Ladies and gentlemen, greetings, and welcome to the PowerSchool Fourth Quarter 2023 earnings call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Shane Harrison, Senior Vice President, Investor Relations. Please go ahead. Thank you, operator. Welcome, everyone, to PowerSchool's Earnings Conference call for the fourth quarter and full year ended December 31, 2023. I wanted to first let you know that we posted a slide deck to the investor relations section of our website that accompanies our remarks here. On the call today, we have PowerSchool CEO Hardeep Gulati and President and CFO Eric Shander. Before getting started, I'd like to emphasize that this call, including the Q&A portion, will include statements related to the expected future results for our company, which 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 and the GAAP financial information, is provided in the corresponding press release and results presentation, which are both posted on PowerSchool's investor relations website at investors.powerschool.com. A replay of this call will also be posted to the same website. With that, I'll turn the call over to Hardeep. Thank you, Shane, and thank you everyone for your time today. PowerSchool finished 2023 with another outstanding quarter of execution, innovation, and profitability. Once again, we delivered double-digit revenue growth that was within our guidance while exceeding our guidance for adjusted EBITDA. For every quarter since our IPO, now 10th quarter in a row, we have met or exceeded the guidance we provided for both revenue and EBITDA. We crossed $700 million of annual recurring revenue as of December, and for the year, we grew our top line double digits while expanding our adjusted EBITDA margin by 210 basis points to 33.2%. We continue to translate our success into cash through our durable financial model, reaching a record free cash flow margin in 2023. Looking at the slide four of the presentation, you will see our fourth quarter results. Total revenue grew 13%, and subscription and support revenue grew 16%. ARR increased 18% to $701 million. Adjusted EBITDA of $59 million was ahead of the high end of our guidance. At our Investor Day in September, we laid out four key components of growth strategy: cross-selling and growing of a large expanding customer base, continued advancement of our platform through innovations and acquisitions, increase our global reach, and investing in building personalized education solutions. This quarter exemplified how we executed across all four. Starting with cross-sell and new logo traction, we saw many customer wins in the fourth quarter that were driven by our differentiated and comprehensive platform of solutions, and we are seeing continued momentum as we enter 2024. As summarized on slide seven, we saw several cross-sell deals in Q4. Chicago Public Schools, the third largest school district in the U.S. and user of several of our products, chose to add our Professional Development solution within our Educator Effectiveness Cloud to support their 20,000 teachers with effective career growth support. Wylie Independent School District in Texas expanded from their usage of Naviance by adding four of our solutions: Assessments, Insights, Staff Evaluation, and Professional Development. Similarly, the Atlantic City Board of Education, New Jersey, user of our student information system and enrollment solutions, added Insights, Behavior, Assessment, and Curriculum Planning to bring their product count to six. We also had a large multimillion-dollar cross-sell expansion with a virtual school organization who uses our SIS that added our Schoology LMS, Assessment, Naviance, ContentNav, and Connected Intelligence platform. In the quarter, we also continued our partnership with the Puerto Rico Department of Education by booking further services related to their territory-wide attendance tracking system on top of our SIS and enrollment solutions after our successful go-live last fall. Data-driven solutions that provide valuable insights into student, school, and district performance and operations continue to meet a large and growing market need. In 2023, we saw 50% increase in the number of deals for our data products, with the total annualized value of those deals increasing over 60% year-over-year. In the fourth quarter, we saw this through dozens of customer wins, including cross-sales with Cherry Creek School District in Colorado and Toledo School District in Ohio, who both selected Connected Intelligence. Finally, our statewide vendor of choice win with the Indiana Department of Education closed just after the end of the year in January. This is the largest win for our Special Program s product line in double-digit millions, which will enable the Indiana DOE and all of its schools and districts in the state with advanced special education case management, eligibility and progress tracking, Individual Education Plan development, and service reporting and documentation. Moving on to Slide 6 and our platform expansion successes in the quarter... In January, we acquired Allovue, an innovative advanced budget management, planning, and analytics SaaS startup, specifically focused on the K-12 education market. We are seeing this as a top-of-the-mind need for many districts as they focus on more effective and efficient use of their ongoing budget as the extra COVID-related federal stimulus funds wind down. We have partnered with Allovue over the last few years as a strategic add-on to our K-12 ERP systems. Allovue also allows us to expand our reach into the broader K-12 finance software market as it integrates with other ERP systems. We are excited to add the Allovue capabilities to the PowerSchool solutions and analytics platform, so we can provide even more comprehensive analytics that include financial planning, as well as enable districts to create more accountability and transparency by seeing the education improvement ROI of their budget investments. Our international expansion initiative made further strides during the quarter, also shown on slide six, with a great international win with Ma'arif Education in Saudi Arabia, which is a great case study on how PowerSchool can land and expand with our platform in international markets. Ma'arif already uses nine PowerSchool solutions for the international schools, and in the quarter, they added two of our recent innovations, Connected Intelligence and MyPowerSchool. Ma'arif also expanded the rollout of the PowerSchool platform to 13,000 additional students in their national schools, leveraging the localization framework and the right-to-left translations we have built for the Middle East region. We continue to expand our international reach in Q4 by signing four additional channel partners, all of which are strong technology resellers and integrators focused on the Latin America region, a strategic growth market for us, given our highly successful nationwide Schoology rollout in Uruguay during the pandemic. With these four, we finished 2023 with 14 new international channel partners ahead of our goal of 12. Also, during the quarter, we hired a general manager for our international efforts, who has a strong background in global enterprise sales and operations. Our focus to 2024 will be to onboard our resale partners, sign on new ones, continue expansion with the growing global customer base, and develop