the quarter.

Operator

is Markets. go Please Matt question ahead. Capital The RBC next Hedberg from with

Matt Hedberg

an The last wise maybe I QX. seasonality I perspective? from this of $XX added, into anything bit you've Great. few taking but context I congrats, little a know well-deserved. us, historically. you don't my to well Thanks and Eric, Eric $XX think, as ARR you know about there Is to ARR net ARR, different year's from for guide questions years, provided million million of

Eric Shander

I Yes. address mean, a appreciate opportunity the good the and Matt, to question, seasonality. it's I always

mean everybody I period. I renewal is hopefully think our QX as largest knows,

So ARR larger. we deals really, What deal, any perspective, in we're it, opportunity happens becoming bit one perspective. is renewals new certainly, this a say we any And is of larger, cause I net while from million perspective a QX our deal were lot from of variability we're that from in are more of certainly are activity getting ARR can seeing the basis, large a really closed one a which the our that in ARR can from our customers, one with quarter, a as guide with little quarter. adding PowerSchool would on deals that net getting don't things much about getting an $X as strategic particular which you pleased have

similar what would So just for offer think, QX, I I trending.

next couldn't that of to say assumption. have million were probably larger ARR the I seeing I you would be and finished pretty we And as I'll deal of amount look $XX If one a net we pipeline, optimistic tell that's look as guess, of assume is let's we increase that we modestly think we good kind in I big obviously, over of can million the deals to certainly continuing. around, just terms sway you that. say, any where $X at at this more quarter, several new What quarters, the look momentum from at

not. larger fourth in sight see of of lot quarters, deals. But Now line the over will do the next Probably they quarter? to a a we all several happen

we from to say, So to update fourth where of assumption decent kind probably just $XX million volume. the is the look for assuming a as would deal continue But just of into quarter. I large we in ended go $X million us to terms

Matt Hedberg

nice Eric. a a for really Super Hardeep. That's question helpful, for dovetail – actually

build. maybe Just thing Is builds pipeline is logos, you I know. think is mean I cited better XX% to to it pipeline just you strength – things us a do that quarter. this really – quarter? you drove year it new stood certainly strong that are versus But the on funding? out what don't cross-sell I that year? of growth there well. out one appreciation? the I driving of that next it of it that the that number sort this was think Is pipeline as But the know growth, I mean stood

Hardeep Gulati

Matt. question, Great

a the right. of I'm is So point One our of what is things. think platform, I here, reiterating key diversity couple the

products, have as We the areas a million have. to all across that are same districts we plus out some struggling, needs an news, definitely the of we have lose balanced large sight support where COVID broad have especially with a few that And districts And well. almost deals intent the that's critical our large over factors, definitely additional or the If some the fact, the such is at they're time, coming pipeline, next do prioritizing. also our their $XX the say but be deal demand line the the of see strong there you very letter of is healthy, deals while most operation making a sound a in I We, driving priority. aspects of environment, the call of in with quarters have transformation these we is talent growth any – And is as different of driving funding that pipeline. out would which definitely business kind of to I have a couple growth a across to in been which percentage. either of

for you refreshing again, to wins, too, some of we only that definitely on of welcoming So and that quarters with have the which large very adds we are guidance. next not what on is, we our the quarters, sharing our a good confidence strong few delivering of are visibility

Matt Hedberg

guys. Thanks again. a Congrats lot,

Hardeep Gulati

you. Thank

Eric Shander

Matt. Thanks

Operator

Fred The ahead. next from Havemeyer go is Macquarie. Please with question

Fred Havemeyer

on And strong and on sentiment say congratulations thank third call reiterate here the a I'll Hi, quarter. the you. think I

here success customer ask roles you Eric, specifically, – renewal you moving And think up? potentially as progressing more But your promotion you to a strength, do that assume rate XXX.X% like firstly, it customer to think also new your looks and do promotion, ask I this on for Eric, question see NRR? about continue what this I I with wanted to retention with that. on PowerSchool that for net company. is line here, to could a high PowerSchool in really watermark it like and congratulations looks wanted opportunity continue do public actually, as

Eric Shander

Yes.

