PWSC - Earnings call 3 2023 | PowerSchool Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to the PowerSchool Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Shane Harrison, Senior Vice President, Investor Relations. Please go ahead.

Shane Harrison

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

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

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

from statements our other risks in materially due to Our to risks of actual differ release SEC results described number projections and and a may and are earnings our uncertainties are The filings. uncertainties. that forward-looking subject

Today's references non-GAAP remarks measures. also financial to include will

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

I the call Hardeep. to will now turn over

Hardeep Gulati

are become in to and K-XX adoption profitability. organizations platform Thank joining our quarter strategies to on the execute revenue us is growth been our quarters you, enhancing meaningful over the more of the today. and everyone, we building momentum with for you, of a continuation third past effective, was and ability PowerSchool's efficient few accelerating this our thank Shane, for and have growth.

$XX of the and X growth to ahead was cloud our growth Our Product-level end a earnings XX% third solutions. our $XXX over of QX many EBITDA high XXXX quarter the with of Revenue posted diversified exceeding in of XX% was double-digit was our results Slide reaching guidance, on XX% representing million, growth summarized well presentation. margin. million, up of Adjusted year-over-year are guidance.

flow cash while game-changing in invest our record continuing product saw quarter the to in innovations. also We

on up new and back-to-school year-over-year as districts X% over which focused for quarter was are business seasonally our sequentially lowest QX, grew opening in ARR is logistics.

results see momentum year to have ARR growth. in in the created continue showcased the double-digit low growth long-term the for These we sustainable full We contribution. SchoolMessenger's excluding driving

types will and fill country all X all Board Florida from and the schools job of and to of the school a source state Let innovation to Slide talent. their solutions me biggest was with recruiting the third X, the go-to-market in several Department state experiencing that Florida strategies. Education QX talent in and of of the over our districts, activity demonstrated Consortium is capabilities state. competitive The of in now XX meaningful special the the of charter the all discuss Florida many quarter, existing product speaks processes notable with had all summarized for replacement This districts hiring The vacancies in solution our will for shortage and order in industry talent momentum where the serve of of an is state a customer Job our our over help the strength XXX that of customer we talent win offerings. on cloud as to

a logo contract. key and is Florida state-level another great win new new

With the won territory-level Florida quarters. straight a win, we deal in state or X have a now

and an and customer district these states and our in further provide choice another and us to footprint are all education vendor These which for we large opportunity early QX very of get Additionally, states. school and the to the in across solution for cross-sell approvals through expand signature given QX. state-level hope been in a have state we special Midwest, strategic deals or

driving state-level the the of differentiated momentum for innovation scalable the these our best-in-class diverse and The platform, nature deals. are footprint

Cloud. Cloud, revenue growth in Information Student performance of and in our most across clouds Our with our strong Talent Student the strong double-digit was Success quarter Cloud

the urgent our organic curriculum of are solutions of planning innovations the criticality and attendance bookings up districts. year-to-date and period year-to-date acquisitions most are the XXX% add-on Take intervention needs for talent example core instruction grew mission Curriculum addressing like attendance same are XX% and of bookings our and versus year-over-year, the year-over-year. interventions The last critical data up bookings XX% timely year. and insight platform,

School School the of and using example Colorado data ARR District, how are shared X or our sizes earnings making their X for to and all technology-minded cross-sells long-term during already of platform data-centric seeing XX of Intelligence for As growth of to students key secure, decisions both These we analyze District and third districts report. Connected quarter, of In and our are on wins X. Intelligence great districts a County This call are and present Cherokee our Modesto are as of District of Day, City as benefit School largest well using the tools XX Investor our aggregate, to data-centric algorithm. the XX solutions the that our teachers. were included last Springs better by Insights our Insights Connected included our part solutions

is are tools. bring to for their their AI for data platform key enabling strategies. and efficient the our their our With lake AI A districts rather solution, AI than with we power proposition product to also customers to Intelligence Connected we're data data secure way that more Data-as-a-Service these enabling to value data a

personalized We beta road Passage AI-based multiple & product continue as generative solution Performance for In first for doing an of education our availability we on our AI-centered Generation tool after very our to product extensive Item this Matters are Assessment innovate add-on successful general trial. map. quarter, a

X beta off kicking are other AI we month, trials products. for this Additionally,

of language for to our will ask sets to an through products, amount the time progress. a and Assistant, the key tool data month, provides This assistance to be interact context of gen focal concept. digging the and and being a taught uncover behavior sets Intelligence to the insights. this add-on find administrators our the on beta save natural massive Also academic a who of is we stuck functionality Personalized plan and first other Homework will the release AI and that areas into student with student to be understands using educators homework for questions Connected in tremendous educators classroom data may anomalies, First which ability and other is the to insights Schoology students what version for

completion Next, X of acquisition I acquired would to activity, like the update on of starting our X. shown M&A the we SchoolMessenger with of Slide recent in QX, the you exciting on progress end have as the October. of companies, Since

our is on acquisitions, our the communication all teachers. glass for our portal deep UI of centers harmonization. our process and integration their pane direct the parents, into with MyPowerSchool people As single integration particular And stage first new capabilities with SchoolMessenger and building of of students focus

