PowerSchool Holdings Stock

PowerSchool Holdings, Inc. (PowerSchool) provides cloud-based software to the K-12 education market.

The company empowers the K-12 education ecosystem of schools, districts and education departments to enable parents, educators and administrators to deliver the best education to children, allowing them to realize their potential.

The company provides a comprehensive platform of cloud solutions that deliver a broad range of mission-critical capabilities to K-12 organizations, including the core system of record used by districts and schools, student and teacher assessment tools, learning management systems, teacher hiring and retention solutions, and insights and analytics that leverage rich data to improve education outcomes. The company serves more than 15,000 customers, including over 90 of the 100 top districts by student enrollment in the United States, over 30 state-, province-, or territory-wide contracts in North America, and sell solutions in over 90 countries globally.

The company’s solution is embedded in school workflows and is used on a daily basis by teachers, students, administrators and parents in schools and districts representing over 50 million students globally, over 80% of all K-12 students in the U.S. and Canada. The company’s cloud-based technology platform helps schools and districts efficiently manage state reporting and related compliance, special education, finance, HR, talent, registration, attendance, funding, learning, instruction, grading, college and career readiness, assessments and analytics in one place. Through its platform approach, the company helps its customers streamline operations, aggregate disparate data sets and develop insights using predictive modelling and machine learning. The company’s ability to transform information into actionable insights improves the efficiency of school operations, the quality of instruction delivered by teachers and the pace of student growth, which the company should have a profound effect on K-12 educational outcomes.

The company’s customers include every major type of K-12 organization across a range of sizes. The company’s solutions are mission-critical and foster a high degree of customer loyalty, resulting in long-standing and stable customer relationships. The company plans to continue to deepen its relationships with existing customers by providing strong customer support, cross-selling incremental solutions and integrating point solutions for customers.

Platform

Mission-Critical System of Record, Engagement and Intelligence

The company’s platform provides a comprehensive suite of cloud solutions that deliver a broad range of mission-critical capabilities to K-12 organizations in over 90 countries globally. Foundational to the company’s cloud applications is its market-leading SIS. The company’s SIS acts as the backbone of the company’s K-12 customers, centralizing their student information and their processes that power core operations, while also supporting their annual state and local reporting needs. In addition to the SIS, the company offers a full suite of mission-critical, cloud solutions that districts need to manage their operations, staff and instruction: PowerSchool Unified Administration, PowerSchool Unified Talent, PowerSchool Unified Classroom, PowerSchool Unified Home and PowerSchool Unified Communities. The company also provides a rich set of analytic capabilities through PowerSchool Unified Insights, consolidating and enabling visualization of data generated from the company’s solutions, as well as from third-party sources. The company’s platform is a comprehensive and unified suite of solution that connects the office, classroom and home while bringing together students, parents, teachers and administrators providing the following key benefits:

Mission-Critical to District Funding and Compliance: The company’s compliance reporting solutions in PowerSchool SIS, PowerSchool Unified Classroom Special Programs and PowerSchool Unified Administration eFinancePLUS (ERP) cover the ever-changing requirements of more than 50 U.S. states and Canadian provinces, providing more coverage for this mission-critical process than any other SIS vendor.

Improves Productivity Through Automation and Simplification: The company’s PowerSchool Unified Administration and PowerSchool Unified Talent solutions are designed to simplify and digitally transform back-end ERP and human resources (‘HR’) operations. These solutions modernize finance and HR workflows within the district, including budgeting, financial reporting, procurement, teacher and employee hiring, onboarding and staff development. Through automation of time-sensitive, manual processes, such as filling temporary vacancies with substitute teachers and focusing on educator efficacy with solutions for professional learning and staff evaluation, these solutions help optimize a district’s operations and allow more time and focus to be spent on classroom instruction and improving educator retention.

Provides Real-time Insight, Transparency and Visibility: The company’s Unified Insights solution integrates data across functional areas, including the office, classroom and home. This provides a holistic view from which all K-12 stakeholders can derive real-time insight, feedback, reporting, notifications and enhanced transparency. Educators and administrators use this visibility and data to closely track and benchmark academic successes and gaps within different demographic groups in their districts, understand location-based enrollment trends to help project funding inflows and requirements and leverage predictive analytics to identify at-risk students. Additionally, communities gain unique insight into performance at the local, district and state level, which drives accountability for leadership.

