Good afternoon and evening, everyone, and welcome to PowerSchool's Q4 2021 earnings conference call. As a reminder, today's call is being recorded and your participation implies consent to such recording. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. With that, I would like to turn the call over to Alan Taylor, Investor Relations. Thank you, sir. Please begin. Thank you. Good evening, everyone, and thank you for joining us for PowerSchool's financial results conference call for the Q4 and fiscal year ended December 31, 2021. On the call today, we have PowerSchool CEO Hardeep Gulati and CFO Eric Shander. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements related to the expected future results for our company and are therefore forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non-GAAP financial measures. Additional information, including definitions and reconciliations between non-GAAP financial information to the GAAP financial information, is provided in the corresponding press release, which is posted on PowerSchool's Investor Relations site at investor.powerschool.com. In addition, this conference call will be available for replay via webcast through the same website. Hardeep will begin with a review of PowerSchool's Q4 and full year highlights. Eric will then take you through a review of the financials before he proceeds to Q&A. We have also made an earnings presentation available in the Events and Presentations section of our Investor Relations website, so please feel free to download the presentation and follow along with today's call. With that, I'll now turn the call over to Hardeep. Thanks, Alan, and good evening, everyone. PowerSchool had an outstanding Q4, finishing the year strong and laying the foundation for a continued growth and momentum into 2022. We exceeded the top end of our guidance range for both revenue and our adjusted EBITDA. We delivered $146.1 million of revenue for our Q4, with 26% revenue growth and an adjusted EBITDA of $33.2 million, a margin of 23%. For the full year, we delivered a record $559 million in revenue for 28% year-over-year growth. Our adjusted EBITDA of $161 million, a margin of 29%. These results highlight the scale and the durability of our business. Our industry-leading unified platform approach continues to differentiate us in the K-12 market, providing long-term growth opportunities for many years as customers look for ways to digitally transform, move to more integrated solutions, empower educators, and offer best-in-class solutions for teachers, students, and parents for improving education outcomes for every child. No other vendor in K-12 SaaS can match our breadth, depth, and presence in North America. We now offer 18 products, including our latest acquisition of Kickboard SEL solution and Kinvolved's communication platform, giving us significant opportunity to expand our footprint within our customer base and new customers to whom we can cross-sell. This cross-sell engine fuels momentum and growth across our business as we enter 2022. Eric will share more details about our financial results and guidance for 2022. Personally, I'd like to spend more time today sharing some exciting updates on the key dimensions of our business that highlight our stability, momentum, and opportunity, adding to our confidence for 2022 and beyond. I'll talk about the large, durable K-12 market that we serve and our inaugural leadership position within that market, the proof points that show our platform strategy is working, as well as our comprehensive platform ability to meet the changing needs of our customers, which create multiple growth vectors and the opportunity to continue expanding our offerings as well. Let's start with the first key dimension, an update on the K-12 market. The North American K-12 market that we serve is very large and resilient. Education represents the second-largest discretionary spend category in U.S. public spend. If you look at the K-12 funding environment, it has mostly grown steadily over the last 30 years, and it is largely insulated from the inflationary or interest-related pressures seen by many industries today. Education spend is largely non-cyclical and bipartisan, creating a relatively protected budget for districts and in turn for our products. Breaking this down further, external IT-related spend is currently a small but fast-growing part of funding. Gartner recently increased their estimates for external IT spending in K-12 schools in the U.S. and Canada and expect it to grow at a 9% CAGR from $17 billion in 2020 to $26 billion by 2025. Additionally, the market will benefit from the $122 billion in additional ESSER funds, much of which is still largely unspent, and will provide additional funding over the next few years. Second, I'd like to update you on our continued leadership in K-12. We enjoy a clear market leadership position in North American K-through-twelve cloud software. We currently have over 14,000 customers on our platform. We added roughly 2,000 customers since the end of 2020. Through these customers, we reach over 45 million students, representing over 70% of the K-through-twelve student population in U.S. and Canada. This expansive reach fuels an incredible opportunity for growth across our product portfolio. Even with this market-leading position, our market share represents only about 5% of Gartner estimated K-through-twelve software spend. We certainly see the opportunity for growth ahead of the market, considering the relatively low penetration rates we see across the product portfolio and the frequent cases where our solutions are mainly replacing paper-based processes, legacy or fragmented solutions. Third, I'd like to update on the exciting success we are seeing with our strategy. Our platform and cross-sell strategy is working. Over the past two years, we have seen a 65% increase in the number of customers who use four or more PowerSchool products, a cohort that grew from just over 1,100 to more than 1,800 customers. In fact, these most loyal customers now represent nearly half of our ARR. This platform strategy creates a flywheel effect in which unified products benefit from each other, which compounds the value for the customer and increase the stickiness for our solution. We're continuing to see successes