PowerSchool (PWSC) Q3 Earnings & Revenues Beat, '23 View Up
PowerSchool Holdings, Inc. PWSC reported impressive third-quarter 2023 results. Its quarterly earnings and revenues topped the Zacks Consensus Estimate and increased year over year.
The uptrend is backed by consistent innovations in data-centric AI solutions, the stretch of its global footprint that sparks market share gains, and investments in adjacent product offerings. These tailwinds position the company to focus on long-term growth and deliver high profits.
Following the results, shares of PWSC notably gained 11.2% in the after-hours trading session on Nov 7.
Inside the Headlines
PowerSchool reported adjusted earnings of 24 cents per share, which topped the Zacks Consensus Estimate of earnings of 21 cents per share by 14.3%. In the prior-year quarter, the company reported adjusted earnings per share of 21 cents.
Total revenues of $182.2 million surpassed the consensus estimate of $179.3 million by 1.6% and increased 12% year over year. This was backed by 9% year-over-year growth in subscriptions and support revenues to $149 million.
PowerSchool Holdings, Inc. Price, Consensus and EPS Surprise
PowerSchool Holdings, Inc. price-consensus-eps-surprise-chart | PowerSchool Holdings, Inc. Quote
The company’s annual recurring revenues were $640 million, up 9% from the prior-year quarter’s reported value of $585 million.
Operating Highlights
During the third quarter of 2023, the total operating expenses of PowerSchool were $98.7 million, up 10.5% year over year, driven by an increase in selling, general and administrative expenses, and acquisition costs.
The quarter’s gross profit margin expanded 360 basis points (bps) to 60.6% year over year.
The company’s adjusted EBITDA in the reported quarter was $62 million, up from $52.2 million reported in the prior-year quarter. Also, adjusted EBITDA margin expanded 180 bps to 34% year over year.
Financial Details
As of Sep 30, 2023, PowerSchool recorded cash and cash equivalents of $322.8 million compared with $137.5 million reported at 2022 end. Long-term debt as of the end of third-quarter 2023 was $822.7 million, up from $728.6 million reported at 2022 end.
Net cash provided by operating activities was $127.7 million in the first nine months of 2023 compared with $106.8 million in the comparable year-ago period.
Q4 & Raised 2023 Outlook
In fourth-quarter 2023, PowerSchool expects revenues to be within the range of $182 million and $185 million, indicating 13-15% growth year over year. Adjusted EBITDA is anticipated to be between $56 million and $58 million, up from $52.8 million reported in the prior-year quarter.
For 2023, the company now expects revenues to be between $697.5 million and $700.5 million, up from the prior expected range of $688 million and $694 million. Also, adjusted EBITDA is now expected to be within $229 - $231 million, compared with the prior anticipated range of $226- $230 million.
Zacks Rank
PowerSchool currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Consumer Discretionary Releases
Choice Hotels International, Inc. CHH delivered mixed third-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. Also, the top and bottom lines increased on a year-over-year basis.
This year-over-year growth is attributable to the company’s top-tier business delivery engine, synergies through the successful integration of Radisson Americas and organic growth of its brand portfolio, focused on hotels that generate higher royalties per unit. The company also aims to remain focused on its robust organic earnings growth strategy and pursue inorganic growth to drive long-term shareholder value.
Hyatt Hotels Corporation H delivered third-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate, while revenues missed the same. However, both metrics increased on a year-over-year basis.
Hyatt’s quarterly results reflected year-over-year growth in comparable system-wide revenue per available room (RevPAR), driven by an increase in occupancy and average daily rate (ADR). This uptrend is primarily driven by robust global travel demand, especially among leisure guests and group customers. Also, net rooms growth fueled solid fee generation, which the company expects to continue in the upcoming period, given the positive trends. However, increased costs and expenses, foreign currency risks and the ongoing macroeconomic uncertainties partially offset the aforementioned tailwinds.
Marriott International, Inc. MAR reported impressive third-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.
The results were primarily driven by robust leisure demand and solid global booking trends. Also, substantial revenue per available room (RevPAR) growth in international markets added to the upside. At the end of the quarter, Marriott's development pipeline totaled 3,200 hotels, with approximately 557,000 rooms.
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