PWSC - Earnings call transcript Q1 2024 | PowerSchool Holdings, Inc.

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Operator

Good day, and welcome to the PowerSchool First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to Shane Harrison, Senior Vice President of Investor Relations. Please go ahead.

Shane Harrison

Welcome, everyone, to PowerSchool's Earnings conference call for the first quarter ended March 31, 2024. let the that our Investor accompanies remarks first slide posted website to our to deck Relations here. wanted you we know a that I section of

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

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

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

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

Hardeep Gulati

thank everyone, Thank and you, Shane, for today. joining you, us

the are for end XX with starting momentum, exceeding strong the of of sequentially to while points We basis our grew and outlook our continued midpoint outlook XX% ARR adjusted revenue improved EBITDA. beating year-over-year, XXXX high NRR XXX%.

support First quarter revenue XX% growing revenue and $XXX year-over-year, million, to up subscription totaled $XXX and million. XX%

continued run XX% education of power representing in solutions year-over-year. Adjusted spend the better and an outcomes improved and of These showcase efficiently. EBITDA stickiness results our that a help of educators market margin, quarter robustness over KX and mission-critical year-over-year million, $XX districts in percentage drive the first more to expansion market-leading X points XX% demand software

consistent the are driven deliver of and enabled sustainability diversity business create growth of results which us model multiple quarter to by results after and our These vectors, quarter. our strength the

shared updates the beating growth meeting consecutive X highlight I on each of in based past. our the guidance. IPO will in quarters since we the of the XX key have or quarter Now vectors

opportunity our America strategic variety for First, cross-sell and of and XX-plus net new meeting significant broad across a district and initiatives. products North comprehensive

Second, our address strategic Allovue AI fourth, add third, high-growth areas most recent expansion launching important market; that acquisition; large continued for and [indiscernible], M&A untapped industry TAM such in solutions first as international disruptive expands over planning successes K-XX a everyone. the budgeting and the that new innovations like growth and assistant our

of and first wins and with Let's highlights new growth momentum in start the with with vectors cross-sell our logos share our customer some key of you QX. in

briefly previewed we QX, history to in and we As largest in one serve Department calls, earning our signed honored deals thrilled in of our to Indiana have recent are the last its improved solution of school Indiana. modernize and districts processes education all state provide every systems, to program special and special the Education at needs every in for to program to student

with their solution replaced as we platform vendor state and Our requirements. reporting a modern compliance enhanced interoperable for more provide federal existing

our deals or and ERP and our saw District, our the varying priorities and the solutions analytics during cross-sell who School multiple MyPowerSchool Rico Vicilia [indiscernible] social selected School public across enterprise chose the regions. show SIS, with and SIS including broad in product, of ability study different volume solutions, across Puerto Bernardino brought of sizes meet who wins also these to presence elected us lead We and of on products, communication and their schools modules. notable our Unified new districts types LEAP other needs then who District talent Unified the several our

who Education to power and system logos, Manitoba our operations their First new information we quarter, Center, Resource also district Nations the purchased During including reporting. great student added

successes is SIS, differentiator SIS along our logo charter reasons the solutions. the of of of student and system, unparalleled is leadership strong for of ongoing our beat, one other many our hard the or School system. to fact, SIS key In with to source a of to use of our stakeholders The students new compliance for information key succeed. to cross-sell its stores reporting and Department and inform or school student Education data manages school help decision-making provide all within reports to district

clear customer is solution a SIS gross satisfaction and high strong scores. premium retention rates with PowerSchool a XXs and market the in leader

brought new roughly win over past cross-selling rates with X/X much stronger million reaching We students in the the already and SIS students products continue SIS. globally students. in million North American is over to and We're of of now use over we one The have SIS accounts new to additional X customers win who XX and our years. X K-XX keys have

During Middle great the in the international progress in second of and vector the Latin first our East, high-growth we growth made in particularly India. expansion, target markets quarter, America

a signed knowledge In Knights modules and Arabia purchased East, PME of [indiscernible] East students our Saudi Middle in schools benefit new the SIS and Middle other through international teachers. to partnership, who their logo we all board,

cross-sell who from base to Cloud Personalized student We their Arabian with Learning Cloud, expanded Cloud. into our now like international Analytics Cloud deployment also customer to our Talent customers continue education and development,

America, business to of who Latin example an including existing SIS, school expanded platform, Another Education enrollment, Edifice, broader we In and cross-sell the among in a international we with of others. in new with [indiscernible] Tegucigalpa many is won ECE other and India, broadened where international presence Honduras modules. customer Schoology in our

to deals prospects excited includes very our and grown year year has the pipeline are year-over-year. This We about channels. this XXX% partner pipeline international as international our full large over

funding our the to front growth our and want priorities third in of on driver, customers. I touch to key move we Before

overall XX% largest K-XX priority. from additional Budgets spend injected bipartisan additional budget staffing, towards to categories managing needs past is and supplemental content targeted and other the education U.S. during $X are and budgets of a onetime an purchases the relatively multiple in core globally are state As ESSER the and X% you and are federal, and few The services sources, insulated to is over year billion globally. know, and trillion local with years. $XXX macroeconomic per one through inflationary over alone resilient funded events.