in these multi-product implementations across schools and districts of all sizes across North America. Take as an example, the Washington County in Utah. As a longtime customer using our student information system, ERP, our Schoology LMS, our formative assessment, they've added Unified Insights in Q4 to further their performance monitoring and administrative management capabilities across the district. Anne Arundel, the fourth largest school district in Maryland, representing about 90,000 students, is the poster child of the platform strategy working. They use 13 of our products today and continue to expand usage, including extending their high school-focused Naviance implementation into roughly 19,000 additional students within their middle school. We saw a 15% increase in active students year-over-year for Naviance across the U.S. during this time of the year, with 6.4 million college applications year-to-date filed using our solution. These stories, which reflect the success and impact our customers have seen from our solution, validate the power of platform strategy. With over 14,000 customers in total, a broad portfolio of 18 products we offer, and 5% of software spend captured by PowerSchool today, the opportunity in front of us is quite large with a ton of room for growth. Fourth, the strength of our diversified comprehensive platform creates multiple growth vectors across our solution areas with the most mission-critical systems to power districts in K-12. Our breadth and depth give us the confidence in our ability to grow no matter how our customers' needs evolve. A recent third-party-conducted brand survey of K-12 customers lists a variety of key priorities and challenges for the next 24 months across different functions. You can find this in our earnings presentation. We believe we are in a unique position to address most of the must-have critical K-12 administrations need today. Our customers also recognize this. The survey also shows PowerSchool has the highest brand awareness and about double the consideration of any pure play education software company. For example, in 2021. Districts elevated their focus on identifying unfinished learning, which led many of them to our insights and assessment products. We are seeing these needs for student insights continue into future years, and we are well-positioned to meet these needs. In fact, we are very excited to share a top five school district by student enrollment in the U.S. just selected our Performance Matters assessment platform for a district-wide assessment solution in addition to their existing multiple products PowerSchool puts in. One of the key challenges districts are facing today is talent shortage. With higher teacher attrition given the stress and the impact from the last two years of COVID. We recently published our talent index survey with a third-party firm which clearly shows that teacher recruitment, their wellbeing, and the retention are the three top priorities for all our customers in 2022. Unified Talent helps them manage their staff from hire to retire. In Q4, we saw a state department of education select Unified Talent as the statewide educator recruitment platform for the entire state. We're also seeing heightened focus on providing an integrated academic, behavioral, special needs, and social-emotional support to give a holistic view of the student. Kickboard, our behavior solution acquired recently in November, helps districts identify students who need behavioral support. We're further innovating to enable a holistic multi-tiered system of support process for districts. We are seeing that students and community engagement is more critical than ever in this challenging time. Districts are seeing major challenges with absenteeism and a need, a centralized, equitable way to reach the families they support. Our most recent acquisition of Kinvolved extends our product footprint in a way to help address this need. This takes me to my last point, the opportunity we have to continue expanding our platform and the market opportunity globally. We saw these needs growing within our customer base and the acquisition of Kickboard and Kinvolved, a great example of how we quickly provide a solution and in turn, drive cross-sell. Kinvolved, which closed in February first, is the latest addition to our portfolio, bringing us a modern, best-in-class solution for K-12 communication and attendance intervention. Kinvolved addresses a massive market need for family engagement in reducing student absenteeism and improving student engagement and outcome. Alongside this M&A, we continue to focus our R&D dollars on innovation to launch new products and capabilities, including a competency-based learning management system across our SIS, LMS, and formative assessment platform, a new graduation planning capability leveraging our Naviance and SIS, utilizing Kickboard to tie SEL and academic data together, our Data Lake project, and as I mentioned earlier, developing a new product to help districts better manage their MTSS workflow. All these investments are foundations for us to build and expand into the global personalized learning market, which represents a $100 billion market opportunity. Our vision, the platform, and the investments allow us to lead the charge towards game-changing innovation to transform K-12 education globally. The combination of these factors I shared, the strong markets, the clear leadership position, the cross-sell momentum from our platform strategy, the multiple avenues to drive growth, and the potential to continue expanding our platform speak to our success, our opportunity, and the durability of our business, allowing us to capture the large opportunity in front of us. We have a clear visibility into driving predictable and profitable growth well into the future, generating free cash flow, which in turn gives us ability to continue to invest and expand our platform. I'm extremely proud of our team and all we have accomplished. I'm also proud to help schools and districts through this pivotal time of rapid change and evolution. It is our goal to move education forward by giving schools and districts the tools and the real-time access to meaningful data, which unlocks the keys to better student outcomes and thriving staff. With that, I'll