PowerSchool Holdings, Inc. PWSC reported lower-than-expected results in the second quarter of 2024, wherein its quarterly earnings and revenues missed the Zacks Consensus Estimate. The top increased while the bottom line remained flat year over year.

The top-line performance was backed by an increase in subscriptions and support revenues, which was driven by increased sales of its solutions to new customers and by cross-selling and upselling to existing customers. However, an increase in total operating expenses due to a hike in research and development, and selling, general and administrative expenses marred the bottom-line growth. Also, acquisition costs attributable to the acquisition of Allovue added to the downtrend.

Nonetheless, the company is optimistic about its prospects on the back of new product launches and its partnership with Bain Capital.

Inside the Headlines

PowerSchool reported adjusted earnings of 23 cents per share, which missed the Zacks Consensus Estimate of 24 cents by 4.2%. In the prior-year quarter, the company reported adjusted earnings per share of 23 cents.

PowerSchool Holdings, Inc. Price, Consensus and EPS Surprise PowerSchool Holdings, Inc. Price, Consensus and EPS Surprise

PowerSchool Holdings, Inc. price-consensus-eps-surprise-chart | PowerSchool Holdings, Inc. Quote

Total revenues of $191.6 million also missed the consensus estimate of $195 million by 2% but increased 10% year over year. This was backed by 16% year-over-year growth in subscriptions and support revenues to $170.1 million.

Operating Highlights

The total operating expenses of PowerSchool were $119.9 million, up 26.5% year over year, due to an increase in selling, general and administrative expenses, research and development, and acquisition costs.

Adjusted gross profit was $133.6 million, up from $124.2 million reported a year ago. On the other hand, the adjusted gross margin contracted 170 basis points (bps) year over year to 69.7%.

The company’s adjusted EBITDA was $66.6 million, up from $61.2 million reported in the prior-year quarter. The adjusted EBITDA margin contracted 50 bps year over year to 34.7%.

Financial Details

As of Jun 30, 2024, PowerSchool recorded cash and cash equivalents of $20.7 million, down from $39.1 million reported in 2023 end. Net long-term debt at the end of the second quarter was $809.7 million, down from $811.3 million reported in 2023 end.

As of the first six months of 2024, net cash used in operating activities was $137 million compared with $92.7 million in the comparable year-ago period.

Zacks Rank & Recent Consumer Discretionary Releases

PowerSchool currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Choice Hotels International, Inc. CHH delivered lower-than-expected second-quarter 2024 results, with adjusted earnings and revenues missing the Zacks Consensus Estimate. However, both metrics increased on a year-over-year basis.

The quarter’s performance was backed by strong demand trends across the company’s diversified portfolio of brands. This uptrend in demand aided in accelerating global hotel openings, expanding international market reach and increasing the size of its rewards program. Moreover, CHH’s versatile business model and accretive growth strategies ensure the support required to foster its growth trends.

Planet Fitness, Inc. PLNT reported stellar second-quarter 2024 results, with adjusted earnings and revenues beating the Zacks Consensus Estimate and increasing year over year.

The quarter’s performance was driven by contributions from new store openings, higher royalty revenues and an asset-light growth model. The strength in the contributions from these factors was reflected in the year-over-year increase in system-wide same-store sales. PLNT aims to define its growth prospects by capitalizing on meaningful opportunities across the industry, globally. Also, its aim to deliver enhanced shareholder value bodes well.

Wynn Resorts, Limited WYNN reported lower-than-expected second-quarter 2024 results, wherein adjusted earnings and revenues missed the Zacks Consensus Estimate. On the other hand, both metrics rose year over year.

The quarter’s results reflect strong contributions from the Wynn Palace, Wynn Macau and Las Vegas operations, partially offset by softer contributions from the Encore Boston Harbor operations. The company’s continuous investments in expanding the business operations on a global scale along with ensuring shareholder value are commendable. This prudent attitude positions WYNN well for growth in 2024 and beyond.



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