PowerSchool Announces Fourth Quarter and Full Year 2021 Financial Results
PowerSchool Holdings, Inc. (NYSE: PWSC) reported robust financial results for Q4 and FY2021, with total revenue of $146.1 million in Q4, up 25.8% year-over-year. The annual revenue reached $558.6 million, marking a 28.4% increase. While the company achieved a record Annual Recurring Revenue (ARR) of $538.6 million, it also reported a net loss of $43.1 million for the year. Looking ahead, PowerSchool anticipates Q1 2022 revenue of $145-$148 million and annual revenue between $620-$626 million. CEO Hardeep Gulati emphasized continued growth potential through cross-selling and strategic acquisitions.
- Q4 revenue of $146.1 million, up 25.8% year-over-year.
- Full-year revenue of $558.6 million, a 28.4% increase.
- Record Annual Recurring Revenue (ARR) of $538.6 million, up 26%.
- Adjusted EBITDA for FY2021 was $161.2 million, or 28.9% of total revenue.
- Significant increase in free cash flow, up 78.3% to $103.2 million.
- Net loss of $43.1 million for FY2021, negative 7.7% of total revenue.
- Net loss of $15.9 million in Q4, negative 10.9% of total revenue.
“We had a fantastic fourth quarter, exceeding the top ends of our guidance on both revenue and Adjusted EBITDA, and capping off a record year for PowerSchool in which ARR grew
“Looking ahead to 2022, we believe we are still early in our growth trajectory and aim to capture upside through cross-sell, continued strategic M&A and a robust K-12 education funding environment. We are gratified by customer feedback indicating the power of our unified, end-to-end platform is resonating with students, teachers and parents and further validating our investments in innovation to build out our personalized learning vision,” Gulati added.
Fourth Quarter 2021 Financial Results
-
Total revenue was
$146.1 million December 31, 2021 , up25.8% year-over-year. -
Subscriptions and Support revenues were
$128.2 million 28.8% year-over-year. -
Gross Profit was
$80.3 million 54.9% of total revenue, and Adjusted Gross Profit* was$96.2 million 65.8% of total revenue. -
Net loss was
$15.9 million 10.9% of total revenue, and Non-GAAP net income* was$28.1 million 19.2% of total revenue. -
Adjusted EBITDA* was
$33.2 million 22.8% of total revenue. -
GAAP net loss per basic and diluted share was
$0.08 $0.14 -
Net cash provided by operations was
$20.2 million $11.8 million
Full Year 2021 Financial Results
-
Total revenue was
$558.6 million December 31, 2021 , up28.4% year-over-year. -
Subscriptions and Support revenues were
$477.3 million 28.7% year-over-year. -
Gross Profit was
$317.7 million 56.9% of total revenue, and Adjusted Gross Profit* was$375.7 million 67.3% of total revenue. -
Net loss was
$43.1 million 7.7% of total revenue, and Non-GAAP net income* was$124.6 million 22.3% of total revenue. -
Adjusted EBITDA* was
$161.2 million 28.9% of total revenue. -
GAAP net loss per basic and diluted share was
$0.21 $0.63 -
Net cash provided by operations was
$143.1 million $103.2 million 60.0% and78.3% year-over-year, respectively. -
Annual Recurring Revenue (ARR)* was
$538.6 million 26% year-over-year, and Net Revenue Retention Rate* was106.4% .
* Definitions of the key business metrics and the non-GAAP financial measures used in this press release and reconciliations of such measures to the most closely comparable GAAP measures are included below under the headings “Definitions of Certain Key Business Metrics” and “Use and Reconciliation of Non-GAAP Financial Measures.”
Recent Business Highlights
-
PowerSchool saw continued growth through its cross-sell strategy, closing the year with nearly 1,500 cross-sell transactions, including a major multi-district city
Department of Education selecting our Special Programs solution in the fourth quarter. -
PowerSchool completed its acquisition of
Kickboard, Inc. , a leading provider of K-12 education behavior management solutions, in the fourth quarter. - PowerSchool completed its acquisition of Kinvolved, expanding its K-12 platform with two-way communication, attendance, and engagement technology, in the first quarter of 2022.
- PowerSchool announced a new, streamlined Human Resources Management System to simplify and centralize human resources management for schools and districts.
- PowerSchool was named the “Pandemic Pivot” winner in the Sacramento Business Journal’s 2021 Sacramento Region Innovation Awards. PowerSchool was recognized for its response to supporting educators and students through the pandemic.
-
The PowerSchool Education Fund , launched inJuly 2021 , added seven new University partners to support classroom equity programs and help diverse new teachers enter the profession.
