Education Technology (EdTech) refers to the management of teaching and learning materials and processes using technological tools and applications. The terms online learning and e-learning are often interchangeable with EdTech. Online learning involves digital educational tools and the internet, which is where students and teachers interact and course material is distributed. Instruction may happen solely online or include some face-to-face interaction (called “blended” or “hybrid” learning). The focus of this report is the K-12 end-user market.
Online learning is not a new concept. However, online learning experienced a tremendous surge due to school closures following the outbreak of the Covid-19 pandemic. Despite the advantages of online learning, it also has significant challenges, and the sustained growth of online learning post pandemic is far from guaranteed.
EdTech content and technology tools surged during the pandemic:
Registered users of Khan Academy increased by 33% year-over-year (YoY) in 2020 to reach 120 million.
Since March 2020, Outschool enrollments have increased elevenfold. Enrollment in September 2020 exceeded 300,000 compared to a total of 80,000 in the three years to mid-March 2020.
Enrollment at Apex Learning doubled in March 2020.
Between March and mid-June 2020, around 50,000 new Moodle sites were registered by schools, universities and educational institutions.
Google searches for “online learning” increased globally by more than 400% YoY as of November 2020.
Online learning platforms offered free access to their services in response to the crisis
Outschool offered USD 50 in free classes for families affected by the pandemic
Increasingly more US school districts partnered with online learning platform providers to gain access to virtual classrooms, digital resources, and communications solutions
Between January 2019 and June 2020, there was a more than 50% increase in the number of institutions that transitioned to the SaaS deployment of Blackboard Learn (Blackboard’s learning management system) to scale their online learning programs and accelerate their online learning strategies in response to the pandemic
In May 2020, Stride Inc. launched a consulting service (‘K12 Learning Solutions’) to help school districts implement an online or blended learning program
In June 2020, Connections Academy introduced five new services for school districts, teachers and education professionals
The EdTech market for K-12 students can be categorized broadly into online school operators, content providers, and technology providers. The industry is dominated by incumbents that have grown both organically and via acquisition as well as large technology companies that have expanded into the education space.
The K-12 online learning space is inundated with players offering a variety of platforms, products, and solutions. Among these are applications with unique offerings or unusual ways of delivering solutions, some of which are featured below.
In the online school operator space, Stride, Inc. is one of the top two education management organizations (EMOs) in the US alongside incumbent Pearson. Content-based product and technology-based product providers usually develop their own products and are varied in terms of what they offer. They are also diverse in terms of funding with some being non-profit based, being funded by government agencies, universities or foundations. Some of the key disruptors we have identified include Kahoot!, Duolingo, Age of Learning, DreamBox Learning, Blackboard, Canvas, Moodle, and Brightspace.
Founded in 2000 as K12 Inc. and headquartered in Virginia, Stride Inc. is an EMO that provides K-12 online education. It offers its online curriculum at three levels: to states and districts as a homeschooling alternative to brick-and-mortar schools; to school districts as a supplement to classroom teaching; and to parents individually as a private, online, homeschooling alternative. The company also operates three tuition-based online private schools. During the 2018-2019 school year, Stride Inc. provided its managed public school programs to 75 schools across the US.
Traditionally focusing on K-12 educational programs, Stride Inc. has also moved into the adult (professional skills) education space providing career readiness education. This is accomplished through its Destinations Career Academies and through Galvanize, a company that develops capabilities for individuals and corporations in technical fields such as software engineering and data science, which it acquired in January 2020. The company’s portfolio also includes Tallo, an app that connects students and professionals with scholarships, post-secondary institutions, and companies, and Nepris, a cloud-based platform that allows educators to connect with industry professionals willing to share their skills and knowledge with students.
In response to the Covid-19 pandemic, the company launched K12 Learning Solutions in May 2020, a consulting service for school districts, and in August 2020 it partnered with College Nannies + Sitters + Tutors to train their staff to serve as effective Learning Coaches as schools reopen at home and online. In June 2020 the company partnered with a public charity, Virginia Ready Initiative, to help those that have lost their jobs due to the pandemic gain the required skills for in-demand jobs.
In October 2020, Stride Inc. expanded its partnership with 7 Mindsets, a social emotional learning (SEL) solutions provider, to provide SEL courses and curriculums, leadership training, and teacher professional development for all Stride Inc. schools over the next three years.
In November 2020, the company announced that it will undergo a corporate name change to Stride, Inc. effective December 16, 2020. The change reflects the company’s continued expansion beyond the K-12 market into the adult lifelong learning market. The company also expanded its portfolio of lifelong learning offerings through the acquisitions of Tech Elevator and MedCerts. The acquisition of Tech Elevator complements the IT-focused curriculum provided by Galvanize, while the acquisition of MedCerts marks the company’s entry into the healthcare education market.