hand it over to Eric to provide a financial update for 2020 and share more about our guidance for 2022. Eric? Thank you, Hardeep, and good evening, everyone. We had a great finish to 2021. Top line performance was strong, driven by our continued cross-sell momentum and strategic M&A. In addition to driving double-digit revenue growth, we maintained a strong adjusted EBITDA margin, which included absorbing public company-related costs as well as additional go-to-market investments we made to fuel our future growth. For the full year, total company revenue was $558.6 million, an increase of 20% year-over-year, which included a beat on the top end of our Q4 guidance range by $4.1 million. We ended the year with an annual recurring revenue balance of $538.6 million, an increase of 26% year-over-year, and our net revenue retention rate was 106.4% up 80 basis points on a sequential quarterly basis, highlighting both the stickiness of our products and our ability to expand within our customer base. Full year gross profit totaled $317.7 million or 56.9% margin, up almost a full point from the prior year. On a non-GAAP basis, adjusted gross profit was $375.7 million or 67.3% margin, an improvement of 138 basis points from the prior year. Margin expansion was driven by our top line performance, coupled with improved operational scale across our cloud operations and customer support organizations. Full-year operating expenses were $312 million or 55.9% of revenue, which was approximately five points higher than the prior year, primarily driven by the addition of public company-related costs and an increase of $16.3 million year-over-year of stock-based compensation expense. We delivered full-year adjusted EBITDA of $161.2 million or 28.9% margin, which exceeded the top end of our guidance range by $2.2 million, reflecting the strength and durability of our business model. We generated strong free cash flow in the year of $103.2 million, up 78% versus the prior year. In addition, we significantly strengthened our balance sheet, ending the year with $86.5 million in cash and cash equivalents, up $33.7 million versus the prior year, and we reduced our net leverage by more than 50%, while still investing significantly in our business. Now turning to our quarterly results, which were strong. Total revenue came in at $146.1 million, up 26% year-over-year and exceeded the top end of our guidance range. Subscriptions and support revenue in the Q4 totaled $128.2 million, up 29% year-over-year, driven by our growth across all our solutions. Services revenue was $14.4 million, up 12% year-over-year, driven by increased product deployments. Gross profit for the Q4 was $80.3 million or 54.9% margin, representing an improvement of 80 basis points year-over-year. On a non-GAAP basis, adjusted gross profit for the Q4 was $96.2 million or 65.8% margin, up 31 basis points year-over-year. Now turning to expenses. R&D expense for the Q4 was $27.9 million or 19.1% of total revenue compared with 19.4% a year ago, which reflects the continued investments we're making in the platform to deliver the products and capabilities for our customers that rely on us to support their mission-critical operations. SG&A expense in the Q4 was $45.9 million or 31.4% of total revenue versus 21.8% from a year ago, which is primarily driven by an increase in anticipated public company-related costs. Our adjusted EBITDA was strong, coming in at $33.2 million or 22.8% margin, beating the top end of our guidance range. We continue to focus on optimizing our business, and we are pleased with the performance over the first few quarters as a public company. Overall, we had a great fourth quarter and ended 2021 with a stronger financial profile. The investments we made within the year position us well heading into 2022. We continue to benefit from a favorable and resilient funding environment. Our market leadership remains a competitive advantage, and we have a broad product platform that fuels a sustainable cross-sell strategy for years to come. Now turning to our first quarter and full year 2022 financial guidance. We expect to deliver total revenue for the first quarter of $145 million-$148 million, representing a growth rate of 23%-25% year-over-year. Adjusted EBITDA in the first quarter is expected to be in the range of $40 million-$42 million, representing a 28% margin at the midpoint. For the full year, our guide reflects the Rule of 40 business, and we believe we can continue to operate in that range well into the future. We expect total revenue for the full fiscal year in the range of $620 million-$626 million, representing 11%-12% year-over-year growth. Please note, starting in March, we lack the acquisition of Naviance in our year-over-year comparisons. As a result, full year guidance is primarily organic revenue growth, given our most recent acquisitions of Kickboard and Kinvolved are not material. Full year adjusted EBITDA is expected to be in the range of $180 million-$184 million, representing a 29.2% adjusted EBITDA margin at the midpoint. For modeling purposes, we expect capital expenditures, which excludes capitalized software of approximately $7 million and share-based compensation expense of approximately $60 million-$65 million for the full year. Fully diluted shares for the year are expected to be in the range of 200 million-205 million shares. In closing, we had an outstanding Q4 that capped off a record year for PowerSchool in terms of revenue and cash flow generation. We significantly improved our balance sheet, paying down debt and setting the stage for another year of strong cash generation. We have a large and growing customer base, and our unified platform approach and market-leading position provide significant cross-sell opportunities for us. K-12 funding environment remains resilient as educators look for ways to digitize their systems, integrate data and improve student outcomes. Our expansive product footprint and low penetration in this market gives us confidence as we head into 2022. I'm excited about the opportunities ahead as we grow our market share and invest for long-term growth. With that, we're now happy to open the call for questions. Operator, will you please open up the line for Q&A? Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Stephen Sheldon with William Blair. Please proceed with your question. Hey, thanks, nice results and guidance here. First, what can you share about the size of your sales team now versus maybe where it stood a year ago? How much capacity do you have in case you start to see a big increase in demand? Some of the stimulus funding, I guess, flows through the system. Do you have the capacity in place at this point to capitalize and start to see that pick up in 2Q, 3Q and over the next couple of years? Thanks, Steve. You know, you're right that there is a fair bit of demand as you might say, inbound from roadshow. We have a sales team arrayed for every aspect of the different. We have a strategic sales team selling to the top 100 largest districts. We have an enterprise sales team that sells to the entire base within the regionals. We have the inside sales team, which is selling to 3,000 and below student count districts and direct to charter schools. We have a pretty exciting coverage also on what we call solution sales team, which is selling to the specific solution based on the key personas like Talent HR and like the platforms as well as on the core back office. We have increased our sales coverage year-over-year, reflecting on the additional new business they're doing. That is an addition about 12 or so resources around the core quarter carry, and then also in terms of the overall solution and support staff as well. Okay. Got it. Yeah, there's some bad feedback there, so I didn't catch all that. But, maybe, you know, I guess just one other one. It sounds like the M&A pipeline continues to be strong. How should investors be thinking about potential for additional M&A this year? And how could the visibility into state and school district plans for the stimulus funds maybe influence what targets you decide to pursue? That's a great question. As you know, our strategy is kind of twofold right here. A big focus is really on cross-selling our platform, which now has 18 products thanks to our recent two acquisitions add-on, the L&O and communication, really kind of continue to go organically through that cross-sell engine. The second part of that is to continue expanding the platform. Most of our M&As are really focused on strategically expanding the entire platform on how we can really achieve the entire system of intelligence, which will drive the personalized learning. Hopefully you're catching me as the- Hold on. Sorry. Yeah, there's some pretty bad feedback on it or echo. David, can you hear us? Operator, can you hear us? Yes, now we can hear you. Is there still a bad line? Yes, the echo is still there. Just hold on one second. Welcome to the conference center. The available conference lines. Goodbye. Lady, ladies and gentlemen, please stand by as we try and reconnect the speakers. Operator, can you hear us? Gentlemen, you're reconnected now. Okay, thanks. Yeah, Hardeep, that's a lot better. All right. Sorry about that. Definitely a technical glitch. Kind of going back to Steven, making sure I repeat both the responses. Number one, on your sales, we have a pretty good coverage to cover all the large strategic enterprise and inside accounts. Also we have a solution team that sells the solution. To your point, we have increased our sales team year-over-year by 12 quota carry people, plus additional support staff to continue to focus on the additional demand we're seeing. The second part of your question on the M&A, as we mentioned that our big focus is on the organic cross-sell, how we are selling our 18+ products into the base. We do continue to expand our platform to kind of further our goal toward personalized learning, which is kind of building that system of intelligence, everything about the student. We are seeing opportunity in adjacent fees, both from a tuck-in and scaled options, which we'll continue to pursue into the year. Hope that's Great. Thank you. That's perfect. Thanks. Bye. Our next question comes from the line of Matt Hedberg with RBC Capital. Please proceed with your question. Hi, guys. Thanks for taking my questions and congrats on a strong close to the year. You know, I remember during the IPO process you talked about, I think, the potential of $2.5 billion of upsell in your base, which is always an impressive statistic. I guess seeing that now I think half of your ARR comes from customers with more than four products is really indicative of that opportunity. Can you talk about you know how you've had some success there and maybe how you could even push that success even higher with even additional cross-sells to tap into that opportunity? Great point, Matt. For the first $2.5 billion, that cross-sell can continue to expand as we bring more integrated solutions and more acquisitions. For example, the whole communication side with our Kinvolved, that adds close to a half a billion of additional TAM for us to cross-sell into our base. You know, we continue to expand that cross-sell total opportunity. As I mentioned also in our prepared remarks, we are actually seeing a lot of increase in our adoption of our multiple products, especially as we shared almost 65% increase year-over-year on customers who have more than four products. We definitely see an acceleration of that cross-sell. We're still early in this game. We only have about 12% of our overall customer base which have more than four products. To your point, there is still a huge opportunity, especially if you look at it from an ARR contribution from those sticky customers. We can have 5 or 6-fold increase of our ARR by just continuing these cross-sell motions. We have both our internal cross-sell strategies on plus one product, kind of really giving customers an opportunity to just add one of our 18 products, a lot of go-to-market focus and functions around it. There is definitely an upside opportunity there to accelerate that, and we continue to drive our go-to-market functions on it. That's really great to hear. Eric, one for you. You know, the trend in software this earnings season has been strong results but lower margin guidance for 2022. You guys aren't doing that. You're guiding to it looks like about 30 basis points of improvement to start the year if that math is correct. Can you talk about, you know, how you're sort of prioritizing those investments, and