process we families portal of positioned create and school-parent communication confusing. a and and comprehensive for is MyPowerSchool are between and differentiated By As most can parents the often their success. student adding therefore This parent-student-teacher SchoolMessenger to uniquely most disjointed particularly attest, portal, meaningfully teachers, schools centralized the deeper communications. PowerSchool leading the to will engagement, supercharge the and driver efficient drive and communication

market expandable by SIS ERP addition Neverskip, solutions. with in is X.X of a During provider. and the ERP with expands our K-XX India product an also million and the for provides The students. Neverskip and India and India-based software This complementary administration PowerSchool's scalable that localized large reach quarter, us third platform addition high-quality K-XX we acquired of

global on international X. our to Turning now expansion broader Slide

As in partners. at direct last our targeted we on have call to up we thrilled well while earnings our discussed signed Day, our go-to-market ahead bringing building a channel are we of XX XX approaching regions we sales year. August, the to are Since Investor end in sign additional with X plan are by model, our others the our to total so far, with partners,

with regions, PowerSchool we Egypt and BeeNet, Singapore Hong in market Africa East CCS Bahwan we Middle the In and with for an the UAE. Oman who the will resell signed Philippines. Kong, Asia, and aligned products and For CyberTek the for agreement

first Cyprus. Our in in Europe, will selling focus partner and Education, Greece Gear on

we in Zealand, of of market, Glenn driving in as we channel goal school XX partner. onboarding forward aligned We other country these outside over each the Technologies look North with selected coming the America. and growth LearnBase. Cook with million of with and partners the our a secondary latest meaningful primary PowerSchool finally, to For of quarters New the Brazil And students, our are

and in These U.S. Day upper expands showcased we unique underpenetrated you third personalize education as our and clear K-XX the quarter are the billion summarized path to our discussed in durable very successes as XXx X. XXs, At platform X% how to $XXX and vision this of in $XX.X addressable the at our TAM September driven SaaS we the position by Investor when strategies opportunities to most a billion we EBITDA international on revenue the how comprehensive K-XX as margin well market education. presented We software our market. event, end and when remain personalized in adjusted vertical for billion roughly Slide at we $X outlined differentiated and our nearly consider expansion Canada as

our our strategy, growth for articulated go-to-market drivers We through channels. expanding multiple reviewed key playbook detailed and internationally

margins. and We also products believe the showed Eric gen up by expanding day industry. the billion that out we personalized EBITDA free clear levers while of $X including will cash will the many we over our detailed product [ employ and transform financial Then targets, the flow the midterm education generate of by road laying signing wrapped revenue future to ] map, in AI XXXX including

presentation, Investor website. via not who to reviewed the anyone you Day encourage Relations our For we has Investor so do

QX was a PowerSchool. for quarter great

momentum in have teams built facets Our of business. our many

and durable execute lines. both and and global top develop We efficient value efficiently, our growth in confident for our continue meaningful am driving deliver in scale build reach. to our bottom I and customers

call the the With quarter. over me for that, to Eric let performance the to financial pass cover

Eric Shander

third a saw flow demand product margin our We cash you, season with solutions. record back-to-school by our particular quarter analytics generation. and in across double-digit Hardeep. strong We busy expansion portfolio during revenue delivered Thank strength data a and highlighted growth, balanced

bookings grew revenue the teams new continues of of Subscriptions in Services million XX% totaled main Puerto million representing in for year-over-year in year-over-year drove strong the XX% representing ARR productivity the increased and revenue license to quarter our schools and the totaled efficiency for exceeding attendance to period which Rico. through good a other by of same driver accounted season, As support $XX.X last time Slide provided in cross-sell activity we $XXX last total a was our services range same X% renewal doubling the our end logos, upsell. and guidance summarized and driven year, $XXX the quarter, and revenue solution earnings from over increase and delivered over we of reflect time delivery on across million, third call. last X% X, the total Revenue in growth new period $XX of the the all more million of our than year. tracking quarter, The security organization. quarter, and high which

representing and with X% recurring rates. as to existing logos, quarter maintained of the acquire a balance an ended We $XXX retention we cross-sell annual year-over-year continue and to upsell million, new strong increase customers

previously, discussed attributed quarterly timing and of and the is we've strategic larger deals. As variability seasonality our to the

continue SchoolMessenger, the from ARR We early excluding full ARR to fourth the the year, for in the low double-digit in expect which growth closed quarter. addition of

of Our came year-over-year, down from at XXX points QX however, XXX retention net XXXX. basis revenue XXX.X%, rate basis in points up

of decline I've QX occur XXXX, we impacting during that a volume large sequential NRR metric. had a see benefit the the can As high renewals given of QX our we this third discussed and quarter, of deals X previously, very in in

costs. profit continued quarter by driven XX% the at margin, with operational basis scale a $XXX million came hosting year-over-year point a and in for XXX Adjusted lowering improvement gross representing

