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1、K-12 Education Technology UpdateHarris Williams|Q1 2023Perspectives on K-12 Education Technology 2School OperationsSolutions that provide the mission-critical software and services backbone to the K-12 ecosystem/school administrationSelect Market ParticipantsSources:R,Gallup,GEEKedu,Fact.MRAdministr
2、ators at nearly 100%of U.S.school districts view utilizing technology as mission critical in order to stay at the forefront of an ever-evolving education landscapeSchool districts are saving time and fundsby utilizing technology to more effectively engage with staff,parents,and students,manage day-t
3、o-day operations,and evaluate the effectiveness of learning programsKey TrendsLearning InfrastructureCurriculum and ContentStudent-Driven SolutionsSolutions built to support educators in delivering personalized,engaging,and effective learning experiencesSolutions focused on digitally delivering core
4、 curriculum,supplemental learning,and targeted interventions through digital solutionsSolutions primarily used by students to improve learning outcomes by supplementing in-classroom instructionSelect Market ParticipantsSelect Market ParticipantsSelect Market ParticipantsKey TrendsEducators continue
5、to prioritize creating engaging and dynamic lesson plans that address the growing learning gap brought about by school closures during the COVID-19 pandemicBy 2025,80%of all school districts will be leveraging data analytics/assessment solutions that measure student mastery in order to support learn
6、ing development through personalized instructionKey TrendsDigital learning tools and solutions are becoming imperative in enabling educators to provide differentiated instruction and targeted interventions to studentsWith over 90%of parents expressing a desire to have their child study computer scie
7、nce,and only 45%of high schools are currently teaching the subject,districts are turning to digital solutions to help bridge the gapKey TrendsFlipped classroom models where students utilize digital platforms at home are becoming increasingly popular,with the market expected to grow at a CAGR of 16%o
8、ver the next 10 yearsThe vast amount of online knowledge has made at-home tutoring and study tools a part of students everyday routine,with 70%of students using digital learning tools outside of the classroom weeklyK-12 Education Technology Observations and Key TrendsThe K-12 education technology la
9、ndscape is undergoing an unprecedented period of evolution,primarily driven by the rapid digitization of learning environments3Happening in K-12 Education Tech NowThe COVID-19 pandemic accelerated the adoption of digital learning solutionsThe shift to remote learning during COVID led to significant
10、investments in digital infrastructure supported by pandemic relief fundsGreater comfort with online learning and the heightened focus on learning loss is driving broader usage of digital and tech-enabled solutionsIncreased Government FundingIn response to increased violence in schools,state legislat
11、ures have passed over 115 bills related to K-12 school safety since 2020,addressing a variety of topics from school resource officers to emergency preparedness procedures and resourcesCybersecurity remains a top priority for schools,with ransomware attacks significantly increasing in recent years,im
12、pacting over 1M students in 2020 and 2021Heightened Focus on Student Safety and SecurityOver 90%of school superintendents believe that the student mental health crisis has worsened since COVID,while nearly 80%say they dont have adequate staff to address the increased challengesNearly three out of fo
13、ur schools have reported providing trainings and professional development to staff in order to help them identify growing mental health concerns among school students since 2020Mental Health and Whole Child EducationEducators have rapidly moved to leverage digital platforms that provide insights int
14、o critical gaps in their students knowledge that traditional exams simply do not coverEffective analytics tools can provide a road map for a school or teacher to assess and address these learning gaps and are therefore becoming indispensable in the learning journeyInsights from Analytics and Assessm