some ESSER of investments and reduced more their broader teacher digital ] While allocate their District districts more in software the sure spend rollout driving office, the classroom create use better their to regular growth tailwinds initial their K-XX [ better insight automation technologies, implementation transformation of for ongoing required to students from K-XX get ongoing this their with are need The contract to outcomes. cases, in also the largely of drive districts eliminate budgets. core at software has time, been that manual and rate can costly support task, to modernize back engagement to optimize fund

including technology much research from spending from I'd every budgets report, July. in nearly state software remain growth in responses across where to and share the more. K-XX That like received U.S. is will of and of forecasted our some areas the from to is annual Territory one In we U.S. March, top education. formally released education on market of our highest range be K-XX survey results why of X,XXX a focus a which we priorities, questions, education wide preliminary the conducted educated

in across district spend. implementing solutions, are the connecting data. and were The infrastructure, that tender budget chronic and top technology management top staffing data areas limiting solutions X Conversely, a student priorities reducing technology integrating Cybersecurity systems, districts AI budget additional hardware of address [indiscernible] tutoring to identified spend protecting identified guidance providing

efficiently needs MTSS, These and modern, systems secure, better surgically, individual and survey school. like and results with provide data solutions health integrated drive needs directly attendance students strategy engagement and mission-critical to data keep with to and platform attendance our aligned and insights on to help student right based provide and the intervention

with efficacy key was budgeting recent our acquisition and efficiency and districts spending a Allovue. rationale of helping fact, behind strategic In

we January budget modernization. half last As of year, from need we roughly we Allovue that for are survey acquired of surveys Education this second in demands their Results Allovue out our strong the date discussed already and educator its said are during of very financial capabilities. call, our that of annual found tools the seeing and earnings

lending Allovue, accurately provide clear provide budgets and most education By of with and the K-XX schools, data state we PowerSchool can planned impact strategic growth comprehensive are suite on district current visibility on our student of outcomes. into drive growth for analytics showcases how and to This available third and adding priorities. district vector now leveraging districts communities leaders M&A additional their expansion tools to

Buddy turning Now innovation. platform, deliver we designed our AI-powered educators students, conversational, administrators of assistant industry-first and for experiences embedded In Buddy contextual differentiated K-XX announced to a generic is fourth January, for parents. and Power our Power everyone. PowerSchool to personalized, growth AI factor

student solutions X Power and them assessments, of to spent assessment. countless levels, new learning lesson recently reading We are and subjects, teachers These for solutions. general availability Power plans assignments, X targeted hours announced different generating Buddy save Buddy for state for with standards. standards personalized to seamlessly designed controls for and and and Azure built AI matters performance and within by and languages They on K-XX district power Schoology with and fine-tuned but specifically AI, and Microsoft responsible Open are for school principles integrate compliant content. state AI-powered

including already for dozens Demand of schools. public strong, schools have and and been signed Epic we very county customers, dual has property charter

for We and opportunity X with these representing million have power pipeline students under beta approximately other roughly have XX several million built body solutions districts of solutions.

to saying impactful a have they the received aligned create by of than assessment teachers Additionally, needed standard more we X/X. have reduced testimonials item time from amount

for data career inventory, be We AI, available Power college are additional Power XXXX custom school XXXX products, body including year. excited coaching engagement X which and to Buddy analysis, will and launch and

impact, information reach, teachers use existing all students, experiences a health and that in contextualized scale, are we solutions day solutions assist into for embedded leveraging leadership us to our Given their that child whole and are positioned administrators generative needs. and breadth every personalize parents, uniquely provide and and provide

leverage their District security. We ensure connected bringing privacy platform data, formalize seriously. it AI lake to severity data to by very in empower AI to also that leads A for their we students data our with districts responsibility data data solution data enables K-XX intelligence their When industry educators student are data. and and their take the to AI helping PowerSchool comes Gen and differentiated

the federal we such applicable people federal had that and and Copa California loss all Act to including many at such and including in privacy probably and Personal her Copa data. Information Student well Privacy as certified are Protection protection Act, and its and Student leaders Family end, rights To to as regulations, by we Online Child other as as states. Education Priva, state variants Online industry pertaining laws, state TrustArc so

proud by the and CISA the U.S. and the design initiative are the of pledge SecurePad also voluntary of Security Cybersecurity Department signatories of privacy Agency House Infrastructure White We student developed pledge and Education.

security subsidized and resources secure our all further also We ecosystem U.S. by the offering schools to and commitment pledged technology to education free districts.

of more Privacy and data please earnings Chief compliance, X For vastly on XX midpoint XXXX have our privacy we to investments company our and than and based fundamentally our ago. AI security our security and presentation student our block. tripled our just than EBITDA the the and it Compliance for EBITDA policies, XXXX Officer, nearly accompanying on doubled expanding responsible information revenue outlook, was to while our by guidelines, today nearly our percentage larger different Since points. PowerSchool years adjusted adjusted is more margin the will refer links

we of in the acquired doubled number portfolio. have and XX Over period, the our nearly companies products our same

of of and XX the network and executive to this markets, started channel delivering kind growth targeted boots talent partners have our exemplary markets a of in ground high-performance culture. requires international We build put all partner on across out international

to company's them targets needed and of team quarter PowerSchool drawn executive proud the these class of results, for many the able we strong powerful been world have I'm attract and mission. by Highlighted retain leaders to about to today, first our in at focused to in $X next line billion to plus Investor Day and and the X reach we remain last strategy and continued the revenue year confident ability success years. in our with shared execute

Eric? the to outlook. I will to turn Eric results discuss and financial Now over

Eric Shander

in delivered with and line over Hardeep. demonstrated to XXXX and with you, EBITDA product off our more strategy. that We initiatives innovation strong the Thank X invest double-digit our margin quarter expanded continued adjusted execution drive prior top to international value kicked a customers the company. long-term and continue that line growth, year our than in We will by first to points

our came million at million revenue First year-over-year in and XX% the quarter in provided in $XXX XX% revenue on $XXX for increase, range of came with quarter. call. representing at total Subscription and line revenue guidance the accounted earnings XX% total year-over-year we last in to support

Indiana Department and the the population to of thrilled serve the are program Education with we the reaching special of special state. honored mentioned, solution Hardeep opportunity As by entire education our

in $X approximately in our million opportunity. that the representing represents of million prior $X scope deal $XX and into a and the slight will Revenue the year. support XXXX revenue this revenue business large million span over significant in subscription given approximately This from totaled Services quarter, services increase