Commenting on the Company’s financial results,
Financial Outlook
The Company currently expects the following results:
Quarter ending |
||||||
Total revenue |
|
to |
|
|||
Adjusted EBITDA * |
|
to |
|
|||
Year ending |
||||||
Total revenue |
|
to |
|
|||
Adjusted EBITDA * |
|
to |
|
|||
* Adjusted EBITDA, a non-GAAP financial measure was not reconciled to net income (loss), the most closely comparable GAAP financial measure because net income (loss) is not accessible on a forward-looking basis. The Company is unable to reconcile Adjusted EBITDA to net loss without unreasonable efforts because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact net income (loss) for these periods but would not impact Adjusted EBITDA. Such items include stock-based compensation charges, depreciation and amortization of capitalized software costs and acquired intangible assets, severance, and other items. The unavailable information could have a significant impact on net income (loss). The foregoing financial outlook reflects the Company’s expectations as of today's date. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially. The Company does not intend to update its financial outlook until its next quarterly results announcement.
Important disclosures in this earnings release about and reconciliations of historical non-GAAP financial measures to the most closely comparable GAAP measures are provided below under “Use and Reconciliation of Non-GAAP Financial Measures.”
Conference Call and Webcast Information
PowerSchool will host a conference call to discuss the fourth quarter and full year 2021 financial results on
Those wishing to participate via telephone may dial in at 1-877-407-0792 (
About PowerSchool
Forward Looking Statements
Any statements made in this press release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including our financial outlook and descriptions of our business plan and strategies. Forward-looking statements are based on PowerSchool management’s beliefs, as well as assumptions made by, and information currently available to, them. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited to: potential effects on our business of the COVID-19 pandemic; our history of cumulative losses; competition; our ability to attract new customers on a cost-effective basis and the extent to which existing customers renew and upgrade their subscriptions; our ability to sustain and expand revenues, maintain profitability, and to effectively manage our anticipated growth; our ability to retain, hire and integrate skilled personnel including our senior management team; our ability to identify acquisition targets and to successfully integrate and operate acquired businesses; our ability to maintain and expand our strategic relationships with third parties, including with state and local government entities; the seasonality of our sales and customer growth; our reliance on third-party software and intellectual property licenses; our ability to obtain, maintain, protect and enforce intellectual property protection for our current and future solutions; the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions. Additional information concerning these and other risk factors can be found in our filings with the
We caution you that the factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.
Definitions of Certain Key Business Metrics
Annualized Recurring Revenue (“ARR”)
ARR represents the annualized value of all recurring contracts as of the end of the period. ARR mitigates fluctuations due to seasonality, contract term, one-time discounts given to help customers meet their budgetary and cash flow needs and the sales mix for recurring and non-recurring revenue. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast, and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
Net Revenue Retention Rate (“NRR”)
We believe that our ability to retain and grow recurring revenues from our existing customers over time strengthens the stability and predictability of our revenue base and is reflective of the value we deliver to them through upselling and cross selling our solution portfolio. We assess our performance in this area using a metric we refer to as Net Revenue Retention Rate. For the purposes of calculating NRR, we exclude from our calculation any changes in ARR attributable to Intersect customers, as this product is sold through our channel partnership with EAB and is pursuant to annual revenue minimums, therefore the business will not be managed based on NRR. We calculate our dollar-based NRR as of the end of a reporting period as follows:
- Denominator. We measure ARR as of the last day of the prior year comparative reporting period.
- Numerator. We measure ARR from renewed and new sale opportunities booked as of the last day of the current reporting period from customers with associated ARR as of the last day of the prior year comparative reporting period.
The quotient obtained from this calculation is our dollar-based net revenue retention rate. Our NRR provides insight into the impact on current year recurring revenues of expanding adoption of our solutions by our existing customers during the current period. Our NRR is subject to adjustments for acquisitions, consolidations, spin-offs and other market activity.
Use and Reconciliation of Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
Adjusted Gross Profit: Adjusted Gross Profit is a supplemental measure of operating performance that is not made under GAAP and that does not represent, and should not be considered as, an alternative to gross profit, as determined in accordance with GAAP. We define Adjusted Gross Profit as gross profit, adjusted for depreciation, share-based compensation expense and the related employer payroll tax, restructuring and acquisition-related expenses and amortization of acquired intangible assets and capitalized product development costs. We use Adjusted Gross Profit to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short-term and long-term operating plans. We believe that Adjusted Gross Profit is a useful measure to us and to our investors because it provides consistency and comparability with our past financial performance and between fiscal periods, as the metric generally eliminates the effects of the variability of depreciation, share-based compensation, restructuring expense, acquisition-related expenses, and amortization of acquired intangibles and capitalized product development costs from period to period, which may fluctuate for reasons unrelated to overall operating performance. We believe that the use of this measure enables us to more effectively evaluate our performance period-over-period and relative to our competitors.
