PowerSchool Holdings, Inc.

Good afternoon and evening, everyone, and welcome to PowerSchool's fourth quarter 2021 earnings conference call. As a reminder, today's call is being recorded, and your participation implies consent to such recording. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. With that, I would like to turn the call over to Alan Taylor, Investor Relations. Thank you, sir. Please begin.

Thank you. Good evening, everyone, and thank you for joining us for PowerSchool's financial results conference call for the fourth quarter and fiscal year ended December 31st, 2021. On the call today, we have PowerSchool CEO, Hardeep Gulati, and CFO, Eric Shander. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements related to the expected future results for our company and are therefore forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non-GAAP financial measures. Additional information, including definitions and reconciliations between non-GAAP financial information to the GAAP financial information, is provided in the corresponding press release, which is posted on PowerSchool's investor relations site at investors.powerschool.com. In addition, this conference call will be available for replay via webcast through the same website. Our deep will begin with a review of PowerSchool's fourth quarter and four-year highlights. Eric will then take you through a review of the financials before we proceed to Q&A. We have also made an earnings presentation available in the events and presentations section of our investor relations website. So please feel free to download the presentation and follow along with today's call. With that, I'll now turn the call over to Hardeep.

Thanks, Alan, and good evening, everyone. Our school had an outstanding fourth quarter, finishing the year strong and laying the foundation for a continued growth and momentum into 2022. We exceeded the top end of our guidance, range for both revenue and our adjusted EBITDA. We delivered 146.1 million of revenue for our fourth quarter with 26% revenue growth and an adjusted EBITDA of 33.2 million, a margin of 23%. For the full year, we delivered a record $559 million in revenue for 28% year-over-year growth Our adjusted EBITDA of $161 million, a margin of 29%. These results highlight the scale and the durability of our business. Our industry-leading unified platform approach continues to differentiate us in the K-12 market, providing long-term growth opportunities for many years as customers look for ways to digitally transform, move to more integrated solutions, empower educators, and offer best-in-class solutions for teachers, students, and parents for improving education outcomes for every child. No other vendor in K-12 SAS can match our breadth, depth, and presence in North America. We now offer 18 products, including our latest acquisition of Kickboard SEL solution and Kinwald communication platform. giving us significant opportunity to expand our footprint within our customer base and new customers to whom we can cross-sell. This cross-sell engine fuels momentum and growth across our business as we enter 2022. Eric will share more details about our financial results and guidance for 2022. Personally, I'd like to spend more time today sharing some exciting updates on the key dimensions of our business that highlight our stability, momentum, and opportunity, adding to our confidence for 2022 and beyond. I'll talk about the large, durable K-12 market that we sell and our inarguable leadership position within that market, the proof points that show our platform strategy is working, as well as our comprehensive platform ability to meet the changing needs of our customers, which create multiple growth factors, and the opportunity to continue expanding our offerings as well. Let's start with the first key dimension, an update on the K-12 market. The North American K-12 market that we serve is very large and resilient. Education represents the second largest discretionary spend category in U.S. public spend. If you look at the K-12 funding environment, it has mostly grown steadily over the last 30 years. and it is largely insulated from the inflationary or interest-related pressures seen by many industries today. Education spend is largely non-cyclical and bipartisan, creating a relatively protected budget for districts and in turn for our products. Breaking this down further, external IT-related spend is currently a small but fast-growing part of funding. Doctors recently increased their estimates for external IT spending in K-12 schools in the U.S. and Canada and expected to grow at a 9% CAGR from $17 billion in 2020 to $26 billion by 2025. Additionally, the market will benefit from the $122 billion in additional SF3 funds, much of which is still largely unspent, and will provide additional funding over the next few years. Second, I'd like to update you on our continued leadership in K-12. We enjoy a clear market leadership position in North American K-12 cloud software. We currently have over 14,000 customers on our platform. We added roughly 2,000 customers since the end of 2020. Through these customers, we reach over 45 million students, representing over 70% of the K-12 student population in U.S. and Canada. This expansive reach fuels an incredible opportunity for growth across our product portfolio. Even with this market-leading position, our market share represents only about 5% of Gartner's estimated K-12 software spend. We certainly see the opportunity for growth ahead of the market. Considering the relatively low penetration rates we see across the product portfolio, and the frequent cases where our solutions are mainly replacing paper-based processes, legacy or fragmented solutions. Third, I'd like to update on the exciting success we are seeing with our strategy. Our platform and cross-sell strategy is working. Over the past two years, we have seen a 65% increase in the number of customers who use four or more PowerSchool products. a cohort that grew from just over 1,100 to more than 1,800 customers. In fact, these most loyal customers now represent nearly half of our ARR. This platform strategy creates a flywheel effect in which unified products benefit from each other, which compounds the value for the customer and increase the stickiness for our solutions. We're continuing to see successes in these multi-product