quarter we And so really So Fred. we first, are do. third ended. in it. we Appreciate thanks, where with Yes, the fact, pleased

across I that we've driving three kind an products, more platform, customer, with kind in other really demonstrates overall our a said, to an what may the end that we the value XXX% existing just the with make discussion Specific got particular the or to really we make we're as have that I we'll And opportunity think value of as momentum engagement year is existing continued year. customers our our two to for a is really leverage opportunity, the platform that aligned of is opportunity of perfect just of standpoint. the make not the can we of see sure products the one the or customer. of Just customers value and renewal all from a the and end ahead we team that the look think but at the any and just We'll certainly where range, really within customers. sure see to we drive really around opportunity which time touch the platform look, expectations sense renewal the

with our and upward performance, end next So But thinking in potential. I finish we'll certainly of everybody we're third well terms we'll year. this beyond kind year, into what really clearly, see future got we'll as expectations. do that year we Certainly, thrilled where And the above is. of the our get we've quarter update

Fred Havemeyer

the been and was sounded your potentially then leveraging sounded some but think – And of interested was me was in ask you win said expanding for to Baltimore their you Talent perhaps Schoology, opportunity schools it that It find the those platforms of even of SIS. a acquisitions. description one some think I'm cross-sell potentially a solutions wanted Thank recent more I if strong. very have of Hardeep. like was purchasing also your of that. to ARR of was Naviance. It more of outside PowerSchools pulled it wrong, please and was interested that sounds of potentially correct your you for total your particular. I It areas and among your smaller in the as may just some broadly products about in I to adopters platform. like, some I be pulled And in I some adding for of the in ARR of that like proportion

Hardeep Gulati

Fred, point. making a Yes, very actually it's good you're

a actually all they're coming of If I large most our shared, from actually at you look non-cross-sell. wins

resonating Try, which our because and but to Plano relationship Schoology started relationship with on we full part they've work expanded our time, support had that students. other classroom sure of just example. classroom example. some to professional that's but and hundred on platform the in together, there time the want that's take what these the classroom another to City these doing with relationship. they whether of with and special vendor they a to your a SIS capabilities. sure these examples. you point online using direct you're together. line we student in with your thousand to assessment, them also and only a on Talent, adopting They're Baltimore you SIS, really actually learning or learning – adopted and of another is of with enrollment The beauty a is great in selection SIS, customers. the across When assessment platform our in their things All They that's and into students, here you're from is the Talent. how expand which the make And broader ed. make doing relationship pieces brings operations not And whether full Talent want make their are our ERP, all or then I full good some work student of are we're we a not and information system an together, So Naviance management. trying few a you few think line training, the into and for they all made the – what's clearly need

Fred Havemeyer

Thank on Congratulations you. the quarter.

Hardeep Gulati

Fred. Thanks

Operator

question from is The Barclays. ahead. Kalia with next Please Saket go

Saket Kalia

here on and I for my guys. market East an questions the actually Thanks dig been Okay, echo success the quarter. congrats a early start my love international. That's taking with bit little hey Middle you, into in more. just Maybe great, to to

think perspective or about has of boots from I think, dollars ground, have mentioned that few couple several guess question and how that you that's you you students no are that one opportunity, the last deals, market the maybe competitive level go quarters. been could on opportunity of the that seeing but whether sort market what competitively? is, I the the You the And I mentioned a over do of you really said one perspective? there breadth into just landscape. know that deeper platform,

Hardeep Gulati

in that are thousand seeing Dubai almost and out International putting now the and well right, seen brought large Sure, are the on countries, already a GEMS have ESOL XX started some well, a cover as in as and greater we've all. the a What a in areas VP management. private in we of a is we likes direct, that we taking mentioned almost as of East actually broader, we schools or our building That after. and and little call very Saket. American can students. student We hundred of to it, of we is seven sales we two And have bit education one million-plus not to based we as team opportunity past the learning students our go only or few are that just maybe with through demand schools Middle TAM about seeing the system more

actually like things to analytics messaging We management, demand and strong. be are seeing the even equally behavior for

exciting likes platform seeing buys, their in the with Arabia part. or sharing been or the ISEE, with you're of the some deals that in Maris in So that's we've Aldar of Saudi Egypt and in UAE

be we students and growing we if students, do million-plus the to few strong hundred XX next expect get be the think for really to is a million-plus thousand a year just TAM then this us not into So us. almost with by pretty from there addressable a to student able that

Saket Kalia

the into next good that's dovetail actually and a helpful, super Got maybe question. – it. That's

I correct You as of a early, there. to the understanding boots CRO great if think, hoping it's to wrong. zoom international the And It new? that this I'm a mentioned was things are today is just and announced Maybe on believe I having well. me VP position, some you're little which ground bit. see, what there that out new Again, from

Hardeep Gulati

a of expertise the sales team, to best different the that would of not CRO, help but Oracle, because of have we global – just are – of which as geographies came East really I the we’re and excited No, from being our have of definitely in are brand really good who one very say actually us for other we actually this international and built have some not coverage, seeing having sales new one always about at demand. and where that similarly Middle we leverage how into around terms a experience we Yes. FCM the brand. we looking we the team. expansion, we expanding things, terms capabilities more is across in Oracle similarly has but more – global strong areas. And some international And able inbounds partnership are just actually the opportunities really translate of

Saket Kalia

Very helpful. guys. Thanks

Hardeep Gulati

Thank you.

