The two biggest remote learning providers — or, more officially, “learning management systems” — became household names as schools scrambled to help students learn online at home, but they’re now fighting to keep their foothold as most districts plan to fully reopen for in-person learning in the fall.
School districts nationwide licensed the platforms so that their students could log in to virtual classes, communicate with their teachers and submit schoolwork from home.
Both companies are trying to keep the momentum and are even set to go public in the coming months after seeing revenue jump more than 15% in 2020. Instructure, Canvas’s parent company, took in $43 million more than the year before and PowerSchool, which owns Schoology, saw revenue rise by nearly $70 million, according to SEC filings.
“The K-12 market saw 10- to 15-year growth over a 12-month period. Who’s doing best? From a paid perspective, that’s Schoology and Canvas,” said Phil Hill, an education technology market analyst and co-founder of MindWires Consulting.
Federal funding will eventually run out
A lot more school districts are paying for a learning management system now than there were before 2020. Hill estimates that both Canvas and Schoology added between 6 and 8 million new K-12 students during the pandemic, based on private data and his reading of the IPO documents. That’s a 78% increase for Instructure, according to its filing.
But it’s unclear how long the boost will last. Districts have about two years to spend the latest — and biggest — round of federal funding that was authorized in March and amounts to roughly $2,600 per pupil.
Instructure and PowerSchool — neither of of which could comment for this story because of the SEC-mandated quiet period that precedes an IPO — warn investors in SEC filings that there’s no future federal aid guaranteed, a risk factor for future growth.
Betting on never returning to pre-pandemic normal
Most schools were offering some form of in-person instruction by the end of the 2020-2021 school year, but a lot of students remained in a hybrid model. Just 52% of fourth graders and 46% of eighth graders attended full in-person learning in May, according to the Department of Education.
Instructure and PowerSchool are betting that schools will continue to offer virtual learning options in some form and learning management systems will be needed well beyond the pandemic. Plus, there will always be homework — and more teachers and students have now embraced using technology to submit it.
Both companies already serve schools around the globe and see growth opportunity internationally and they offer more than just their K-12 platforms. PowerSchool owns a suite of other services including systems for school HR and student registration and Canvas also serves colleges.
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