INVESTMENT BANKING Q1 2020 EDUCATION

[Pages:19]INVESTMENT BANKING

EDUCATION TECHNOLOGY INSIGHT

Early Childhood // K-12 // Higher Education // Corporate // B2C

Q4 2021

IN THIS ISSUE

Market Update

2

About Us

15

FOR INSTITUTIONAL USE ONLY

EDUCATION TECHNOLOGY INSIGHT

Education Technology M&A & Capital Raising Activity

Number of U.S. Deals by Quarter(1)

Dollar Volume of U.S. Deals by Quarter(1)(2)

Q4 2021

450

400

350

300

250

200

174

150

100

154

50

10

0

10

Q2 '20

411 357

290 269

310

261 195

207 201

153

16 26 Q3 '20

32 36 Q4 '20

39 44 Q1 '21

46 50 Q2 '21

46 55 Q3 '21

Strategic PE - Majority / Sale PE - Minority

387

289

45 53 Q4 '21

387 transactions were announced in Q4 2021, approximately 75% of which were minority PE deals

$20,000 ($ in millions)

$19,480

$18,000 $16,000

$5,430

$14,000 $12,000 $10,000 $8,000

$12,420 $4,810

$13,000

$11,080

$4,960

$6,000

$4,000

$2,000 $0

$1,207 $713 $356 Q2 '20

$3,925

$2,680 $892 $353 Q3 '20

$5,220

$2,390 Q4 '20

$4,691

$3,030 $491 $1,170 Q1 '21

$2,970 Q2 '21

$5,150

$2,880 Q3 '21

Strategic PE - Majority / Sale PE - Minority

$5,510

$3,150 $450 $1,910 Q4 '21

Over $5.5 billion in Q4 2021 in announced transaction value, approximately 65% of which were PE deals

1. Source: PitchBook for the period April 1st 2020 to December 31st 2021. 2. Comprised of deals where the $ amount of investment was disclosed

RAYMOND JAMES INVESTMENT BANKING 2

EDUCATION TECHNOLOGY INSIGHT

Education Technology M&A & Capital Raising Activity

Q4 2021 U.S. Deals by Sector

B2C 2%

Q4 2021 U.S. Deals by Domain

LMS, Classroom & Other Learning Tech

5%

Other 5%

Payments, Tuition Mgmt. &

Commerce 2%

Early Childhood 15%

K-12 45% Corporate 19%

Higher Ed 19%

Admissions & Enrollment

7%

Corporate Learning, Certification & Recruiting

9%

Online Learning 35%

Data Analytics, Assessments & Student

Success 19%

Administrative / School Operations

19%

Q4 2021

Companies focused on the K-12 and Higher Ed markets which comprised ~63% of the transactions announced in Q4 2021

The industry witnessed a focus on Online Learning and Administrative / School Operations domains in Q4 2021, which comprised ~54% of total transactions

Source: Mergermarket; Selected Recent Strategic M&A Activity and Selected Recent Private Equity Activity from the period October 1st to December 31st 2021.

RAYMOND JAMES INVESTMENT BANKING 3

EDUCATION TECHNOLOGY INSIGHT

Q4 2021

Market Valuation Metrics

Education Technology TEV / Revenue(1)(3)

24.0x 20.0x 16.0x 12.0x 8.0x 4.0x 0.0x

20.0x 14.1x

16.6x 12.8x

13.5x 13.0x

13.2x 11.0x

9.0x 8.1x

7.9x 6.7x

7.4x 5.9x

7.2x 5.3x

7.1x 6.8x

7.1x 5.5x

6.8x 6.1x

5.8x 5.3x

2.9x 2.7x

5.1x 4.3x

Docebo Inc. Duolingo, Inc. Tyler Workday, Inc. Instructure Constellation Coursera, Inc. Sylogist Ltd. Oracle

Technologies,

Holdings, Inc. Software Inc.

Corporation

Inc.

2021 2022

ReadyTech PowerSchool Chegg, Inc. Learning

Holdings Holdings, Inc.

Technologies

Limited

Group plc

D2L Inc.

4.6x 4.5x

Blackbaud, Inc.

1.5x 1.3x 2U, Inc.

Education Technology TEV / EBITDA(2)(3)

30.0x 20.0x

26.5x 23.3x

10.0x

25.7x 22.9x

23.4x 21.2x

15.2x 13.6x

21.9x 16.0x

19.1x 15.1x

17.8x 15.1x

17.6x 17.3x

17.3x 15.7x

14.0x 13.8x

0.0x

Constellation Software Instructure Holdings,

Inc.

Inc.

PowerSchool Holdings, Inc.

Learning Technologies Group plc

2U, Inc. 2021

ReadyTech Holdings Limited

2022

Sylogist Ltd.

Blackbaud, Inc.

Chegg, Inc.

