PowerSchool Q1 2024 Earnings Presentation

First Quarter 2024 Results

May 7, 2024

Disclaimer

Forward-Looking Statements

This presentation contains “forward-looking statements” within the meaning of the safe harder provisions of the U.S. Private Securities Litigation Reform Act of 1995. Any

statements made in this presentation 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 are not assurances of future performance and may 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: economic

uncertainty, including high inflation, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession, instability of the banking system,

and reduced government spending or suspension of investment in new or enhanced projects; 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; and the other factors described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year

ended December 31, 2023, and our most recent Quarterly Report on Form 10-Q, each filed with the Securities Exchange Commission (“SEC”). Copies of such filings may be

obtained from the Company or the SEC.

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 presentation. We undertake no obligation to publicly update forward-looking statements,

whether written or oral, to reflect future events, future developments or circumstances, or new information. except as required by law.

Non-GAAP Financial Metrics

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, see “Non-GAAP Reconciliations.”

The leading cloud software for K-12 education

55+ million

80%+

of all students in U.S.

and Canada

Student Reach

17K+

customers

90%+

of top 100 U.S. districts

District Reach

$720M

annual recurring

revenue

ARR

33%

Q1 2024 Adj. EBITDA

margin

Adj. EBITDA

Comprehensive

vertical SaaS platform

Mission-critical

for large, durable end

market

Predictable and

Profitable

financial profile

Multiple Growth

Drivers

to drive sustainable long-

term growth

$100B+

total addressable

market

TAM

1) Represents Non-GAAP or key business metric. See appendix for definition and/or reconciliation of GAAP to Non-GAAP metrics.

$612

$636

$640

$701

$720

Q1`23 Q2`23 Q3`23 Q4`23 Q1`24

$159

$185

Q1`23 Q1`24

S&S

+18%

Q1`24 Highlights

Revenue

Adjusted EBITDA

ARR

1) Represents Non-GAAP or key business metric. See appendix for definition and/or reconciliation of GAAP to Non-GAAP metrics.

$ in millions

Subscription & Support Services, License & Other

16%

y/y

18%

y/y

33%

margin

$49

$61

$62

$59

$61

Q1`23 Q2`23 Q3`23 Q4`23 Q1`24

24%

y/y

Key Growth Vectors Driving Our Success

Cross Sell &

New Logos

Continued customer momentum

Int’l

Expansion

Product

Innovation

Strategic

M&A

Strategic State-Level Win

Cross-Sell Successes

One of the largest deals in company history

Largest Special Programs win in company history

Our solution offered modernized approach to meeting state

and federal reporting requirements

Toledo Public Schools – SIS & ERP

Visalia USD – My PowerSchool, Communications

San Bernardino City USD – Analytics, Talent

LEAP Social Enterprise – SIS, Schoology, Enrollment &

Naviance

New Logo Successes

Manitoba First Nations Education Resource Centre - SIS

Key Growth Vectors Driving Our Success

Cross Sell &

New Logos

Continued progress in international expansion

Int’l

Expansion

Product

Innovation

Strategic

M&A

Middle East & Africa

Latin America

India

Cybersecurity and protecting student data

Implementing new AI guidance

Implementing attendance solutions to address chronic

absenteeism

Connecting data across systems (integration)

Integrating technology solutions

Delivering on Key Customer Priorities

… Aligned With Our SolutionsDistricts’ Top Priorities

for School Year 24/25…

Full platform of 20+ solutions

Connected Intelligence DaaS

SIS, Attendance Intervention

PowerBuddy

SIS, full platform of 20+ solutions

Key Growth Vectors Driving Our Success

Cross Sell &

New Logos

Continued strategic M&A

Int’l

Expansion

Product

Innovation

Strategic

M&A

Innovative Budget Management, Planning & Analytics Solution

Top-of-mind need for many districts as they focus on effective

use of budget dollars

An add-on to our existing ERP systems, expands our reach into

the broader K-12 finance software market

Acquired in late January

Key Growth Vectors Driving Our Success

Cross Sell &

New Logos

AI-powered innovation

Int’l

Expansion

Product

Innovation

Strategic

M&A

PowerBuddy for Assessment

PowerBuddy for Learning

Reduces educators’ workload by developing effective

assessments for students, saving them valuable time

Creates questions and passages in just minutes that are

contextually aligned to the data within the platform

GA in April, available in Performance Matters, part of

Personalized Learning Cloud

Personal assistant for teaching and learning

Makes educators’ lives easier by helping them easily create

high-quality assessments and instructional content

GA in April, available in Schoology Learning, part of

Personalized Learning Cloud

“Thanks to PowerSchool's PowerBuddy for Assessment, we were

able to save teachers' time by decreasing how long it takes to

create a standards-aligned assessment item by two-thirds!”