Non-GAAP year, point adjusted to invested with R&D in efficiency R&D and basis last revenue third total drive in representing last compared capitalized of a we improved and came expenses. XXX Moving in model R&D expenses, invest a quarter basis XX.X% revenue This of research XX.X% development growth. in in same $XX of R&D cost our year. improvement. XX.X% time percentage with game-changing the as was to point the compared revenue of long-term at reflects representing the operating million, expense while XX.X% period Including profile XXX the to continue innovation reduction

last are go-to-market quarter, third million Non-GAAP revenue our will sales the and the The quarter marketing with reflects compared of growth. in that XX.X% year. revenue international third XX.X% we of $XX drive investments in the SG&A expense increase in of totaled organization our and making $XX million or long-term representing activities

per by better our in was than quarter adjusted year diluted driven L&O million, XX% last a range, was the $X.XX we income management fully from the points a EBITDA of high the share, $X.XX our and in continued Third same exceeded and end quarter last share guidance XX% net at third coming the per performance $X.XX basis period $XX cost XXX margin, time strong revenue. up Non-GAAP year. in or focus representing which in on had diluted

Free in flow million $XXX $XXX cash period third strongest the seasonally our a year. last same flow is million cash record the quarter, quarter, which time in compared was with

for flow XX, the in the time XXXX, contributed was X year. increase. ended working XX% and collections with compared same cash improvements margin free September Our the period flow to months last Strong capital free cash XX%

we in to the acquisition Net was the balance a time the in quarter with used the X.Xx with year of XXX% $XXX an ended QX. the last the which increase at cash This leverage included compared and to balance of term end earlier. year. over debt sheet. SchoolMessenger million Moving finance the X.Xx We upside equivalents, loan, $XXX million same period quarter

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

to for fourth This total revenue both year-over-year our be the that the lower of due the our levels quarter. in which growth the will revenue continuing license range at representing expectations our and year. outlook improve includes SchoolMessenger. L&O midpoint, This expect services timing For fourth million, includes $XXX prior also productivity than to the and other we $XXX XX% services revenue expectation to and quarter, million the in their team is of

in XX.X% adjusted at $XX million business the making of that the are the platform integration This EBITDA expect margin $XX to midpoint. a We fourth in representing includes be million, we investments mentioned. guidance the quarter to SchoolMessenger range Hardeep

and are EBITDA. For revenue our year adjusted full the XXXX, increasing we ranges guidance both for

now For XXXX $XXX.X midpoint. at million, to finish XX% of growth in representing expect $XXX.X the million we an revenue, range the to

which $XXX XXXX to our SchoolMessenger quarter. point a from at in year to million, adjusted year are the includes now $XXX guidance original the in million a we the all at midpoint, fourth of the represents full finish of XX.X% XX the margin basis we representing For expect the EBITDA, making range the of beginning improvement and investments

$XX of expenditures, we by in shares. to of are expected million year the $XX range For capitalized to million approximately software, million modeling expect million. million to year expense diluted share-based $XX shares the purposes, full to be of the including approximately and of Fully capital million $XX compensation end XXX XXX

Overall, results we with QX. we're saw the pleased in

flow executing strategies growth revenue are profit the I'm for with the year. our very well. teams happy Our and particularly progress throughout on cash

for customers will growth while all success. we in profitability We're and where which our business looking reflects expect XXXX long-term forward in durability invest of our double-digit to financial This product finishing top the and deliver with meaningful to our grow continuing strong believe we to to next-generation investments, position both and PowerSchool, and low significantly students long world ARR expansion. future over a line momentum strong, growth model margin

operator the ask please for and Q&A. here to line stop will I open the

Operator

Our is Instructions] first from Barclays. question with today Kalia Saket [Operator

Saket Kalia

with start you. we'll maybe Hardeep,

just of little time of more called of the a kind bit competitors associated sort the recently because in activity K-XX your of lines. market funding ESSER out One and

get I deeper very I'm anecdotally? you PowerSchool just think you right, into of as just and PowerSchool in kind been line, as have But Now necessarily talking what but catalyst. consistent that about it is a seeing the we not right, as just discrete time from team a of and of helpful can about that wondering, item, deeper talk sort

Hardeep Gulati

sure, Saket. Yes,

school especially recently it too, good it's lot helpful Day, been is investments saying, to -- that that school think services students. on for out how learning districts, There's of but very our of and the not just pandemic. teachers the came cushion they have at for have a It and consistent been about it as kind good of provides how around a make the can the is we talked a accelerate you operations, item. with we sure I gains what on also Investor

about, and remains need software, our subscription But talked it is know, for the to we've do software as for you as nice as that long-term overall commitment funding the a you that. more And environment. cushion

spend our ] budget. the would our of for long [ actually most So over software dollars districts the

for there With material get do use that year. or impact. ESSER see And projects, to is we on -- be funds if have as do had another that deployments, able might an that said, see there, the especially early some any hasn't they implementation well. of going to but we benefits We it some been

As there you is still which mentioned that spent. about not a is chunk good

but lot still that. support of there's get at a districts Some well. to as And earmarked, continue do has for services look areas we to that and that districts around that been of provide

Saket Kalia

but to helpful. sort you it's early we Got how us to Can I and this basis it. Got Eric, models? year. of as revenue that thinking remind for on maybe ARR much layer it. too my of SchoolMessenger That's annual to of know into just guide very you kind how is an we sort SchoolMessenger be adding kind for about follow-up. EBITDA of should 'XX, our And