We our quicker from continue to implementations, see efficient which cycles customers value more for time deployment to platform. using our our drives

in activity and as smallest $X strongest million, acquisitions. is revenue period on first million This balance the the ended well representing same last partner expectations which addition of performance other, have We in the our our third-party slightly driven year. ever by revenue with cross-sell stream came in seen quarter. was third-party the of and recurring from XX% the time quarter license annualized our as Revenue quarter. $XXX totaled mainly strong relates an activity the an for over of based we revenue the This quarter below the increase largely mix to the recent

net came representing Our rate focus at with up retention margin, basis $XXX XX.X% scale. year-over-year in XXX basis continued by profit management came a revenue quarterly point points basis. gross quarter improvement a driven million Adjusted on the and in XX for sequential XXX% a operational cost on our at

expense compared first year. representing the with and of came last time expenses. research development same period in revenue for the at million to $XX Moving XX.X% a Non-GAAP operating in XX.X%

R&D in continued and percentage million This products year. total the same capitalized AI investment in on Including expense the last of $XX future the of in representing compared expense with XXX the period a Non-GAAP XX.X% will million our the totaled first $XX that increase reflects point was or of with shape data revenue R&D XX.X% R&D XX.X% revenue investing in of prior quarter, education. focus basis expenditures, adjusted as year. our of revenue in XX.X% SG&A time revenue in compared

are was largely lower G&A XXX driven by international continued expense we partially point This in and was by sales on making scale, activities our offset improvement basis operational our due build-out. focused go-to-market investments to which marketing and the

million, high continued our EBITDA guidance margin a our of exceeding XX.X% and quarter representing First adjusted was to margin, end range expansion. commitment the $XX reflecting

we per Non-GAAP year. of to Higher headwind expense non-GAAP impact expense diluted in fully per first net a period was fully related share down was our Allovue, quarter we reported had acquisition a $X.XX the income and diluted same noncash in the the to of tax share, per from time last $X.XX $X.XX earnings approximately approximately an share of $X.XX the $X.XX. which had interest

free we cash and compared million year. by QX last interest in driven a point of capital, the the in working reduction be period is in low in same time timing which acquisition-related the expense, costs This increase related. believe bonus with changes the timing was to which quarter payouts typically a million and renewals to flow, seasonal reaches negative $XXX First negative $XX due

Moving the compared payments with over end offset same a Messenger school earlier. X.Xx as million quarter our credit year cash related decrease due million the year. quarter cash and facility. of the a was to acquisitions, Net on in a by the and period Allovue cash to to $XXX of balance sheet. QX with was the revolving debt draw flow of of leverage X.Xx the XX% This $XX last We and partially equivalents, time seasonality ended largely the

year our seasonality. the As the in half leverage collection a of net reminder, second decreases the given

turning outlook. XXXX quarter year our to financial full Xnd Now and

representing in in a adjusted to expect margin $XX million XX% we of revenue deliver EBITDA million range the of to to the the range For million $XXX million, $XX midpoint. at the second quarter, and total $XXX

year total in representing year-over-year our $XXX the are midpoint XXXX, we full million, For to guidance revenue million range expected with to be $XXX reiterating a the rate. growth of the XX% with

EBITDA a margin We EBITDA XX.X% of are to million, $XX representing adjusted to midpoint. adjusted a full our year raising guide the $XX range at million

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

pleased and in against continued our line expansion. strategy execution very the by top first we're with Overall, demonstrated margin delivering double-digit We the quarter. progress growth

the focused are on differentiated customers delivering We call Q&A. and to This comprehensive you intensely Alan, and our concludes remarks. market-leading our will open innovation please value through a platform. prepared for

Operator

Hedberg Matt comes RBC Our first question Capital [Operator Markets. Instructions] from of

Unknown Analyst

It's for Hedberg. Dan Berce Matt

So Eric, more in you called the out remarks. implementations prepared efficient

there to you've the or Are something accelerate on. with incremental time point implementations that's to services maybe working to anything maybe year think team I this out any new want undertakings you incremental been value, there? and

Eric Shander

implementation, I seen it's that. look, student which good what did we this possible. would it the information And and super is months. last never have -- we that success. have they on No, of When in a ago, Yes. have as look, Rico, focused team Years all continuous year, lot team of seen, X large a always appreciate we're system But did, been question. improvement. proud you Puerto did a

So we're placed. the work work at packaging we up is continually being are looking the how where

certainly So with not I done. tell progress, pleased you, I'm we're the would while

you to to continue then And focus in the build levels. factory going So approach to continue we're on efficiency other certainly, would out I areas tell India. our will

we'll I and year, the guess that. with the say tuned there. continue stay see significant, stop team was to of going which I'm But made proud would progress last to because not efficiencies I So super we're

Unknown Analyst

is pipeline then you as nicely building Puerto growth And key a highlighted the that like there. It Internationally, you great. sounds Rico That's factor. mentioned there.

a international more focusing on looking at year, this up or of the level year of had you partners you adding a of lot adding signed partners. far? think guess ramp new targeting maybe what you are last similar success so I I

Hardeep Gulati

very Sure, on jump international. Dan. And This excited Hardeep. about I'll that. we are the in is overall,

we mentioned -- the at still seeing XXX% in growth year built XX-plus almost deals good partner growth a in pipeline. entire this the expecting the pipeline, is helped sized large as globe. the also as think that look we partners, exciting international the especially some I XX% we're on What's With well. are almost we have across by channels

in in terms especially the deals we of have lot both improving in. a as about International, partner execution strong management a team, built well more partner we our seen our sign partners, also we through do So brought our as success pretty of coverage channel in and but most definitely the -- new own are agents. focused have to did bringing GM engine of we pipeline as partner these of these expect own pretty have good a We a

as As Europe, well, you're and on will little in partners some we Southeast more the of to Western going see expanded we to that. develop Africa continue to Asia, coverage a bit the

partners But is and do bringing executing closing those. big and kind the actually focus the have their actually enabling pipeline we and of

Operator

from question Peterson comes next James. Raymond The Brian of

Unknown Analyst

This Brian. Start that back there And the sets are particular any has success what selling been XXXX, into base? in with you're is prioritizing Jessica motes customer product for off like for cross-sell?