15、entsRapid Evolution of Learning EnvironmentsTotal expenditures for education technology have risen to$17.2 billion in 2022,a 5.6%increase from the previous yearSince January 2023,$103 billion has been spent from the total allocated$190 billion in ESSER funding,with over 45%of the funds remaining uns
16、pentSources:Gartner,FutureEd,EdWeek,KFF,EdNote,K-12 DiveFuture of Education Technology Conference(FETC)Insights4Student SafetyPros and Cons of AITeacher Recruitment and RetentionPrivate Equity UpdatePrivate Equity UpdateInterest in the Education Technology and Services sector remains high,and invest
17、ors are increasingly focused on asset quality as measured by sustainable organic growth,scalable margins,and customer health/revenue mixOn the heels of slower deal activity through the second half of 2022,many financial sponsors are exploring both liquidity opportunities and new platform investments
18、 in 2023While debt markets tightened in 2022,the expectation is for gradual loosening over the course of 2023 to support M&A activity,particularly among private credit fundsTeacher Recruitment and RetentionFETC attendees cited teacher recruitment and retention as the number one concern in their loca
19、l district that they would like to see improvedStudent-to-teacher ratios are a major concern,with nearly 44 percent of public schools reporting full-or part-time staff vacancies;total teacher/administrator headcount has decreased by over 300,000 in the past 13 yearsTime ConstraintsNearly two-thirds
20、of teachers cite a lack of time due to workload pressures as a key issue preventing teachers from providing consistent feedback to studentsSeveral point solutions and comprehensive technology platforms have been developed that help to bring efficiencies to the classroom with the goal of improving st
21、udent learning and outcomesTime ConstraintsPros and Cons of AIWith ChatGPTs high-profile launch in late 2022,there was little doubt from educators attending FETC that most of their students have used or seen the new AI technologyGiven that 90%of students have used ChatGPT for help with a homework as
22、signment,teachers are beginning to incorporate AI software into curriculums to work in tandem with traditional educational assignmentsStudent SafetyWith more than 80 percent of schools using electronic notification systems up nine percent since the start of 2022 to alert parents in case of emergency
23、,student safety measures remain of the utmost importanceTechnology is helping educators to foster a safe school environment,in addition to a distraction-free and secure online experience both inside and outside the classroomKey discussion topics among leading education technology companies and inves
24、torsSources:Proprietary Harris Williams Conference Insights,The Graide Network,NCES,Forbes,Washington Post Select Harris Williams PublicationsWhat Were Reading5EY“The use of education technology exploded during the pandemic,with even the most tech-adverse K-12 educators adopting some level of EdTech
25、.Still,there is much work to do to harness benefits such as efficiency,collaboration and individualized education that can come from this technology.”Read the full article here.Wall Street Journal“Traditionally,teachers have measured a students reading fluency by sitting alongside them as they read
26、aloud,timing with a stopwatch and marking places in the passage where a student stumbles.Many of the new and developing tools look to automate that process,letting computers do the assessment work for teachers so they have more time to focus on instruction and grouping students according to level.Re
27、ad the full article here.Exploding Topics“Adaptive learning is a high-tech form of personalized education.Thanks to AI,digital learning interfaces can adapt to students needs in real time,providing the lessons and exercises that are needed to fill in knowledge gaps and reinforce concepts.All at the
28、level of the individual student.More recently,processing power(both in the cloud and on local devices)has become powerful enough to employ AI for this purpose.”Read the full article here.EdSurge“EdTech companies are focused on wooing the district leaders who can push through purchases.Its incumbent