sales opportunities and pipe as we build towards our goal of having an international business that contributes 10% of our revenue by 2028. Turning now to our innovation momentum on slide seven. As we shared at our Investor Day in September, one of the biggest growth opportunities, which significantly expands our TAM to $100 billion, is providing a personalized education for every student journey. With the advancement of generative AI, we now have the ability to personalize education at scale and provide conversational, adaptive, and tailored engagement for everyone in the education ecosystem: teachers, administrators, parents, and students, all of whom contribute to the successful education outcome. There is a weakness in the generalized AI technologies and standalone supplemental AI tutors in that they don't have the details of what the individual student needs are, the context of what's happening in the classroom and with the homework, nor the access to the daily engagements a student has with all the personas. With us being the most comprehensive K-12 platform in the market, we at PowerSchool have solutions that process and understand all the key elements in education, including the student, classroom, school, teacher, and district operations. As the most pervasively deployed education platform in North America, we are interacting with all the personas in education millions of times per day. Combining these unique differentiator has resulted in our very exciting, recently launched, comprehensive, personalized AI platform for K-12 education, PowerBuddy. PowerBuddy is an AI assistant for everyone in education ecosystem, students, parents, teachers, district administrators, and even counselors. As the conversational AI tool that utilizes K-12 and district data, PowerBuddy changes every element of education engagement and enables personalized and highly effective support for everyone. For students, PowerBuddy is a personalized digital helper and tutor that knows their curriculums, grades, homework, areas of improvement, learning styles, interests, and more. For instructor, PowerBuddy is a teacher assistant that can help create lesson plans and Assessments. Parents can leverage PowerBuddy to inquire about their child's performance and receive personalized resources. District administrators can use PowerBuddy as a virtual data analyst that can efficiently access district performance information by talking to their data. PowerBuddy is an AI that will be integrated to each product across our platform, so it efficiently and seamlessly brings AI to every customer through the products they already use. On slide seven, you will see a link to a video that showcases PowerBuddy and how it will be used by our platform, various personas and use cases. To make it affordable for every district and enable phased adoption, we will be offering PowerBuddy for individual use cases and products like Assessments, learning, insights, communication, content creation, college and career readiness, teacher coaching, and other use cases, with the ultimate goal to launch PowerBuddy for personalized homework that will be available to both districts and individual families to support their child. We have already started monetizing our AI platform. PowerBuddy for Assessment to create test questions and passages using generative AI has been purchased and adopted by districts representing over 50,000 students, and we already have a strong pipeline for future opportunities. Our recent launch of ContentNav, which utilizes AI to provide a centralized, dynamic, and easy-to-explore repository of digital instruction content for all grade levels and for a wide variety of PowerSchool districts and external sources, is in the market now with deployments with several districts with over 500,000 students and $ millions of opportunity in our pipeline. We are further enhancing that solution to leverage generative AI to help build original curriculum, content, class project ideas, explanatory text, and sample stories and passages. We're also seeing phenomenal interest in the beta test for other PowerBuddies, including PowerBuddy for Learning, which is integrated into Schoology, and PowerBuddy for Insights. Many of these PowerBuddy solutions are scheduled for launch in the summer and the winter of this year. Our data-as-a-service solution, Connected Intelligence, is the foundation of the safe, secure, customizable, and effective usage of our AI. We are generating very strong sales and demand for our Connected Intelligence Data Lake platform for AI. K-12 organizations like Epic Charter and Challenger Schools are using Connected Intelligence platform today to create custom AI models for different use cases. We're launching a campaign to allow districts to get ready for AI with Connected Intelligence and PowerBuddy for Custom AI, which allows customers to create their own chatbots with custom datasets such as district handbooks, guides, and other resources for parents, communities, and internal staff. We are seeing this as a pivotal moment in K-12 education and for PowerSchool. PowerBuddy has the potential to completely transform education globally, and how every persona engages and does their daily function in K-12. We are moving to an AI-first innovation investment philosophy, leveraging personalization and conversational elements in all of our new innovations. Our platform of 20+ solution is unmatched in the industry and provides us a unique and large opportunity to integrate our powerful AI for K-12 education capabilities into each of our products to generate new streams of revenue. It creates many additional monetizable products that add $30-$50 of TAM per student initially, and a lot more as we move into providing integrated content and services to districts and families. We have a significant competitive advantage to achieve this growth and further expand our overall differentiation and business model. All this customer, product expansion, and innovation momentum I shared sets PowerSchool up very well for 2024. We are confident of our durable financial model to drive double-digit revenue growth, consistent margin expansion, and free cash flow generation. We continue to be the leader in our category and a best-in-class vertical SaaS company with a clear path to a Rule of 50 profile. With that, let me pass the call over to Eric to cover the financial performance and guidance. Eric? Thank you, Hardeep. We had a great quarter, as Hardeep outlined, and we exceeded almost all of our financial objectives, delivering profitability above guidance with revenue growth of 13%. Both revenue and adjusted EBITDA were significantly ahead of our initial guidance that we provided at the start of the year. This performance gives us confidence in our 2024 guidance of double-digit revenue growth and continued margin expansion. For the full year 2023, our top line grew 11%, while our adjusted EBITDA margin expanded by 210 basis points to 33.2%. We achieved all of this while expanding our international presence, acquiring and successfully integrating SchoolMessenger and Neverskip, and investing in game-changing innovations that will help make personalized education a reality. A summary of our results are shown on slide eight. Fourth quarter total revenue came in at $182 million, up 13% year-over-year and in line with our guidance range that we provided on our last earnings