PowerSchool has reached an agreement to acquire Schoology, a provider of learning management systems with a sizable footprint among K-12 schools and districts.
If approved, the pending acquisition would mark the latest puzzle piece that PowerSchool has purchased this decade. Founded in 1997, Powerschool was first bought by Apple in 2001, and then by Pearson in 2006. The publisher sold the PowerSchool to private equity firm Vista Equity Partners in June 2015. Onex, another private equity firm, invested in PowerSchool in 2018 and shares equal equity ownership with Vista.
Since 2015, PowerSchool has acquired eight companies. Through these deals, the company has expanded its product suite beyond its original K-12 student information system offering to assessment, enrollment, special education and talent management services. Schoology would be PowerSchool’s second purchase of a learning management system (LMS), after it acquired Haiku Learning in 2016. Haiku has since been rebranded as PowerSchool Learning.
Neither the financial terms of the deal nor its expected closing date were disclosed in the announcement. Executives from both companies were unavailable when reached by EdSurge (but we will update the story with additional details and commentary when available).
The two companies previously partnered in 2017 on product integrations that allowed users to more easily access and share information across both systems.
The pending deal would combine two established companies with large customer bases. According to the press release, PowerSchool’s tools are used by roughly 45 million students, and Schoology reaches 20 million users. Given their respective footprints in the U.S. K-12 market, there is likely a sizable overlap among users.
Data from LISTedTECH, an education market research firm, shows that PowerSchool is by far the most commonly used SIS, claiming roughly one-third of the market in U.S. and Canada.
In a crowded LMS field, Schoology has roughly a 17 percent market share in small to mid-sized districts, and a 14 percent share in large districts that serve more than 6,500 students, according to the same data source. Schoology trails Google Classroom, Canvas and Moodle in terms of adoption in large districts, but is the only one of the four that offers a paid offering focused on K-12. Canvas and Moodle are also widely used in higher education, and Classroom is a free tool with fewer functionalities.
K-12 LMS market share in U.S. and Canada. Source: LISTedTECH
Even in third and fourth place, Schoology holds unique bragging rights. While Instructure, the developer of Canvas, has reportedly never lost a higher ed customer, “our data showed that two K-12 districts became the only losses of customers that we are aware of in the history of Canvas, with both selecting Schoology in 2019: Tempe School District and Turner Unified School District in Kansas City,” wrote Jeanette Wiseman, a senior associate at MindWires, an education market consulting and market analysis firm, earlier this year.
From her perspective, PowerSchool’s desire to add a popular tool to complement its flagship student information system makes sense. “They’re taking what is a really successful LMS in the K-12 space, and pairing it with the tool that all teachers have to work with, the SIS. All the data that schools manage ... everything flows into the SIS,” she tells EdSurge.
Wiseman particularly noted Schoology’s assessment and grading platform, which allows teachers and administrators to easily look at students’ performance across different grade levels. “That kind of longitudinal data complements well with a SIS.”
Funneling and connecting data from different education systems is also very much part of PowerSchool’s positioning and strategy to create a “unified classroom,” as its CEO Hardeep Gulati told EdSurge in 2016.
However, the nature of the deal gives Wiseman some pause as to whether Schoology can continue to grow. Private equity-backed transactions are often followed by cuts to make operations more lean and profitable, sometimes involving layoffs. “That’s always the fear when you see this type of deal,” she says, “and what we don’t know is how the final management will shake out, and whether there will be changes.”
Founded in 2009, Schoology has raised more than $57 million in venture capital, according to Crunchbase. Its last influx of funding came in the form of a $32 million Series D round in 2015. At that time, the company wanted to expand into the higher education market but has backed away from that aspiration to focus solely on K-12.