Non-GAAP Net Income, Non-GAAP Cost of Revenue and Operating Expenses and Adjusted EBITDA: Non-GAAP Net Income, Non-GAAP Cost of Revenue, Non-GAAP Operating Expenses and Adjusted EBITDA are supplemental measures of operating performance that are not made under GAAP and that do not represent, and should not be considered as, an alternative to net income (loss), GAAP cost of revenue and GAAP operating expenses, as applicable. We define Non-GAAP Net Income as net income (loss) adjusted for depreciation and amortization, share-based compensation expense and the related employer payroll tax, management fees, restructuring and acquisition-related expenses. We define Non-GAAP Cost of Revenue and Operating Expenses as their respective GAAP measures adjusted for share-based compensation expense and the related employer payroll tax, management fees, restructuring expense, and acquisition-related expense. We define Adjusted EBITDA as net income (loss) adjusted for all of the above items, net interest expense and provision for (benefit from) income tax. We use Non-GAAP Net Income, Non-GAAP Cost of Revenue, Non-GAAP Operating Expenses and Adjusted EBITDA to understand and evaluate our core operating performance and trends and to develop short-term and long-term operating plans. We believe that Non-GAAP Net Income and Adjusted EBITDA facilitate comparison of our operating performance on a consistent basis between periods and, when viewed in combination with our results prepared in accordance with GAAP, help provide a broader picture of factors and trends affecting our results of operations.
Free Cash Flow and Unlevered Free Cash Flow: Free Cash Flow and Unlevered Free Cash Flow are supplemental measures of liquidity that are not made under GAAP and that do not represent, and should not be considered as, an alternative to cash flow from operations, as determined by GAAP. We define Free Cash Flow as net cash provided by operating activities less, cash used for purchases of property and equipment and capitalized product development costs. We define Unlevered Free Cash Flow as Free Cash Flow plus cash paid for interest on outstanding debt. We believe that Free Cash Flow and Unlevered Free Cash Flow are useful indicators of liquidity that provide information to management and investors about the amount of cash generated by our operations inclusive of that used for investments in property and equipment and capitalized product development costs as well as cash paid for interest on outstanding debt.
These non-GAAP financial measures have their limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, these non-GAAP financial measures should not be considered as a replacement for their respective comparable financial measures, as determined by GAAP, or as a measure of our profitability or liquidity. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures only for supplemental purposes.
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see "Reconciliation of GAAP to Non-GAAP Financial Measures" below.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
||||||||||||||||
(unaudited) |
||||||||||||||||
(in thousands except per share data) |
Three Months Ended
|
Twelve Months Ended
|
||||||||||||||
|
2021 |
2020 |
2021 |
2020 |
||||||||||||
|
(unaudited) |
(unaudited) |
||||||||||||||
Revenue: |
|
|
|
|
||||||||||||
Subscriptions and support |
|
128,170 |
|
|
99,481 |
|
$ |
477,296 |
|
$ |
370,853 |
|
||||
Service |
|
14,442 |
|
|
12,912 |
|
|
61,976 |
|
|
49,471 |
|
||||
License and other |
|
3,483 |
|
|
3,701 |
|
|
19,326 |
|
|
14,564 |
|
||||
Total revenue |
|
146,095 |
|
|
116,094 |
|
|
558,598 |
|
|
434,888 |
|
||||
|
|
|
|
|
||||||||||||
Cost of revenue: |
|
|
|
|
||||||||||||
Subscriptions and support |
|
38,160 |
|
|
28,847 |
|
|
135,963 |
|
|