Enables Seamless Communication, Collaboration and Engagement: The PowerSchool platform seamlessly connects all K-12 stakeholders. Teachers can manage the full instructional process while interacting digitally with students inside and outside of the classroom. For example, through the PowerSchool Unified Classroom and its Schoology LMS, educators can effectively manage their classrooms and deliver instruction through a fully digital platform, while fostering real-time collaboration with their students. The company’s Unified Classroom provides dashboards that highlight achievement and learning gaps, and the ability to integrate high-quality, standards-aligned digital content from any vendor into their daily curriculum, giving educators the ability to assign personalized learning paths to students based on their individual needs. This functionality has been instrumental for blended and virtual learning during the COVID-19 pandemic.

Improves Education Outcomes: The company and its unified platform of products are centered around the goal of helping educators and students realize their potential. Whether the company is freeing up teacher time with PowerSchool SIS and Unified Classroom, empowering educators by driving parent and student engagement with Unified Home and Unified Communities, or providing administrators the visibility and analytics they need with Unified Insights, Unified Administration, and PowerSchool SIS, the company’s solutions deliver the time, tools and data the company’s customers need to focus their energy on driving education outcomes rather than administrative tasks. The company equips educators with the tools and information needed to deliver personalized instruction to each student. For example, through Unified Communities and Naviance, counselors can help students prepare for life after high school through assessments, planning tools and curriculum that align to students’ competencies and goals.

Reduces Operational Costs: The company provides an integrated suite of easy-to-use cloud-based software solutions that eliminate the need for disparate tools and related expenses associated with deploying, managing and maintaining them on-premises. By digitally transforming high frequency workflows and automating manual processes, schools are able to dramatically reduce their operating expenses. For example, the company’s PowerSchool Enrollment solution supports the core online enrollment process by eliminating costly manual data entry and paperwork, reducing associated printing and mailing costs and reducing time spent by parents enrolling and re-enrolling their children each year.

Growth Strategies

The key components of the company’s growth strategy are to cross-sell to the company’s existing customers; expand the company’s customer base; unlock the power of data; expand the company’s partnerships to cultivate a broader k-12 ecosystem; continue to selectively target acquisitions; and build upon the company’s social impact.

Technology Offerings

The company’s suite of cloud solutions help K-12 districts and schools manage a broad set of mission-critical functions.

PowerSchool SIS

PowerSchool SIS is the mission-critical data backbone that powers K-12 operations. It serves as the hub and single source of truth for student data. The SIS simplifies reporting and improves compliance with student data mandates outlined by local, state, and federal guidelines. This ensures accurate and timely regulatory reporting required for districts to receive funding and is used by nearly every school constituent on a day-to-day basis. The company is the leading K-12 SIS provider in the United States, connecting over 19 million students and spanning from state level deployments to smaller charter and private school deployments. Schools and districts depend on the company’s modern, easy-to-deploy SIS to improve daily operations, boost administration productivity, identify problem areas and ensure funding with easy reporting. The company provides a scalable SIS that covers all district and school administration needs, including registration, attendance, scheduling, federal and state compliance reporting, data management, faculty management, emergency/medical and health management. Because of its wide-ranging impact on a district or school’s operations, the SIS can have a profound impact on securing essential funding, optimizing operations and resourcing, and ultimately improving student outcomes.

Features of the company’s SIS include:

System of Record: The company’s SIS serves as the source system of record of all student data—enrollment, grades, attendance, health, behavior, transcripts, report cards, discipline management, student fees, and more. In addition to being the source of record, the SIS is used as the hub for data that is leveraged by other systems used by stakeholders.

Configurable, Adaptable Software: The company’s SIS can be easily deployed and tailored to fit districts’ and schools’ unique needs. Every layer of the PowerSchool SIS is extensible and can provide configuration in the user interface, data layer and business logic. Alternatively, the company offers hundreds of pre-built and ready to use configurations based on the company’s experience with other districts and school boards.

Real-Time Student Insights: Real-time insights into student attendance, behavioral trends and key demographic information allow administrators and teachers to make informed decisions that lead to student growth.

