PowerSchool Holdings, Inc.

being recorded. I would like now to turn the conference over to Shane Harrison, Senior Vice President of Investor Relations.

Please go ahead. Thank you, Operator. Welcome, everyone, to PowerSchool's earnings conference call for the first quarter ended March 31, 2024. 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 President and CFO, Eric Shander. Before getting started, I'd like to emphasize that this call, including the Q&A portion, will include statements related to the expected future results for our company, which 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. With that, let me now turn the call over to Hardeep.

Thank you, Shane, and thank you, everyone, for joining us today. We are starting 2024 with continuous strong momentum, beating the midpoint of our revenue outlook and exceeding the high end of our outlook for adjusted EBITDA. ARR grew 18% year over year, while NRR improved 30 basis points sequentially to 107%. First quarter revenue totaled $185 million, up 16% year over year. and subscription and support revenue growing 18% to $167 million. Adjusted EBITDA improved 24% year-over-year to $61 million, representing a 33% margin and expansion of over 2 percentage points year-over-year. These first quarter results showcase the robustness of software spend in K-12 market and the continued demand and stickiness of our market-leading mission-critical solutions that drive better education outcomes, empower educators, and help districts run more efficiently. These results are driven by the strength of our multiple growth vectors, which create the diversity and sustainability of our business model and enable us to deliver consistent results quarter after quarter. Now 11 consecutive quarters since our IPO of meeting or beating guidance. I will highlight the updates in the quarter based on each of the four key growth vectors we have shared in the past. First, significant cross-sell and net new opportunity across North America for our comprehensive and broad 20-plus products meeting a variety of district and state strategic initiatives. Second, our expansion and successes in the untapped large international market. Third, continued strategic M&A that expands over time and adds solutions that address the most important growth areas, such as our recent all-of-you budgeting and planning acquisition. Fourth, launching new disruptive high-growth innovations like PowerBuddy, a K-12 industry first AI assistant for everyone. Let's start with our first growth vectors and share with you some of the highlights of customer momentum in cross-sell and new logos with our key wins in Q1. As we briefly previewed in our last learning calls, we are thrilled and honored to have signed in Q1 one of our largest deals in recent history to serve the Indiana Department of Education to provide special program solution to the state and all its districts to modernize systems, processes, and improve special education program needs for every student at every school in Indiana. Our solution replaced their existing vendor as we provide a more modern, interoperable platform with enhanced compliance for federal and state reporting requirements. We also saw several of the notable cross-sell wins during the quarter, including Toledo Public Schools, who selected our SIS and ERP solutions, Visalia Unified School District, who chose our communication and our new MyPowerSchool product, San Bernardino City Unified School District, who selected our analytics and talent modules. Leap Social Enterprise in Puerto Rico, who broadened their presence with us on multiple products, including SIS, Schoology, Enrollment, and Naviance. The volume and the types of deals across these broad solutions show our ability to meet the varying needs and priorities for districts of different sizes and across regions. During the quarter, we also added great new logos, including Manitoba First Nations Education Resource Center, who purchased our student information system to power their district operations and reporting. In fact, one of the reasons for our ongoing cross-sell and new logo successes is our key differentiator of strong, unparalleled leadership of our student information system, or SIS, along with many of our other solutions. The SIS is the heartbeat, the source of truth. It stores and manages all student data within a school district or charter school system. Schools use the SIS for compliance reporting to Department of Education and to provide reports to key stakeholders to inform decision-making to help students succeed. PowerSchool SIS is a premium solution and a clear market leader with gross retention rates in the high 90s and a strong customer satisfaction scores. We continue to win new accounts in SIS and have brought in over a million new students over the past two years. We're now reaching over 20 million K-12 students globally and roughly one-third of North American students. SIS is one of the keys to cross-selling additional products, and we have much stronger win rates with customers who already use our SIS. During the first quarter, we made great progress in our second growth vector of international expansion. particularly in the high-growth target markets in the Middle East, Latin America, and India. In the Middle East, through our board-Middle East BME partnership, we signed a new logo, Knights of Knowledge International Schools in Saudi Arabia, who purchased SIS, Schoology, and other modules to benefit all their students and teachers. We also continue to cross-sell into an international customer base with customers like Arabian Education Development, who expanded their deployment from student cloud to personalized learning cloud, talent cloud, and now our analytics cloud. Another example of international cross-sell is in Latin America, where we broadened our presence with the International School of Tegucigalpa in Honduras in an existing Schoology customer who expanded to a broader platform, including SIS, enrollment, eCollect, and other modules. In India, we've won new business with Kalkidhar Education and Edufice, among many others. We are very excited about the international prospects this year, as our full-year international pipeline has grown over 200% year-over-year. This includes large deals and pipeline to our partner channels. Before we move to our third growth driver, I want to touch on funding and the key priorities in front of our customers. As you know, K-12 is one of the largest spend categories globally, with over 700 billion in U.S. alone and over 5 trillion globally. The core budgets are resilient and are relatively insulated from inflationary and other macroeconomic events. Budgets are funded through multiple sources, federal, state, and local, and education is a bipartisan priority. ESSER injected an additional 5% to 10% per year to the overall budget targeted towards one-time purchases and managing additional staffing, supplemental content, and services needs during the past few years. While in some cases, districts use ESSER to fund their initial implementation and rollout of K-12 technologies, districts are largely required to allocate their ongoing software contract spend from their regular core ongoing budgets. The broader tailwind driving the software growth in K-12 has been the need for digital transformation to support more automation of their