PowerSchool Holdings, Inc.

Good afternoon and evening everyone and welcome to power school second quarter 2022 earnings call. As a reminder today's call is being recorded and your participation implies consent to such recording. At this time all participants are on 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 Shane Harrison, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. Thank you for joining us for PowerSchool's earnings conference call for the second quarter ended June 30th, 2022. I wanted to first let you know that we posted a slide deck to the Investor Relations section of our website that accompanies our remarks here. On the call today, we have PowerSchool CEO Hardeep Gulati and CFO Eric Shander. Before we get started, I'd like to emphasize that this call, including the Q&A portion, 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 and results presentation, which are both posted on PowerSchool's Investor Relations website at investors.powerschool.com. A replay of this call will also be posted to the same website.

Let me now turn the call over to Hardik. Thank you, Shane, and thank you, everyone, for joining us this afternoon. PowerSchool's second quarter was a resounding success that showcased the acceleration of the momentum we have been building. It was a record-setting quarter for our cross-sell strategy, and we continue to see growth in our customer base with new logo bins. Our financial performance exceeded our expectations, and we expect this strong momentum to continue for the rest of the year, as reflected in our increased guidance. Our K-12 target market continues to see strong tailwinds, including the ongoing secular shift of digital transformation in education and large stable funding sources that provide insulation from external economic factors. Our continued growth and momentum are testaments to both the strong target market and the value customers see when expanding their footprint of our unified platform. We are excited by the success we saw in Q2. And as I reflect on the results, three key themes come to mind. First, we saw financial momentum in expanding margins and strong growth. Second, we have great customer momentum with our strongest ever cross-sell ARR quarter. And lastly, we continued our platform momentum by capitalizing on the opportunities to further expand our comprehensive product suite. I'll begin on slide four with the financial momentum we saw in Q2. We reached total revenue of $158 million and subscription and support revenue of $135 million, which grew 11% year over year. Profitability also improved on a sequential basis, resulting in adjusted EBITDA of $49 million representing a margin of 31%, the highest margin we have achieved in a full quarter since our IPO. ARR increased 10% year-over-year and 4% sequentially. We continue to deliver a compelling combination of high visibility growth with strong profit margins. On slide five, you will see our tremendous customer momentum in the quarter. we'd reach our highest ever cross-cell ARR in a quarter, even higher than the levels we saw at the onset of COVID when demand for classroom technology spiked. This growth was driven by success across the product portfolio. For example, one of the largest K-12 districts in Canada, Peel District School Board, with 151,000 students in Ontario, is an existing customer that chose to expand with us by adding six additional products, including our student information system. Another good example of a customer recognizing the value of our platform is Clarksville Montgomery County School System in Tennessee. Already a customer of our SIS, Talent, Assessment, and Naviance products, They replaced a competing classroom LMS with Schoology and also added our new behavior support solution to take advantage of the full integrated suite. On the customer expansion front, we had another great quarter with over 20% year-over-year growth in new logo wins. This helped increase our customer base to over 15,000 as we increasingly see school districts Embrace our integrated platform of technologies that drive operational efficiencies, advanced teacher and student success, and provide powerful data insights to administrators, teachers, and families. We are seeing large new customers like Evansville-Wenderburg School Corporation in Indiana, who bought nine products, including SIS, Talent, and Naviance, for the 21,000 students. Additionally, our growing international team had another large win with the new customer in Saudi Arabia, Marif Education, who purchased our comprehensive platform, including our SIS administration and full unified classroom suite. A key reason behind the decision was that PowerSkill is the only provider, even internationally, bringing all these best-in-class capabilities in one suite. This customer success shows in the sequential growth of our ARR and NRR. The ARR growth of 10% year-over-year and 4% sequentially was the best organic sequential growth we have seen since the COVID-driven mid-2020 timeframe. Our improvement in cross-selling combined with strong customer retention grew over NRR 207.3%, a 60 basis point improvement from Q1 of this year. As we enter the second half, we see a significantly larger pipeline of opportunities that we have ever seen, including some large deals. With a strong funding environment boosted by SR stimulus funding, Districts are accelerating their digital transformation plans in operations, talent management, and classroom, and getting better insights in to help address learning gaps for better-engaged students and empowering teachers. As you will see in slide six, since the end of Q1, we have continued the expansion of our industry-leading unified platform by introducing new organic products and completing a highly