Cloud Hosted and Secure: The company’s dedicated security team and its solutions, whether deployed on private or public cloud, hybrid-cloud or in a few cases on-premises, ensure district data is safe, secure and always accessible. The company adheres to the highest security standards, holding an ISO 27001 certification.

Simplified Compliance Reporting: The company has invested over the course of the last 20 years in building, maintaining and constantly updating the company’s regulatory database and reporting capabilities that span across 47 U.S. states and 5 Canadian provinces, supported by a team of approximately 150 individuals. With student data securely and accurately captured in the SIS, the company’s solution greatly simplifies state compliance reporting and empowers districts and boards to receive maximum funding.

Master Scheduler: Automates the scheduling process for school administrators.

Industry Data Standards Support: The company’s SIS can be accessed across multiple systems and applications in a seamless and actionable way, improving administrative efficiencies and saving teachers valuable time, allowing them to focus their energy on personalizing instruction to reach each and every student. The company supports the Ed-Fi Alliance and SIF, which are industry initiatives to develop a scalable solution for data exchange and interoperability.

Family Engagement: The company’s SIS provides real-time access to attendance, assignments, grades, report cards, transcripts and messages from teachers and school bulletins to students and their families from their phone, tablet or computer via an online portal or the company’s mobile app.

PowerTeacher Pro Gradebook: Simplifies grading and tracking of student progress on traditional grades and standards mastery. Assignments, tests and quizzes can all be graded online and shared with parents and students through the online portal in real-time.

PowerSchool Enrollment and PowerSchool Ecollect Forms

PowerSchool Enrollment is the company’s end-to-end online enrollment software that supports the core registration and admission processes (e.g., lottery and school choice) for schools and districts. PowerSchool Enrollment works with other SIS providers, cutting costs and saving time by eliminating manual data entry and paperwork and reducing unnecessary printing and mailing costs. Accurate and up-to-date enrollment data helps school administrators streamline compliance reporting and optimize resource allocation across learning, medical and transportation needs.

PowerSchool Ecollect brings all K-12 forms online, allowing users to create, edit and share online forms from within the PowerSchool SIS. Administrators can pull from a library of form templates or create their own forms and share forms with neighboring districts. PowerSchool Ecollect can be used for wellness surveys, e-learning consent forms, device tracking, permission slips, field trips, transportation requests and parent-teacher conferences among several other uses. The company has seen this functionality leveraged by its customers during the COVID-19 pandemic to collect health-related information about their students.

PowerSchool Unified Communities

The company’s Unified Communities solution is focused on helping educators, students, parents, and administrators get the most out of PowerSchool through a broader ecosystem of users, partners, and higher education institutions. With core solutions that facilitate students connecting their education learning path with their post-secondary life planning activities, students and school counselors have a robust solution to deliver on the core mission of career and college readiness for education agencies.

Educators can connect to career opportunities and best practice resources through the broader PowerSchool community portal. Through Unified Communities, PowerSchool provides:

Naviance, the leading college, career, and life readiness solution, reaching over 40% of high school students in the U.S. Through Naviance, counselors help students prepare for life after high school through career discovery and assessments, counseling curriculum, course planning, and facilitating the college application process.

Intersect, an innovative admissions solution with exclusive integration with Naviance that helps higher education institutions understand student interests and helps make personalized connections during the admission process.

Job Board, a solution allowing customers to promote job postings and diversify their candidate pool with the nation’s most popular online K-12 job board.

ISV Partner Program, an exclusive collection of 120+ partners who are critical to the company’s mission of improving the education experience. The company’s program promotes the delivery of comprehensive solutions to all areas of management of a classroom, school, district, or state.

PowerSchool Community Portal, a place for 500k+ administrators, educators, partners, parents, and students to get the most out of their PowerSchool products, allowing them to connect with peers and PowerSchool experts online.

PowerSchool Unified Insights

PowerSchool Unified Insights solutions are used to provide a holistic view of state, district, and school-level information. Harnessing the power of customers’ data using predictive modelling and ML, PowerSchool Unified Insights delivers real-time awareness, transparency and visibility of educational, operational, compliance, and talent trends.