Oracle Corporation

Source: CapIQ and Equity Research as of December 31, 2021. 1. Revenue multiples 20.0x are considered Not Meaningful (NM) 2. EBITDA multiples 35.0x are considered Not Meaningful (NM) 3. Omits companies where multiples for both FY2021 and FY2022 are either not available or not meaningful

RAYMOND JAMES INVESTMENT BANKING 4

EDUCATION TECHNOLOGY INSIGHT

Market Valuation Metrics

Education Services TEV / Revenue(1)(3)

4.5x

3.0x

2.8x

2.7x

1.5x

0.0x Tribal Group

2.0x

1.9x

Houghton Mifflin Harcourt

2.1x

2.0x

1.6x

1.5x

John Wiley & Sons 2021 2022

Pearson

1.1x

1.1x

Stride

Q4 2021

0.9x

0.8x

Aspen Group

Education Services TEV / EBITDA(2)(3)

16.0x 8.0x

13.8x

13.4x

9.9x

9.5x

9.1x

8.4x

8.4x

7.9x

7.5x 6.5x

0.0x Tribal Group

John Wiley & Sons

Pearson 2021 2022

Houghton Mifflin Harcourt

Stride

Source: CapIQ and Equity Research as of December 31, 2021. 1. Revenue multiples 20.0x are considered Not Meaningful (NM) 2. EBITDA multiples 35.0x are considered Not Meaningful (NM) 3. Omits companies where multiples for both FY2021 and FY2022 are either not available or not meaningful

RAYMOND JAMES INVESTMENT BANKING 5

EDUCATION TECHNOLOGY INSIGHT

Q4 2021

Public Comparables

Education Technology

Company

Oracle Workday Constellation Software Tyler Technologies Chegg Blackbaud Duolingo PowerSchool Holdings Instructure Coursera Docebo Learning Technologies Group 2U D2L ReadyTech Sylogist

Stock Price 12/31/21

Market Cap

Enterprise Value(1)

$87.21 $237,926 $293,962

273.18

68,905

67,478

1,854.57

39,301

40,092

537.95

22,872

24,064

30.70

4,480

4,419

78.98

3,704

4,225

106.11

4,638

4,098

16.47

2,601

3,741

23.98

3,367

3,689

24.44

3,836

3,041

67.06

2,290

2,078

2.41

1,945

1,924

20.07

1,513

1,425

10.87

606

766

2.84

303

319

10.19

247

238

Mean

Education Technology Median

Revenue(2)

TEV EBITDA(3)

2021E

7.1x 13.2x 7.9x 13.5x 5.8x 4.6x 16.6x 6.8x 9.0x 7.4x 20.0x 2.9x 1.5x 5.1x 7.1x 7.2x 8.5x 7.2x

2022E

6.8x 11.0x 6.7x 13.0x 5.3x 4.5x 12.8x 6.1x 8.1x 5.9x 14.1x 2.7x 1.3x 4.3x 5.5x 5.3x 7.1x 6.0x

2021E

14.0x NM

26.5x NM

17.3x 17.6x

NM 23.4x 25.7x

NM NM 15.2x 21.9x NM 19.1x 17.8x 19.8x 18.5x

2022E

13.8x NM

23.3x NM

15.7x 17.3x

NM 21.2x 22.9x

NM NM 13.6x 16.0x NM 15.1x 15.1x 17.4x 15.8x

Revenue Growth

20A / 21E 21E / 22E

5%

5%

19%

19%

28%

17%

13%

4%

19%

10%

1%

3%

52%

30%

27%

11%

35%

12%

40%

25%

65%

42%

39%

10%

22%

18%

20%

20%

39%

28%

9%

35%

27%

18%

25%

17%

EBITDA Margin(2)

2021E

51% 29% 30% 26% 33% 26% NM 29% 35% NM NM 19% 7% NM 37% 40% 30% 29%

2022E

49% 25% 29% 27% 33% 26% NM 29% 35% NM NM 20% 8% NM 37% 35% 29% 29%

Education Services

Company Pearson John Wiley & Sons Houghton Mifflin Harcourt Stride Tribal Group Aspen Group

Stock Price 12/31/2021

Market Cap

Enterprise Value(1)

$8.30

$6,255

$7,363

57.27

3,178

4,290

16.10

2,062

2,101

33.33

1,381

1,751

1.37

298

296

2.36

59

72

Mean

Education Services Median

TEV

Revenue(2)

EBITDA(3)

2021E

1.6x 2.1x 2.0x 1.1x 2.8x 0.9x 1.8x 1.8x

2022E

1.5x 2.0x 1.9x 1.1x 2.7x 0.8x 1.7x 1.7x

2021E

9.1x 9.9x 8.4x 7.5x 13.8x NM 9.7x 9.1x

2022E

8.4x 9.5x 7.9x 6.5x 13.4x NM 9.1x 8.4x

Revenue Growth

20A / 21E 21E / 22E

1%

4%

10%

6%

0%

5%

24%

3%

7%

3%

22%

12%

11%

5%

8%

4%

EBITDA Margin(2)

2021E

17% 21% 24% 15% 20% NM 20% 20%

2022E

18% 21% 25% 16% 20% 2% 17% 19%

Overall Median

*EBITDA excludes stock-based compensation Source: CapIQ and Equity Research 1. Sorted by Enterprise Value 2. Revenue multiples 20.0x are considered Not Meaningful (NM) 3. EBITDA multiples 35.0x, and EBITDA margins ................
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