call. Full year 2023 revenue was $698 million, representing a growth rate of 11% for the year. Fourth quarter subscription and support revenue grew 16% year-over-year and accounted for 90% of total revenue in the quarter. For the year, subscription and support revenue grew 10% and represented 86% of total revenue. Our services business generated revenue of $15 million in the fourth quarter, flat year-over-year. For the full year, our services business grew 3% year-over-year. The moderation in services growth was expected and is due to us accelerating our implementations and driving more efficient deployment cycles, which deliver quicker value to our customers and ensure retention over the long term. Revenue from license and other, which relates mainly to our third-party and licensed revenue, was $3 million in Q4 and was down year-over-year due to higher licensing activity in the prior year. Full- year L&O revenue came in at $25 million, representing a 48% increase over the same time period last year. This increase was due largely to upfront license fees from Los Angeles Unified School District and hardware revenue associated with our Puerto Rico Department of Education deal. We ended 2023 with an annual recurring revenue balance of $701 million, an increase over the prior year. The strong performance was driven by the contribution from SchoolMessenger, new logo ARR growth, which was over 50%, continued cross-sell and up-sell, and our typical contracted price increases. Our net revenue retention rate, or NRR, came in at 106.7%, representing a sequential decline of 50 basis points from Q3. This decline was due to the timing of large bookings, specifically the Unified Insights win with the state of Alabama in Q4 of 2022, which rolled off of the trailing 12-month calculation and the movement of the Indiana Department of Education deal from Q4 into January. As we've discussed in prior quarters, large deals continue to be very strategic and important to us. In my operations capacity, given the variability that these large, complex arrangements can create, I've been working with our services team to accelerate our implementations, which improve the time to value for our customers and lead to continued cross-sell opportunities, as well as quicker revenue recognition. Adjusted gross profit for the quarter came in at $129 million, with a 70.8% margin, representing a 130 basis point year-over-year improvement. For the full year, adjusted gross profit reached $491 million, or a 70.4% margin, representing a 230 basis point improvement over 2022. We continue to benefit from greater operational scale and continued process efficiency improvements. Looking at operating expenses, fourth quarter non-GAAP research and development expense came in at $24 million, representing 13.2% of revenue, compared with 13.8% last year. Including capitalized R&D expenses, the total invested in R&D was 18.6% of revenue, compared with 18.9% in the prior year. On a full year basis, non-GAAP R&D expense declined 3% to $87 million, representing 12.5% of revenue, compared with 14.4% in the prior year, an improvement of 180 basis points. Including capitalized expenses, the total invested in R&D was 18.1% of revenue, a 280 basis point improvement over 2022. Non-GAAP SG&A expense increased 22% year-over-year in the fourth quarter to $45 million, representing 24.9% of revenue, an increase of 190 basis points year-over-year, in line with our long-term financial framework. The increase was due largely to higher sales and marketing investments around international expansion and increased North America sales coverage across our expanded product portfolio. Non-GAAP SG&A expense for the full year 2023 increased 19% to $171 million. Our fourth quarter adjusted EBITDA increased 12% to $59 million, representing a 32.6% margin, and exceeded the high end of our guidance range by $1 million. Full year adjusted EBITDA was up 18% to $232 million, representing a 33.2% margin, which was 210 basis points over 2022 and 70 basis points higher than the original guidance we provided at the beginning of 2023. Non-GAAP net income in the fourth quarter was 17 cents per fully diluted share, compared with 27 cents per diluted share in the same time period of the prior year, largely due to higher interest expense and non-cash tax expenses. Full year 2023 non-GAAP EPS was 82 cents, compared with 85 cents we earned in 2022. Fourth quarter free cash flow was $32 million, representing a margin of 17.7%. Full year free cash flow grew 25% to $130 million, reaching a margin of 18.6%, a 210 basis point year-over-year improvement, and a record free cash flow margin for the company, driven by improved working capital and lower capitalized product development costs, which helped offset higher interest expenses. Moving to the balance sheet, we ended the quarter with $39 million in cash and equivalents impacted by the acquisition of SchoolMessenger. Net debt leverage at the end of the year was 3.4x. We expect our net debt leverage to be in the 2.5x- 3.0x range by the end of 2024. This debt level provides us ample opportunity to continue our strategy of acquiring strategic assets that are accretive to our financial profile and help us build an even stronger platform for our customers. As shown on slide nine, for the full year 2024, we expect total revenue to be in the range of $786 million-$792 million, with a midpoint representing a 13% year-over-year growth rate. This guidance assumes stronger S&S growth, the most strategic part of our revenue. License and other revenue will be returning to 2022 levels, and our services revenue is expected to be growing in the single-digit range. For the full year 2024, adjusted EBITDA, we expect to be between $267 million- $272 million, representing a 34.2% margin at the midpoint. For the first quarter of 2024, we expect to deliver total revenue in the range of $183 million-$186 million, representing a 16% year-over-year growth rate at the midpoint. For the first quarter, adjusted EBITDA, we expect a range of $56.5 million-$58.5 million, representing a 31.2% margin at the midpoint. Just as a reminder, a lot of our in-person sales and marketing events occur in the first quarter that are intended to drive top-line growth throughout the year. For modeling purposes, we expect full year 2024 capital expenditures, including capitalized software, of approximately $48 million-$52 million, and share-based compensation expense of approximately $80 million-$84 million. Fully diluted shares by the end of the year are expected to be in the range of 203 million-207 million. As we wrap up 2023, we're excited about the business momentum heading into 2024, as it gives us confidence not only in our 2024 guidance, but our pathway to reaching 1 billion+ in revenue by the end of 2026. This concludes our prepared remarks. Operator, will you please open up the line for Q&A? Thank you. Ladies and gentlemen, at this time, we'll be conducting a question-and-answer session. If you'd like to ask your 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, really nice work here. Wanted to start on the AI initiative and just kind of digging in a little bit there. How are the school districts you sort of thinking about leveraging AI at this point? It seems like you guys are going to be rolling out a lot of tools and capabilities, but are you sensing any hesitancy from customers, at