Kahoot, the Oslo-based gamified e-learning platform, has announced that it will be going fully private in a $1.7 billion deal led by Goldman Sachs Asset Management’s private equity division. Kahoot is well-known for creating a popular platform that allows users to create, share and play education-focused “games” used by billions of students and adults worldwide. The company has been traded for years on the Merkur Market in Oslo and has received investments from traditional VCs, strategic investors like Microsoft and Disney, and Softbank.
Existing Kahoot backers General Atlantic, LEGO Group’s KIRKBI Invest A/S, and Glitrafjord (controlled by Kahoot CEO Eilert Hanoa) have been named as the other major shareholders in the deal. Unnamed other investors and management will also have stakes in Kahoot. The acquisition will take some of the volatility off the table and caps off years of Kahoot taking a two-tier approach to its business finance.
The deal represents a premium on Kahoot’s publicly traded shares as of yesterday, specifically 53.1% to the closing price on the Oslo Stock Exchange on May 22, 2023, when it was NOK 22.86. However, it is a major step down from the company’s highest valuation at the peak of the Covid-19 pandemic.
Kahoot was founded in 2012 and launched its first products in 2018. The company has two separate divisions that serve K-12 students and adults/businesses. It has hosted “hundreds of millions of learning sessions with 9 billion (non-unique) participants in more than 200 countries and regions,” and currently has more than 1 million paying users. Kahoot has collectively raised more than $500 million over the years.
At its height of trading, in 2021, Kahoot was trading as high as NOK 109/share. The share price has fluctuated a lot over the years. A year ago, in June 2022, it was trading at 17.92 NOK/share. Kahoot was one of the many remote learning startups that saw its star rise as people stayed away from physical classrooms and office spaces, giving the company a lot of business and attention from investors.
Kahoot today released a set of financials that painted a mixed picture. In Q2, it made $41 million in revenues, up just 14% on last year; $40 million in “invoiced revenue” up 8%; EBITDA of $11 million up 60%; and operating cash flow up 90%, to $10 million. However, Kahoot noted that it only had and cash equivalents of $96 million by the end of the second quarter.
Kahoot, like other tech businesses, has struggled in the public markets post-pandemic. Investors are adjusting to a new reality: a world grappling with recession and inflation, and consumers and businesses using less of the digital services (like e-learning and e-commerce) that they heavily leaned on just a year before.
Goldman Sachs Asset Management’s private equity division, which is leading the acquisition, seems to believe that there is a longer-term opportunity here and is willing to bet their existing stakes on it. “Kahoot! is unlocking learning potential for children, students, and employees across the world. The company has a clear mission and value proposition, and our investment will help to grow its impact and accelerate value for all stakeholders,” said Michael Bruun, global co-head of Private Equity at Goldman Sachs Asset Management, in a statement. “Through this transaction, we are pleased to partner with a fantastic leadership team and group of co-investors to expand a mission-critical learning and engagement platform and contribute to its further growth and innovation.”
General Atlantic, a major shareholder in the deal, is also looking forward to continuing their partnership with Kahoot. “Since General Atlantic partnered with Kahoot! in September 2022, the company has maintained significant momentum across key strategic initiatives, including scaling its enterprise offering and global subscriber base while also extending its premium IP partnerships and delivering product innovation to leverage advances in generative AI,” said Chris Caulkin, MD and head of technology EMEA at General Atlantic, in a statement. “Through this transaction, we are pleased to deepen our commitment to support Kahoot!’s long-term growth in collaboration with the broader co-investor group. We look forward to our continued partnership with Eilert and the Kahoot! team in the years ahead.”
KIRKBI Invest A/S, a subsidiary of the LEGO Group, is also named as a major shareholder in the deal. “We are excited to invest alongside Goldman Sachs Asset Management, General Atlantic, and Kahoot!’s management team to accelerate the growth of Kahoot,” said Thomas Lau Schleicher, chief investment officer at KIRKBI. “We are impressed with the company’s journey, having developed an exciting range of products to interact with its users in a fun and engaging way. We support the company’s mission to empower learners and educators worldwide, which resonates with our core values, and find the investment fits very well with KIRKBI’s long-term investment strategy.”
Kahoot’s mission is to make learning awesome. The company’s portfolio of solutions drives billions of learning interactions every year, coming together through continuous product innovation and a team with the ambition to put magic learning moments at everyone’s fingertips. “As the need for engaging learning, across home, school and work, continues to grow, I am excited about the opportunities this partnership represents for our users, our ecosystem of partners, and for the talented team across the Kahoot! Group, to advance education for hundreds of millions of learners everywhere,” said Hanoa in a statement.
First reported on TechCrunch