And we do expect that to be kind of a little slightly ahead of the plan but more — I would say over the — what we’ve talked about, 3 to 5 years, we will be about $80 million to $100 million of business. I think we’ll be very much on track on it.
Operator: The next question is from Ryan MacDonald with Needham & Company.
Ryan MacDonald: Congrats on a nice quarter here. Hardeep, I’m curious on the India acquisition, what sort of drove the decision of sort of buying versus partnering as you’re entering that market? And as we think about sort of guidance — or not guidance for next year but fourth quarter, how much revenue and sort of margin are you expecting from a contribution perspective from that acquisition?
Hardeep Gulati: Sure. I can start that and I’ll ask Eric to feel for to jump in as well on the numbers. So Ryan, I think on the — when you look at from the India market, first to just define you the market, it’s actually one of the largest education markets in the world, right? 230 million K-12 students; 50 million plus of them are in actually private schools. So it’s a very — think about it from a size perspective, as big as U.S. just in the private school market itself, even outside the government schools as well. So it is a very attractive market for us. We also have a pretty sizable presence with our offshore center with almost 1200-plus [ph] people there; so we have very strong capabilities to excel there. We have — over the last couple of quarters, as we have put boots on ground on sales side, we actually saw pretty good traction of our Schoology product.
We saw a lot of good traction on some of our even interest in analytics. But one of the areas we would continuously get on the SIS side was a little bit more localization required, especially around ERP, payments and some of the transportation and other logistics element for the local. So what we looked at is that it was great to have bringing an acquisition which actually gives us a localization, still allows us to bring our broader platform to the Indian market, especially over classroom and analytics products, marry that with our SIS for larger, bigger opportunities, for a more bigger rollout. And you now have a perfect combination for something which is not present in the India market. Most of the market who has been addressed for the 50 million is through small shops.
So now this is also — while it’s — already has about 1.2 million students out of the 50 million students that we talked about from private school, it’s still a small company. So you talk about a couple of dollars per student typical pricing, right? So it’s a very small acquisition. But what it does give us is it gives us about 900 schools proof point where we can cross-sell, start selling the broader vision. And also we’re looking at more strategic partnerships and we’ve been — for potential future acquisitions so we can kind of fill in the full platform including some of the assessments and curriculum around — for the India market which will allow us to really enter that market in a big way. So it’s an exciting market. I’m really excited about this acquisition.
Even though it’s small, I think it’s going to be very strategic over the long run for us.
Eric Shander: Yes. I would just — Ryan, I would just say in terms of — as you think about the financials, as Hardeep mentioned, fairly immaterial, as you would expect with any tuck-in that we do. But again, for all the reasons that Hardeep mentioned, it really is you bring it into our distribution engine and our ability to be able to scale it. That’s what really gave us access to the 900-plus schools. So the financial contribution will be relatively immaterial in the fourth quarter. But again, as we start to scale and as we start to build it up, we’ll start to see that momentum really increase as we get into 2024 and beyond.
Ryan MacDonald: Maybe just as a quick follow-up on SchoolMessenger. I think you talked about that acquisition having the potential to be accretive to overall EBITDA margins. But you also talked about sort of deep investment in the near term on integrating from a technology perspective. Should we expect sort of that accretion to happen in the next couple of quarters out? Or even with that investment, are you assuming that it would be immediately accretive?
Eric Shander: Yes. So Ryan, great question. So one of the things that really got us excited about SchoolMessenger is really bringing it into our MyPowerSchool which is the single pane of view for teachers and students, etcetera. So we are going to take a quarter or two for some investments that we’re making for that integration. But post that, I would say, middle part of next year, you will start to see it be accretive to the company. But there is going to be some upfront implementation and integration work that we’re doing. So it’s going to be a quarter or two that we’ll focus in on that. And then obviously, it was a profitable company prior to the acquisition and we believe that we will get it back to that spot and probably even have some further leverage beyond that.
Operator: The next question is from Stephen Sheldon with William Blair.
Patrick McIlwee: You got Pat McIlwee on for Stephen today. So just kind of further on some of these prior questions. You put up really nice profit this quarter with an EBITDA margin of 34%. And I know you mentioned there’s going to be some expense related to SchoolMessenger in the fourth quarter but that guidance for the quarter implies a margin of 31%. So just wanted to ask how we should think about that step down, if that’s all — for the most part SchoolMessenger or whether or not there are any other considerations on that front that are worth calling out.