back office, eliminate costly manual tasks, reduce teacher administrative time, modernize the classroom to drive more engagement with students, and also get better insight so districts can optimize their investments to create better student outcomes. That is why education software spending is forecasted to remain one of the highest growth areas in K-12 education. In March, we conducted a survey of our annual education focus report, where we received nearly 2,000 educator responses from across the U.S., from every state and U.S. strategy on a wide range of questions, including top K-12 technology priorities, budgets, and much more. I'd like to share some of the preliminary results from our market research, which will be formally released in July. The top five technology priorities districts identified are integrating technology solutions, connecting data across systems, implementing attendance solutions to address chronic absenteeism, providing AI guidance and infrastructure, cybersecurity, and protecting student data. Conversely, the top areas of budget management that district identified were limiting additional staffing budget, hardware spend, and reducing tutoring spend. These survey results directly aligned with our solutions and platform strategy to provide secure, modern, integrated systems and data with mission-critical needs like MTSS, attendance intervention, and data insights to provide the right help efficiently and surgically based on individual student needs and drive better attendance and engagement to help keep students in school. In fact, helping districts with budgeting and spending efficiency and efficacy was a key rationale behind our recent strategic acquisition of All of You. As we discussed during our last earnings call, we acquired Oliveo in January of this year, and we are already seeing very strong demands for its capabilities. Results from the second annual Oliveo Education Financial Survey found that roughly half of the educators surveyed said that their budget tools are out of date and are in need of modernization. By adding all of you, PowerSchool can now provide schools, districts, and state education leaders with the most comprehensive suite of K-12 data and analytics tools available to accurately plan budgets and provide clear visibility for the communities into district spending and the impact on student outcomes. This showcases how we are leveraging our third growth factor of strategic M&A expansion to drive additional growth on current district priorities. Now turning to our fourth growth vector of differentiated innovation. In January, we announced our generative AI platform, PowerSchool PowerBuddy, a K-12 industry-first AI-powered assistant for everyone. PowerBuddy is designed to deliver conversational, personalized, contextual, and embedded experiences for educators, students, administrators, and parents. We recently announced general availability of two new AI-powered solutions, PowerBuddy for Learning and PowerBuddy for Assessment. These two solutions are targeted for teachers to save them countless hours spent generating student assignments, lesson plans, and assessments, personalized to different reading levels, subjects, languages, and state standards. They seamlessly integrate within Schoology and Performance Matters. and are built on Microsoft Azure OpenAI, but designed and fine-tuned by PowerSchool, specifically for K-12, with controls for responsible AI principles and compliant with district and state standards and content. Demand for property has been very strong, and we already have signed dozens of customers, including Epic Charter Schools and DeWall County Public Schools. We have several other PowerBuddy solutions under beta with districts representing approximately 2 million students and have built roughly 10 million of opportunity pipelines for these solutions. Additionally, we have received impactful testimonials from teachers saying they have reduced the amount of time needed to create a standards-aligned assessment item by more than two-thirds. We are excited to launch additional PowerBuddy products, including PowerBuddy for data analysis, custom AI, college and career engagement, and coaching and mentoring, which will be available for 2024 and 2025 school year. Given our leadership in reach, scale, breadth, and impact, we are uniquely positioned to provide generative AI solutions that personalize experiences, leveraging whole child information, and are embedded into existing solutions that students, parents, teachers, and administrators use every day and provide a contextualized help and assistance for all their needs. We're also helping districts formalize their data platform for AI with our differentiated, connected intelligence data lake solution that enables districts to ensure their data sovereignty and empower their educators and students to leverage GenAI by bringing AI to their data. When it comes to data, PowerSchool leads the K-12 industry in student data privacy and data security, a responsibility we take very seriously. To that end, we are certified by industry leaders such as TrustArc and Prevo, and we proudly adhere to all applicable federal and state laws pertaining to student data, including federal laws such as Family Education Rights and Privacy Act, FERPA, and the Child Online Privacy Protection Act as well as state regulations including California's Student Online Personal Information Protection Act and its variant in many other states. We are also proud signatories of the Student Privacy Pledge and the white house secure by design initiative a voluntary pledge developed by the cyber security and infrastructure security agency cisa and the u.s department of education we also pledged our commitment to further secure the education technology ecosystem by offering free and subsidized security resources to all u.s schools and districts for more information on our student privacy compliance security investments and our responsible ai guidelines please refer to the accompanying earnings presentation for links to our data security policies and our chief compliance officer privacy blog. PowerSchool today is a vastly larger and fundamentally different company than it was just five years ago. Since 2019 and based on the midpoint of our 2024 outlook, we will have more than doubled our revenue and nearly tippled our adjusted EBITDA while expanding our adjusted EBITDA margins by nearly 10 percentage points. Over the same period, we have acquired 11 companies and nearly doubled the number of our products in our portfolio. We have started to put boots on the ground in international markets and built out a channel partner network of 14 partners across all of our targeted international markets. Delivering this kind of growth requires exemplary executive talent and high-performance culture. I'm proud to have been able to attract and retain the world-class executive leaders and team needed for PowerSchool of today, many of them drawn to the company's powerful mission. Highlighted by these strong first quarter results, we remain focused and confident about our continued success and ability to execute in line with the strategy and targets we shared at our investor day last year to reach $1 billion-plus in revenue in the next three years. Now I will turn over to Eric to discuss the financial results and outlook. Eric?