implementations across schools and districts of all sizes across North America. Take as an example the Washington County in Utah. As a longtime customer using our student information system, ERP, our Schoology LMS, our formative assessment, They've added unified insights in Q4 to further their performance monitoring and administrative management capabilities across the district. Ane Arundel, the fourth largest school district in Maryland, representing about 90,000 students, is the poster child of the platform strategy working. They use 13 of our products today and continue to expand usage, including extending their high school-focused Naviance implementation into roughly 19,000 additional students within their middle school. We saw a 15% increase in active students year over year for Naviance across U.S. during this time of the year. with 6.4 million college applications year-to-date filed using our solution. These stories, which reflect the success and impact our customers have seen from our solution, validate the power of platform strategy. With over 14,000 customers in total, a broad portfolio of 18 products we offer, and 5% of software spend captured by PowerSchool today, The opportunity in front of us is quite large with a ton of room for growth. Fourth, the strength of our diversified, comprehensive platform creates multiple growth factors across our solution areas with the most mission-critical system to power districts in K-12. Our breadth and depth give us the confidence in our ability to grow no matter how our customers' needs evolve. A recent third-party-conducted brand survey of K-12 customers lists a variety of key priorities and challenges for the next 24 months across different functions. You can find this in our earnings presentation. We believe we are in a unique position to address most of the must-have critical K-12 administrations need today. Our customers also recognize this. The survey also shows PowerSchool has the highest brand awareness and about double the consideration of any pure play education software company. Take examples for 2021. Districts elevated their focus on identifying unfinished learning, which led many of them to our insights and assessment products. We are seeing these needs for student insights continue into future years, and we are well positioned to meet these needs. In fact, very excited to share a top five school district by student enrollment in U.S. just selected our Performance Matters assessment platform for a district-wide assessment solution in addition to their existing multiple products PowerSchool footprint. One of the key challenges districts are facing today is talent shortage with higher teacher attrition given the stress and the impact from last two years of COVID. We recently published our Talent Index Survey with a third-party firm, which clearly shows that teacher recruitment, their well-being, and the retention are the three top priorities for all our customers in 2022. Unified Talent helps them manage their staff from hire to retire, And in Q4, we saw a State Department of Education select Unified Talent as the statewide educator recruitment platform for the entire state. We're also seeing heightened focus on providing an integrated academic, behavioral, special needs, and a social-emotional support to give a holistic view of the student. BigBoard, our behavior solution acquired recently in November, helps districts identify students who need behavioral support. And we're further innovating to enable a holistic multi-tier system of support process for districts. We are seeing that student and community engagement is more critical than ever in this challenging time. Districts are seeing major challenges with absenteeism and need a centralized, equitable way to reach the families they support. Our most recent acquisition of Kinwald extends our product footprint in a way to help address this need. This takes me to my last point, the opportunity we have to continue expanding our platform and the market opportunity globally. We saw these needs growing within our customer base. and the acquisition of Kickboard and Kinwald, a great example of how we quickly provide a solution and, in turn, drive cross-sell. Kinwald, which closed in February 1st, is the latest addition to our portfolio, bringing us a modern, best-in-class solution for K-12 communication and attendance intervention. Kinwald addresses a massive market need for family engagement in reducing student absenteeism and improving student engagement and outcome. Alongside this M&A, we continue to focus our R&D dollars on innovation to launch new products and capabilities, including a competency-based learning management system across our SIS, LMS, and formative assessment platform, a new graduation planning capability leveraging our Naviance and SIS, utilizing take both to tie SEL and academic data together, our data lake project, and as I mentioned earlier, developing a new product to help districts better manage their MTSS workflow. All these investments are foundations for us to build and expand into the global personalized learning market, which represents a $100 billion market opportunity. Our vision, The platform and the investments allow us to lead the charge towards game-changing innovation to transform K-12 education globally. The combination of these factors I shared, the strong market, the clear leadership position, the cross-term momentum from our platform strategy, the multiple avenues to drive growth, and the potential to continue expanding our platform, speak to our success, our opportunity, and the durability of our business, allowing us to capture the large opportunity in front of us. We have a clear visibility into driving predictable and profitable growth well into the future, generating free cash flow, which in turn gives us the ability to continue to invest and expand our platform. I'm extremely proud of our team and all we have accomplished. I'm also proud to help schools and districts through this pivotal time of rapid change and evolution. It is our goal to move education forward by giving schools and districts the tools and the real-time access to meaningful data which unlocks the keys to better student outcomes and thriving staff. With that, I'll hand it over to Eric to provide a financial update for 2020 and share more about our guidance for 2022. Eric?