29、on those leaders to get input from teachersrather than relying on vendors sales pitches.The result of leaving teachers out is often a suite of EdTech tools that will sit unused by educators because theyre not helpfulboring,evento students.”Read the full article here.Deal SnapshotOnline Learning:360t
30、raining Highlights Opportunity in Regulated End MarketsProfessionals from the Harris Williams Technology Group and Business Services Group discuss online learning in regulated markets and our recent 360training dealLink to ReadAccess All Harris Williams Insights HereProfessional Education and Learni
31、ng TechnologySector UpdateLink to ReadProfessional and Tech-Enabled ServicesSector UpdateLink to ReadHow the Rapid Adoption of EdTech Is Changing K-12 Education The 8 Most Interesting EdTech Trends of 2022When It Comes to Picking EdTech,Are Schools Listening to Teachers?Can Tech Boost Reading?Litera
32、cy Tools Come to ClassroomsSelect Recent K-12 Education Technology Transactions6Source:S&P Capital IQBuyerTargetBrightBytes is a provider of analytical tools that help educators view how tech spending and use affect student outcomesThis acquisition will help Alphabet transform school district data i
33、nto actionable intelligence that improves the academic outcome and well-being of studentsOctober 2022Purchase Price:Not DisclosedAlphabets acquisition of BrightBytesTargetBuyerLearnPlatform is a provider of solutions that enable educators to manage,measure,and evaluate the effectiveness of their lea
34、rning toolsThis acquisition accelerates the impact of Instructure on schools,universities,and shared partner providers by adding evidence-based insight into inventory,compliance,procurement,and usageDecember 2022Purchase Price:Not DisclosedInstructures acquisition of LearnPlatformBuyerTargetLinkIt!i
35、s a provider of student performance data warehousing,analytics,assessment,and multi-tiered support system solutions to K-12 schoolsThis acquisition will further accelerate LinkIt!s growth objectives,including expanding into additional geographic markets and investing further in product development a
36、nd platform integrationsDecember 2022Purchase Price:Not DisclosedSerent Capitals acquisition of LinkIt!BuyerTargetReally Great Reading is a provider of education solutions and supplemental curriculum focused on developing foundational literacy skills for students in grades K-3This acquisition will f
37、urther accelerate Really Great Readings scalability and growth initiatives through an increased ability and opportunity to serve new and underserved marketsFebruary 2023Purchase Price:Not Public InformationVistria Groups acquisition of Really Great Reading CompanyTargetBuyerAccelerate Learning is a
38、provider of STEM-focused education curriculum and professional development solutions to K-12 students and teachersThis acquisition will further Accelerate Learnings growth objectives and scalability while assisting in expanding upon their existing relationships with their customersFebruary 2023Purch
39、ase Price:Not Public InformationProvidence Equitys acquisition of Accelerate LearningTargetBuyerTeachers Pay Teachers is a provider of an online marketplace that enables teachers to buy and sell original educational materialThis acquisition will further increase IXLs catalog of educator-created cont
40、ent and tools for digital instruction,supplementing a family of globally renowned brands March 2023Purchase Price:Not Public InformationIXLs acquisition of Teachers Pay Teachers-50%100%150%200%50%60%70%80%90%100%110%120%130%140%150%+10.1%+60.7%K-12 Education Technology Public Company Trended Stock P
41、erformance7Source:S&P Capital IQ Note:As of March 1,2023Indexed stock price performance for the period February 2022 February 2023Indexed stock price performance for the period February 2018 February 2023Education Technology PlatformsS&P 500Education ServicesEducational Content and Publishing(9.9)%(
42、10.6)%+29.9%+46.8%+15.6%(29.2)%Public Company Stock Performance Last 12 MonthsPublic Company Stock Performance Last 5 YearsEducation Technology PlatformsEducational Content and PublishingEducation ServicesK-12 Education Technology Public Company Operating and Valuation Metrics8Median EV/LTM RevenueM