Kylene Schneider

Teacher - Holmes Middle School

“This will take the time away from mining data to using it. I

also love the way my teachers will be able to use it to create

lessons and assessments that are more personalized for

their students and that students will have additional

resources beyond what they are given from their teachers. It

has the potential to make learning truly ubiquitous and

engaging!”

Kimberly Nidy

Director of Technology

Industry-Leading Data Privacy & Security

AI Data Platform

Connected Intelligence data lake approach of “bringing AI to

data” preserves data sovereignty

Student Data Custodianship

We comply with all federal laws (FERPA, COPPA) and state

regulations (e.g., SOPIPA) governing student data privacy

Signatories of Student Privacy Pledge and White House’s

Secure by Design Pledge

Certified by industry leaders such as and

Additional Resources

PowerSchool’s Global Privacy Statement

Blog post: PowerSchool’s Commitment to Protecting Student Data Privacy

PowerSchool AI

$141

$147

$149

$164

$167

Q1`23 Q2`23 Q3`23 Q4`23 Q1`24

Q1`24 Financial Highlights

+18% y/y

Subscriptions & Support revenue +18% y/y

Broad-based product growth with continued strength in

data-driven products

Growth driven by continued cross-sell and strong new

logo bookings

Net dollar retention driven by continued cross sell of

platform and annual price increases

Year-over-year decline attributable to composition of

bookings skewing towards new logo

Continued margin strength driven by gross margin

improvements

Robust bottom line despite non-cash tax expense and

interest expense headwinds

+18% y/y

ARR

S&S Revenue

NRR

Adj EBITDA

& Margin

$ in millions

Revenue

$185.0M

+16% y/y

ARR

$720.3M

+18% y/y

NRR

107.0%

-210bps y/y

Adj EBITDA

33.1%

+210bps y/y

Non-GAAP EPS

$0.17

-6% y/y

1) Represents Non-GAAP or key business metric. See appendix for definition and/or reconciliation of GAAP to Non-GAAP metrics.

2) “Non-GAAP EPS” represents Non-GAAP Net Income per fully diluted share; see appendix for definition and reconciliation of Non-GAAP Net Income and fully diluted shares.

$49

$61

$62

$59

$61

31.0%

35.2%

34.0%

32.6%

33.1%

Q1`23 Q2`23 Q3`23 Q4`23 Q1`24

$612

$636

$640

$701

$720

Q1`23 Q2`23 Q3`23 Q4`23 Q1`24

109.1%

109.5%

107.2%

106.7%

107.0%

Q1`23 Q2`23 Q3`23 Q4`23 Q1`24

Q2 2024 and FY 2024 Outlook

Q2`24

Outlook as of 5/7/24

FY 2024

Outlook as of 5/7/24

Revenue

$192M - $197M

10% - 13% y/y

$786M - $792M

13% - 14% y/y

Adjusted EBITDA

$67M - $69M

34.9% - 35.0% margin

$268M - $273M

34.1% - 34.5% margin

Capitalized Expenditures Including

Capitalized R&D

$48M - $52M

6.1% - 6.6% of revenue

Stock Compensation Expense

$80M - $84M

10.1% - 10.7% of revenue

Fully Diluted Shares

- 203M - 207M

1) Represents Non-GAAP or key business metric. See appendix for definition and/or reconciliation of GAAP to Non-GAAP metrics.

Appendix

Definitions of 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. We record ARR at the time a customer purchases a new

product or renews an existing product, and at a value that represents the contracted annual recurring revenue value excluding any granted one-time discounts. 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. Typically, our customer agreements are sold on a three-year basis with one-

year rolling renewals and annual price escalators. These annual renewal processes provide us an additional opportunity to upsell and cross sell additional products. We assess

our performance in this area using a metric we refer to as NRR. 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:

• 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.

• Denominator. We measure, as of the last day of the current reporting period, the last twelve months of ARR that was scheduled for renewal.

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.

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 analytical and supplemental informational purposes only, and should not be considered in isolation or as 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 (Loss), Non-GAAP Cost of Revenue and Operating Expenses, and Adjusted EBITDA: Non-GAAP Net Income (Loss), 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 (Loss) as net income (loss)

adjusted for depreciation and amortization, share-based compensation expense and the related employer payroll tax, management fees, restructuring expense, 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, nonrecurring litigation 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.

Non-GAAP Financial Measures

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 used in 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, see “Non-GAAP Reconciliations.”