then maybe just, you know, remind us about how we think about sort of that balance between growth and obviously strong and extending profitability? Yeah. Thanks, Matt. First, I would just say, I mean, we were really pleased with where we ended the year, and certainly, you know, ahead of our expectations. You know, we wanted to continue the signal of the expansion on the margins, which we did in the guide. You know, as I've mentioned, we've got a lot of opportunity to continue to drive leverage. In fact, we could, you know, increase the margins even more. However, we do choose to, you know, look at longer term growth investments. We really like to, you know, continue the margin expansion, but then also and really want it to be a Rule of 40 plus. You know, we are reserving capacity, as I've mentioned before, you know, in the out years as we look at international and some of our other longer term growth opportunities. You know, we feel really good. Strong finish to the year. We're gonna show expansion into next year, you know, this year. Certainly, I'd say we could be, you know, well into the 30% margin EBITDA from a total perspective. You know, we are reserving that capacity for these longer term growth opportunities, which, you know, we feel really confident in. That is, that's really good to hear the balanced growth and profitability. Thanks a lot, guys, and best of luck. Yeah. Thanks, Matt. Thanks, Matt. Our next question comes from the line of Fred Havemeyer with Macquarie. Please proceed with your question. Hey. Thank you. You know, Hardeep, I think I wanted to start on ESSER funding. I know it's a topic that we've talked about in the past, but, you know, now with ESSER funds distributed and, at this point, I believe fully funding all of the state level education plans, you know, could you talk a little bit more about how this is shaping some of your purchasing conversations with schools? Also, you know, as we progress with ESSER funding through the 2023 timeline, do you see any risk of customers that have purchased PowerSchool or education technology with ESSER funding, churning, or do you think that they would continue with the products after ESSER funding? Great question, Fred. Let me first kind of put into perspective, right? We're talking about when you look at the full education spend yearly, it's almost $700 billion. ESSER money is about $122 billion, additional focus to be spent over the next few years, which they can even do a purchase in 2024 for the next three or four years as well. It is gonna get spread out over the next a lot of years. As you can see, you know, it's actually another 10% or 15% additional benefit for school districts of having these additional funds. We typically don't need the stimulus money to really fund our solutions. Most of our districts would actually buy from their normal fund, specifically for IT spend, which they have allocated. As you know, that's still a small, that's only 2%-3% of the overall. When they're buying these technologies, which are must-have, whether it's for classroom, for student system or college career readiness, they're not necessarily tapping it based on the stimulus. Stimulus does help them to leverage it for a quick, budget management, so they can kind of really tap into it while they work out the long-term funds. We are not really expecting any kind of a really change because once these solutions are in, they're really sticky, they're must-have. We're not really selling any nice-to-have capabilities. All of these are once you roll out to all the teachers and students and parents, you're not gonna really take them off. Majority of our funding of our solutions still is happening from their core budgets. Thank you there. I wanted to also ask about, you know, the cross-sell that you're seeing here because that growth in customers is now paying more than four products was looking particularly impressive during 2021. I wanted to ask, you know, could you talk about what has really been clicking with your cross-sell motion that has driven this increase? I think it was up to 1,800 customers now with more than four products. Also, could you give us some color on where in the portfolio you're seeing the most cross-sell traction? Thank you. Great. Take, Fred, a couple of things. One is the flywheel effect I mentioned, right? The more customers buy our solutions, the more they need the integrated platform. As they buy our student system or school e-learning management, then they want assessment, they want analytics, they want special ed's, they want communication. It really kind of creates more stickiness for them to buy additional solutions. That's the flywheel effect we are seeing with more and more of our offering integrated customers who are taking advantage of that. In terms of the second part of the question, how do you really which areas we are seeing, it is a little bit dependent on the areas I mentioned in the study, the survey which talks about the customer needs are evolving. Coming out of the pandemic, customers' focuses are evolving. There was a lot of focus on assessment analytics over the last year. We are seeing increased focus on talent management because they're trying to recruit and onboard, manage substitute teachers, and as well as retain teachers. We're also seeing increased demand for social, emotional, and understanding the whole child and providing the right interventions, as well as the communication piece, which I mentioned is why we acquired Kinvolved. We're seeing a huge demand for really trying to engage kids on and their absenteeism to kind of address that area and reach out to the family. So we're really hitting on to as the customer needs evolve, we have an ability to really hit their key priorities. That's the beauty of our platform, that we can really manage to the entire broader aspects of what the customer needs for the digital transformation journey. Thank you. Our next question comes from the line of Saket Kalia with Barclays. Please proceed with your question. Okay, great. Hey, guys. Thanks for taking my questions here. Hardeep, maybe for you just to start, you know, given that it's year-end, we've got a nice guide here for next year. Can you just remind us roughly, you know, what was the number of students that are currently on the