Hardeep Gulati

that's great a Jessica question.

a solutions our all have is of exciting the the part addressing that of different of one needs. really So platform variety breadth of the all these we

we what on we see an call on we're when Xbox. looking are going where --, the and we are to at cross-sell we So the focusing demand the when as

it's these can each overall priorities, whether able points solution solutions customer, different the in right the graduation defy it's We pain be whether XX-plus improving in help office, their you customers' -- it's whether elements, will where as we drive with key districts needs, bring rates to them. with the [indiscernible] their and work management it's back or terms and a whether really key to imagine, the talent funding to these of and of the the solution space the classroom, with in

across motions So globe. actually our cross-sell are the

software channel country. K-XX in sales largest whole the the have We

HR to districts are them building and from as engaging CFOs these that the CIOs transformation Technic as based on plans. in are the Chief key their all with the and print as what all from We core on plan levels, Officer way strategic well

see One, year, Now further continuation -- at as really areas of well. do last products seen for of we year focus. which are levels data and are in in this the of have a high this analytics what the we big demand

do identify every and reach kid deal help more districts Especially investment with learning to we kid they they child specific on to them but need. what based which supplemental optimize and out their reaching spend so can needs to as funding they manage their these the with limited how how on help are can every able data

growth We prepared the also, as is this year. us I for you of mentioned big area a all in remarks,

lot budgeting a we We're the with they the are of with one seeing as our actually that growth of priorities. messenger seeing big can of of where exciting top MyPowerSchool of areas and different pipeline remains all That's is solutions manage demand elements. along $XX a why need help one that school communication Parent well. about million, the engagement our for the

as about then excited are demand actually AI. the mentioned, we seeing I very we And in the are

luncheon XX% have districts. started We AI of shown excited seeing doing brought really about with across already universally the their are much in districts. the about trust been nation. and pretty that looking we We're be seeing almost districts how series And into can at we are pipeline they've for customers our or the have XX-plus

to we a growth that So expecting are phenomenal well. be area as

Unknown Analyst

with this like with further really schools? now saying of bodies, into That's so how the your capabilities, about early is And do further far? just of the user cool. AI Like some rollout what Gen feedback you you're increasing PowerBuddy's the product power the what for potential view stickiness digging AI

Hardeep Gulati

Yes.

there we're and create time. beta quantitatively that that some feedback for time significant planned a how mentioning -- this data custom and AI in of the they than which front elements for understanding the create teachers less as of The is are their setting teachers all allows already items. getting was as them especially launching of their boards in to is the and data Principals and I and can actually As around real districts, we of better insights efficiency well get to

college of less career also coaching, you efficiency drive as in MyPowerSchool helps and There's Power the where across. value Buddy the

feedback the as pretty instrumental. the have these we ones beta, across the well general properties, which So as been all built in different has

see one this In how are the their areas to that do districts on education be they of seeing help we fact, navigate big efficacy of outcomes. actually improved of can

Charter phenomenal actually It And good level, ability district teachers testimonies and are guys been student. we have be well from provide Epic a having coverage surely which the a as able got media check a few where to those as as have and well, to we encourage you outlets has game help teacher seeing changer. news to to

Operator

next comes Saket Barclays. from question of Kalia The

Saket Kalia

Maybe Can kind And prepared result related with a business. line of us you the it's kind your ESSER seeing little had positive the time I'll kind remind bit just change that, just you. are pipeline impact any I think maybe your the negative? remarks, impact out it the a you customers? of that as what funding I or of of maybe start -- ESSER it, in to or for for flushing on is in funding, little appreciate I mean, that

Hardeep Gulati

portal there states, a out. the it look is you When overall transparency upon federal where Saket, check people ESSER at that can necessary again, Yes. funds, on depending

right? been we're onetime their buying content, allocated. budgets, it ESSER spent. from been more the as supplemental staffing, You will see would that loss even when ESSER buying I tutoring district purchases, has ongoing right, mentioning, of We, were say XX% normal XX% And help funds learning that have largely almost already funds towards the they're to they're to software, of

that. some So to see of that a the we the they implementation direct to benefit use it out don't might see dollars on did impact very We roll systems.

to a our not material So pipeline. seeing we're impact to that be

our launched qualifications solution And pipeline we especially of as also even actually well. buddy more of improvement a pipeline, well pipeline. MyPowerSchool of showing and put -- seeing we our the half a half which further the new has international we're AI-powered bringing already have And all second while have our as we In as you as that on actually lot is integrations and seeing grown our are fact, a pipeline, year-over-year. to second our validation we ramp-up,

business as that we and our showing So if do these solutions not further given actually you trends perspective, are or see healthy. or pipeline retention gross given critical, retention And can similar overall be our imagine, are from on to trends very positive mission our that.