In November 2020, a lawsuit, Lee v. K12 Inc. et al., was filed against the company and some of its executives in the U.S. District Court for the Eastern District of Virginia. The allegations filed claimed that Stride Inc. issued false and misleading statements in its efforts to meet the increased, Covid-19 pandemic-driven demand for virtual and blended learning. Such statements were concerning the company’s technological capabilities, infrastructure, expertise, and data security strength. The suit was dismissed by a federal judge in September 2021, on the basis that the shareholders had failed to adequately allege that the company had violated securities laws or acted intentionally. In January 2021, Stride partnered with 21K School, India’s first online school, to offer its own curriculums as well as those of one of its accredited partners, The Keystone School, beginning with the 2021-2022 academic year.
In February 2021, the company selected the cohort of its multi-year We Stand Together scholarship. With a USD 10 million investment, the scholarships are part of a series of initiatives to support racial and socioeconomic inclusion in education and provide more education options to underserved communities. Scholarship recipients will receive tuition-free, full-time enrollment at Stride’s K12 Private Academy or higher education scholarships. Further, in April 2021, the company partnered with the National Association of Black Male Educators (NABME) to increase the number of Black teachers it employs and to equip current teachers with tools to facilitate inclusive classrooms online and physically.
In March 2021, Stride partnered with MetaMetrics, an educational measurement and research organization, to provide Stride teachers with premium membership access to MetaMetrics’ Lexile & Quantile Hubs containing tools and resources to provide personalized instruction.
In May 2021, Pearson, a global education company, stated that it is “not preparing a bid” for Stride, in response to reports that stated the contrary.
In August 2021, Stride released its earnings results for year ending June 30 2021 reporting a revenue of USD 1.54 billion (up 54% YoY) driven by an increase in demand across all Stride products, and a gross profit of USD 534.9 million translating to a gross margin of 34.8%.
Online school operators:
Extra-curricular learning; college and career readiness:
Online school operators are mostly for-profit corporations that run state-funded, tuition-free schools as an alternative to traditional public schools. The main players in this space have built their own platforms. Pearson is one of the top two education management organizations (EMOs) in the US.
Content-based product providers offer a variety of curricular and extracurricular classes to enhance students’ traditional education. They can be further categorized into curriculum-based learning, language or technology learning, test preparation and tutoring, early childhood or special education, and so on. Houghton Mifflin Harcourt (HMH), McGraw-Hill Education, and Cengage are top providers in this space reaching a large share of US school districts, teachers, and students. As established providers of content and learning solutions for students, instructors, professionals, and institutions, they have extended their offerings to include digital platforms.
Technology-based product providers can be further categorized into learning management systems (LMS), testing and assessment, operational, reference and search, and networking. Incumbents in this space include global technology companies such as Google, Microsoft, and Amazon who have introduced various digital solutions for the education sector.
Pearson is a global education company delivering learning solutions for early childhood through high school. The company’s interactive tools and content range from digital and print core curriculums, to supplemental content, intervention programs, and professional services. Pearson delivers K-12 online education to schools and students in the US and internationally. Solutions include Connections Academy, an online school program delivered via full-time, online public schools, while also operating a private online school. The first Connections Academy online school was established in 2001. Connections Academy joined the Pearson Group in 2011. As of February 2021, more than 100,000 students across 29 states were enrolled in Connections Academy’s virtual public schools.
In February 2019, the company sold its US K-12 courseware business to Nexus Capital Management, a Los Angeles-based private equity firm, which was thereafter rebranded as Savvas Learning Co. In January 2020, Pearson’s business was restructured into four reporting segments: Global Online Learning (comprises Virtual Schools and Online Program Management [OPM]); Global Assessment (Pearson VUE and US Student Assessment); International (Assessment, English, Schools and Higher Education); and North American Courseware (US Higher Education Courseware is key business with Canadian Courseware).
In response to the Covid-19 pandemic, Pearson launched new services for school districts in June 2020 to help them transition to online learning. In August 2020, the company raised USD 459 million through a social bond; the funds will support Connections Academy, BTEC (a service that provides vocational qualifications), and the GED Testing Service (a partnership with the American Council on Education to help students who haven’t completed high school earn an equivalency certificate).
In February 2021, Pearson added the Coastal Connections Academy in Florida and the Oregon Connections Academy to its network. These will deliver the Connections Academy virtual school program during the 2021-22 school year to K-12 students in both states. Later that month, the company acquired Spotlight Education, a provider of video reporting technology.
In May 2021, the company stated that it is “not preparing a bid” for Stride, Inc., an online education company, in response to a report that stated the contrary. Pearson agreed to pay a fine of USD 1 million in August 2021 for misleading investors about a data breach that occurred in 2018 and resulted in the theft of millions of student records.