platform as of the end of 2021? And kinda how you're thinking about that balance of growth in students versus growth in revenue per student next year, even directionally. Does that make sense? Yeah, that makes sense, Saket. As you know, we are, you know, when we talk about we're reaching 70% of the North American market, that's roughly 45 million students across all of our different components. To your point about how we look at the ARPU in terms of per student share of the wallet, when you look at the funding environment, which is largely stable in this time, we are looking at almost 12,000+ on average. We're talking still about between $10-$15 per student per share. With IT spending of software components, that's almost like, you know, they're spending about $150-$200. There's a lot of room for us to grow that student per share of the wallet. We really focus on less about from a dollar perspective, as much about getting one more additional product for our districts. That way our cross-sell motions are more designed to kind of really get more stickiness of the platform. When we talk about the adoption of 4+ customer, let me share another key stat. Take example of districts who have more than 25,000 students. We now have more than 3+ products on average with them. Generally for our broader population, that's 2+ average. Our larger customers, now we actually have 3+ products with them. That's kind of the motion is really to get more stickiness and more adoption of our platform with our customer base. Got it. That's very helpful. Eric, maybe for you a follow-up and somewhat related, great to see the stabilization in net revenue retention. Can you just talk about sort of the path from here as we go into 2022 on that metric? You know, I know there are some mechanics in there that are just worth reminding everyone about and just kinda how that sort of progresses through 2022, even directionally. No, yeah, absolutely, Saket. First, I appreciate the opportunity. Yeah, I mean, look, as we turned in Q4 at 106.4%, which was a slight dip from the third quarter, you know, obviously that was really reflecting the strong cross-sell that we saw in the quarter. You know, as we get into 2022, you know, you should expect the NRR to continue each quarter to increase and improve. You know, when we get to the end of the year, I think, you know, people will be pleased. We'll see at least a point of improvement. The other thing I would just say to keep in mind, and we had mentioned this, you know, as you look at the impact of NRR since it is a trailing twelve-month metric, you know, there are two items in there that have impacted it. We've got roughly a point of impact from Naviance. When we made that acquisition, certainly their retention rates weren't as high as the PowerSchool profile. So, you know, you would have added a point onto the 106. And then, you know, obviously when we were in 2020, we had extraordinarily strong bookings related to COVID, which would have been about another point. So, you know, you can think about two points of adjustment to that. You know, as you look at the trailing or the, you know, the trending into 2022, expect continued improvement from here on out every quarter. That's very helpful. Thank you. Thanks, Saket. Thank you. Our next question comes from the line of Brent Thill with Jefferies. Please proceed with your question. Hi, guys. This is David Don Grant for Brent with Jefferies. Thanks for taking the question. I wanted to ask about the funding environment. The last numbers I saw, the majority of the ESSER funds have still yet to be spent. I'm curious why that is, and do you anticipate that all $122 billion will be spent by the time the three-year period is up? Sure. When you look at from the funding approval standpoint, only, you know, between 5%-10% of what's actually spent. What we have seen the progress since the stimulus is that there is approvals now from states about how the funding needs to be spent, and that approvals have now coming through pretty much majority of the states as well. It is gonna trickle down to a lot of districts, and districts have started using some of these funds as additional dollars to that. A good example is one of the top school districts I mentioned who use our formative assessment platform. They're using a decent chunk from the current budget, but they're also using some of the ESSER money to help them with the initial set of implementation in here. Districts will tap into these funds over the time. It is something they don't have to necessarily spend all of it by 2024. They can spend for the period for these even longer. I do wanna reiterate, the overall funding environment is very stable. One of the key things we wanna keep driving to the factor is that we see a lot of discussion about interest rates. We're largely insulated in the funding environment in K-12. Stimulus is giving an additional you know jolt to kind of help with the speed of the velocity. Largely, when we look at our deals, given the key pieces we sell which are must-have, funding is kind of really helps accelerate things, but not a required component for districts to adopt our solution. Got it. Maybe just a follow-up on LMS, right? Obviously, a big beneficiary in 2020, and you know, I think it's roughly half of K-12 schools are now using a paid LMS. Would just love to hear how that's, you know, product is doing. You know, obviously, I'm assuming it's cooled off after, you know, big pull forward during COVID, but any update there would be appreciated. Thanks. Yeah. You know, you're absolutely right. In 2020, there was a huge demand. We had talked about we almost added 4 million+ students on the core platform in LMS. What we do see is every year we are seeing about 1 million-2 million additional adoption on LMS. When you look at the full 60 million population in North America, half of that students doesn't have a best-in-class paid LMS. There is still a lot of room to continue for us to grow and add that 1-2 million students and grow double-digit on our classroom products for many years to come, given how much the market 1111opportunity still exists. Great. Thanks, guys. Appreciate it. Thank you. Our next question comes from the line of Gabriela Borges with Goldman Sachs. Please proceed with your question. Good