Non-GAAP Reconciliations

Reconciliation of Gross Profit to Adjusted Gross Profit

(in thousands)

Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023

Gross profit $105,106 $108,631

$110,314 $104,868 $89,965

Add:

Amortization 18,929 17,409

16,355 15,945 15,769

Depreciation 151 152 153 163 252

Share-based compensation 2,273 2,422 2,494 2,654 2,458

Restructuring 1,279

–

(13) 524 13

Acquisition-related expense 173 261

–

47 87

Adjusted Gross profit $127,911 $128,875 $129,303 $124,201 $108,544

Gross Margin 56.8% 59.6% 60.6% 60.3% 56.4%

Adjusted Gross Margin 69.2% 70.8% 71.0% 71.4% 68.1%

Reconciliation of Net Loss to Adjusted EBITDA

(in thousands)

Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023

Net loss ($22,848) ($18,657) ($1,306) ($4,295) ($14,813)

Add:

Amortization 35,492 33,845 31,523 31,050 30,873

Depreciation 937 815 820 822 918

Net interest expense 20,996 20,183 16,409 16,101 14,029

Income tax expense (benefit) 4,872 4,767 (3,475) (1,724) (45)

Share-based compensation 14,685 14,528 15,297 17,910 15,481

Management fees 80 80 80 95 63

Restructuring 3,858 3,062 308 917 1,366

Acquisition-related expense 3,202 4,006 2,319 314 1,534

Loss on extinguishment of debt

– – – – –

Other expense (income) due to tax rate change

–

(3,264)

– – –

Adjusted EBITDA $61,274 $59,365 $61,975 $61,190 $49,406

Net loss margin (12.4%) (10.2%) (0.7%) (2.5%) (9.3%)

Adjusted EBITDA margin 33.1% 32.6% 34.0% 35.2% 31.0%

Non-GAAP Reconciliations

Reconciliation of Net Loss to Non-GAAP Net Income

(in thousands, except share and per share data)

Q1 2024

Q4 2023 Q3 2023 Q2 2023 Q1 2023

Net loss ($22,848) ($18,657) ($1,306) ($4,295) ($14,813)

Add:

Amortization 35,492 33,845 31,523 31,050 30,873

Depreciation 937 815 820 822 918

Share-based compensation 14,685 14,528 15,297 17,910 15,481

Management fees 80 80 80 95 63

Restructuring 3,858 3,062 308 917 1,366

Acquisition-related expense 3,202 4,006 2,319 314 1,534

Loss on extinguishment of debt

– – – – –

Other expense (income) due to tax rate change

–

(3,264)

– – –

Non-GAAP Net Income $35,407 $34,415 $49,041 $46,813 $35,422

165,037,089 164,417,080 163,785,972 163,067,859 160,506,571

202,691,148 202,071,139 165,666,867 163,067,859 160,506,571

($0.12) ($0.09) $0.00 ($0.02) ($0.07)

($0.12) ($0.10) $0.00 ($0.02) ($0.07)

165,037,089 164,417,080 163,785,972 163,067,859 160,506,571

204,127,677 203,960,969 203,320,926 201,893,199 199,449,447

$0.21 $0.21 $0.30 $0.29 $0.22

$0.17 $0.17 $0.24 $0.23 $0.18

Non-GAAP net income per share of Class A common stock -

diluted

Weighted-average Class A common stock outstanding used in

computing GAAP net loss per share, basic

Weighted-average shares Class A common stock outstanding

used in computing Non-GAAP net income, basic

Weighted-average shares Class A common stock outstanding

used in computing Non-GAAP net income, diluted

GAAP net loss attributable to the PowerSchool Holdings, Inc.

per share of Class A common stock - basic

Non-GAAP net income per share of Class A common stock -

basic

GAAP net loss attributable to the PowerSchool Holdings, Inc.

per share of Class A common stock - diluted

Weighted-average Class A common stock outstanding used in

computing GAAP net loss per share, diluted

Non-GAAP Reconciliations

Reconciliation of GAAP to Non-GAAP Cost of Revenue and Operating Expenses

(in thousands)

Q1 2024

Q4 2023 Q3 2023 Q2 2023 Q1 2023

GAAP Research & Development $31,651

$27,867

$26,751

$25,862 $25,421

Less:

Share-based compensation 3,636 3,207 4,116 4,675 4,072

Restructuring 2,396

–

105

Acquisition-related expense

493

657

–

145 1,376

Non-GAAP Research & Development $25,126

$24,003 $22,551 $21,033 $19,868

GAAP Selling, General and Administrative $52,432

$58,513 $53,606 $53,129 $49,558

Less:

Share-based compensation 8,777

8,898 8,686 10,580 8,951

Management fees

80 80 80 95 63

Restructuring

145 2,965 238 385

1,248

Acquisition-related expenses

1,780 1,270 (142)

122 70

Non-GAAP Selling, General and Administrative $41,650 $45,300 $44,744 $41,947 $39,226

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Unlevered Free Cash Flow

(in thousands)

Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023

Net cash provided by operating activities ($89,685) $42,941 $220,390 ($32,711)

($60,027)

Purchases of property and equipment

(3,887) (837) (393) (582) (356)

Capitalized product development costs (8,956) (9,807)

(8,766) (10,272) (9,676)

Free Cash Flow ($102,527) $32,297 $211,231 ($43,565) ($70,059)

Add:

Cash paid for interest on outstanding debt 19,129 18,138 15,853 13,973 13,695

Unlevered Free Cash Flow ($83,398) $50,435 $227,084 ($29,592)

($56,364)