At a time when potty training and iPad inductions are delivered at the same age, kids can get sucked into the toxic digital world quite fast if not monitored. Now, parents can look forward to a healthier digital experience for their kids as family-focused cyber safety company Family Zone (ASX: FZO) acquires student well-being SaaS provider Educator Impact (EI) for approximately $7 million.
Family Zone will pay $2.95 million in shares (issued at 30c) upfront with performance consideration of up to $4.2 million. That will be subject to EI’s flagship product Pulse growing annual recurring revenue by 200% by 30 June 2024. Any shortfall reduces the consideration amount.
EI is an Australian student well-being SaaS solution, raking in $1.7 million of revenue. Its quick growth and high revenue is credited in large part to EI’s flagship product, Pulse, a student well-being tool for educators. Managing Director of Family Zone, Tim Levy, shared, “EI is an innovator in the exploding student engagement and wellbeing sector, delivering SaaS solutions to K-12 schools. EI’s flagship Pulse product is proven and ready-to-go for cross sell to our 24,000 schools in the US & UK.”
Pulse enables easy 60-second weekly check-ins to encourage students to reflect on their mental, social and physical well-being by answering a few questions based on research by EI. This way, teachers get insights into students’ current well-being, and are able to intervene early and track changes to ensure improvement.
Pulse’s agenda seamlessly fits into that of Family Zone, which is geared towards creating a safer digital experience for children. The Company’s unique innovation is its patented cyber safety ecosystem, a platform enabling a world-first collaboration between schools, parents and cyber safety educators.
In FY22, Family Zone’s operating revenue rose by nearly 400% on FY21 to $44.72 million. Its revenue comes largely from three sources: its education business through the sale of its cyber safety services to schools through contracted student licences (B2B), its consumer business through the sale of its parental control service subscriptions to parents directly (B2C), and its school networks (B2B2C).
Like most companies, Family Zone hopes to expand its offerings into the US, and the EI acquisition puts it in a pretty position to do so. Currently, there is a lot of funding flowing into the student well-being sector. In fact, the Biden administration has committed $125 billion in funding for districts to support student well-being and other programs. Family Zone is tapping into this growing sector and is already experiencing successes. In FY22, the Company reached 16% of US school districts, up from 10% in FY21.
The Chief Wellbeing Officer at Family Zone, Jordan Foster, noted, “Educator Impact is a perfect acquisition at a perfect time for Family Zone. EI offers Family Zone access to highly competitive products in a fast growing segment with a natural fit to our proposition all in time for the upcoming busy sales periods in the US and UK.”
This acquisition complements Family Zone’s acquisition of Qustodio, a parental controls company, in August this year. Not only does it further Family Zone’s all-inclusive offering, but it also sets the Company on the path to establish its ground in the US.
Alinda is a Business Reporter for The Sentiment
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