108,158 |
|
||||
Service |
|
13,832 |
|
|
11,813 |
|
|
51,803 |
|
|
41,324 |
|
||||
License and other |
|
836 |
|
|
369 |
|
|
2,384 |
|
|
1,320 |
|
||||
Depreciation and amortization |
|
13,014 |
|
|
12,217 |
|
|
50,708 |
|
|
41,000 |
|
||||
Total cost of revenue |
|
65,842 |
|
|
53,246 |
|
|
240,858 |
|
|
191,802 |
|
||||
Gross profit |
|
80,253 |
|
|
62,848 |
|
|
317,740 |
|
|
243,086 |
|
||||
|
|
|
|
|
||||||||||||
Operating expenses: |
|
|
|
|
||||||||||||
Research and development |
|
27,866 |
|
|
22,549 |
|
|
92,740 |
|
|
70,673 |
|
||||
Selling, general, and administrative |
|
45,907 |
|
|
25,279 |
|
|
149,167 |
|
|
92,711 |
|
||||
Acquisition costs |
|
1,225 |
|
|
2,472 |
|
|
7,299 |
|
|
2,495 |
|
||||
Depreciation and amortization |
|
16,002 |
|
|
13,388 |
|
|
62,818 |
|
|
54,744 |
|
||||
Total operating expenses |
|
91,000 |
|
|
63,688 |
|
|
312,024 |
|
|
220,623 |
|
||||
Income (loss) from operations |
|
(10,747 |
) |
|
(840 |
) |
|
5,716 |
|
|
22,463 |
|
||||
Interest expense - Net |
|
7,519 |
|
|
15,962 |
|
|
58,935 |
|
|
68,714 |
|
||||
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
12,905 |
|
|
— |
|
||||
Other expense (income) - Net |
|
(10 |
) |
|
1,027 |
|
|
(644 |
) |
|
358 |
|
||||
Income (Loss) before income taxes |
|
(18,256 |
) |
|
(17,829 |
) |
|
(65,480 |
) |
|
(46,609 |
) |
||||
Income tax expense (benefit) |
|
(2,380 |
) |
|
(25 |
) |
|
(22,415 |
) |
|
39 |
|
||||
Net income (loss) |
$ |
(15,876 |
) |
$ |
(17,804 |
) |
$ |
(43,065 |
) |
$ |
(46,648 |
) |
||||
Less: Net loss attributable to non-controlling interest |
|
(3,544 |
) |
|
— |
|
|
(9,296 |
) |
|
— |
|
||||
Net income (loss) attributable to |
|
(12,332 |
) |
|
(17,804 |
) |
|
(33,769 |
) |
|
(46,648 |
) |
||||
|
|
|
|
|
||||||||||||
Net loss attributable to the |
$ |
(0.08 |
) |
$ |
— |
|
$ |
(0.21 |
) |
$ |
— |
|
||||
Weighted average shares of Class A common stock outstanding - basic and diluted |
|
157,996,637 |
|
|
— |
|
|
157,576,056 |
|
|
— |
|
||||
|
|
|
|
|
||||||||||||
Other comprehensive income (loss) - Foreign currency translation |
|
114 |
|
|
491 |
|
|
(554 |
) |
|
353 |
|
||||
Total other comprehensive income (loss) |
|
114 |
|
|
491 |
|
|
(554 |
) |
|
353 |
|
||||
Less: comprehensive loss attributable to non-controlling interest |
$ |
80 |
|
$ |
— |
|
$ |
(55 |
) |
$ |
— |
|
||||
Comprehensive income (loss) attributable to |
$ |
(12,298 |
) |
$ |
(17,313 |
) |
$ |
(34,268 |
) |
$ |
(46,295 |
) |
||||
|
|
|
|
|
||||||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(unaudited) |
||||||||
(in thousands) |
|
|
||||||
Assets |
|
|
||||||
Current Assets: |
|
|
||||||
Cash and cash equivalents |
$ |
86,479 |
|
$ |
52,734 |
|
||
Accounts receivable—net of allowance of |
|
48,403 |
|
|
47,977 |
|
||
Prepaid expenses and other current assets |
|
38,423 |
|
|
22,799 |
|
||
Total current assets |
|
173,305 |
|
|
123,510 |
|
||
|
|
|
||||||
Property and equipment - net |
|
15,676 |
|
|
17,069 |
|
||
Capitalized product development costs - net |
|
80,611 |
|
|
58,894 |
|
||
|
|
2,454,692 |
|
|
2,213,367 |
|
||
Intangible assets - net |
|
804,909 |
|
|
763,459 |
|
||
Other assets |
|
27,489 |
|
|
24,401 |
|
||
Total assets |
$ |
3,556,682 |
|
$ |
3,200,700 |
|
||
|
|
|
||||||
Liabilities and Members’ Equity |
|
|
||||||
Current Liabilities: |
|
|
||||||
Accounts payable |
$ |
12,449 |
|
$ |
11,145 |
|
||
Accrued expenses |
|
71,167 |
|
|
53,698 |
|
||
Deferred revenue, current |
|
294,276 |
|
|
229,622 |
|
||
Revolving credit facility |
|
— |
|
|
40,000 |
|
||
Current portion of long-term debt |
|
7,750 |
|
|
8,450 |
|
||
Total current liabilities |
|
385,642 |
|
|
342,915 |
|
||
|
|
|
||||||
Noncurrent Liabilities: |
|
|
||||||
Other liabilities |
|
7,423 |
|
|
7,535 |
|
||
Deferred taxes |
|
295,959 |
|
|
6,483 |
|
||