least initially, about these initiatives? Is it hesitancy mixed with excitement? I know a lot of your AI solutions are in the very early stages of a rollout, but what are you hearing from your school district customers about their comfort levels? You know, do you think it could take some time here to get some traction? Sure. Hi, Steven, great question. As you can imagine, there is a lot of interest on AI broadly in the market, and K-12 is not immune to that. In fact, we are seeing a lot of interest from K-12 districts about it. In fact, a survey you know showed that almost 60%-70% of the districts are already dabbling with it, whether in you know certain schools, certain regions, or internal within the IT itself. We're seeing the same interest, actually, from our customer base. In fact, we have a webinar, which has almost had 3,000 attendees who are looking at how to get ready for AI. That includes training, but then adopting tools as well. What we are seeing is, especially with the broader need, there's a risk districts are very concerned about, where if they're trying to experiment or they're trying to roll out AI in limited capacity, how do they make sure that their data AI is protected and also the responses they're getting is secure? But one of the differentiation we are bringing is that we are allowing them to bring their AI to the data rather than taking their data to the AI. What I mean by that is, with our data lake platform, with our AI tools, we're actually allowing them to bring all the OpenAI and other LLM models right within their firewall, right within their control, looking at their data, to be able to have and make sure that it still protects the privacy and security. So that's one advantage which districts are really excited about, and that's why we're seeing a lot of interest in our data lake, as well as the whole AI platform itself. Second, what we're seeing, Steven, is a lot of interest that they want to roll out a one holistic AI platform. You can imagine there's a lot of interest in chatbots in multiple areas, from supplemental learning to college planning or other areas, but the problem is that none of those actually have the full context of what's going on in the classroom. So rather than putting these multiple tools, they're looking for us as a platform which can have the full context and allows them to really roll it out in a comprehensive way. And the third, which, you know, the fact that we have such a strong presence of our products across the base, we're able to embed the AI into every element of our product, so they can actually interact with the same products now in a much better way, be able to have a conversational, personalized experience. And that really is driving a lot of interest, whether that's AI within our Schoology, whether it's in our assessment, or whether it's in our parent portal or MyPowerSchool, and as well as Naviance and other tools. So really exciting to see the traction. Even though it's early, we are already seeing customers who have bought it and also tons of interest on our beta that we do expect within this year, we're gonna start seeing a couple of million dollars of revenue on AI products and almost doubling up from there on. Understood. It seems like, yeah, you clearly have a very large opportunity there. As a follow-up, great to see the international channel partnership expansion, especially in Latin America. It seems like you have a lot of tips to the spear there now and a good case study in Uruguay. So how are you thinking about the potential to add to your--y ou know, I know you're gonna be relying on channel partners mostly now, but the potential to add to your direct sales resources in Latin America, what would you want to see before making a bigger investment in direct go-to-market? And on the product side, is there much you need to do to have the product ready to cater to those markets? That's a fair question. So when, when you look at it from a perspective, we wanna make sure that we can expand international, but in a profitable way. We already saw great results. So on our last year effort, we almost grew our international ARR by 50%. What's also exciting is these channels we have established, enabling them, partnering with them, so that they can actually help us, create the broader distribution angle, is what allows us to really scale that, but also in a profitable way. With that said, to your point, we're also looking at direct field investments in, countries like India as well as Middle East, where we're already seeing good traction. We might expand that to other regions as we see those regions kind of really driving the demand. But we do expect that this is gonna be both a channel effort as well as direct markets, where we will have a critical mass. All right, great. Thank you. Thanks, Stephen. Our next question comes from the line of David Lustberg with Jefferies. Please proceed with your question. Hey, thanks so much. This is David Lustberg, going through Brent. I wanted to ask around, you know, the guidance that you guys gave, and is there any way that you guys can, you know, quantify or give some color around how much of the guide is organic versus inorganic, you know, mostly pointed towards the acquisition of SchoolMessenger? Thanks. Yeah. Hey, David, it's Eric. So, yeah, so I think it's important as you think about the guidance, we're super excited around the full year, you know, double-digit growth that we're seeing certainly on the revenue side. You know, what I prepare to my, you know, remarks, you know, hopefully is helpful for everybody to understand as you think about, you know, L&O kind of moderating back to the 2022 levels. So yeah, as you all know, 2023, we had some big strategic items in there, and then certainly the services business, you know, being in the low single digit range from a growth perspective. So you can kind of back into, you know, the revenue piece, which is very much in line with our double-digit growth. So, you know, we're super excited around, you know, kind of how we finish the year, how we're set up for 2024. And then obviously, you know, as we mentioned back in our investor day in September, you know, we're gonna do all of this growth, but we're gonna do it, you know, with the mind of, you know, continuing to expand margins, which is why we're offering up, you know, 100 basis points of expansion. So I think both top line and bottom line, you know, should really see the momentum that, you know, that we have been articulating. There is a good, you know, component of that, you know, continuing to come from the core business, which is very much intact and continuing to drive a lot of the business. Got it. And then maybe as a follow-up, also want to ask on international. You know, obviously, I think last year maybe could be best described as, you know, the ramp-up year with you guys adding a lot of, partners. I guess, as you think of this year, you know, I know you guys don't guide to international growth, but if you just think about the opportunity this year and, you know, how those channel partners that you got last year have ramped, would just be curious to think, to get your views on how you guys are thinking about, you know, how international can look this year, and specifically, you know, the timing of the, the ramp with your channel partners, would be helpful? Thank you so