Eric Shander

to hear you. good So from

So things of the us as SchoolMessenger to talking profitability at fit the we've this really strategic the been to of one we when company, looking but the business, also of attracted were just only business. not the that you all

turns about of for you So the take you for a the best at will, better, a the can think, you I if the what assume is I to EBITDA think multiples, would of framework financials. terms or say the way PWSC the in PowerSchool get, proxy financials if looking couple nice

terms but XXXX, we're going continuing still -- the planning certainly stages right the really phases knee-deep we're we're into it's have. to in optimistic contribution for early of As to so now,

estimate would incremental I ARR the kind buildup point of ARR, more It the best the at with of percent SchoolMessenger of we're as time, from could through annual still some be an a in bit that, would X-or-so be -- team. work a little terms perspective. my than but this In of working we

Operator

next The Brian question James. Raymond with from Peterson is

Brian Peterson

color moving in was a relatively read on quarter? to fair ARR I of I the drove saw Am Eric, And I if new kind the any held to on that? some trends. right? parts So but Is steady. as it but growth the what net wanted this moderate know there's ARR bit, that stronger so, hit that NRR, we reading that

Eric Shander

Yes. Look, new. to terms to I low And in net ARR double we're the good see the the still we and prepared as estimating we mentioned for have really in of momentum continue my be remarks, digits full year. in

So really good, continued momentum there.

for opportunity One just quarter, in everybody versus other to last recall transaction, up we you'll keep license a LAUSD ended ARR. into had and the which mind. And going being thing

there's new related couple to be again, the we good moving of pieces, going the net of business So bigger a see parts to quarter. but did in part the a

Brian Peterson

Great. sounds get up map? which expect I I'd appreciate the Hardeep, it time line the love road we international that color like on expected. And to perspective revenue in partner the quicker change traction the should on that that. ramping than is Does there.

Hardeep Gulati

Sure. Brian. Thanks,

chunk Board ATS, on as state Just the net remarks, multiple the for the that's adding application entire the net of talked I your sizable a of logo, of Florida Brian, deal state. talent talent -- in to of about Job rollout a prepared talent the in across of districts the I about think the last as new -- the about point, our for so our management. a deal Again, state, DOE question well solutions good one solutions of tracking

of few for saw story our new a logo, we as So and net a great that well. more

question. So other moving the to

about we asking international. are actually the Absolutely, You're ahead.

we over as initially exceed think ]. hours are XX literally [ would over all that were We well. we months In year signing fact, for probably targeting and XX have partners away from basically I the

still partners covering importantly allowing element that strategic is key make the of the enablement quarter. to that having fully to in really of done engine that. markets within sales cover them -- -- Egypt, the hard have more we these partner, mark, traction partners get get that already most -- are to of the And enabled, strategic good have a kind the spot. is Especially work bright we And similarly to we lot we us job and on a of important of a America seeing And and seeing phenomenal exclusive our coverage. be global the is We're a some for one going. our was There that of a wanted example, already growth Arabia deals. good of of Latin traction being getting one. we some Saudi had another

kind pretty through expect push, the it India be X we growth. to think a million years, that we you international the as look up would acquisitions of I if business. think And -- say traction, but through think both I about, to little we -- do we've us I slightly over as for the to talked more look setting plan, will million of $XX next of what ahead is well our do $XXX about organic, well X year be

I we'll on very it. track on be much think

Operator

The with Needham from Ryan is next MacDonald Company. & question

Ryan MacDonald

Congrats as of not curious nice that the market? of for Hardeep, you're the sort margin as are quarter, a what acquisition? And guidance much how you revenue sort fourth buying about decision we perspective from on contribution drove or -- sort here. a that of versus quarter expecting of year acquisition, partnering but on next sort India guidance of I'm entering from think and

Hardeep Gulati

Eric Sure. start on for feel to as to in that, can numbers. ask I'll jump well and I the

students. one at -- India on look million actually XXX Ryan, you them I it's schools. of education market, XX the the largest the just So actually private are in markets the million market, the define to world, K-XX plus in first from of think right? when you

as perspective, U.S. as itself, very even the schools it government size think about So just private as it's a school the in -- outside a well. market from big

So it us. market is a very for attractive

people there. sizable our pretty center with a with We almost also XXX-plus presence have offshore

to So we very excel there. capabilities have strong

we have ground last couple we of our side, good of good boots analytics. saw the in and payments local. the But some of on other one get traction actually transportation some logistics required, little traction bit of a especially more interest was We ERP, on continuously even of SIS would Schoology the sales and quarters, the the we on over for on -- a localization as areas pretty around product. saw put side element lot have We our of

rollout. larger, what bring has for opportunities, a at India over market. is SIS was bigger it you combination have still our the which for in analytics is XX is us an a our addressed Most we to bigger actually have who more shops. and the something platform to perfect allows the So looked great through million broader with us of that a And bringing to for localization, present for acquisition, now gives the that especially marry classroom Indian products, market, been small not market which

small million is we this about XX from students about out X.X still talked that company. of students now million already private the also has school, -- a So -- it's while it's

about the couple broader give right? of is start gives point talk you it's So cross-sell, pricing, we typical can a selling XXX does it dollars us small schools where it But vision. very So about a what us acquisition. proof per student

market, in we've in a which will the potential including of looking some more allow and kind assessments the also way. we're market India we really -- full of to future enter us fill big and can so partnerships curriculum acquisitions that platform around -- been And at strategic for the for

run really small, very be exciting market. think it's I'm about acquisition. us. to long I an it's excited it's Even for the this So over strategic going though