Tax receivable agreement liability |
|
404,394 |
|
|
— |
|
||
Deferred revenue -net of current |
|
6,881 |
|
|
5,568 |
|
||
Long-term debt, net |
|
733,425 |
|
|
1,160,326 |
|
||
Total liabilities |
|
1,833,724 |
|
|
1,522,827 |
|
||
|
|
|
||||||
Stockholders'/Members’ Equity: |
|
|
||||||
Members’ investment |
|
— |
|
|
1,855,730 |
|
||
Class A common stock, |
|
16 |
|
|
— |
|
||
Class B common stock, |
|
4 |
|
|
— |
|
||
Additional paid-in capital |
|
1,399,967 |
|
|
— |
|
||
Accumulated other comprehensive income |
|
(216 |
) |
|
441 |
|
||
Accumulated deficit |
|
(165,026 |
) |
|
(178,298 |
) |
||
Total stockholders'/members’ equity attributable to |
|
1,234,745 |
|
|
1,677,873 |
|
||
Non-controlling interest |
|
488,213 |
|
|
— |
|
||
Total stockholders'/members’ equity |
|
1,722,958 |
|
|
1,677,873 |
|
||
Total liabilities and stockholders'/members' equity |
$ |
3,556,682 |
|
$ |
3,200,700 |
|
||
|
|
|
||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
(in thousands) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
(unaudited) |
|
(unaudited) |
||||||||||||
Cash flows from operating activities: |
|
|
|
|
||||||||||||
Net loss |
$ |
(15,876 |
) |
$ |
(17,804 |
) |
$ |
(43,065 |
) |
$ |
(46,648 |
) |
||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
||||||||||||
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
12,905 |
|
|
— |
|
||||
Depreciation of property and equipment |
|
1,531 |
|
|
1,632 |
|
|
6,485 |
|
|
7,344 |
|
||||
Amortization of intangible assets |
|
23,153 |
|
|
19,894 |
|
|
91,350 |
|
|
78,663 |
|
||||
Amortization of capitalized product development costs |
|
4,298 |
|
|
4,067 |
|
|
15,644 |
|
|
9,737 |
|
||||
Loss on disposal/retirement of property and equipment |
|
70 |
|
|
400 |
|
|
97 |
|
|
500 |
|
||||
Provision for allowance for doubtful accounts |
|
993 |
|
|
53 |
|
|
1,119 |
|
|
170 |
|
||||
Equity-based compensation |
|
11,682 |
|
|
1,373 |
|
|
25,137 |
|
|
5,592 |
|
||||
Amortization of debt issuance costs and discount |
|
895 |
|
|
1,383 |
|
|
9,097 |
|
|
5,500 |
|
||||
Changes in operating assets and liabilities — net of effects of acquisitions: |
|
|
|
|
||||||||||||
Accounts receivables |
|
36,281 |
|
|
41,836 |
|
|
7,299 |
|
|
11,566 |
|
||||
Prepaid expenses and other current assets |
|
3,233 |
|
|
1,072 |
|
|
(1,099 |
) |
|
(2,387 |
) |
||||
Other assets |
|
93 |
|
|
(2,393 |
) |
|
(1,576 |
) |
|
(6,351 |
) |
||||
Accounts payable |
|
4,259 |
|
|
2,166 |
|
|
2,265 |
|
|
(2,165 |
) |
||||
Accrued expenses |
|
2,135 |
|
|
4,032 |
|
|
3,381 |
|
|
(996 |
) |
||||
Other liabilities |
|
(78 |
) |
|
(95 |
) |
|
(271 |
) |
|
(273 |
) |
||||
Deferred taxes |
|
(3,458 |
) |
|
(885 |
) |
|
(24,864 |
) |
|
(1,925 |
) |
||||
Deferred revenue |
|
(48,995 |
) |
|
(33,562 |
) |
|
39,199 |
|
|
31,127 |
|
||||
Net cash provided by operating activities |
|
20,216 |
|
|
23,169 |
|
|
143,103 |
|
|
89,454 |
|
||||
|
|
|
|
|
||||||||||||
Cash flows from investing activities: |
|
|
|
|
||||||||||||
Purchases of property and equipment |
|
(766 |
) |
|
248 |
|
|
(3,988 |
) |
|
(2,771 |
) |
||||
Proceeds from sale of property and equipment |
|
— |
|
|
66 |
|
|
— |
|
|
69 |
|
||||
Investment in capitalized product development costs |
|
(7,641 |
) |
|
(3,332 |
) |
|
(35,920 |
) |
|
(28,822 |
) |
||||
Acquisitions—net of cash acquired |
|
(14,362 |
) |
|
(75,874 |
) |
|
(333,593 |
) |
|
(75,753 |
) |
||||
Net cash used in investing activities |
|
(22,769 |
) |
|
(78,892 |
) |
|
(373,501 |
) |
|
(107,277 |
) |
||||
|
|
|
|
|
||||||||||||
Cash flows from financing activities: |
|
|
|
|
||||||||||||
Proceeds from Revolving Credit Agreement |
|
— |
|
|
40,000 |
|
|
55,000 |
|
|
101,000 |
|
||||
Proceeds from |
|
— |
|
|
— |
|
|
315,200 |
|
|
— |
|
||||
Repayment of |
|
— |
|
|
— |
|
|
(320,000 |
) |
|
— |
|
||||