much, guys. Sure. So, David, two things. One, I guess just being off back from Eric's point about it, just to make sure you also notice. I think as Eric was talking about retreading from our investor day, we've been talking about even if you take SchoolMessenger out, we are expecting double-digit growth into 2024, as and what we saw in 2023 as well, factoring the whole software growth as we shared about both the subscription as well as we had some large license deals. So we are still feeling very strong on the core growth, even outside the acquisition. Now, the piece, I guess, on the international, as I mentioned, we, you know, we saw 50% growth in our ARR. We're expecting the growth rates to continue in that-- In fact, for probably even X rate, as we look at both organic and inorganic part in the international. The channel partnerships are definitely shaping up well. We have a lot of activity going on in pretty much every part of the region around it. Our goal would be, is to focus on not just large deals, but actually focus on how just we create more channels into international schools, IB schools, as well as the areas where we can start selling not just our core systems, Schoology, but also bringing our data products. So this is where you would start seeing international just ultra X-rate on that. Our next question comes from the line of Rich Hilliker with UBS. Please proceed with your question. Hi, guys. Can you hear me okay? Yes. Yes. Awesome. Thanks for taking my question, and for all the helpful color today. I was wondering, to hit on SchoolMessenger once more, I was wondering if you could maybe disclose, or, or maybe you did, and I missed it, the contribution to either revenue or ARR in Q4, because I saw that nice ARR growth number, and I was wondering if you could tease that out a little bit more, given we're still early, you know, in that disclosure period. Yeah. So, Rich, and I think, you know, look, similar to all of the other acquisitions that we've made, we really, you know, our strategy is as soon as we acquire these strategic, you know, assets and capabilities, we integrate them into the platform, you know, rather immediately. So, you know, for us to start breaking it apart and kind of, you know, looking at a piecemeal, that, you know, doesn't, it's not the way we go to, you know, way we go to market. And, you know, if you think about just for us, it's really the, the value of the platform that our customers get from us. So, you know, last year, we had kind of given some color around, you know, the you know, kind of think about the ARR and the, you know, call it the $40 million range around there. You know, that probably should be good enough to, you know, for you guys to kind of model through what the impact is. And then, you know, as we mentioned last year as well, we did make some investments, and we are making some investments into the SchoolMessenger platform as we're integrating it in with MyPowerSchool. So you saw a little bit of that last quarter, and then obviously, as we get into this quarter, you'll note that the margins were, you know, down a little bit. But again, that's very much seasonal, with what we expect, because we do, you know, we do expect some continued investments in the, School Messenger platform in Q1, as well as some of our on-site and, sales and marketing events, occurring in the first quarter. But again, you know, I think hopefully that's enough, you know, color to give you guys, you know, some, some ways of modeling it. Yeah, and Rich, just to give you some other data points to Eric's point, we almost did 100+ transactions just on SchoolMessenger in Q4, but a lot of them were bundled with either our SIS or with MyPowerSchool or with our Attendance Intervention. So that's why we, you know, we are seeing a lot of good, exciting stuff. Now, we are even more excited about where the second half, as we are launching that as fully part of MyPowerSchool, with two-way chat, all integrated, along with PowerBuddy, to actually personalize the whole interactions itself. That's where we think that's gonna completely, you know, drive a overall consolidated growth of that entire communication platform. Got it. Okay, that's really helpful. Thanks for that added color there. I also wanted to just quickly touch on the bundle opportunity, the persona-based cloud bundles. I think when we've spoken in the past, you'd mentioned that, you know, you, you've been sort of using this one more product rally cry, right, as you went to market, and customers were increasingly aware of these bundles. So I'm wondering, are you seeing traction yet? Have you tweaked anything on, you know, in the sales organization or incentives in any way as we think about those potentially contributing more and more in 2024 and beyond? Thanks. Yep. Great question. As you know, we almost have now 20+ products, right? Best-in-class products satisfying a lot of different mission-critical elements of the school district. But one of the things we were trying to figure out is that rather than customer having to think about 1+ product, how do we go after personas and allow them to buy multiple products, allow them to kind of fully have automation across all their critical elements? So we launched these 6 clouds, plus our platform components like data as well as comms and AI. And what we're seeing is now pretty much every element of our GTM, from our collateral to our go-to-market, has been now aligned to these clouds. So you would actually have Student Cloud for going with the student services, Personalized Learning Cloud for the instruction. You've got the CCLR for the guidance counselors or MTSS for the counselors, the whole Student Success Cloud for the accountability, and similarly, educator effectiveness and, you know, Finance Cloud. So what has allowed us is to now is really cross-sell more effectively within clouds, make it simpler for our customers to buy products so they can buy more additional products together, as well as also being able to have better relationship with each of the personas. And that strategy is working well. So in fact, pretty much now every element of our sales actually leverages the cloud go-to-market. Yeah, I think, Rich, the one thing I would say, just like Hardeep said, if you think about the cloud bundles, it's just really kind of focused the team in terms of the way they go-to-market to each persona, right? So it's a much more effective and efficient go-to-market motion. Got it. Okay, thanks. 