Eric Shander

you you Hardeep any financials, tuck-in into Hardeep Yes. for ability I engine with distribution terms would the in just Ryan, of XXX-plus to really fairly I be as the that the immaterial, expect able you our mentioned, as bring gave is we again, reasons it. and that all But mentioned, to what about really access us our it That's just -- as scale -- would schools. to it think do. would say

to be beyond. up, quarter. get relatively we to contribution we financial the scale as fourth immaterial we we'll will start as momentum increase that again, and and it start XXXX the start So in as really see to But into build

Ryan MacDonald

a SchoolMessenger. as on just quick Maybe follow-up

I sort EBITDA near also having of think overall accretive you talked integrating you talked investment But about to term the from investment, sort be margins. next on of quarters about be a to that of technology expect deep in are perspective. that potential in acquisition couple Should that that even immediately the out? you would with assuming to happen accretive? accretion Or it we the

Eric Shander

Yes.

Ryan, great So question.

SchoolMessenger of view of things the pane and one into So bringing really the us students, got that which is our excited single teachers really about cetera. it MyPowerSchool, is for et

of we be So X upfront that doing. and are part implementation is year, work company. some say, take there you integration going some to to we're a going that, start next to that making the for see investments we're for would that accretive middle post I quarter will or But But integration. to it be

believe quarter even have the that. spot leverage to that. probably So X obviously, back to company and further prior get it's And profitable we a acquisition, beyond then was will it focus it that going that a we that be or on we'll to some in and

Operator

Sheldon Blair. The next from William Stephen question with is

Patrick McIlwee

You got Pat McIlwee Stephen on today. for

further of some just So on these of questions. prior kind

the You quarter put there's implies up quarter, expense you fourth really to with XX%. in quarter going the margin be guidance know some that SchoolMessenger to mentioned but this nice EBITDA for related profit a XX%. And of an of I margin

part the whether calling or that's down, there we on -- So to not are other for how out. just think if or ask any most are step worth about that should that all SchoolMessenger considerations wanted front that

Eric Shander

between some the I And is most think question. great to important timing about this, a there kind it's No, and think way QX Yes. QX. of of activity

happen in million. that of by in is think I an we year been that adjusted could have there could been remarks, mentioned prepared in that QX either happened L&O It timing raising we but most it I $X full QX. some you important my are perspective, some of activity or, But if was saw what QX. QX, have As EBITDA is about from the think

super We that are integration performance. with the we We're investing this QX have. work in pleased

the you our That's I we what XX% in XXXX, full the say think full again, year, is we'll is total. from which, year And a up full X point financial about to around ended where be going points would percentage model. end as above year full

a hitting we're profit cylinders from standpoint. all on So

So important going year. to kind variability, be where about quarter minor it's just think to but some the again, I it's we're most for think going the full of be to

Patrick McIlwee

Yes. question. Understood. my second And then

data for products. ARR said You

sounds additional there exactly last products traction customers maybe these I quarter to on think -- Is how strong be the at any really might can the in in then is give color And past this up -- and expect year-over-year. are this continue that like you using was for it quarter. years? to almost you there quarters coming point and what evolve XXX%

Hardeep Gulati

Patrick. Sure,

be what year MTSS strong. of in that interventions support use school engagement, launched full You're rollout actually we actually coming they for has on student district comprehensively can the a where state programs to we for a at each cases a We Alabama understanding years seeing. our for further for students, saw performance back Alabama where school we system level have. right, hey, fact, and look the case in support. in class, kind at a terms We this of, are where case every are use first student. We full this evolved every use showing has call who's what support into my couple up absolutely growth right, and, rate even MTSS, multi-tier X in -- there of student lot saw continues pretty had of And are multiple of

on is [ not for kid provide last, the that. the side, kid emotional, able a intervention growth a areas the career upon If be all And state has for have do do every is the ] on pretending, but academic it a driving at bringing months. basically resources. can If a pathways what huge you and scaling a required social, strategies call need way XX level would there. If their how you XX, support them. very individual plans for to be district and it, similarly, and level, going has student depending you And support keep behind been one kid supporting over strategy to that comprehensive or that support for of at

now we're a Intelligence. of huge on seeing But Connected interest also amount

you is data actually where the your one product data source lake. element, data On bringing sandbox about of data kind it we're or think your just

You're where not to from which able bringing just audit able correlations, also to able things the are, your have being of to understand have of tell and all have have to systems, from being for being the as [indiscernible] systems, for even you security, your that that. being challenges not well data a have able PowerSchool it you kind that and data being your may -- long-term able as reporting other on to

So are workforce we and it very tying Insights the has not just strategy, talked we seeing become the a the with deal, data interest deal but strategy along planning. up even huge LA as strong to data about Montana it around

where you're understand and going on K-XX support a view students to them. you So your are how have and the students can