Administrators use the data and insights to help identify at-risk students, drive better attendance, improve school engagement, analyze student assessment scoring, and monitor social and emotional wellbeing. Reporting tools and dashboards provide critical data access that enable educational leaders to make day-to-day decisions and help increase leadership effectiveness at the school and district level by delivering clear operational insights and helping administrators track, manage and monitor all aspects of a school or district’s student, teachers, operations and performance metrics. As the company’s data engines continue to grow, its proprietary AI and ML capabilities strengthen, generating actionable insights and adaptive recommendations designed for personalized learning.

The company’s Unified Insights MTSS (Multi-Tiered System of Supports) is relied upon by school districts as a framework for providing personalized support to at-risk students. Securely importing data from a school’s or district’s Student Information System, behavior management system, social emotional learning (SEL) system and assessment solutions, Unified Insights MTSS helps educators support the needs of the whole child by identifying and tracking student risks and needs, executing and monitoring interventions and reviewing the efficacy of the customers’ specific MTSS framework for continuous improvement without compromising student data privacy.

Also part of the company’s Unified Insights family is its Connected Intelligence solution, the first fully managed Data-as-a-service (DaaS) platform for K-12 schools. Connected Intelligence provides school districts and education agencies with a comprehensive, unified, global, fully managed and secure data platform with advanced analytics capabilities. With Connected Intelligence, school districts retain sole ownership of their data and can easily and securely collaborate with internal stakeholders and external partners to gain new insights into their organization, increase educational success and equitable opportunities for all students, spend fewer resources managing data and storage, warehouse data securely in one place, and expand access to all data, including historic, current, future and any third-party data sources.

PowerSchool Unified Classroom

PowerSchool Unified Classroom 2021 is the only solution to combine best-in-class LMS, Formative Assessment, Special Programs, SIS and Unified Analytics to create a complete teaching and learning classroom solution that helps give teachers the time and information they need to support whole-child instruction. With the ability to connect with any SIS, it allows teachers to track a student’s learning, behavior and academic performance in real-time across the educational journey. Valuable teacher time is saved by removing duplicative manual tasks that once plagued teaching: multiple logins, duplicate data entries, manual assignment management and infrequent communication. PowerSchool Unified Classroom reaches over 19 million students and brings together LMS, assessment, analytics, gradebook and special education case management in one place, facilitating seamless data flow between technology offerings. Progress allow for proper remediation and a personalized learning experience.

Schoology Learning: LMS built specifically for the K-12 market. As a leading LMS provider for K-12, Schoology makes it easy for students and teachers to access the following from one integrated platform: course management, curriculum management, communication and collaboration tools, integrated assessments and actionable analytics. Teachers can see a complete view of a student’s performance and use information to develop strategies in order to address and eliminate instructional gaps through tailored instruction and personalized learning paths. During the extended school closures caused by the COVID-19 pandemic, Schoology was instrumental as the learning hub for blended and virtual learning. Schoology has over 12 million users in over 65 countries globally.

Performance Matters Assessment: Assessment software for teachers to author and administer benchmark assessments. Features include standardized assessment methods, scoring methods and analytics. Teachers gain increased visibility into students’ learning progress to easily identify and resolve any learning issues while avoiding manual processes and saving time.

Special Programs: Integrated case management system for students with special needs. The software facilitates the development and management of special education documents, including pre-referral, eligibility, individualized education plan, service documentation, state reporting, and data collection for Medicaid billing.

Behavior Support: The only evidence-based (ESSA Level II) behavior management solution in the market, which helps educators more effectively management social-emotional learning (SEL) and multi-tiered systems of support (MTSS) to help improve student well-being, school culture, and achieve more equitable outcomes.

Gradebook: Software that simplifies grading and tracking of student progress on traditional grades and standards mastery within Schoology and PowerSchool SIS. Assignments, tests and quizzes can all be graded online and shared with parents and students through the online portal in real-time.

PowerSchool Unified Talent

PowerSchool Unified Talent simplifies Human Resources (‘HR’) operations by modernizing HR workflows through digitization to enhance sourcing and retention of employees. Schools, districts and boards representing over 30 million students use the company’s software to navigate the complete employee lifecycle, including recruiting & hiring, onboarding & managing and developing & retaining high-quality talent. Additionally, the company serves more than 400 colleges and universities in Higher Education, primarily through a talent management and acquisition system purpose-built for Higher Education.