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. Appreciate it. Thanks. Hardeep, maybe. Hey, Hardeep, maybe just to start with you, congrats on the state-level contract with Indiana. You've actually had several state-level deals or wins like this in recent quarters, and so maybe a quick question there is, what product families are these deals sort of gravitating towards? And just to clarify, that's a deal that will contribute to Q1 ARR. That actually did not help you in Q4. Is that right? Yeah, that is right. That did not help the Q4. In fact, I think as we've talked about some of the services elements, so it also had a little bit of an impact on our Q4. But even though we have talked about these strategic deals, have the phenomenal opportunity here, as you mentioned, is if you look at the nine or ten quarters, we've got significant, state opportunities pretty much in every quarter. And we even our pipeline actually looks pretty exciting. You actually took from a perspective, we see this as a broad range. This was a special deal. Florida, what we did last quarter was around the talent recruitment. We've seen a lot of analytics interest. We've also done this, opportunity in Puerto Rico. We do see these large deals to be very strategic because not only it proves that we are best in class, allows us to replicate that not just to the state, but large districts and other value. In fact, one of our big focuses to, as we focus on a lot of strategic deals over the last year, we're gonna start really gearing up our sales expansion so we can start bringing that same capabilities to enterprise and inside. In fact, just in the last 12 months, we have done almost close to 3 deals, which are $10 million plus. Just shows you that kind of traction we have not seen before. So these are very exciting opportunities, but they do have, to your point, some revenue and implications which move it on, but ARR also, Indiana, is gonna come in Q1. Got it. That's super helpful. Eric, maybe for you, I was wondering if you could just dig a little bit deeper into the services delivery aspect that, that you touched on in your prepared remarks. I mean, it sounds like you're delivering just faster time to value for the customer, and I think that's coming through in sort of the services revenue guide for next year. Maybe the question is, what's driving maybe that, that new approach with services, and how do you think about that services business, you know, kind of longer term? Does that make sense? It does. It does. So I think many of you know, I've actually taken responsibility for the services business for about a year now. One of the things that we did was we actually restructured a lot of the work packages and the teams that were doing the work. So what you're seeing is, you know, increased productivity. You're seeing a lot more of the same type activities being done by groups of people versus spread across many, many teams. So the result of that is actually, you know, quicker operational velocity, right? It's getting the customer implemented quicker and certainly time to value, as well as it's enabling us to actually recognize the revenue quicker. The implication of that, right, is, obviously, we're getting much more efficient, but I would also encourage you to take a look at our margins. Our margins are up in 2023 versus 2022, and a lot of that really has to do with the efficiency of how we've reorganized a lot of these teams. So, I'm super proud of the work that the team's doing, and, you know, look, they're gonna continue to be very strategic to our customers because they're, they are what enables our customers to get the most value out of the technology. So it's gonna continue to be a, you know, a big part of the value proposition, and we're gonna continue to focus on how fast we can, you know, get a lot of the products in. You know, I think a good, a good, example of this was, you know, when we did Puerto Rico. I mean, we did one of the largest SIS implementations across 270,000+ students in, like, 6.5 months, which is never been done before, and the team did it with a, you know, huge amount of quality in there, too. So, so stay tuned. So yes, you'll see less--you know, you won't see the revenue growth as high, but again, you'll see continued, you know, strong margins as well as, you know, we'll get, the revenue recognition quicker, and that obviously helps on the subscription side as well. Seems like a nice trade-off. Thanks very much. Appreciate it. Yeah, thanks, okay. Our next question comes from the line of Brian Peterson with Raymond James. Please proceed with your question. Hi, gentlemen. Thanks for taking the question. I just wanted to hit on the SIS market a little bit. I know that's a, the big part of the product portfolio. Love to understand maybe how that performed through 2023, and, and how does the pipeline of SIS deals look as we head into 2024? Sure, Brian. Again, I think as you said, SIS is very strategic, right? We have not only its biggest part of our business, it's also the most strategic when it comes to school district. Allows us to cross-sell, especially as we are talking about the AI platform and data platform. Having those integration definitely gives us even a bigger leadership opportunity to be able to do that. SIS, actually, when you look at the Student Cloud, it actually grew double-digit for us in 2023, and we are expecting that to continue to do that into 2024 as well. Their pipeline looks pretty healthy, both in the U.S. as well as international. So that's great to hear. And I just maybe a separate question on the families monetization. I know you have an embedded opportunity, given your presence in all the school districts, but what kind of sales and marketing effort are you guys thinking about potentially making as you kinda broaden the monetization opportunity? Any perspective there? Thanks, guys. Yeah, excellent question, Brian. So as we've talked about with the PowerBuddy, right? So imagine PowerBuddy having the ability in school districts to be able to roll out for parent engagement, for student engagement, and driving any help they need on homework, for teachers to be able to create lesson plans, for counselors and students to be able to understand better on the career and college path. It's a very pervasive AI system, which allows us to not only support the school districts, but now take that one level right within the families' engagement itself and providing families with additional support that they're interested in. So there is a strong opportunity for us to even commercialize that into a whole B2C with the families. Our first focus is, again, on the districts. That's where, as we talked about, PowerBuddy is almost adding, close to a, you know, $2 billion of TAM just within our base. But as we take it to the B2C opportunity, and also being able to think about us like a Netflix of education, where we can provide the right content and services and tools right within our AI system to the families, and allows us to kind of go after even, you know, $100-$200 per student TAM in, in a consumer world. So that is what really gets us assigning to almost a $100 billion TAM. Good to hear. Thanks, Hardeep. Thank you. Our next question comes from the line of Ryan MacDonald with Needham and Company. Please proceed with your question. Hi, thanks for taking my questions. Hardeep, maybe first for you, you talked about, in your prepared remarks, about the AI and K-12 creating this, incremental $30-$50 of TAM per student. Can you talk about, today, how much of that $30-$50 are you going to market with today in terms of, driving incremental sales? And then how should we think about what part of the budget that, that incremental $30-$50 of TAM per student comes from, from districts today? Is it sort of new, pockets of budget potentially, or, or what would you, I guess, be replacing, to sort of unlock this incremental opportunity over time? Thanks. Sure. When you look at from a perspective, the products we've already launched, as I shared in my prepared remarks, was like our data lake with the AI platform, our, you know, PowerBuddy for Assessment, so teachers can create quizzes and everything, as well as our ContentNav, which we are further enhancing with the ability to even create, curriculum and