Saket Kalia

Eric, to for for that to of just cash broad the brush. see Good bit. you love year we see or flow this to the But just Can hear cash it's go to I'd a little good is nice flow a how kind about hear. follow-up more up anecdotally kind about of -- EBITDA of talk is even here you just think that kind helpful, you. it's just just bit or think broadly, maybe how about either little free my guide always and

Eric Shander

Yes, Saket. sure,

it I points of over is $XXX finished basis year. in remarks, around as prepared full expecting we to just took $XXX million. year million my the mentioned So top which be XXX up we're adjusted the end, EBITDA so well on to where right, We

I free As roughly year, were last XX% you and on we as think focus about flow, margin. cash

While we what don't on tell flow, it. of components I guide a free cash the key will you to couple

percentage however, much then But benefits I with back track our interest million cash almost last points is in very from on get the be back of about while said Day. We there. interest. flow, we're half have rates we And -- certainly are are we what X absorbing of much year, those would an points targeting in we what's who the X knows on the from flat what in to percentage free just on September so range with still year, will certainly, could some in of happen interest expense year, going also this we incremental to very $XX Investor say focused

will on keen We the as I by we're as a marching towards XXXX, have that and mid-XXs well focus that. the and in very company be

we're go that. where and about an around overall So hopefully, of the outs ins the some some color that that thinking standpoint, margin with into gives -- from you

Operator

The from Jefferies. Thill next of question comes Brent

Brent Thill

On go-to-market in of platform? and this distribution year, adoption quota-carrying the the to making reps any differences big or strategy of any partners in or new help you're terms changes broader you're that putting in changes

Hardeep Gulati

we Brent, sales at sales it our each team, expanding year. force our Yes, to as also always increased coverage XX% but well. by XX% actually are We've least model optimizing

see we will an that's on. you where area focus our to As from that investments continue

actually platform reducing continues are the for our we to As grow, team. territories sales our

on in to platform further to continue each able the levels at they do to the of to district engage with all be that that. able So are and personas

constant a motion each us is that year. for So

We have well better to bringing this as the on That results investment International, year creating new actually actually from ramped be our net we last we new where that started cross-sell both as started seen has business, the up. international. create definitely

channel direct this partners ground well deals. that to in continuing Middle kind as well then the well partner as ramp are We both of and support India Latin as year as but from boots partner America both as our on coverage East, supported to channel, in up by site, also some

which in strategic it periodically of the X are one parts and these we model coverage with -- that of are most the sure the America, entities XX,XXX we that the we call of are buying in in them much we honor. solutions is needs PowerSchool of addressing North we we So front make of exciting pretty to front

Brent Thill

your visibility of your feel pipeline concerned What would you anything how X when Any are about? pipeline, versus about about do what X where the in you maybe characterize seeing? past? And pipeline you the just to better even be ago? the the see, nuances the said differences, that you're months Or Okay. think you to overall

Hardeep Gulati

Yes.

that we As increase seen in definitely pipeline. year-over-year a mentioning, have Ben, the

as as Even we XX call clarity over XX to better rates. have last, on pipeline and a the it, implemented the controls to on our and more well months, us eye give as put pipeline close our lot in visibility

go we have better a So things how visibility on by.

X seen some very exciting Buddy, just areas with buddy just of mention launched actually for if we've less piece, example, actually the these about Power are Power the areas, Learning we're and some comfortable than close it deals pipeline already buddy with think Power almost fact just I the the did on with you pipeline XXX-plus we've exists. where months Allovue So have piece, growth revenue million, the we how that to back, $XXX,XXX much closed only that you $XX Buddy of our tells that. opportunities sitting assessment. And that we're handful almost not Power for a on opportunity

be area. pretty And exciting see a we that, us definitely that's growth to give going -- do

of nightmare sync and are are which back big a systems their the with I different highlighted, So survey is data as can about having looking not lot you integrations time the worried systems, imagine, they going Districts worried and at siloed which districts and security, results to a old [indiscernible] still are are of they about integration, them. dealing automation. still for

are their efficient about way Districts worried efficacy. for more to and continued budgets more be

when help and for continuing you looking solutions on districts. at the And their all priorities insights. empower these they're of what are strategic do, everything the at look on budgets, we on teachers their data breadth and So looking help hitting and depth we also managing the they're at

So whenever year. they one, opportunities on to want customer, next X months the away and sitting if we with least reprioritize are which are over with not we walking the at

and So we coverage more we the in why continue are we customers, the model. the invest to getting that's more the pipeline from are seeing,

Operator

comes The Stephen of William from next Blair. question Sheldon

Patrick McIlwee

for You've on got Pat today. McIlwee Stephen

ask a of a Or go your live to it for that? customization customer for than And existing implementation this customer So burden, my would like domestically? heavier any Knowledge first the a that to a platform that require any announced be is with additional I nice question, -- like quarter. wanted does that win of you win just is

Hardeep Gulati

look you of are that as One Yes, they the Patrick, when on our it models. with especially a deal, doing implementation from at is is the would well. be -- partners some BME, actually involved, of international, the elements there which where of couple

support strategic such they're have services. with So India as of global where the local oversight an that's why as partnerships our well implementation some Provided providing from and support these reason we the teams. our the and

the in as have East, calendars lecture not have are Arabic as East full student Middle cautions the or actually terms systems already region, product. localization Schoology of have, translated Second, including schools, Schoology for localizations and schools, in implementing Middle already of international left well do for in to actually our We right we East. and well you local our as are who the just other also now but as local elements, which SIS tools the Middle the

the including element all will of BME and actual have through partner has we years, network X region, localization below. over already the do last extensive the So the done we investment, carrying that implementation partner who be but majority in the the which the supported have been

Patrick McIlwee

Okay. Understood.

those but considerations the your there a call as you just them the we'll that, know of the them. point about then generally, it's so additional be price margin profile customizations, with scale and thinking U.S., are early, internationally. selling we model that And as or of any to outside follow-up with some of partner I solutions there should under

Hardeep Gulati

X our system information the level the configure differentiators you is they different application, application, how One attributes the put of the actually things. Patrick, extensibility rules, of So is also that of big well countries. states. Canada view almost as that both to one so why different as student XX systems across is progressive have and local In provinces elements. all been America and other SIS in XX the all North across even having That's deployments to integrations we from

the actually product. built is into is level inherent That that big So configurability easy and differentiator. a very of

there's East bit regions GDP price point of India adjustment In we the price little a is, we points. North the points pricing expect but very see be actually do. we Middle the to margins, are to some terms is America close wherever Latin to We seeing and America to more be of lower very do close

models have and built hosting So service pricing. based our support we on local the

So not our dilutive, are even to expanding margins international. are we as

Patrick McIlwee

all That's Great. really Okay. helpful.