So really these to expansive. continue use cases be

to can in tools the the of the run of AI their where to of all are is Intelligence able putting with the terms not very and risk future, AI and data AI on use these letting actually their about -- bring than One to data taking how seeing districts actually having and Connected is around and Connected everything what be in how interest you things they they -- we can tools -- of technologies. security new top AI this exciting think so rather Intelligence

very So K-XX on a a for phenomenal be lot us growth educator do on launching to analytics the and that That's of has also been career well -- We as well. focus as we are area in broadly. interest. expect strong also going of

So we very exciting our do see of area, this opportunities and to be here. one growth see continued going to you're highest

Operator

question The with from Gabriela Goldman next Sachs. is Borges

Carolyn Valenti

for Gabriela. is on Callie This Congrats Valenti quarter. the on

of some me customer SIS press First Day, plus of some of the the would in releases recent or the functionality include one you've Investor seen or with for be, kind I've since acquired space and deals support the out maybe modules. SIS how broadly? these few like built other programs a seem core more that behavioral as modules though. I been to in or the special you've add-on to SIS been system more to They complementary important ask, wanted such then very seeing success the like have just And add-on

Hardeep Gulati

talk to to you. great and Callie, question, Great

of launching assessment talked selling can at management, -- we and add-on one Callie, think, interventions forms are like or you selling MTSS Day -- as I in behavior of are and trying look so behavior multiple support. selling selling looking just Similarly to that the how sell student special providing with education. LMS and things attendance classroom, the just we remember Investor way our about we curriculum instruction than rather the right, elements, also the holistic I so at was but in document you products but our selling products clouds, management, success, not also the individual actually but not

of We modules seeing the time. are happening same multiple cross-sell a these at good of

in press the what that's and So observing traction. our release you're

the on at when We things is growth acquisition are key strategy in on -- is interventions the you where and about we our working add-on very MTSS also prepared these demand our as Intelligence acquisition, of innovation in of talked like our Connected of our that our but look add-on some one the what timeliness very market. timely remarks well. this also The are and attendance seeing based like curriculum, of

thing drive And right. is and really actually as districts. our market of to So the top quickly is the most add-on for growth the the being based us well the to partnerships in react able have able have important to to of what additional as being the you're needs and on pulse allowing XX% quickly U.S. acquisitions to market

districts I attendance. you my who school how think a perspective, more district a of get do do about, If are enrollment from urban get worried about there I lot how and school

this then seeing that, So intervention good you're really speaks that's to why and growth.

of the That's still talk you that of so a about kids social, SEL have are who are a as side curriculum from giving about compliant teachers and lot struggling curriculum. still a them be standardized discussion emotional a of and And you making state support. the lot are policy. driving sure curriculum, with There the can lot and behavior, there

important about. we districts care that things really our most addressing the So are

Carolyn Valenti

wanted asked million X sense. different into a bit. quickly. about there That me the I in just for those few the little $X is that's I but to outside And year you clarify, dig from acquisitions a of one ways, guidance full did? know this year then increase coming have makes just guidance like people to second full in of any portion

Eric Shander

to it, you be related. is about it think of acquisition majority So as going yes,

and I -- good while a Callie, think So it's -- question.

has I think year while important you between addressing what's I'm important, this, shift, think there understand, full the to too, is expectations. line mix will, a categories. if you as been in about absolutely our What's the with

the that coming more That's more our more we've is team, expectations. as given with business, comes well. that as a is good productive. because absolutely lower gotten bit services obviously, and lower the our original a services being and efficient So fact And revenue margin team than productive efficient of in a

of you That's not because but double if from Hardeep I look at that year to just the in full it's important, then at and you revenue the, be still full we the year look look the the a at software the and low and going L&O and pie. think I perspective. will, subs component the support, As also growth digits as though,

bit of shift expectations. the about in line as across it's think full a you much year, the some again, So mix of a with components, our very but

Operator

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

Matthew Hedberg

said eventual you curious, Hardeep, you products about of AI comment on probably of just at think side quarter. sort you -- about just you that thoughts But were kind slow sort first. the should like earlier the that? I'm or kind talked call, how pricing monetization out any of think on some we would the -- just on this I be gen about could think SKUs, adoption of do or of we how rolled obviously, -- in it

Hardeep Gulati

Matt. excited we're AI. about are Great innovation really And we some gen point, putting on of the

at for I just the we at proposition think applications when very what that's -- the ability a even but also of embed from scale And of these our we're have as are current this look and strong used interest to, not from we and really unique from districts. our differentiation it multiple to a the school districts in state level. into getting do already why market some districts you seeing are lot

I want of to be able want to in things be create one to able you one areas see products individual will want new create plan. Schoology. to what within we going I And talked Well, the lesson of that's for items and a is able the of a to are product. are that Matters. we Performance have that of my have to these to about I to full the quiz. making GA be, to again, kids Schoology. want help a be add-on tutoring Well,

gen help add-on for We areas will Unified I'm find Insights me going and and because quickly to Connected assist assess the rather navigating. me than an have to have our Intelligence, the AI data able be

So data to our add-on be products. of to that's going all an

within understand support can you AI the with their can and My with side way parent be to to talk our they able school. interact parents and parents communication allows gen a parent how on gen and to in your the -- tool, AI similarly to launching are actually We which a engage PowerSchool SchoolMessenger use having child that whole the