additional content. So think about that could to be somewhere in about range of $8-$10 is what we are already monetizing and selling to our customers now. By end of this year, we expect this to almost grow to $30-$50, depending upon the size of the, the volume of the contracts, the, the number of students. So we are trying to monetize all the elements. Now, the reason we are trying to do this in chunks is that even though it's the same platform, it has the full context of the entire student, but we are allowing districts to be able to adopt these things in a chunk. So that way, they don't feel like having to secure a big budget. Compare that to a Khanmigo or others, where, you know, they might have to spend $30-$50, right? To be able to take help on that. So that's kind of our differentiation, that we can easily embed them into the tools they are using, adopt it in chunks, but still have the benefit of the full platform. From a budget perspective, we see this both within the IT budget, because they're already providing data elements and everything to enable the different elements, but more so from the fact that this helps take all the investments they are doing on tutoring, on content, on interventions, and make it more surgical so they can actually reach more students and help them on the needs, what they have, as well as being able to engage with parents and support teachers better. Super helpful color there. Maybe, maybe just, piggybacking off of that, you mentioned sort of the tutoring opportunity inherent with it. As you look at going to market in sort of, in the early days this year, is there an ability to access, some of the remaining pools of the ESSER funding with, maybe some of the PowerBuddy, applications or use cases this year, to maybe pull in some of that sort of, last, or final spend before it needs to be allocated? And then, just on ESSER funding, generally, I know it doesn't obviously impact the business directly too much, but are you seeing any, early days of changes in prioritization, within the districts and schools for the upcoming selling season, given the fact that they know that they need to sort of prioritize and allocate that pool of spend first before maybe, you know, paying closer attention to sort of the core budget? Thanks. Yeah, I think there's a mix of everything what you're saying. But as from our perspective, as we, you know, that our solutions are basically recurring subscription-based, so they have to secure the dollars for them from their normal budget, right? They typically don't use the ESSER. But with that said, as we have said, sometimes if on an implementation, they might use a one-time element. So we're not seeing that to be, you know, any major change in our buying patterns. We do see that there is a Behavior change within districts around what they need to spend on from a ESSER perspective, those elements to be prioritized and other. You are absolutely right. Some of the pieces we are selling on our data and PowerBuddy does allow us to be more so, allow them to spend these dollars more surgically. So from that perspective, we do see a role to play in helping these districts spend their ESSER dollar better. And especially with all of your acquisition, we are also allowing them to manage their ongoing budgets better and be able to tie that to the ROI as well. So that's why we do help these districts on that budgeting and planning. Thanks again for the color. Our next question comes from the line of Koji Ikeda with Bank of America. Please proceed with your question. Yeah. Hey, guys. Thanks so much for taking the questions. I wanted to ask you a question. You know, kind of in the commentary in the prepared remarks, you talked about consistency in the results of the IPO, you know, meeting and beating your guide. And I do appreciate that consistency, but really thinking more about the beat side on the revenue. It seems at times deal sizes or deal cycles and NRR can be volatile, which can put a damper on upside potential. You know, just thinking about the EdTech vertical, I was under the assumption that deal cycles could be a bit more predictable and seasonal within this category. But maybe thinking about your expanding product offerings, you know, larger deal sizes and going more international, it should require us to think about the predictability a little bit differently. Can you help us understand some of the puts and takes there, please? Yep. So, Koji, it's Eric. So I think, you know, and we've had several large deals, whether it's LAUSD, whether it's Puerto Rico, and now Indiana as an example, right? You know, one of the things we've consistently said is what we're not gonna do is we're not gonna try to artificially time a deal, and, you know, just to get it into a particular quarter, right? Because a lot of times when you do that, it means you're gonna be doing some sort of unnatural pricing and discounting, et cetera. So, these deals are large, they're strategic, and, you know, when we've got line of sight to a large deal, right, it's just a matter of sometimes there's, you know, a lot of processes on the customer side, especially when you're talking about some of these state deals. You know, they can have up to 30 different approvals required there. A lot of that, which is out of our hands in terms of the timing of it. You know, Indiana is a perfect one, right? I mean, we were very optimistic that it was gonna close in Q4, but then as you know, as you kind of see, as it progresses through the approval cycle, sometimes the approvals take a little bit longer than anticipated. We knew we had the deal; it's just a matter of timing. So, what I would just say is, you know, as we've said in the past, really kind of focus from our standpoint on the full year and, you know, what we're committing to from a full year perspective. And, look, when there is deal variability, we're obviously gonna articulate it and articulate the impact to it. I think it's also important to you know, kind of think about, as you think around something like Indiana, the impact of that, had that closed in Q4, right, our net, you know, revenue retention would have been 100 basis points higher than where it ended up being. So it would have actually shown a 50 basis point sequential improvement versus going down by 50 basis points. So, again, it just kind of gives you the magnitude that it will have on the metrics. And, you know, what Hardeep and I have committed to is being very transparent around, you know, the you know, some of the ins and outs of these deals. But I mean, again, we don't wanna get into a spot where we're just trying to force fit a deal into a particular quarter. It's just not good for, you know, it's not good for the, the, the business in terms of trying to, trying to do that from a discounting standpoint. Got it, Eric. That's super helpful. And just one follow-up here. Fourteen channel partners to finish the year ahead of the goal of 12. Is 14 enough to hit your 2024 revenue targets, or should we think about, you know, 14 expanding to a certain level and to reach the revenue targets? And then is there some way to think about maybe a stretch goal for partners or the number of partners that could be available for PowerSchool to partner with over the next several years? It's a fair question, Koji, and we, we're not putting an artificial number to it. So it's more actually driven