PowerSchool Holdings Inc (PWSC) Reports Strong Third Quarter 2023 Financial Results
PowerSchool Holdings Inc (NYSE:PWSC) announces a 12% year-over-year increase in total revenue, reaching $182.2 million in Q3 2023.
Adjusted EBITDA grows 19% to $62.0 million, surpassing the upper end of guidance.
GAAP net loss per diluted share improves to $0.00, and Non-GAAP Net Income per diluted share rises by 14% to $0.24.
Annualized Recurring Revenue (ARR) climbs 9% year-over-year to $640.4 million.
On November 7, 2023, PowerSchool Holdings Inc (NYSE:PWSC), a leading provider of cloud-based software for K-12 education in North America, released its financial results for the third quarter ended September 30, 2023. The company reported a total revenue of $182.2 million, marking a 12% increase from the previous year and exceeding the high end of the third quarter guidance range. This growth was driven by a 9% increase in subscriptions and support revenue, which totaled $149.0 million.
Financial Performance Highlights
PowerSchool's financial achievements for the third quarter include a significant improvement in GAAP net loss per diluted share, which reached $0.00, a 100% improvement over the prior year. Non-GAAP Net Income per diluted share also saw a 14% increase to $0.24. The company's Adjusted EBITDA grew by 19% to $62.0 million, again exceeding the high end of the third quarter guidance range. The company's cash flows from operations were robust at $220.4 million, with Free Cash Flow at $211.2 million.
ARR reached $640.4 million, a 9% increase over the prior year, although the Net Revenue Retention (NRR) rate saw a slight decline to 107.2%, down from the previous year and the prior quarter. Despite this, PowerSchool's CEO Hardeep Gulati expressed confidence in the company's strategic direction, stating:
"These third quarter results showcase our ability to build scale, operate with efficiency, and generate value. Our ongoing innovations in data-centric AI solutions, our investments in adjacent products, and the build out of our global footprint are increasing our total addressable market by a factor of ten. Not only are we building a runway for sustainable long term growth at leading levels of profitability, we are uniquely positioned to deliver the future of personalized education."
Strategic Developments and Outlook
PowerSchool has been actively expanding its platform and international presence. The acquisition of SchoolMessenger and India-based Neverskip has broadened PowerSchool's communication solutions and administrative software offerings, respectively. Strategic channel partnerships have been established in regions such as the Middle East, Africa, Asia, Europe, South America, and New Zealand, further extending PowerSchool's global reach.
PowerSchool's President and CFO, Eric Shander, commented on the financial results:
"We are pleased to see such consistent execution across our teams in this third quarter as we balance our revenue growth objectives with our goals around profitability and cash flow. This performance is benefiting our progress in innovating our next-generation products, which we believe will position PowerSchool, our customers, and students all over the world for a long future of success."
For the quarter ending December 31, 2023, PowerSchool expects total revenue to be between $182 million and $185 million, with Adjusted EBITDA projected to be between $56 million and $58 million. For the year ending December 31, 2023, the company anticipates total revenue to be in the range of $697.5 million to $700.5 million, with Adjusted EBITDA between $229 million and $231 million.
Financial Statements Summary
The consolidated statements of operations and comprehensive loss reveal a gross profit of $110.3 million, or 61% of total revenue, and an Adjusted Gross Profit of $129.3 million, or 71% of total revenue. The net loss was $1.3 million, or negative 1% of total revenue, while Non-GAAP net income was $49.0 million, or 27% of total revenue.
The balance sheet shows that as of September 30, 2023, PowerSchool had $322.8 million in cash and cash equivalents, and total assets amounted to $3.81 billion. Total current liabilities stood at $542.5 million, with total stockholders' equity at $1.76 billion.
Overall, PowerSchool Holdings Inc (NYSE:PWSC) has demonstrated strong financial performance in the third quarter of 2023, with revenue growth and profitability metrics exceeding guidance. The company's strategic acquisitions and global expansion efforts position it well for sustained growth in the education technology sector.
Explore the complete 8-K earnings release (here) from PowerSchool Holdings Inc for further details.
This article first appeared on GuruFocus.