43、edian EV/NTM RevenueMedian EV/LTM EBITDAMedian EV/NTM EBITDALTM Revenue GrowthNTM Revenue GrowthLTM EBITDA MarginNTM EBITDA MarginPublic Company Operating MetricsPublic Company Valuation MetricsSource:S&P Capital IQ Note:As of March 1,2023Education Technology PlatformsEducational Content and Publish
44、ingEducation Services15.6%5.9%4.3%9.8%4.1%1.8%10.8%12.9%14.7%20.8%16.6%20.4%2.8x1.9x1.7x2.4x1.8x1.8x21.8x12.5x11.1x12.8x10.2x11.0 xK-12 Administrative Education Technology LandscapeCORE OPERATIONSSISEnterprise Resource PlanningData&AnalyticsAttendance&SchedulingWebsiteAdmissions&Enrollment Parent Co
45、mmunicationIT&Content ManagementTransportation&NutritionSchool Health&EHRSchool SafetyMedicaid ReimbursementCybersecurity&Device ManagementTechnology solutions that manage K-12 administrative needs to support districts,teachers,and studentsStudent&Alumni ServicesWHOLE CHILD SOLUTIONSTEACHER-FOCUSED
46、SOLUTIONSMental HealthSEL CurriculumSpecial Education SoftwareMTSSSEL Analytics/AssessmentCollege&CareerTeacher PD&Alternative CredentialsHR&StaffingTeacher Sourcing&StaffingTeacher Observation&Talent Management9PaymentsTo view full market map,please reach outto the contact listed HEREK-12 Education
47、al Development Technology LandscapeLEARNING INFRASTRUCTURELMSAssessmentsTeaching PlatformsGamified LearningSpecial Education&Assistive TechnologyLibrary ManagementDiversified CurriculumSupplemental Content&CurriculumMathELAFoundationalReadingCodingRoboticsElectives&CTEVirtual Reality&LabsTest PrepEL
48、LEarly Childhood&ElementaryStudy ToolsTutoringVirtual SchoolsTechnology solutions that enhance the learning experience and students skills across a broad variety of functional areas10STUDENT-DRIVEN SOLUTIONSCURRICULUM&CONTENTTo view full market map,please reach outto the contact listed HERETechnolog
49、y Coverage AreasApplication SoftwareInfrastructure&Security SoftwareIT&Managed ServicesSector Coverage AreasArchitecture,Engineering&Construction Education Human Capital ManagementPharma ComplianceGovernment&Public SectorIndustrialLegalReal Estate&Property TecheCommerce&RetailHealthcareOffice-of-the
50、-CFOSupply Chain&LogisticsThematic Focus AreasSaaS/CloudIntegrated PaymentsDigital TransformationAI/Machine LearningContact UsTECHNOLOGY GROUPThierry MonjauzeManaging Director,Group Head +44 20 7518 8901Andy LeedManaging Director (415)217-3420Martin KeckManaging Director (617)654-2104Mat TsuiDirecto
51、r +44 20 7518 8926Ben de FiebreVice President (415)Deep Sector ExpertiseHarris Williams Team Education Technology Experience12Harris Williams is a global investment bank specializing in M&A advisory services.Clients worldwide rely on us to help unlock value in their business and turn ambit
52、ious goals into reality.We approach every engagement with boundless collaboration,pooling expertise and relationships across industries and geographies to uncover the unique story of each company.Energy,Power&InfrastructureTransportation&LogisticsBusiness ServicesIndustrialsAerospace,Defense&Governm
53、ent ServicesHealthcare&Life SciencesConsumerTechnologyDeep Industry ExperienceOffices:Boston|Cleveland|Frankfurt|London|Minneapolis|Richmond|San Francisco|Washington,DCRevenue from repeat clients70%Managing directors promoted fromwithin the firm 83%Year history30+GLOBAL M&A ADVISOR13Sources and Disc
54、losures14Investment banking services are provided by Harris Williams LLC(Harris Williams).Harris Williams is a registered broker-dealer and member of FINRA and SIPC.Harris Williams&Co.Ltd is a private limited company incorporated under English law with its registered office at 8th Floor,20 Farringdo
55、n Street,London EC4A 4AB,UK,registered with the Registrar of Companies for England and Wales(registration number 07078852).Harris Williams&Co.Ltd is authorized and regulated by the Financial Conduct Authority.Harris Williams&Co.Corporate Finance Advisors GmbH is registered in the commercial register
56、 of the local court of Frankfurt am Main,Germany,under HRB 107540.The registered address is Bockenheimer Landstrasse 33-35,60325 Frankfurt am Main,Germany(email address:).Geschftsfhrer/Directors:Jeffery H.Perkins,Paul Poggi.(VAT No.DE321666994).Harris Williams is a trade name under which Harris Will
57、iams LLC,Harris Williams&Co.Ltd and Harris Williams&Co.Corporate Finance Advisors GmbH conduct business.The information and views contained in this presentation have been prepared in part by Harris Williams.This presentation does not purport to be comprehensive or to contain all the information that