afternoon. Thank you for taking my question. Hardeep, I wanted to get a little bit of commentary on what you saw during 2020 and 2021 in terms of buying patterns of your customers. How do you think about how much of what you saw during COVID was temporary versus maybe the sense that we're getting is there's also something structural happening in terms of greater willingness to invest in education and analytics and technology. Maybe just commentary or reflections on what you see as temporary versus permanent from the last couple of years. Absolutely, Gabriela. There are two factors. One is COVID definitely in the last two years has put a broader enlightenment about how the school districts don't have the right infrastructure support to handle disruptions like what we just encountered. That visibility has not gone just to the district owners and the teachers. I think pretty much every person and every parent can vouch for that as well, that there is technology can play a bigger role to help kind of manage school disruptions of any kind. We are seeing a broader demand shift on having additional discussions around broader digital transformation as well as the, as you point, more insights to help understand where the students are. I had a department of education, superintendent for a state talk about that while the learning loss created 25% of the students in that state who actually had learning loss, they were already to begin with, had 30%-40% of the students which were not meeting the national standards. That learning loss visibility is also pretty big. Most of the things that we're talking about on the digital transformation, the visibility on analytics, as well as better understanding and communicating with the students, these are systematic shifts, and we are seeing the demand really happening across the entire nation on that. That's helpful. Thank you. A follow-up, if I may. You made a couple of comments on the work you're doing with data warehousing with Snowflake. Would love to hear how you're thinking about that opportunity longer term and whether it creates an additional avenue of monetization that's accretive to the analytics work that you're already doing. Thank you. Absolutely. Our Unified Insights is right now the most broadest insight platform that exists in K through 12. Not only we can do the stage and engagement data, the achievement data, the SEL data, we can bring the whole child view as well as predictive understanding of how the students really are impacted. We are definitely, with our Snowflake implementation, accelerating to bring all kinds of additional data which will feed into the district so they have a better way to not just improve their operational efficiency, but also understand better the student and personalize education. That is the nirvana which completely transforms K through 12 education, and our initiatives are definitely in the direction to make that happen. Thank you for the color. Yeah. Thanks, Gabriela. Our next question comes from the line of Karl Keirstead with UBS. Please proceed with your question. Hi. Hey, great. Thanks. Hey, Eric, as we model unlevered free cash flow for 2022, one obvious starting point is to look at the 50 basis points increase in your adjusted EBITDA margin based on your guidance and grow unlevered free cash flow margins by the same. Is that a reasonable starting point or anything funky you'd call out in terms of cash flow in calendar 2022? Yeah, no, yeah, I think that's a reasonable cash flow assumption, Karl. You know, the only other thing I would say is that, you know, I provided the CapEx less the product costs, software product development costs that's being capitalized. You know, for that, I would just kinda you know use very similar ratios that we had in 2021, but there isn't anything unusual to expect in there. Got it. Good to hear. Thank you. Our next question comes from the line of Brian Peterson with Raymond James. Please proceed with your question. Thanks, gentlemen. Congrats on the strong close to the year. Eric, maybe just starting with you. You know, as we think about the seasonality of the business, as you're looking ahead to 2022, is there anything that you would kind of share in terms of seasonality, in terms of ARR or revenue metrics as we progress through the course of the year? Any help on that? Yeah, absolutely, Brian. First, I appreciate the opportunity to continue to remind everybody around the seasonality of the business because our business is a little bit unique. You know, what I would say is, if you think about ARR, you know, you'll continue to see upward growth, but then very similar to what you saw in 2021, a lot less growth going sequentially from Q2 to Q3. The reason for that is because the majority of our renewals happen in Q3, so to the extent that there's any churn that's gonna be impacted there. We'll continue to provide at least directional color around that. You know, again, I think from an ARR perspective, you know, just the phenomenon of, you know, Q2 to Q3, not as big of a growth as you will see in other quarters. Certainly from a revenue standpoint, I would just remind everybody that when you think about sequential revenue from Q3 to Q4, that will dip down as it did this past quarter. As all our subs and services continue to grow and we continue to see the positive momentum there, the decline from Q3 to Q4 is all related to services revenue because the decline in terms of projects that are happening near the end of the year, schools aren't focused on projects as well as training declines. Our L&O, so license and other activity in the Q4 is traditionally lighter just because the majority of the renewals happen in Q3. You know, again, just I think it's important and we'll continue to remind everybody about that seasonality as we get into the subsequent quarters. You know, I certainly appreciate you asking the question and giving me the opportunity to be able to just reemphasize that to everybody. No, that's great color, Eric. Hardeep, maybe just following up with you. You know, we heard a lot about the cross-sell success this year. You know, obviously, there's a lot that you guys can go and attack in terms of the market and the value you're providing to the customers. But I'm curious if there were maybe one or two product categories that you really felt optimistic about 2022 in terms of the cross-sell, what would those be? Thanks, guys. Thanks, Brian. The number one I think we just touched upon in the last answer was like the analytics. You know, we almost seen 30% growth, and we expect that to continue, in fact, even higher numbers because that is a universal need for most of the districts. 