strategic tuck-in acquisition. to help districts solve for their ever evolving challenges. Last month at the annual ISTE or International Society for Technology and Education Conference, we introduced an innovative new product that offers multi-tiered system of support known as MTSS to boost student success and support educators. MTSS connects all the data to create actionable whole child view and align personalized intervention plans across all levels and types of support required for students. We are seeing great early traction with this product, which was built organically on top of our unified insights analytics engine that continues to see strong demand and has become a clear market leader. In Q2, we secured a multimillion dollar statewide contract from the Maryland Department of Education for unified insights that will benefit eight hundred and fifty thousand students with rich analytics across the state. We are continuing to further differentiate our analytics offering by launching last week at our Council of Education Innovation Conference of a new connected intelligence solution powered by Snowflake, the first fully managed data as a service solution for K-12 schools. Having the ability to unify all data under one secure, comprehensive platform district and education agencies will be able to connect data from early childhood to adulthood as well as internal and external data to position all students for lifelong success and positive social and economic futures. We further invested in our Naviance College Career Life Readiness Solution with the acquisition of HeadED2, a small but very complimentary tuck-in acquisition that expands our CCLR capabilities for students of all ages, including elementary schools. This solution also supports state-level CCLR initiatives, providing state-specific career, military, and technical education exploration and pathway planning portals for all 50 states, and initial statewide contracts with California, Nevada, and Pennsylvania. This customer and platform expansion has resulted in record-breaking profitability and success in Q2, helping us exceed our financial guidance for the fourth consecutive quarter and setting us up well for a strong second half. In fact, July marked the one year anniversary of the PowerSchool IPO. Going public was a major step in PowerSchool journey and supports of a near and long term growth opportunity to redefine how the world educates K through 12 students. I would like to take the opportunity to summarize our progress on the four key unique differentiators we highlighted during our IPO. On slide seven, I'll start with our unmatched unified platform. Since the IPO, we have expanded the platform from 14 to 19 products, a continued progression towards our personalized learning vision. Our innovation engine and investment strategies in complementary solutions of behavior support, unified communication, curriculum management, MTSS, and connected intelligence have further strengthened our differentiation and accelerated the adoption of our platform to address the holistic needs for districts to drive automation, efficiency, and personalization. Our second key differentiator is our scale customer base. We have amassed 15,000 customers, having added nearly 3,000 since the IPO. through effective go-to-market operations and high-return technology investments. Tremendous market opportunity is still ahead of us, particularly with 1.2 billion K-12 students that live outside of North America. We are beginning to build capacity with feet on the ground and strategic channel partnerships outside of the U.S., and we'll be accelerating those investments further over the next six to 12 months. We already are seeing strong early successes in Middle East, India, Southeast Asia, and Latin American markets. For example, a Q2 channel partner in India selected Schoology with plans for deployment across 250 schools representing 160,000 new students in India by mid next year. Our business model is our third key differentiator. The Models Foundation is entrenched with deep enterprise-level relationships with districts and education agencies. We are providing mission-critical and efficiency-enabling solutions that are core to our customers' operations, instruction, and supporting their students and educators. Cross-selling to our existing customer is central talent to our business model. With over 15,000 customers utilizing on average only two of our products, we have a unique and sizable runway for cross-selling. In fact, since the IPO, our cross-sell strategy resulted in the number of multi-product customers growing nearly 30%, a great example of how we can dive deeper into our customers' digital transformation needs. And lastly, on the differentiators, our financial profile is durable and has a long history of profitability and cash generation. This profile is built on a high mix of predictable recurring revenue coupled with strong margins and operating leverage. We have expanded our profitability since the IPO with our adjusted EBITDA growing 22% and adjusted EBITDA margins gaining over 400 basis points. Sustained execution around these four differentiator has been a cornerstone of our success. The strength of our sticky, and resilient business model as well as our solid financial profile especially in uncertain economic environment such as we see today is enviable and we expect heightened investments in mission critical cloud solutions and data insights as school system modernize creating a tailwind for this business I am more excited than ever about the various growth opportunities ahead of us and look forward to the coming quarters to showcase our continued momentum. Let me pass the call over to Eric to cover our future financials. Eric? Thank you, Hardeep.