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PowerSchool reports first earnings report since going public

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Education software provider PowerSchool CEO Hardeep Gulati joins Yahoo Finance Live to discuss the company's first earnings report after going public, outlook for future growth, and investing in more technology throughout U.S. school districts.

Video Transcript

[MUSIC PLAYING]

JULIE HYMAN: Education software provider, PowerSchool, just reported its first earnings as a publicly traded company, and reported that revenue rose by 41%. We have seen, of course, a lot of different school districts get further online, get further into technology. And that's benefited the company. Hardeep Gulati is with us now. He is the CEO of PowerSchool. HARDEEP, Good to see you. And exciting times for you as you made this report as a public company.

As I mentioned of course, a lot of adoption among school districts, which has been a real driver for you. And according to you guys, 70% of the districts in the US and Canada use PowerSchool, but not all of your products. And you got a lot of questions on the call about sort of expanding your reach among your existing clients. Where do you see the biggest opportunities to do that?

HARDEEP GULATI: Good morning, Julia. First, we are we're happy with the results for the quarter. But more importantly, the impact we are making as you know PowerSchool is used by 70% of the US and Canadian students and school districts. And you know, on average, our school districts use more than two of our modules.

We do have a full unified platform, which is one of the most industry comprehensive, which not only provides systems like student information system, where you mentioned you check the kids grades, attendance, their homework, their broader report cards. But also classroom technologies, like our Schoology Learning Management, which allows them to really share their homework and assignments, look at online content, and as well is blended learning. So? You can make sure that the kids are engaged in any form.

We also support our talent management and back office ERP systems. So [? mixer ?] schools can actually recruit teachers and support the whole capabilities around being able to onboard them, provide the professional learning support. And our recent acquisition of Naviance earlier this year, where we have expanded it to career college, and life readiness. So we're really bringing the entire end to end whole child view for these school districts, which is allowing them to provide equitable education and opportunity for every child.

And that's what is our vision. That's the mission we have been working on. And the first half kind of proved-- our momentum really proves the value the school districts are seeing with that.

JULIE HYMAN: And so Hardeep, thank you. So the next step then, is it to push further into the full suite of products for these clients, and how do you expect to do that?

HARDEEP GULATI: You know, Julie, we today support almost 13,000 districts in different entities across North America. And a lot of our capabilities when it comes to, are very mission critical to them, to support the daily operations as well as making sure the student outcomes are improved. To your point, what we are looking at is, what is the next important things for these districts which allows them to have a look at the full digital transformation of not just their back office, but within their classrooms, as well as their entire engagement with the student and the parents as well.

So we continue to look at bringing the next key capability that any school district or institution needs, and helping them with that change management, as well helping them improve their education outcome for that child. What we also see is an opportunity, which we actually saw in the first half, is the [? online ?] [? unified ?] analytics. Really bringing together all the data from system, not just PowerSchool, but multiple systems that allows them to kind of look at the full view and whole child, look at where the interventions might be required, which is very important right now with the learning loss we saw last year. But then also look at operational efficiencies, but then also look at drive better accountability across the entire district.

BRIAN CHEUNG: Hey, it's Brian Cheung here now. What's interesting is that I understand that you do have some initiatives when it comes to getting this type of technology into the hands of communities that really need it, especially with racial equity issues being highlighted over the last year or so. But one major concern is the lack of access to broadband, which might prevent some of these communities from being able to access cloud based education services.

So as a company, how do you approach that issue. And I understand that might extend beyond the reaches of technology for education itself, but more for broadband access. But who are you engaging with to talk about getting some of these disadvantaged communities this type of technology?

HARDEEP GULATI: You're absolutely right, Brian. We sell almost 93 of the top 100 education public school districts in North America. And as you can imagine, many of them are in urban areas, as well as thousands of rural school districts. And access is one of the big challenges both within the rural, as well as within the urban districts.

We actually do work with a lot of school districts on partnering with them, and in looking at the holistic support they need. T-Mobile, Verizon, they are big partners for us, where we are bringing them jointly with the school districts to help make sure that they actually support. T-Mobile 10 Million project has been one of our good partners, as well as the other telecom providers.

