Investment Opportunities

PowerSchool IPO: Online Education Giant Goes Public on NYSE

The PowerSchool IPO is here. The online education software company went public on July 28. Here are the latest details…

PowerSchool IPO: About The Business

PowerSchool IPO

PowerSchool is a California-based leading provider of cloud-based software for K-12 education in North America. The platform serves 70% of all K-12 students in the U.S. and Canada, according to the filings.

PowerSchool supports over 45 million students and 12,000+ districts, schools and other educational institutions in over 90 countries, according to the company website. This includes 93 of the top 100 districts by student enrollment in the United States. The company also sells solutions in over 90 countries.

Teachers and administrators use PowerSchool’s products to manage their data, such as attendance, grades and homework assignments. Schools scrambled to implement distance learning during the COVID-19 pandemic, pushing software sales higher.

PowerSchool divides its product offerings across eight categories:

  • Student Information Systems
  • Unified Classroom
  • Unified Administration
  • Unified Talent
  • Unified Communities
  • Unified Home
  • Unified Insights
  • Performance Matters

Now that we have gotten a glimpse into the business, let’s explore some financial data for the PowerSchool IPO…

Financial Data

Detailed financial information is included in the PowerSchool IPO prospectus, allowing you to gain more insight into the company’s finances. If you’re in the market for PWSC stock, let’s look at the details.

PowerSchool highlights some key information for investors. The company’s balance sheet data can be summarized as follows…

Total Revenue: The company recorded an increase in revenue. PowerSchool recorded $365 million in revenue for the year ended December 31, 2019. At the end of 2020, PowerSchool reported an increase to almost $435 million – a 19% increase.

Gross Profit: PowerSchool recorded a gross profit of $195 million for the year ended December 31, 2019. In 2020, the company recorded $243 in gross profit. That’s more than 24% growth!

Net Loss: PowerSchool’s recorded net loss has decreased. At the end of 2019, the company’s net loss was just under $91 million. But for 2020, the company’s net loss lowered to under $47 million – decreasing by almost half.

Cash: PowerSchool’s cash flows have increased. The company recorded $39 million in cash for fiscal 2019. The company’s reported cash grew to under $53 million in 2020.

Total Assets and Liabilities: As of December 31, 2020, the company has reported $3.2 billion in total assets and $1.5 billion in total liabilities.

Debt Risk

PowerSchool’s financial statements show growth in terms of revenue and gross profit. But there’s one problem…

PowerSchool has never turned a profit. The company reported that it has an accumulated deficit of $243.2 million as of December 31, 2020.

With the use of proceeds, PowerSchool plans to repay outstanding debt, pay related expenses to the offering and for general corporate purposes. The company plans to offset debt but noted anticipated increases in expenses in the prospectus. PowerSchool wrote that it has a history of cumulative losses and doesn’t expect to be profitable anytime soon…

As of December 31, 2020, we had total current and long-term indebtedness outstanding of approximately $1,160 million. Our indebtedness, or any additional indebtedness we may incur, could require us to divert funds identified for other purposes for debt service and impair our liquidity position. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets or issue equity to obtain necessary funds

To get a better insight into the company’s finances and use of proceeds, you can check out the PowerSchool IPO prospectus. And for those interested in the filing, let’s look at the details.

PowerSchool IPO Filing Details

The PowerSchool IPO priced at $18 a share, the low end of its $18 to $20 price range. The company is offering nearly 39.5 million shares for a $711 deal size. Shares are trading on the New York Stock Exchange under the symbol “PWSC.” The offering opened on July 28 and is expected to close on July 30.

PowerSchool has granted its investment underwriters the right to buy an additional 5.9 million shares at the $18 price. PowerSchool is expected to raise $816 million if the underwriters exercise the option.

A $1 million donation will be made by PowerSchool in conjunction with the offering toward philanthropic initiatives to benefit K-12 educators.

The offering was led by Goldman Sachs, Barclays, Credit Suisse Group and UBS Group. PowerSchool currently has a market value of around $3.5 billion.

As always, make sure to research before you invest. IPOs can be volatile for the first few months and share prices are constantly changing. But if IPO investing interests you, check out our top recent IPOs and our IPO calendar. We update it daily to give you the latest news on upcoming and filed IPOs.

For other education investing opportunities, check out the Coursera IPO.

If you’re looking for the latest investment opportunities, consider signing up for Liberty Through Wealth. This free e-letter is packed with market insights from leading experts. You’ll hear directly from bestselling author and investment expert Alexander Green. He’s also worked as an investment advisor, research analyst and portfolio manager on Wall Street for 16 years.


About

Aimee Bohn graduated from the College of Business and Economics at Towson University. Her background in marketing research helps her uncover valuable trends. Researching IPOs and other trends has been her primary focus over the past year. When Aimee isn’t writing for Investment U, you can usually find her doing graphic design or traveling with friends.

Articles by

Related Articles

Investor Survey

IU Masterplan
Popular Posts