by how good our coverage in the markets where we have already product solutions in the target, and do they have the right access and ability to be able to sell that? So it's more about coverage than the number. There will be more partners, absolutely, but at the same time, it's also the quality of the partners. We are not going with the approach of let's have 100, 200 partners and then see if anybody sells. We gotta--if we are investing these partners, we are driving them to have the growth, and we believe that, you know, we will, we can continue to providing the, the guidance as we've given it, that this should become a material business in the next few years. Got it. Thank you so much. Thanks, Koji. Our next question comes from the line of Joe Vruwink with Robert W. Baird. Please proceed with your question. Great. Hi, everyone. Thanks for taking my questions. Maybe just one clarification to start, and it's on the core organic performance in subscription and support, and something I think, Hardeep, you actually mentioned in a prior answer. So just to be clear, in FY 2024 and the guidance you've provided, that does entail, organic growth in the double digits, and that rate of growth in 2024 is actually gonna be stronger than where FY 2023 finished. Is that all an accurate statement? Yes, that's absolutely accurate. And, Joe, the thing that I think is also important is, as you know, we've kinda talked about, you know, LAUSD being a big, you know, strategic deal, right? If you were to look at the, you know, subscription and support, and then also kind of account for what we're calling our strategic software activity, that being a very strategic, software transaction, we were also in the low double-digit growth for 2023. So yes, absolutely, and you see that pick up even a little bit more, as we get into 2024. Okay, that's great. Thank you. This next question is maybe gonna be guilty of apples and oranges analysis, but I'll give it a try. So at your Investor Day, I think the comment was made that AI products, in terms of the revenue potential to PowerSchool, that could approach maybe $100 million or so in the midterm horizon. You know, today you're talking about a $2 billion TAM associated with these products. Obviously, when I think about your product suites, they operate at very high market share, you know, much higher than the simple math here would be at maybe a 5% share of the TAM as it's being defined. I guess, what's your reaction to that analysis? Are you maybe just being pragmatic, and you don't wanna get ahead of yourself 'cause it is super early, or is there some embedded observation about maybe the uptake of AI products in the K through 12 setting you're trying to factor in? Yeah, I think you're right. We are trying to be pragmatic, make sure that we are able to get the early, you know, what we are seeing, early interest. Don't let it kind of get us ahead of ourself. We do want to kind of launch all these Power Buddies, being able to start showing the value, which we believe is tremendous. In our, as I mentioned in my prepared remarks, the in K-12, especially think about student time, teachers' time, principal times, parents' time, it's so valuable. And these AI tools, the conversational and personalized element, allowing them to engage proactively with the right persona, changes everything in education, of how these products are built, how all our products are integrated, and how they are actually communicating. That's why you see such a phenomenal, big opportunity here, and our districts see this, our personas see it, and we do expect this to be big. This is the whole reason why we are-- you know, if you think about from a profitability compared to our competitors, we've been investing significantly in R&D, almost with our capitalized R&D to almost $40 million-$50 million, you know, and that has been broadly around the data and AI platform, which allows us to really invest in kind of transformation element in personalization that we have been counting on, and we now see that actually start getting real and being able to start monetizing that. That's great. Thank you very much. Our last question comes from the line of Callie Valenti with Goldman Sachs. Please proceed with your question. Hi, this is Callie Valenti on for Gabriela. First one for me is, I wanted to follow up on what you said before and kind of the idea of being the Netflix of education. If we think about the content side of that, how do you think about partnering with versus acquiring an asset potentially on that content side of things? Yeah. Hi, Callie. You're absolutely right. It's both from a, just kind of think about a Netflix model or a Prime or a HBO model. It's both about, you know, having a partnerships with a lot of strategic content providers, being able to provide the right content and services within the context. So imagine, based on a kid's need, you're providing the right content, which has the most efficacy to support that child, as well as being able to provide services like tutoring targeted to that child's need. Because we have the system of engagement with them, right? We have the intelligence and context. So this is both partnership as well as, in some cases, acquisitions, which will allow us to kind of have those more targeted content as well. That makes sense. Thank you. And second one for me is, you kinda called out a very impressive new logo, new logo, like, ARR growth number. Curious, like, what products are you seeing drive new logo growth the most? Is that just SaaS, or are you seeing some of the data products via Connected Intelligence? And then also just any trends you would call out in new logos in international markets versus in the core North America market. Pretty, pretty balanced in terms of most of our product. I think the same products we've talked about, which are seeing very good growth. Data products, of course, the student, you know, we're selling data products even when they're not our customers. We are also seeing, again, Student Cloud continues to do very well. Talent products are doing exceptionally well. And even things like our Attendance Intervention and all that is actually creating new logo opportunities. And then, it's very reflective of our market share, with international being a little higher on the new logos as well. Okay. Thank you. Great. Thanks, Callie. That concludes our question and answer session. I'd like to hand it back to Hardeep Gulati for closing remarks. Thank you, everyone. I appreciate everybody staying for this earnings call. As Eric and I shared, this has been a very exciting quarter as well as an exciting year. Not only we recorded double-digit growth, we are also guiding to a double-digit growth, which just shows you the robustness of this business model as well as our platform. All the differentiations in terms of being the most comprehensive platform, both in terms of being able to sell to different needs of the customer, to be able to have the diversified platform, so it provides the stability, being able to secure larger deals, as well as being able to use our innovation to continue performing with the double-digit growth, both within U.S. as well as internationally, is what's exciting about our business, and we appreciate everybody's support and looking forward to an exciting 2024. Thank you, everyone. 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.