58、 a recipient may need in order to evaluate any investment or potential transaction.This presentation is not a research report,as such term is defined by applicable law and regulations and is provided for informational purposes only.Any and all information,including estimates,projections and other fo
59、rward-looking statements,presented in this document may involve various assumptions and significant elements of subjective judgment and analysis which may or may not be correct.Harris Williams has not independently verified,and neither Harris Williams nor any other person will independently verify,a
60、ny of the information,estimates,projections or forward-looking statements contained herein or the assumptions on which they are based.The information contained in this document is made as of the date hereof unless stated otherwise.Harris Williams does not expect to update or otherwise revise this do
61、cument nor provide any additional information,nor correct any inaccuracies herein which may become apparent.The information contained herein is believed by Harris Williams to be reliable,but Harris Williams makes no representation or warranty as to the accuracy or completeness of such information,an
62、d information contained herein that is based on material prepared by others may involve significant elements of subjective judgment and analysis which may or may not be correct.Opinions,estimates and projections contained herein constitute Harris Williams judgment and are subject to change without n
63、otice.This presentation is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular transaction,nor shall this presentation form the basis of any contract.It does not constitute and should not be constru
64、ed as an endorsement or recommendation of any entities products or services.No part of this material may be copied or duplicated in any form or by any means,or redistributed,without Harris Williams prior written consent.EdNoteEdSurgeEdWeekExploding TopicsEYDisclosures and DisclaimersSourcesFact.MRFo
65、rbesFutureEdGallupGartnerGEEKeduK-12 DiveKFFNCESPitchBookRS&P Capital IQThe Graide NetworkWall Street JournalWashington PostAppendix16($in millions)Public Market Operating and Valuation MetricsSource:S&P Capital IQ Note:As of March 1,2023MarketEnterprise%of 52-WeekRevenue GrowthEBITDA MarginEnterpri
66、se Value/RevenueEnterprise Value/EBITDACompanyCapitalizationValueHighLTMNTMLTMNTMLTMNTMLTMNTMEducation Technology PlatformsDuolingo,Inc.$4,479$3,89997.9%47.3%33.4%N/M10.9%10.6x7.9xN/M72.9xInstructure Holdings,Inc.3,5963,92479.9%17.2%9.9%N/M38.8%8.3x7.5xN/MN/MPowerSchool Holdings,Inc.3,1914,28876.7%1
67、2.9%9.7%17.7%32.5%6.8x6.2xN/MN/MBlackbaud,Inc.2,9013,78185.5%14.1%3.4%9.7%30.0%3.6x3.5xN/M11.5xChegg,Inc.1,9632,11541.2%(1.2%)(1.8%)13.9%32.4%2.8x2.8x19.9xN/MCoursera,Inc.1,65188545.9%26.1%14.7%N/MN/M1.7x1.5xN/MN/MLearning Technologies Group plc1,3341,53778.7%166.9%33.0%N/MN/M2.8x2.1xN/MN/MUdemy,Inc
68、.1,32987753.0%22.0%15.2%N/MN/M1.4x1.2xN/MN/MDocebo Inc.1,15194172.0%43.5%27.9%N/M5.3%7.0 x5.5xN/MN/MHealthStream,Inc.77875095.6%3.9%5.2%11.9%20.8%2.8x2.7x23.7x12.8x2U,Inc.6851,56761.2%1.8%2.6%4.7%15.9%1.6x1.6x35.0 x10.0 xNerdy,Inc.31425958.6%N/A19.9%N/MN/M1.6x1.3xN/MN/MSkillsoft Corp.23770920.3%N/M(
69、37.9%)N/MN/M0.8x1.4xN/MN/MTribal Group plc12212949.9%0.1%(0.8%)9.3%8.8%1.3x1.3x13.7x14.6xMedian$1,331$1,23966.6%15.6%9.8%10.8%20.8%2.8x2.4x21.8x12.8xEducation ServicesGrand Canyon Education,Inc.$3,474$3,36993.5%1.6%4.3%29.5%30.6%3.7x3.5x12.5x11.6xStrategic Education,Inc.2,0122,04884.8%(5.9%)4.1%12.9
70、%15.4%1.9x1.8x14.9x12.0 xStride,Inc.1,7751,93989.2%10.1%5.3%11.1%15.9%1.1x1.0 x9.9x6.6xAdtalem Global Education Inc.1,7512,45286.8%N/A(1.0%)24.0%24.6%1.7x1.7x7.1x7.0 xFranklin Covey Co.66362787.1%14.3%11.0%12.7%16.6%2.3x2.1x18.2x12.5xWilmington plc37135598.9%(9.0%)1.3%18.7%23.8%2.5x2.4x13.2x10.2xAme
71、rican Public Education,Inc.19731143.5%73.3%2.5%10.2%10.6%0.5x0.5x5.0 x4.7xMedian$1,751$1,93987.1%5.9%4.1%12.9%16.6%1.9x1.8x12.5x10.2xEducational Content and PublishingWolters Kluwer N.V.$29,256$31,68398.7%7.4%3.4%30.4%32.4%5.4x5.3x17.9x16.2xPearson plc7,9689,15192.2%(0.3%)1.1%15.0%20.2%2.0 x2.0 x13.