We do take that approach even beyond. One of the initiatives we actually did with one of our long term investor, Vista Equity and Robert Smith, who also believe in the equity in education is also part of our million PowerSchool Education Fund, supporting six southern communities where underprivileged [? childs, ?] where teachers have to step up a lot of times in supporting those communities. We not only donated together with them $1.5 to $5 million, we're also partnering as part of an Education Fund of $1 million with almost eight to ten school of educations. So we can encourage more teachers from underprivileged regions in helping them bring to the profession, helping them with the certifications required, so we can have more teachers who can enter the job and support these communities further.

JULIE HYMAN: And Hardeep, that brings up another interesting question for me. And it's really interesting that you have this education non-profit initiative on the side of the company, and makes sense given what you guys do. But that also brings up the core question of school funding, right. I imagine that amongst you your clients there is a pretty broad range of their funding abilities when it comes to investing in the technology that you provide.

So what is school funding look like going into this school year and beyond? And what effect is that going to have on your business?

HARDEEP GULATI: You're absolutely right, Julie. School districts are always having to do more with less. And they always-- it has budget pressure always remain, given the amount of teachers and the resources they need to provide for every child. With that said, one of the things when you look at the broader education funding in North America, it has been that very resilient. In fact, some of the recent federal stimulus as well as policies are supporting that even further in terms of really helping these school districts provide all the necessary things, even that's required as part of this pandemic.

One of the key things what we have been focused on is, how do we support these school districts in those education technology. And edtech is a small portion of that funding, but growing. And it has a huge opportunity for us to provide even bigger impact to these school districts on all the different aspects of making sure we have more effective instructions, teachers are supported well, as well as the ability for us to really continue to support the whole child, as well as the broader education outcome, and the success for each child.

So we do see that these education funding, as well as the stimulus continue to have an effective opportunity for us to partner with these school districts for not just this year, but into the next few years as well.

JULIE HYMAN: Gotcha. Very interesting, those funding questions. And then finally, just one last question. This is something we've been asking all of the CEOs we've been speaking with today. And it has to do with vaccine mandates. Because we just heard the president last night say that there is going to be broader vaccine mandates by the federal government. What's your vaccine policy at PowerSchool? And are you going to have to change anything as a result of the President's plans?

HARDEEP GULATI: You know, being a technology company personally with 3,000 employees, which are across North America, as well as the globe, we have been able to really work remotely, and being able to provide a safe environment for every one of our employees. But more importantly, this is an important topic for all our customers. And one of the core aspects what we provide with our technology is actually helping districts manage all that information and policies to help make sure that they can continue their learning.

So what we are seeing, we are supporting a lot of the school districts and State Department of Educations in capturing that information, being able to effectively use that in a real time, being able to really provide online enrollment. We had almost 10 million students who leveraged our online enrollment this summer. We had more than almost 15 million students who are using in the classroom to make sure that while they are doing in line and in-person learning, but they can also get a chance to collaborate with the teachers and districts offline when it's not required.

So we are really trying to support districts on this journey in terms of making sure that they can keep the teachers and students safe, but provide the continue of learning. And we are in the center of that technology components.

JULIE HYMAN: And sorry, Hardeep, for PowerSchool itself then, since you guys are most of your employees then at home? So the vaccine question is more moot. Or how are you thinking about that issue?

HARDEEP GULATI: Yeah, being remote right now that question is moot. But as we push our reopening to start off next year, and as we kind of get into that we will be following the national and CDC guidelines to make sure that we are providing the safety for every one of our employees.

JULIE HYMAN: Gotcha. Hardeep Gulati, CEO of PowerSchool. And Hardeep, kudos to you for keeping steady there. I know you were having some lighting issues on your end. You performed beautifully despite the on and off. Thanks so much, Hardeep.

HARDEEP GULATI: My apologies. Those are part of our energy saving technology. But you know--

JULIE HYMAN: Listen, I totally get it. I totally get it. I figured that's what it was. Hardeep, thanks so much. See you soon.