Virtual learning companies received a boost from federal money

The two largest distance learning providers – or, more officially, “learning management systems” – have become household names as schools scramble to help students learn online from home, are now fighting to keep their grip as most districts plan to fully reopen for in-person learning in the fall.

School districts across the country have licensed the platforms so their students can connect to virtual classrooms, communicate with their teachers, and submit homework assignments.

Usage increased immediately. Interactions with Schoology’s platform jumped 400% at the start of the pandemic for Schoology, followed by another 600% increase after the state of Texas hired the company to serve all of its districts for two years. Last summer, Canvas made deals with at least 10 states, including Nevada, New Hampshire and Iowa. He claims his website has been one of the 20 most visited websites in the United States in recent months.
The rapid adoption was fueled in part by billions of dollars in federal stimulus funds approved by Congress to help school districts continue to operate during the pandemic. Over the past year, three different federal aid programs sent a total of $ 192 billion in taxpayer money to schools that could be used for a variety of things including masks, cleaning supplies, upgrades. ventilation systems, summer school programs and virtual learning platforms.

The two companies are trying to keep the momentum going and are even expected to go public in the coming months after seeing their revenues increase by more than 15% in 2020. Instructure, the parent company of Canvas, made $ 43 million more than the previous year and PowerSchool, which owns Schoology, saw its revenue increase by nearly $ 70 million, according to SEC documents.

“The K-12 market has grown 10 to 15 years over a 12-month period. Who’s doing the best? From a paid perspective, it’s Schoology and Canvas,” said Phil Hill, education technology market analyst and co-founder of MindWires Consulting.

Federal funding will eventually run out

Many more school districts are paying for a learning management system now than there were before 2020. Hill estimates that Canvas and Schoology have added between 6 and 8 million new K-12 students during the pandemic, based on private data and its reading of the IPO documents. That’s a 78% increase for Instructure, according to its record.

But we don’t know how long the boost will last. Districts have about two years to spend the last – and largest – round of federal funding that was authorized in March and amounts to about $ 2,600 per student.

Instructure and PowerSchool – neither could comment on this story due to the SEC-mandated period of silence leading up to an IPO – warn investors in SEC files that no help Federal future is guaranteed, a risk factor for future growth.

“Such increases in customer acquisitions and renewals may not be sustainable or may be reversed at any time,” PowerSchool says in its brief.

Bet on never getting back to normal before the pandemic

The US Centers for Disease Control and Prevention said it was safe for students to return for full-time in-person education in the fall, but fear of sending unvaccinated children back to school persists for some as the Delta variant continues to spread.
While many families were frustrated with the challenges of online learning, others found it to better support children with different learning needs. A growing number of parents are looking for distance education only, and their options appear to be expanding.

Most schools were offering some form of in-person instruction by the end of the 2020-2021 school year, but many students remained in a hybrid model. According to the Department of Education, only 52% of fourth-graders and 46% of eighth-graders attended a full learning in person in May.

Instructure and PowerSchool are betting that schools will continue to offer virtual learning options in one form or another and that learning management systems will be needed well beyond the pandemic. Plus, there will always be homework – and more teachers and students have now embraced the technology to submit it.

“Schools and students no longer have to choose between in-person or online – we expect there will be a combination of the two options to meet various needs and at different times,” Instructure said in its folder.

Both companies already serve schools around the world and see growth opportunities internationally and they offer more than their K-12 platforms. PowerSchool has a suite of other services including systems for school HR and student registration, and Canvas also serves colleges.


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Norma A. Roth