Operator

next go Koji with from Securities. Please BofA Ikeda ahead. question is The

Koji Ikeda

to home. you to ask to most maybe that about to about which Hey, over earlier. you the Hardeep, administration, we wanted thinking you next these classroom, understand I growth question, in the over most the wheel the And context could contribute the low congrats of double-digit the the about organic the excited wheel months? this the are promotion and one maybe parts or five year algorithm Could XX you think President, congratulations communities Eric. years comment help as next growth algorithm think X.X us growth hey, of of Eric, have, unified product guys had you new that. for on here a that on guys talent, about

Hardeep Gulati

very has ask take let single-digit even the be as exists were almost add there. out me recording we solution. to have digit to large, – but of well that of part our Koji, that we Sure. transformation where if country like we’re the it Koji, not if Stride, and high business I’ll And while you something, talked of wants biggest deals opportunity that growth, in in. Eric him post-pandemic with to think options about territory the student we’re with – double a level just or pandemic, actually jump seeing

confidence. us large that here a gives bringing in Peel. fourth of We Canada year very shared strong with district this So one kind of the

very are So student these momentum, the which solution. entire makes us confident about

districts as a their of have integration as systems. dealing integrated their who actually provide are and there’s lot the if a not higher are out going an issues priority insurances gone systems, are lot well. And with Districts they that they are able to have back-end and antiquated right because and a think to upgrade making districts secure solutions, They upgrade. I know there. through COVID, systems of need the data they security aspects these

we in strong So leverage of to kind a that. are very position

growth. breadth. offers our year-to-date. else has so there definitely management, Nobody it’s growth components, LMS, assessment, and pre-COVID the it’s mentioned, these Our good you it’s to in with excited special that. some shared are been just be as all state-level that seen had it’s that COVID double-digit different big we then behavior, We’ve talent brought that And seen Naviance post-COVID even and over combination. we about It a not demand opportunities ed, on post-COVID classroom it’s continues

that on digit double as well. growing been have We

So of expect to Insight continue, one innovations in. think that these biggest to areas. those districts. is to we where we bringing signs the and seeing growth with partner especially are huge really continue that are are the we with growth, That’s we’re going good we

think There’s a position. really state to with such in a match are districts, but very even nobody providing just unique who comprehensive I we level. not else analytics can

on be that. So to position are very in districts a we fortunate partnering with

Koji Ikeda

about if letting we environment? to growth, Got seeing how slowing is in recession, growth is a it, XXXX equation Hardeep. for as little pipeline margin, – bit maybe should kind head Thanks about the be fantastic. versus But potential harder follow-up into which how deals becomes for deals more that. we me close versus thinking one a that – it slowing into mentioned so a close And you investing be of should to XX% a more profits thinking managing we moderate and demand maybe potentially growth just

Hardeep Gulati

which billion broader also small K-XX, IT their if is the portion fairly almost of years I of very and as of from more funding. is that of needs it the important for aspects which $XXX lot base the tie is the of environment we’ve plus, recession things the still saying even think aspects they been is the – last you’ve well K-XX they funding a insulated Money, proving deal have it’s that, Ester is these largely typically, seen working. XX as organization. to is to funding one the funding with stable

the of part equation healthy some that well. as of on demands IT So the is

So we see to that be. also

not we Sales So really this. as continues expecting any we’re sales were our are And that’s of velocity sales to improve. demonstrated, I actually mentioning, think velocity decreasing. or cycles

the make expecting So push as comes we’re really as of We balanced deals we’re time, growth, to from not don’t profitability. away well. But lot your profitability at to a sure a which that. looking sustainable point, there’s are with which we growth profitable. are for as much And walking not always growth

Eric Shander

of it’s districts option out. And like given to growth, to said given but line we heritage, before, of I that we the fact mission-critical add a both. have the Yes. want I running a PE our add. right? to I want it’s We trading this top mean, profit. able we’ve not Koji, Eric. would systems the We mean want kind be just are also lot systems,

kind look going demonstrating and finishing the for into guidance So we full year we quarter extremely strong certainly we’re year head and as XXXX. next then we forward to bullish of feel next year, the showcase to that

Koji Ikeda

so Thanks Thanks, taking questions. much guys. the for

Hardeep Gulati

Koji. Thanks,

Eric Shander

Koji. Thanks,

Operator

question Brian Please from is with go Peterson next Raymond James. The ahead.