Operator

question of Borges comes Sachs. from next Goldman Gabriela Our

Unknown Analyst

Laura on is for Gabriela. This

a bit school products, Can XXXX On interest really given there's and talk a you for they them. And seem the like year? capabilities little power a body of and lot the focus exciting there's buddy pipeline, customer any for Power specifically about demand? if the XXXX for build-out

Hardeep Gulati

imagine a entire unique experiences. Power And transform huge you here No, this to the really for is we because Buddy opportunity because for can the Yes. installed position are such exciting is we such a have base. us

the understand student, everything classroom. what's have about happening the We in

personalize We experiences and leveraging adopt. our conversational, and contextualize are then embed easy districts so able to Generative AI also them are them they solutions, into to for but make

Performance can will connected element pretty Schoology intelligence, There data Buddy Power so a Power for Buddy our will the district much even custom insights. we be rest they easily help bring to and and Power search be them matters. and to our elements There's college allow solutions. MyPowerSchools We've to them ask any with Power well of Buddy So and can them of and planning to be Buddy parents to every as be conversational for one with data launched questions. unified coaching and and a to our a with those. which within help career talk able There's and with able mentoring as engage talent have [indiscernible] with students will AI so

which any pervasive of have are TAM to also amount providers depth pretty all Power Buddy, a only a additional going the huge it but going you're companies. big personalizing, is is we these all also -- different not the creating So us have Buddy Power because and AI understanding to been with broader much platforms, and niche able embed supported for the Not not other having growth to by into part breadth one Power differentiator applications. of to of be Buddy

the It's don't actually our Schoology in built actually from making niche assessment it platform more who differentiate having We're Power of invested more comprehensive differentiators. Buddy and of solutions even have thanks strongly platform platform. haven't us a AI more to and is helping sales talent a because or core seeing some of

we supporting So and a them us help in also our interventions experiences they districts do to even elements, provide address to making lot allows really whether of different value are differentiated. this and these improve more for but or the think solutions all trying

going platform. our is it even us growth improve of existing to cross-sell help So our

Unknown Analyst

how and Buddy admins? models And pricing the you about and pricing about helpful That's versus teachers parents talk sticking bit little versus color. products, thinking Power with the you're can for a students

Hardeep Gulati

more Absolutely. bite-size We adopting them in Buddy to or value that such we this think be quickly. when Day are shared Investor these looking from that districts of at can make to our about you the are Power start

wants which $XX $X we would almost have $XX somebody student. I $X as a each Power in a be platform, to per be range would for So Buddy about for, of the that full said, solutions, these per to student. But of

price we the We're to attractive And they're value seeing the overall pretty points seeing creating. do actually pretty given are the those. market. are that a We be good response seeing we getting on where

Operator

from of Securities. comes Bank America of Our next question Koji Ikeda

George McGreehan

from how on just This competitive is I kind international kind in front, competitive of terms dynamics wanted the different George McGreehan Kind of your in guys the you what you are are on would to that say of ask for markets you of the in. domestically? Koji. markets international see

Hardeep Gulati

we see in market, like of schools, has when creating do America East, a where Latin full growth of lot no government that markets. given prioritized Yes, have And schools some on we areas. at niche new in some a platform. of of population on putting solutions, going the is better private established. clear leader. regions the especially there infrastructure. even they is are have are George, reasons the clear one Middle are see these untapped the India, high-growth And which and we don't They the are you focused There's when leader, These we don't look investment that the

And want do private to schools enrollments, schools breadth career these deals, want you seeing of with They the depth best as districts And unique and class. these They student or when a from want lot full even are we They or They national a platform want planning. we analytics. LMS. college why want the And see are it. an globally, looking ability has at are even this and that's can They want won't opportunity. company they a platform. of system. great which in

country-level literally opportunities. we also have things in pipeline, see we big the the of One

So see differentiator. to that be big we definitely a

of I But we why are of a the we more growth players, don't markets especially established where and U.K. competition. strong the like areas those also level markets Western much they where see these not is either. investing high are that's think mature all, some in are there very but Europe, high-growth

Operator

Rich from comes question next of Hilliker Our UBS.

Richard Hilliker

of color bit on could metrics or talk about in if is a I'm forward. a one would past, that's you and that the first little important little how talked be The student any Any XX,XXX if wondering growth Eric. bit moving could we performed the driver color an the we've helpful. how really organic give quarter. segment us or In for X,XXX for to segment

Eric Shander

Yes. Rich. And thanks,

standpoint. what X,XXX customers, quite is well XX,XXX ones both benefit, right? to as for that everybody's referring as can actually has momentum that the I standpoint larger Just in is enterprise to are performed our These obviously, Rich are strategic bookings well. And the talk from a students. the And then a -- retention

standpoint just renewal can volume. is low As point from our first all appreciate, you renewals quarter a a

renewals, team are as of bookings leadership as over terms the really teams teams with as lot that, sales good are segment Hardeep the rest that. QX. volume partnering the renewals year. a segment on as very the contributor happens pipeline. retention look as the kind what as a both will continue we opportunities year and the of seeing Our made changes through they be in of is we go there's a And within that for good is seeing we're from some in what good That the us past our some on And of to with upcoming mentioned, segment. we of nice Enterprise well working But with sales rates are we've

Richard Hilliker

my Maybe here. question Great. next Okay.

adopting about details trends we One portfolio. there's and could helpful wondering talk us? and if you cross-sell which remark products You've drove of rehighlight specific more I'm ever of or pointedly how in was in have your or that just if commonality the for that any sort broadening QX. could a interested are us what around lot you that you're given customers strongest