Repayment of Revolving Credit Agreement |
|
— |
|
|
— |
|
|
(95,000 |
) |
|
(61,000 |
) |
||||
Repayment of First Lien Debt |
|
(1,938 |
) |
|
(1,937 |
) |
|
(7,750 |
) |
|
(7,750 |
) |
||||
Repayment of Second Lien Debt |
|
— |
|
|
— |
|
|
(365,000 |
) |
|
— |
|
||||
Repayment of Incremental Facility |
|
— |
|
|
(175 |
) |
|
(68,775 |
) |
|
(525 |
) |
||||
Payments for repurchase of management incentive units |
|
— |
|
|
— |
|
|
(448 |
) |
|
(989 |
) |
||||
Payments of deferred offering costs |
|
— |
|
|
— |
|
|
(11,753 |
) |
|
— |
|
||||
Payment of debt issuance costs |
|
— |
|
|
— |
|
|
(2,823 |
) |
|
— |
|
||||
Repayment of capital leases |
|
— |
|
|
2 |
|
|
(27 |
) |
|
(34 |
) |
||||
Proceeds from Initial Public Offering |
|
— |
|
|
— |
|
|
766,075 |
|
|
— |
|
||||
Net cash provided by (used in) financing activities |
|
(1,938 |
) |
|
37,890 |
|
|
264,699 |
|
|
30,702 |
|
||||
|
|
|
|
|
||||||||||||
Effect of foreign exchange rate changes on cash |
$ |
(43 |
) |
$ |
1,577 |
|
$ |
(556 |
) |
$ |
876 |
|
||||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
(4,534 |
) |
|
(16,256 |
) |
|
33,745 |
|
|
13,755 |
|
||||
Cash, cash equivalents, and restricted cash—Beginning of period |
|
91,525 |
|
|
69,502 |
|
|
53,246 |
|
|
39,491 |
|
||||
Cash, cash equivalents, and restricted cash—End of period |
$ |
86,991 |
|
$ |
53,246 |
|
$ |
86,991 |
|
$ |
53,246 |
|
||||
|
|
|
|
|
||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
||||||||||||||||
(unaudited) |
||||||||||||||||
Reconciliation of Gross profit to Adjusted gross profit |
||||||||||||||||
|
Three Months Ended
|
|
Year Ended
|
|||||||||||||
(in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
|
|
|
|
|
||||||||||||
Gross profit |
$ |
80,253 |
|
$ |
62,848 |
|
$ |
317,740 |
|
$ |
243,086 |
|
||||
Depreciation |
|
449 |
|
|
394 |
|
|
1,771 |
|
|
1,566 |
|
||||
Share-based compensation(1) |
|
2,070 |
|
|
117 |
|
|
3,556 |
|
|
359 |
|
||||
Restructuring(2) |
|
712 |
|
|
743 |
|
|
3,097 |
|
|
1,594 |
|
||||
Acquisition-related expense(3) |
|
107 |
|
|
135 |
|
|
591 |
|
|
465 |
|
||||
Amortization |
|
12,565 |
|
|
11,818 |
|
|
48,939 |
|
|
39,434 |
|
||||
Adjusted Gross Profit |
$ |
96,156 |
|
$ |
76,055 |
|
$ |
375,694 |
|
$ |
286,504 |
|
||||
Gross Profit Margin(4) |
|
54.9 |
% |
|
54.1 |
% |
|
56.9 |
% |
|
55.9 |
% |
||||
Adjusted Gross Profit Margin(5) |
|
65.8 |
% |
|
65.5 |
% |
|
67.3 |
% |
|
65.9 |
% |
||||
| ____________________ | |||
(1) |
Refers to expenses flowing through gross profit associated with unit-based compensation. |
||
(2) |
Refers to expenses flowing through gross profit related to migration of customers from legacy to core products, and severance expense related to offshoring activities, facility closures and executive departures. |
||
(3) |
Refers to expenses flowing through gross profit incurred to execute and integrate acquisitions, including retention awards and severance for acquired employees. |
||
(4) |
Represents gross profit as a percentage of revenue. |
||
(5) |
Represents Adjusted Gross Profit as a percentage of revenue. |
||
Reconciliation of Net loss to Adjusted EBITDA |
||||||||||||||||
|
Three Months Ended
|
|
Year Ended
|
|||||||||||||
(in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
|
|
|
|
|
||||||||||||
Net loss |
$ |
(15,876 |
) |
$ |
(17,804 |
) |
$ |
(43,065 |
) |
$ |
(46,648 |
) |
||||
Add: |
|
|
|
|
||||||||||||
Amortization |
|
27,451 |
|
|
23,966 |
|
|
107,013 |
|
|
88,400 |
|
||||
Depreciation |
|
1,564 |
|
|
1,632 |
|
|
6,514 |
|
|
7,344 |
|
||||
Net interest expense (1) |
|
7,519 |
|
|
15,956 |
|
|
58,928 |
|
|
68,611 |
|
||||
Income tax benefit |
|
(2,380 |
) |
|
(25 |
) |
|
(22,415 |
) |
|
39 |
|
||||
Share-based compensation |
|
11,670 |
|
|
1,372 |
|
|
25,125 |
|
|
5,592 |
|
||||
Management fees(2) |
|
39 |
|
|
36 |
|