Recruiting & Hiring: Expands schools’ hiring pool, helps identify strong candidates and streamlines processes making recruiting easier.

Onboarding & Managing: Simplifies HR management with paperless processes and substitute management software for continuous and undisrupted learning.

Developing & Retaining: Supports teacher advancement with tailored professional learning and clear evaluations that promote collaboration.

PowerSchool Unified Administration

PowerSchool Unified Administration is a highly configurable end-to- end ERP system designed to simplify the unique office needs of K-12 schools and districts and unlock staff productivity. The company’s software gives administrators a single, integrated solution to simplify the management of school operations, bringing together finance, HR and payroll allowing stakeholders to reduce cost and save time while more effectively allocating resources. Built specifically for K-12 environments, PowerSchool Unified Administration ensures schools and districts in more than 45 U.S. states and Canadian provinces stay in compliance with changing regulatory requirements by generating state-required reports and streamlining the management of teacher contracts, payroll, workflow and student funding accounting.

Integrated HR and finance workflows enables schools and districts to easily process departmental requests across functional silos, from budget allocation to HR decisions and actual payments all out of one solution.

PowerSchool Unified Home

PowerSchool Unified Home acts as a bridge between class and home through a fully integrated mobile app, giving parents transparency into students’ academic performance, schedules, school bulletins, and more. Through the company’s acquisition of Kinvolved, the company provides an integrated communication engine ensures that administrators can deliver time-sensitive mass communication via text, email, and voicemail. Personalized two-way communication (with built-in translation available into more than 60 languages) supports student outcomes as the result of increased parent engagement, and automated attendance notifications help reduce chronic absenteeism. With mobile notifications for grades, test scores, and new assignments, students can take greater ownership and accountability for their learning while parents are able to engage and work with teachers to better support their children’s academic progress.

Customers

PowerSchool serves the full spectrum of K-12 organizations, including state departments of education, public school districts of all sizes, charter schools, independent schools, virtual schools and more. Within these organizations, the company’s buyers include the following:

Superintendents and other heads of schools responsible for all aspects of their K-12 organizations and constituents;

Chief Information Officers and other IT leaders responsible for their organizations’ full IT portfolio, including infrastructure, software, hardware and more;

Chief Financial Officers, Chief Business Officers and other financial and administrative leaders responsible for administrative functions and financial success;

Chief HR Officers and other human resources leaders responsible for management and development; and

Chief Academic Officers and other instructional & accountability leaders responsible for academic achievement, reporting, content and curriculum;

As the clear leader in the K-12 space, the company’s engagement with customers is unparalleled. As of December 31, 2022, the company had 36 state- and province-wide contacts in place and partner with over 90 of the 100 largest U.S. districts by student enrollment, including the NYC Department of Education and the Los Angeles Unified School District. As of December 31, 2022, the company served over 15,000 customers in over 90 countries representing over 50 million students, representative of over 80% of all students in the U.S. and Canada.

PowerSchool has a multi-channel approach to customer support that includes live channels where the company’s customers can speak with the company’s Technical Support Engineers and on-demand channels where customers can self-serve whenever they may need assistance. The company’s Technical Support Engineers go through extensive training to both learn the company’s products, as well as to build customer service skills and are available to assist the company’s customers across all of it the company’s product lines. Technical Support Engineers deliver support to the company’s customers via live chat, live phone, email, and the company’s web portal. In addition to these channels, the company has a robust customer community, which is available to every customer. On the company’s customer community, customers can help each other answer questions, research articles and how-to documents, as well as watch videos on product functionality. PowerSchool utilizes third-party support consultants in a staff augmentation approach during busy times of the year. These third- party consultants go through training to provide a consistent level of support to the company’s customers and are used only on an as-needed basis.

Sales and Marketing

The company had a sales and marketing organization of over 377 individuals as of December 31, 2022 that employs a two-pronged go-to-market approach, allowing the company to efficiently sell to and serve the needs of K-12 organizations. This approach, combined with the company’s status as the market leader with a strong reputation has allowed the company to build an efficient, predictable sales model.