Brian Peterson

Thanks well, gentlemen quarter. congrats Eric, the very and congrats well-deserved. And on as

come for it’s this wanted expected? those. of maybe you’ve they And pretty up the little quarter Are I’d question, keep in for coming the in buying than these solving. and districts momentum understand you’re have the to you the pretty actually, and past? a in hearing last the clear cross-sell actually is cycle problems than we in follow Because they a on about that to So to quicker I I cycles of in sales think sales seen shorter some bit lot strong. the needs actually some love

Hardeep Gulati

differentiation through and we actually based of Even improving our Brian have key all think healthy. one it of to be the by the out XX%. to just not that is cycle our is again improved, data But sales things, be on that look our quarter-over-quarter, diversity times, just that of across a platform. XX%, the case I year-over-year seems think to the I call is almost we has lot the products,

address or the solution we for able seasonality the focused based platform public is beauty exposed all – that are cycles about that’s parts on dependent no is sustainable that just of be on and districts happening comp what’s – times digital compared parts a the healthy assessment. and the might sales on country on is the growth. unique focusing certain not are we the other there that. growth, change, might because exposed particular and we the There provide, where in that’s have more And might what to and the are of different on but curricular a Certain get always on, what’s we’re one we’re don’t So to or we they need. And good, or to focusing how what’s or kind are other to like able full niche to product elements one lesser is learning. that market, – overly might that. private that why provide are putting vendors of going demand other That be vendors maintain product right or us country we not exciting management that’s the communication for

we able depending whatever priority really key the to So are support is. upon

Brian Peterson

the interesting have budgets. Understood. And when the made of being a in sales next lot for but on maybe went just don’t I through. of that follow-up just a we year, ball cycle we are decisions spending kind it’s crystal know And a

things love As think any year, emphasis? ahead to there are to get guys. Would on how you IT Thanks looking any the thoughts would that budgets that? any you’re look color Or overall? more next get on

Hardeep Gulati

Brian. Sure,

nation do student the are, the data understanding of you do how analytics I kind a right what a you’re their are SM think assessment globally I about provider making students and you data, because be And understand the mentioned unique of in loss right need it, not is effect. you’re the it. and their big whether data what and strategies but definitely even to because I’ve help actually them only – spending reiterate, a area the focus of to so just lot going help you to across the but and can costs, learning interventions we a which districts to the what the analytics of address times, lot the understanding to we’re is, that not that only learning few your is are brings students learning costs, for intervention the how providing where by it’s actually do position learning talent how recovery able all right data, to what tied money do, work to provide on a the

is the one good dollar even analytics, their you’ve realizing scrutiny system, broken, these seeing again, And large dealing of current we other healthy, as under has demand security And lot on back-office that seen do SIS a holes. how the well the deals that. are come or to the a on systems including all multimillion and a systems as out on are integrating that’s So some of is definitely, districts fairly are they’re path. of see position, where IT to districts large at a called growth level, pipeline, rest well student with security their who districts as they’re hit that. where, stronger a tremendous we see seeing SIS is district insurances which I of upgrade getting unless in that information again, wake-up state are actually with unique we but environments for the they handle call levels We visibility, of we’re a lot lot their issues higher

talent the well. seem high So management we those is some the areas be talked about of the demand, much areas definitely doing two pretty are then and to in still

Brian Peterson

Thanks, Hardeep.

Hardeep Gulati

some for to close an of call, I’ll everybody quarter. Great. the top I giving – of to so know opportunity us this on our we highlights are really just in share quickly. share it dialing appreciate I

as unified in strong with, hopefully to we And we a sales thanks and momentum the is good actually in I significant teachers are in not platform. want you results but do us continue also current to pipeline, results X,XXX differentiated reflected facing our critical create do positive profitability with we and leverage, millions these stakeholders. and to a needs As students. as being partnering only some position partners all customers clearly to to XX,XXX-plus given we a thank drive the results, velocity helping only – employees operating in deliver help to continue and strong, make and markets of most for our k-XX strong our our over can see as almost diversified, top improvements us very as line guidance, not believe see that well well of are more value but as to unique impact address our

you thank to us So for time join taking the today.

Operator

call. today’s conference concludes This

pleasant You and lines. participating, Thank may day. a for have your you disconnect

PowerSchool (PWSC) 8 Nov 222022 Q3 Earnings call transcript