|
654 |
|
|
839 |
|
||||
Restructuring(3) |
|
1,271 |
|
|
3,357 |
|
|
4,847 |
|
|
5,027 |
|
||||
Acquisition-related expense(4) |
|
1,988 |
|
|
3,548 |
|
|
10,650 |
|
|
6,438 |
|
||||
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
12,905 |
|
|
— |
|
||||
|
|
|
|
|
||||||||||||
Adjusted EBITDA |
$ |
33,246 |
|
$ |
32,038 |
|
$ |
161,156 |
|
$ |
135,642 |
|
||||
Adjusted EBITDA Margin(5) |
|
22.8 |
% |
|
27.6 |
% |
|
28.9 |
% |
|
31.2 |
% |
||||
| ____________________ | |||
(1) |
Interest expense, net of interest income. |
||
(2) |
Refers to expense associated with collaboration with our principal stockholders and their internal consulting groups. |
||
(3) |
Refers to costs incurred related to migration of customers from legacy to core products, remaining lease obligations for abandoned facilities, severance expense related to offshoring activities, facility closures, and executive departures, and event cancellation fees related to the COVID-19 pandemic. |
||
(4) |
Refers to direct transaction and debt-related fees reflected in our acquisition costs line item of our income statement and incremental acquisition-related costs that are incurred to perform diligence, execute and integrate acquisitions, including retention awards and severance for acquired employees, and other transaction and integration expenses. These incremental costs are embedded in our research and development, selling, general and administrative and cost of revenue line items. |
||
(5) |
Represents Adjusted EBITDA as a percentage of revenue. |
||
Reconciliation of Net loss to Non-GAAP Net Income |
||||||||||||||||
|
Three Months Ended
|
|
Year Ended
|
|||||||||||||
(in thousands, except per share data) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
|
|
|
|
|
||||||||||||
Net loss |
$ |
(15,876 |
) |
$ |
(17,804 |
) |
$ |
(43,065 |
) |
$ |
(46,648 |
) |
||||
Add: |
|
|
|
|
||||||||||||
Amortization |
|
27,451 |
|
|
23,966 |
|
|
107,013 |
|
|
88,400 |
|
||||
Depreciation |
|
1,564 |
|
|
1,632 |
|
|
6,514 |
|
|
7,344 |
|
||||
Share-based compensation |
|
11,670 |
|
|
1,372 |
|
|
25,125 |
|
|
5,592 |
|
||||
Management fees(1) |
|
39 |
|
|
36 |
|
|
654 |
|
|
839 |
|
||||
Restructuring(2) |
|
1,271 |
|
|
3,357 |
|
|
4,847 |
|
|
5,027 |
|
||||
Acquisition-related expense(3) |
|
1,988 |
|
|
3,548 |
|
|
10,650 |
|
|
6,438 |
|
||||
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
12,905 |
|
|
— |
|
||||
|
|
|
|
|
||||||||||||
Non-GAAP Net Income |
|
28,107 |
|
|
16,107 |
|
|
124,643 |
|
|
66,992 |
|
||||
|
|
|
|
|
||||||||||||
Weighted-average Class A common stock outstanding used in computing GAAP net loss per share, basic and diluted |
|
157,996,637 |
|
|
|
157,576,056 |
|
|
||||||||
Weighted-average shares Class A common stock outstanding used in computing Non-GAAP net income, basic |
|
157,996,637 |
|
|
|
157,576,056 |
|
|
||||||||
Weighted-average shares Class A common stock outstanding used in computing Non-GAAP net income, diluted |
|
199,090,415 |
|
|
|
198,602,714 |
|
|
||||||||
|
|
|
|
|
||||||||||||
GAAP net loss attributable to the |
$ |
(0.08 |
) |
|
$ |
(0.21 |
) |
|
||||||||
Non-GAAP net income attributable to the |
$ |
0.18 |
|
|
$ |
0.79 |
|
|
||||||||
Non-GAAP net income attributable to the |
$ |
0.14 |
|
|
$ |
0.63 |
|
|
||||||||
| ____________________ | ||
(1) |
Refers to expense associated with collaboration with our principal stockholders and their internal consulting groups. |
|
(2) |
Refers to costs incurred related to migration of customers from legacy to core products, remaining lease obligations for abandoned facilities, severance expense related to offshoring activities, facility closures, and executive departures, and event cancellation fees related to the COVID-19 pandemic. |
|
(3) |