So homework, phenomenal are even opportunity, personalized a opportunities, these the is which bigger outside huge for with picture coaching of for the teachers.

over top going and couple how We other multimillion-dollar with student. seeing of that -- lines start per all of is And we years, couple our products, monetize data of these next be are that are dollars monetization a on you of strategy. add-on the will similar to product the to

their of platform Connected our choice becoming for strategy. about, the talked is Intelligence for I AI As districts

as So use tool, our will way we're [ of a use district ] data any another their AI district marketplace how enable strategy. supporting they to or AI a a on who's broader PreK wants to platform PowerSchool

So well. we'll at these districts be able Intelligence to as monetize Connected that whole

Operator

is Joe Baird. question with next The Vruwink from

Joseph Vruwink

up follow talent to Florida. wanted deal on big in management I the

back of your to see the say you indication is Would think that pent-up make mentioned the been on demand. your XQ but like PowerSchool peers recently, is pipeline solutions to in some have area pent-up you is back demand it too capital in there's activity maybe I that's ERP unlock? and put the in maybe Or that human the and an declaration? it soon starting XXXX, burner office an

Hardeep Gulati

question. Good

we the the HR because some and talent do think CFO. I to ERP time So the typically club sold back, both piece and that's

of kind they perspective, that's a -- So common buyer. a buying from

teachers, solutions growing we itself, teachers, by and double consistently. those when actually when is you recruiting cloud of group But substitute been professional the teachers, this up. onboarding kind digit development them, talent them, of see grouped our So at buyers, lines them look by you product have

than shared new fact, year-to-date of if more In at has grown that that . business, XX%. look I you

we product that during have double-digit talent pandemic, see our to to to consistently. been Even prior continues even able very pandemic, on growth be So post-pandemic, in healthy.

in talent K-XX. now of us actually good are of to competitor case our actually becoming Some even for we're displace have a allowing market Florida. is products we in the like we clear the that, leader put in seeing innovation that And traction nearest the on

to has the do continues And low Now post-pandemic, We that gone been ERP of expect being to still market single And is XX% post still good be legacy. while in which digits. a the slow. slow. pre-pandemic, traction really that -- track saw it has market we

be out could As there. for their it are But within growth opportunities. districts will a there -- before be start that which see immediate to very we normal cadence, we the a do pockets us of interesting think drilling get years and we near come are And overall of we the couple future, some seeing in I for tracking.

Joseph Vruwink

get I I these just the mean deals? But a row it's of is license, typically. big emphasis. some strength. I contracts this support X license And you with quarters Okay. of ask, strategic follow-on in to do then sheer of magnitude really wanted a know

in a relationship period you're of be over buying component license we recurring see time, kind more a activity just decided for licenses good comes. if a in next year. it where seeing I'm is a could any there So as might vogue that wondering actually at you shift account, and gives the preference strategic of

Eric Shander

Yes.

it's Joe, So take I'll that. Eric.

related discussion Puerto So aside was was in there the it it customer. know, a or been how more desire guys the wanted they their of such But deals you or quarter, as that, to utilize think from terms strategic million are LAUSD, $X.X where less with software. so talking in was And Rico this obviously, to I previously about. about there we've that

a take I think consideration a we point-in-time where say, to items trend, if emerging what in. I the standpoint, an be customers' not I'm it's structured will. appropriately it's of most always And going would transaction, more will if you forecast type But probably sure or it. from we'll that's even our absolutely do deal in little the there's for because us be can bit be happen actually to the can But these a number they from depending quarter. higher is L&O internally upon any hardest when lower one quarter,

pervasive L&O don't but that, tremendous necessarily and from deals of amount a to thinking to absolutely a terms they we trend. the with of as continue time, there's to it be don't more we -- see it. just time monitor wouldn't happen. we because very and call There's see So the necessarily in what will leave going one-off deals I year why to to transparent Street going be it, those going just we're are of be next But hey, I

Operator

Brett next The Fitzgerald. is question with from Knoblauch Cantor

Brett Knoblauch

come growth a the I played on upsell to as perspective. renewals how when we when that's they should of turn occur? motion be guess happen most focus integrating. or next from historic begin you expect know on maybe Is the -- But historical curious the acquisitions normally year, is to maybe XQ Just have made, existing do I guys to going main out I to you that to customers? guess something

Eric Shander

Yes.

think I I the question. good a say will acquisition depend Brett, on it's we it of And would make. what is type So

on next like our a an those distribution smaller make technical the or those pop Chalk, Kinvolved we into get where engine, it's And immediate a So putting tuck-ins, happened we pretty whether much Kickboard sales quarter. those. in or

all place. their and like integrating our asset that certainly team of focused, settled. we're are and team When you're getting the plans and a that well. in Making the we've sizable of sales elements strategic absolutely on as the about sure SchoolMessenger, pipeline all product Meanwhile, in talking building operational team foremost, first acquired It's the is a that.

say I So business momentum would will that continue. the

see you a second of of the seeing us. start particular most uptick is that the renewals year, as start half probably in integration behind the next we You'll when to an in mentioned, and likely space lot activity work