The company’s Account Management team services state-level educational entities, districts and private and charter schools. This team is divided into Strategic Accounts, Enterprise Accounts and Inside Sales sub-teams, which are respectively organized by customer region and size. The company’s Account Management team is focused on acquiring new customers as well as upselling and cross-selling additional products into the company’s broad customer base, as shown in the two case studies below. These efforts include prospecting for new clients, driving new deals across state-wide, consortium, district and private entities while providing specialized sales attention to achieve higher penetration of PowerSchool solutions.

To complement the company’s Account Management sales teams, the company has a Solutions Sales team. The Solutions Sales team is consisted of product specialists across all the PowerSchool solutions, including PowerSchool Student Information Systems, PowerSchool Unified Classroom, PowerSchool Unified Talent, PowerSchool Unified Insights, PowerSchool Unified Communities and PowerSchool Unified Administration solutions, providing dedicated product knowledge and know-how for a focused sales dialog, including demonstrations and in-depth product reviews with prospects and existing customers.

Both of these teams are enabled by several supporting organizations:

Solution Engineers responsible for technical sales functions, including but not limited to, preparing and delivering product demonstrations;

Sales Development Representatives responsible for outbound lead generation and inbound lead qualification;

Sales Operations organization responsible for managing internal sales systems, processes and targets;

Sales Enablement organization responsible for new hire onboarding, continual product and sales skills training, and sales tools;

Bids and Proposals organization for project management of inbound RFPs, RFIs, RFQs and similar documents; and

Marketing organization with discrete functions for demand generation, solution marketing, corporate marketing and public relations.

PowerSchool’s contracts typically have a three-year term with one-year rolling renewals, although the company has many large contracts with terms that extend beyond three years. Customers are billed annually in advance, with a small number of customers billed semiannually, quarterly or monthly. The company experiences predictable annual renewal cycles, with a meaningful portion of invoices for service periods beginning in July and September.

Privacy and Government Regulation

Numerous laws and regulatory schemes have been adopted at the national and state level in the United States, and in some cases internationally, that have a direct impact on the company’s business and operations. For example:

The Children’s Online Privacy Protection Act, which imposes additional restrictions on the ability of online services to collect information from minors. In addition, certain states, including Utah and Massachusetts, have laws that impose criminal penalties on the production and distribution of content that is ‘harmful to a minor’.

The Family Educational Rights and Privacy Act, which protects the privacy and restricts the disclosure of student information and generally prohibits an educational institution from disclosing personally identifiable information from a student’s education records without a parent’s consent if the student is younger than 18 years of age or the student’s consent if the student is 18 years of age or older.

The U.S. Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act, among other things, imposes specified requirements relating to the privacy, security and transmission of individually identifiable health information.

In addition, the company’s business is subject to laws specific to students, such as the Delaware Higher Education Privacy Act and a California statute which restricts the access by postsecondary educational institutions of prospective students’ social media account information.

Intellectual Property

The company has registered ‘PowerSchool’ and the ‘PowerSchool’ logo as trademarks in the United States and other jurisdictions.

Competition

Due to the comprehensive nature of the company’s platform, the company competes with education-focused vertical software providers, such as Blackboard and Frontline Education, as well as horizontal enterprise software providers, such as Workday and SAP that offer solutions across multiple verticals.

The actual competition in each of the company’s key solutions is described below:

Student Information System: The company competes with other national SIS providers, such as Infinite Campus, Edupoint and Skyward.

Unified Communities: The company’s leading college and career readiness solution faces competition from other education-technology providers, including Xello, SCOIR, and other providers.

Unified Classroom: The main competitors for the company’s Unified Classroom solution include systems offered by Instructure and Illuminate Education. In addition to the main competitors, Google and Microsoft have products, Google Classroom and Microsoft Teams, respectively, that serve the K-12 end-market.

Unified Admin: The company’s leading K-12 ERP software competes with K-12 focused ERP systems offered by Tyler Technologies and Skyward. From time-to-time, the company face competition from Oracle, SAP, and other horizontal providers when selling to the largest school districts in the U.S.

Unified Talent: The company’s Unified Talent solution faces competition from other education-technology and enterprise software providers, including Frontline Education, Eduphoria and other small local providers.

History

PowerSchool Holdings, Inc. was founded in 1997. The company was incorporated in 2020.