Refers to direct transaction and debt-related fees reflected in our acquisition costs line item of our income statement and incremental acquisition-related costs that are incurred to perform diligence, execute and integrate acquisitions, including retention awards and severance for acquired employees, and other transaction and integration expenses. These incremental costs are embedded in our research and development, selling, general and administrative and cost of revenue line items. |
|
Reconciliation of GAAP to Non-GAAP Cost of Revenue and Operating Expenses |
||||||||||||
|
Three Months Ended
|
|
Year Ended
|
|||||||||
(in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||
|
|
|
|
|
||||||||
GAAP Cost of Revenue - Subscription and Support |
$ |
38,160 |
$ |
28,847 |
$ |
135,963 |
$ |
108,158 |
||||
Less: |
|
|
|
|
||||||||
Share-based compensation |
|
1,061 |
|
16 |
|
1,634 |
|
66 |
||||
Restructuring |
|
1 |
|
213 |
|
113 |
|
578 |
||||
Acquisition-related expense |
|
55 |
|
115 |
|
414 |
|
365 |
||||
Non-GAAP Cost of Revenue - Subscription and Support |
|
37,043 |
|
28,503 |
|
133,802 |
|
107,149 |
||||
|
|
|
|
|
||||||||
GAAP Cost of Revenue - Services |
$ |
13,832 |
$ |
11,813 |
$ |
51,803 |
$ |
41,324 |
||||
Less: |
|
|
|
|
||||||||
Share-based compensation |
|
1,011 |
|
100 |
|
1,922 |
|
293 |
||||
Restructuring |
|
712 |
|
530 |
|
2,984 |
|
1,016 |
||||
Acquisition-related expense |
|
52 |
|
20 |
|
177 |
|
100 |
||||
Non-GAAP Cost of Revenue - Services |
|
12,057 |
|
11,163 |
|
46,720 |
|
39,915 |
||||
|
|
|
|
|
||||||||
|
$ |
27,866 |
$ |
22,549 |
$ |
92,740 |
$ |
70,673 |
||||
Less: |
|
|
|
|
||||||||
Share-based compensation |
|
2,828 |
|
242 |
|
5,198 |
|
969 |
||||
Restructuring |
|
1 |
|
612 |
|
685 |
|
852 |
||||
Acquisition-related expense |
|
323 |
|
265 |
|
1,004 |
|
737 |
||||
|
|
24,714 |
|
21,430 |
|
85,853 |
|
68,115 |
||||
|
|
|
|
|
||||||||
GAAP Selling, General and Administrative |
$ |
45,907 |
$ |
25,279 |
$ |
149,167 |
$ |
92,711 |
||||
Less: |
|
|
|
|
||||||||
Share-based compensation |
|
6,769 |
|
1,014 |
|
16,371 |
|
4,264 |
||||
Management fees |
|
39 |
|
36 |
|
653 |
|
839 |
||||
Restructuring |
|
557 |
|
2,003 |
|
1,065 |
|
2,582 |
||||
Acquisition-related expense |
|
334 |
|
676 |
|
1,756 |
|
2,742 |
||||
Non-GAAP Selling, General and Administrative |
|
38,208 |
|
21,550 |
|
129,322 |
|
82,284 |
||||
|
|
|
|
|
||||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Unlevered Free Cash Flow |
||||||||||||||||
|
Three Months Ended
|
|
Year Ended
|
|||||||||||||
(in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||||||
Net cash provided by operating activities |
$ |
20,216 |
|
$ |
23,169 |
|
$ |
143,103 |
|
$ |
89,454 |
|
||||
Less: |
|
|
|
|
||||||||||||
Purchases of property and equipment |
|
(766 |
) |
|
248 |
|
|
(3,988 |
) |
|
(2,771 |
) |
||||
Capitalized product development costs |
|
(7,642 |
) |
|
(3,332 |
) |
|
(35,920 |
) |
|
(28,822 |
) |
||||
|
|
|
|
|
||||||||||||
Free Cash Flow |
$ |
11,808 |
|
$ |
20,085 |
|
$ |
103,195 |
|
$ |
57,861 |
|
||||
|
|
|
|
|
||||||||||||
Add: |
|
|
|
|
||||||||||||
Cash paid for interest on outstanding debt |
|
6,664 |
|
|
14,828 |
|
|
51,438 |
|
|
72,102 |
|
||||
|
|
|
|
|
||||||||||||
Unlevered Free Cash Flow |
$ |
18,472 |
|
$ |
34,913 |
|
$ |
154,633 |
|
$ |
129,963 |
|
||||
Category: PWSC-F
View source version on businesswire.com: https://www.businesswire.com/news/home/20220302006194/en/
Investor Contact:
investor.relations@PowerSchool.com
855-707-5100
Media Contact:
public.relations@powerschool.com
206-295-2826
Source:
FAQ
What were PowerSchool's earnings results for Q4 2021?
What is PowerSchool's financial outlook for 2022?
What is PowerSchool's net loss for FY2021?
What was PowerSchool's Adjusted EBITDA for FY2021?
How did PowerSchool perform in terms of Annual Recurring Revenue?