Operator

The Macquarie. next Havemeyer from with Fred question is

Frederick Havemeyer

hear little something clarify license have in I coming I think from revenue Eric. misheard that a Did too. this, was the I this line I earlier wanted Rico Did quarter? there, Puerto -- might across bit I deal the to

Eric Shander

piece of obviously of the so that There's scanner, as So There's piece. was. came just only subscription it the services the into the the obviously it part well component a yes, quarter. that's as a hardware --

Frederick Havemeyer

deals, And last ask, I Got quarter, times lead I to some think you're could larger it. implementation subscription particularly how wanted lagging talking to about ARR. revenues,

to wanted I ask, trend that's quarter So well? this is that a persistent tracking as

Eric Shander

quarter extraordinarily Rico system I necessarily. you large mean XXX,XXX this when like Not where see there's Puerto students, have implementation. that deals you'll a large typically,

gets You'll see the the region, system using they the ARR recognized it. start turned than then much actual over and quicker to

more size that that ARR at which and delay, will, -- But So haven't previously when that you seen of you look was cause would deals revenue. QX, as if pronounced we QX. between

Frederick Havemeyer

talking least spent a which will and take executive I interest and end portion Hardeep, next their through year my generative reading then, the about it And forming at change. in policy White AI it. House's And there, the Got a place spent they order. AI of over in while

be White just AI. the U.S. generative if about any and government have AI Generative House specifically. how initial approaching So you thoughts education curious might and

Hardeep Gulati

card. with of the the system time, complexity Rico implementation students, which about think SIS the using X the it's parent to about quarter, Fred, implementations And that in And one out. something We biggest about big Fred. XXX,XXX in of to so with already adding first, think sure, very just to I exciting, record the last is maybe we've Rico Puerto call Yes, the question for achieved last every in Eric's point, some live of went in the months. related support our Puerto

virtual phenomenal the multiple with go-live it's their is So schools which of the in another Arabia. a on stride, schools, Saudi phenomenal Maarif

Intelligence. So and we Connected had some -- our with LA our with Alabama Insights and

as So this quarter actually well, exciting go-lives very, very was timely. very which

policy into the as very much sure I generative point AI, the there in about not AI. ethics that think your making a plugged is are as and the well we the generative the bias

standards to the one or really that PowerSchool or of have the factor will of in don't strategy state the either who fact, that at in. strengths to provide a policy in data this it's makes elements well huge lot our In compared factored the And be come district from have they advantage the the relationship non-K-XX companies opportunity the as as of us with to assurance strategy. going don't and to is that the district scale a do have policies, for to broader able

with experience their be partner up and even in to and in, being they and of sure advantage right So starting make way. used -- of all can the AI. is not those are are that having and take schools looking sure the identification, who seeing to And are data elements roll strategy in these there data are helping the charter at the are state elements we strategy and factored private shape looking the then -- how generative just the around schools that to they AIs districts actually but us at CMOs make out

able position to well. as support districts, able be be So we a align are the to unique policies to to really very to in advantage federal

Operator

is Koji next from question of America The Securities. Ikeda with Bank

George McGreehan

of Koji. if you products for what has any several on talk when are McGreehan to the do George of just was of cohort the have cohorts about of drive adopted several. that look kind districts is than that wondering upsell? there and the between I -- then fewer kind differences you -- those of like help and This about that kind there talk of commonalities maybe you in kind cohort Could at could any kind you

Hardeep Gulati

great is This question. a

actually where we now customers think In tackled if these Investor XX%. X-plus -- couple to at the you of contributing our are over in of talked products, Day by about have years the look ARR are are customers about who your XX% last grown right last and fact, using the we that of XX% you this and over base years, we X length at

has overall X ] XX% last So over growth [ years. the over double of been

more So cohorts is going products, to more with us, have your you're you're X-plus specific point, And growth. to get around do going more when faster than you're value. going actually very there you and to to buy

still So the doesn't exciting on lot part products. of is there also is of customers a -- but interest X-plus XX% have our

So of growth. get more of as exploration our entrenched we cohort, customers see or with get products, more X them that we X into

So a of go-to-market customers us as big focus for the cloud with more adopted our is as well on multiple products. getting

Operator

our question-and-answer for back conference over closing session. would like This to any the Hardeep to Gulati concludes I turn remarks.

Hardeep Gulati

you Thank again you, -- today. joining us everyone, Thank operator. for for

really are to finishing exciting an XXXX. looking We forward of

both quarter strong saw, a and revenue very you -- it be EBITDA. As guidance with on on

in XXXX to to our how looking and and just growth path top double-digit our also but X XXXX the EBITDA talked really on not on build next years we $X at XX% continue to billion the both ] [ and on into are execute our profile, about. continue We Day shared we which we deliver Investor plus at can line

So very PowerSchool runway exciting. is for

[indiscernible]. of investors continuing everyone. than our about, we Really, want allowing to all to education to less transform to I every us, to thank in PowerSchool and X% opportunity, personalized child. and going As you, believe our we're Thank us and innovation bring for penetrated. education our our team, is talked really Huge customers

Operator

The conference today's presentation. has concluded. attending Thank now you for

disconnect. now may You

PowerSchool (PWSC) 7 Nov 232023 Q3 Earnings call transcript