90% of the districts do not have good understanding of the broader data and then insights. We do see that as a category continue to do extremely well. I mentioned talent management, a lot of focus on right now on teacher attrition and recruitment and how to handle that. We are definitely seeing you know, double-digit growth on that platform, and we are seeing such tremendous demand across the specs as well. I do see coming out of the COVID, as I mentioned, the broader digital transformation, whether it's enrollment, whether that's our student information system, our ERP products, we are seeing more increased focus on it. Now, this is where different districts are at different points, so the demand is much more spread, and that's the beauty of our platform. We can kind of meet the different evolving needs of our customers, and we do kind of fully see acceleration of growth in certain categories. We are able to kind of still have all of our products grow because there are definitely districts who are further behind in their transformation journey. Thank you. Thank you. Our next question comes from the line of Joe Vruwink with Robert W. Baird. Please proceed with your question. Great. Hi, everyone. Just a question on the total customer growth being in the high teens this year. Are there any commonalities in where the new logos are coming from and any trends maybe in new logos landing larger? You know, understand that a lot of your bookings come from existing accounts, but in thinking of the 65% growth in the core product customers, are there actually new logos contributing to that performance as well? There are definitely suite deals we still see through the latter part of the question. Okay, great example, Renaissance Academy, Challenger School. We are seeing districts and charter school organization and even private school organizations who are buying multiple products and suites and directly moving to the four plus category. But to your point, broadly, when you look at the total new, there's a lot of inside accounts, which would typically be the charter schools and districts who are small. But we are, you know, seeing a broader interest in even new logos, District W in New Jersey or Fall River in Massachusetts. They are kind of really moving into our SIS and the broad platform, so that new adoption is kind of coming from multiple sources. Naviance definitely also contributed to that as well. You know, that's again the beauty of the overall platform. We are able to address the multiple key growth vectors across the different needs of the customers as well. Okay, great. In the earnings presentation, looking at slide 7 and just the timelines associated with new systems, if I read between the lines a little bit, most of your solutions gather interest 6 to 12 months maybe before they're needed or implementation. You've also said that, you know, most of the stimulus is still on the horizon as the catalyst on the horizon. Putting that together, would you actually expect FY 2023 to be a more consequential year of growth than even FY 2022? Yeah, I think the broader sheer point here is that both based on the trends we are seeing on digital transformation, our own cross-sell momentum, as well as funding environment to be very stable, rich, and further helped by the stimulus. We do expect that our growth is largely de-risked, not just for you know, this year, but even for next year and so on. We are definitely sitting in a very comfortable environment, and we continue to expect the growth rates to be you know, to continue to build on. Great. Thank you very much. Thanks, Chip. Our next question comes from the line of Koji Ikeda, with Bank of America. Please proceed with your question. Oh, hey, guys. Thanks for squeezing me in here. I'm hopping on a little late, juggling a couple calls, so apologies if this question was asked. It's actually a question on the EBITDA guidance here. You know, looking at the first quarter versus the full year, it seems to imply a little bit of back-end loaded EBITDA, you know, linearity here on the profitability. I mean, could you just maybe, you know, help us out? Is that the right way to think about it, or is there any sort of seasonality in the spend that we should be thinking about that could affect, you know, some of the quarterly, you know, seasonality with the EBITDA, you know, going throughout the year? Thanks, guys. Thanks, Koji. No, the way to think about it is if you look at Q4 to the first quarter, we are showing expansion going from roughly 23% adjusted EBITDA in Q4 to you know, roughly 28% in Q1. It continues to improve in each quarter subsequent to that, getting us to the midpoint of 29.2%. You know, we just see a continued progression. I think just the way that some of the models may have had the public company costs spread throughout the year probably just needed to be readjusted a little bit. There is no notion of back-end loading from a margin standpoint. Got it. Thanks, Eric. Thanks for taking my questions. Appreciate it. You're welcome. If there are no further questions, I'd like to hand the call back over to Hardeep Gulati for closing remarks. Well, thank you, everyone. Thank you for your continued support for PowerSchool and our mission. We are very excited, as you can tell from the results on both our performance as well as the opportunity ahead for us in 2022 and beyond. The markets we serve are very durable. Our leadership, as you know, is very clear and inarguable. Our momentum you're seeing on the cross-sell platform definitely shows that our platform strategy is working. As well as we have ability to really meet the different evolving customer needs, given our comprehensive platform, really puts us into an opportunity to continue to expand our adjacencies as well. We are very confident about our growth ahead. Thanks again, and I appreciate and have a wonderful evening. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.