Eric Shander

Yes. I that. mean I'll Rich, -- on start, so

opportunity we Education, as Indiana largest announced history. that of the we've our programs our special company's it's Department ever So actually had in

an prior across well we ARR $X contributor some segment But I know, It see that seen, there's being largest an did to as is that. And big the a to we've made, for the I Hardeep, add. a customer. cross-sell is existing on obviously, large momentum our that. perspective, Indiana cross-sell But is comments over us. opportunity if nice This even of million don't you'd back anything enterprise well. From else

Hardeep Gulati

actually would Rich, Yes, we products every one deals see, have that is of quarter. typically, what in of our many the

always CCLR. of happening it's There's cross-sells quarter. we any the be So whether Navios, look the the of will the the when deal Unified breadth in it's So some there volume Inside the us. on part every XX-plus areas you at one is of products, cross-sell of CI, do multiple for and depth each just of of always products, happening the across that's And of the it the talent right? exciting each products,

Operator

Vruwink Our Joe from Baird. comes of question next

Joseph Vruwink

looking year. the not but a we that I to around at kind budget framework. in, go guidance robust validation year pipeline. to little for next outside finalize wanted you've on maybe around into look just potential back seems grading the a on conservatism the It embed When to conversation through process like distracted midterm the more that your also just the this Does -- of below a trying bit conversion schools pipeline. rates prevailing become gone certain and decisions trends school when

And forecast? gross what the retention midterm into about the you've then baked assumptions Similarly, forward that

Eric Shander

Eric. it's Yes. Joe,

and Hardeep start, in. me can add Let then

to as of the believe full as we end drive Large the we're and appreciate guide, very quarterly will deals you year. last firm over year at look right, can several on where have full but all terms quarters, yet we the seen achievement, certainly we're In going variability, from

recalibrating bit kind year. you're larger some a really of what seeing So deal just yet full little terms the of in variability, but potential is just of reaffirming kind us

was through early guidance gross that for So lowest And QX well. And I in ramping there like that's from continue, extremely signs we we QX renewal up standpoint, and period is very our obviously just you're the a retention all but provided. positive as standpoint, QX are a the We're our seeing then from said, successful. period. QX

So isn't concerned us I that see would has that seen just to say unexpected. we're to date something going we've that there that anything

Hardeep Gulati

down of a the might compared And what they guess for niche slow beauty When other we our a at have that whatever and your certainly I particular look Joe, they is reason, the question right? then on business. to the area, and trends, different think you solution, back might certainly, I this come just part demand impacted right? growth has up, see, right, of

data in elements, solution the what entire to lot as because But pretty different the all consistent a are selling much our we our mission pretty more for the districts impacting all elements products software well critical happens is these with results. decision-making much we critical see

upon for product. we Now picked and all saw a We've certain data like XXXX the depending classroom in products and of then area. might more have data demand, back the lot and down up up growth mentioned bigger was growth area a that area us out

still to for are for will why you mentioned, data when we see some big products. is the highlighting So what focus, our is variations this like we area, see and think demand at them. Allovue as demand year, areas a of right, we do products, you I of is look the big this that's our budgeting is some

they As their improve so they continue can to look they do how attendance at improve funding.

intervention, our so our help can well provide actually the a MTS our lot to engage. of for demand We as they see support communications as intervention attendance

see view is of the where in to marketing and [indiscernible] the we This us with these full are That invest motions, acquisitions the advisers, view, XX% allows of plays, that to to allows row our the of priorities. with to seats front see to and what one sales which the that in sitting top have Having things. sales these the aligned well we trend. we kind able our as us the across school sure the innovations play strategic districts their front So our all innovation both need. of our priorities we nations is to as are broader get our priorities are our on able districts make

have players the view And depth that robustness K-XX model. the ] breadth have gives us don't solutions, they and the other don't catality [ they demand because the see what in coverage of mission you don't of and the and

Joseph Vruwink

consulting to quarter or of Okay. there impact the come That's services And ask of and the that business a in to what great. be financial had that on software? component a about has going times then maybe up then good And it's wanted as might that actually this It full actually Or well? of year? and -- call. have is all brand kind to in sort I couple is a Allovue.

Hardeep Gulati

big X will are there already again you largely, tell business. X guidance. this already -- are like Most is into of Chesterfield know. there or closed you visibility. what this couple that you guys we is ARR-based have guidance have guys a But large as to shared is the going We've in largely, I gave and our full deals Columbus, when If those we models, of the deal ARR. What have services but pipeline we let built well. things, would We with this of most year the

Operator

The of next question comes from Fred Havemeyer Macquarie.

Frederick Havemeyer

I competition. core on begin about out and to of others in wanted a Campus Infinite the I there couple been SIS points space.

SIS, and changes competitive in to seeing? What market largest our vantage K-XX. and share point particular, there are in any ask just American in you is wanted And North the SIS the drill into and I major market are So shareholder leader landscape?

Hardeep Gulati

clear still market Brent, are as I mentioned, the right, leader. we

doubled more nearest than the competitor. have of We market our share

class. in best are We

deals their us these are look If districts, the which of look you which competitions School, a you perspective through selected a and look Toronto SIS. Public Puerto solutions, company at Rico, all from which as at public decided an SIS Stride, different like major if is the

Our gross retentions class. are top

platform deals we where deals. be capabilities, of might X and would terms in them -- more than lose more we of SIS or when into the with modern we because -- the we look solution rates, other differentiator we And integrate all from definitely us rest allow -- are we these gives pieces. lose. win all our the to our we there X But even most at are win So

Frederick Havemeyer

Investor I were at multiproduct Day to good quite fastest-growing wanted something adoption about of as X-plus well. also I as products customers. of customers fall. detail and past It's gave And a you think this the about groups your back ask recall, I then bit X actually among

wanted to X I parter So ask, here. guess, I

that's as the you are are we're there multiproduct And Analyst in terms major adoption? into buying in primary K-XX year Day? of time since particular how what think any cycle, of purchasing going products points that or importance particular that going secondly, trended And you Firstly, into are of frame. the pain months this the June seeing