72、2x9.7xGraham Holdings Company3,0043,47692.0%23.2%1.5%13.8%7.1%0.9x0.9x6.4x12.2xJohn Wiley&Sons,Inc.2,4673,49078.8%1.1%2.2%14.5%20.7%1.7x1.7x11.7x8.0 xScholastic Corporation1,5791,40996.2%16.9%N/M7.8%N/M0.8xN/M10.6xN/MSanoma Oyj1,5072,39558.5%(2.7%)N/M21.1%N/M1.7xN/M8.2xN/MMedian$2,735$3,48392.1%4.3%
73、1.8%14.7%20.4%1.7x1.8x11.1x11.0 xTotal Median$1,651$1,93979.9%11.5%4.1%13.8%20.4%1.9x2.0 x13.2x11.6xRecent Sector Transaction Detail17Closed DateTargetAcquirerBusiness DescriptionMar-23Teachers Pay TeachersIXLProvider of an online marketplace intended to permit teachers to buy and sell original educ
74、ational materialFeb-23Accelerate LearningProvidence Equity PartnersProvider of solutions and curriculum products that allow teachers to build state and next-generation science standardsFeb-23Really Great Reading CompanyVistria GroupProvider of educational solutions,and supplemental curriculum focuse
75、d on developing foundational literacy skills for students in grades K-3Dec-22LearnPlatformInstructure Provider of solutions that enable educators to manage,measure,and evaluate the effectiveness of their learning toolsDec-22LinkIt!Serent CapitalProvider of student performance data warehousing,analyt
76、ics,assessment,and multi-tiered support system solutions to K-12 schoolsNov-22Double LineLearningMateProvider of data and technology strategy services with a focus on education to governments,school districts,and nonprofitsNov-22Mastery PrepAchieve Partners ManagementProvider of SAT,ACT,and other st
77、andardized test preparation services,by utilizing online classes and bootcampsOct-22BrightBytesAlphabetProvider of analytical tools that help educators view how tech spending and use affect student outcomesOct-22BrainPOPKIRKBIProvider of interactive digital videos,quizzes,and related materials for g
78、rade 3 and above,spanning math to the artsSep-22Blackboard K-12FinalsiteProvider of learning management,web community manager,and mobile communications applications solutionsSep-22Learning OvationsScholasticProvider of analytical insights that allow teachers to review student assessment data and ide
79、ntify room for growthSep-22SchoolInfoEdlioProvider of website management,mobile application,and mass notification solutions for communication between families and schoolsAug-22Pivot InteractivesDiscovery EducationProvider of online science experiment videos to K-12 studentsAug-22Illuminate Education
80、Renaissance LearningProvider of data management system that allows teachers and administrators to access student demographics and assessment dataAug-22Pearson K-12 Italy BusinessSanomaProvider of local online secondary education learning courses/content in Italy specializing in philosophy and litera
81、ture Aug-22BigSISCommunity BrandsProvider of school management and student information system solutions,that unify admission,enrollment,fundraising,and academics functionsAug-22DoodleLearningDiscovery EducationProvider of personalized learning applications focused on math and English to K-12 studentsAug-22Houghton Mifflin HarcourtVeritasProvider of online K-12 core curriculum,supplemental and intervention solutions,and professional learning servicesAug-22FinetunePrometricProvider of AI-assisted assessment and learning technology solutions to the education sectorSource:S&P Capital IQ