Hardeep Gulati

Yes, we're to Fred, is, what pretty when we with. shared the much we trends the seeing ran analyst similar

update, year on similar more share about to on multiproducts update bit in trends to that. a later this not are pretty next So maybe that little there's growth calls we the or We're the the major what shared. on happy a cross-sell earning

year-over-year a get on So guys that well. you view more can bit full little as

Similarly, a all the talent as we're student well seeing integrated we lot interest with seeing product The seeing full on we like cloud trends, the more are what more different as that. are the is that data pieces. cloud

those definitely seeing of So are growth. we the the cloud, areas highest the are

Operator

question Company. Ryan from next comes MacDonald of & Needham The

Ryan MacDonald

one we starting see, a that a great and creative was see and here spending business to in this But is said districts your Buddy. staffing. really relates the that success impacts potential was little to thing on schools automation. on of very a Fully lot Power keep realizing additional from we not that its obviously, bit Wanted you all ESSER clearly talk that, to as for get and core maybe to spend. spent funding up to it beneficiary that you're obviously, -- picking It's

make that in going And more driver to onetime districts around acting to XXXX, Buddy automation that and those of schools the a have Power challenged is fewer from more they for streamlined, spend. anything Is effective, budgets more in that? because be that around looking maybe a staffing of just that as staff

Hardeep Gulati

Absolutely.

hard key on and supplemental need. to at the on based that very putting they're is I tutoring, health whether look interventions. putting touched they're you student perspective here It's think content, from point every when and a they're reach the you

XX% data touched used the they tutoring the needed it didn't who spent to engage fact, large tens us of it In school a who and with kid even actually were gave millions able -- them. districts point and that the one they the need never of of on the it they is able it, were kids XX% to and of never

It's and help market. today effective $X,XXX the them optimize and disrupt even This allowing surgical also to system spend. help so we'll tap is able have time. and allows us [indiscernible] everything. student, allows way tutoring services into per to to student overall in They be contextual that. and broader to help they're the as overall differentiate the to This support and well expanding their us every on providing more This provide almost in they supplemental to now just-in-time do more why are it's us contract putting over as can

Ryan MacDonald

really Eric. color quick as That's that, follow-up Art. a I on appreciate But for just the great. maybe

As talked you But -- -- you to not continue neutral, it it priced accretive? to a more We about should Buddy, the success be have gross is expect that. where with pricing. Power would already it at margin point if we

Eric Shander

Yes.

dilutive. is So will be not what assume Ryan, say, should I you it that would

cost are AI put where there's so such capped calls elements it a the that of the calls into we've of designed that such we high that have they are We volume in some get get kind the into situation that causing our pricing of there kind in certain -- whack. out there get algorithms, don't of to of

now we've way very it that this And the we technology will is margin that whatnot. similar to be up the rapidly have. set quite that current it profile So is look, and expanding

costs look continue kind all these possibilities, of expect AI and do as to come we we algorithms source at different the open -- So open of some to down. of the the

what that term here, term, just short it point, some line assume it's current short can in in going say our the be margins with would medium to say, I at to would but to So yes, accretive, I what be are.

to margins. dilutive be Our sure going to to was candidly, not was it biggest the make that focus,

Operator

The comes question next from Brett Knoblauch Cantor Fritzgerald. of

Brett Knoblauch

Maybe just on AI.

of I talking driving I and deals? think point that XXXX. every in or are on As you is given expected? opportunity -- just just factor as conversation GA, guess, And focal the you this you guys the to is maybe a not on add-on to year, winning maybe year seen? commentary it what but look for AI-related the next good is, customers, of Is products big have better that we a as rate how that some lot a in guess, than revenue it what's

Hardeep Gulati

Yes, Brett.

conversations center. actually you'll be surprised many how think and I of are the front So

ready As and is a are XX-plus almost formed almost are loaded risk. that which district some participation I is security campaign we QX Get and across to seeing already committees have we their into on are the series are is a data districts, these what XX% inversely what about running or nation. luncheon at AI. XX% pretty they for And open a of because audience being in the using source teachers mentioned, of versions going are QX the the data there AI privacy already started We called number worried doing and much in we what

better for intelligence, giving So these start AI data to the ready get data to they to they're in can data efficacy bring talking elements about we their they connected rather were the different also so using able with our the AI just last to strategy the question. are then AI. taking with But by than improving

such the leaders this seeing an why see and exciting center you that's a be fun So the we pipeline and lot are and growth there. of to for opportunity

revenue. the expecting are We

last but into -- a is I year be bit from there up for year in year. expect little that this really next doubling us to few dollars revenue already, of shared in this this the release last do of we earnings millions the

few become for So business we the this us next almost expect do a to years. in material

Brett Knoblauch

I appreciate it.

Operator

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

Hardeep Gulati

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

to strong double-digit team delivered of a Our the and innovation expansion products. XXXX margin and our AI with start growth, momentum launch continued a excellent

mission-critical you durable provide software see, and and strong KXX can a business remain market. products As fundamentals sticky our end to stable We robust.

to to and we continue cross-sell new logos. growth, Our engine drive win continues sustainable repeatable,

areas and the thrilled in opportunity the strategic of of with the data, as success us. a is as Power focus Innovation AI well I'm about top Buddy ahead

our points also build and software for our concerns whose to acquisition all proof long-term top-of-mind continue financial planning and a to markets as key continue We support district execute budgeting that of timely will in growth. is you, and M&A, we such thoughtful latest international of our

I you on updating Thank look joining you drivers again, in next these forward the everyone, key growth today. to quarter. for strategic

Operator

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

You disconnect. may now

PowerSchool (PWSC) 7 May 242024 Q1 Earnings call transcript