The End of the Road for Edmodo: Egypt, via China

Author

Phil Hill
August 17, 2022

Edmodo, once valued at $236 million and currently boasting more than 100 million registered learners, will shut down the LMS in just over a month, as notified in Twitter.

The online FAQ post provided a partial explanation:

However, after more than a decade of ensuring Edmodo can stay a free tool for all, we have found that it is no longer viable for us to maintain the level of service you deserve and that we can take pride in ourselves. As a result, we have made the difficult decision to shut down Edmodo.com.

This shut down will have no extended transition period, as the site will be unavailable five weeks from tomorrow, with all data permanently deleted.

All accounts on Edmodo (Teacher, Student, and Parent) will be permanently deleted after our platform is fully shut down. ​​Not only will your account be deleted but all personal data and any materials you have created within your account will also be permanently deleted. You can be assured that your personal data will not be shared, transferred, or sold to any 3rd party and, in fact, once permanently deleted, it will not be accessible or recoverable even by Edmodo

North American LMS View

In North America, Edmodo was used as a primary LMS by roughly 5% of K-12 districts based on our most recent market analysis, with those school districts representing 4% of total enrollments. Only Canvas, PowerSchool / Schoology, Google Classroom, Moodle, and D2L Brightspace were more widely used in K-12. 1

This still leaves us with the question of how we got here.

Enter the NetDragon

Edmodo was founded in 2007, positioned as the Facebook of education, and by 2012 the company announced key milestones as shared by TechCrunch.

The startup is today announcing that it has officially crossed 7 million users and is now being used in over 80,000 schools. Districts across the U.S. are now doing wide-scale implementations, and 80 of the top 100 largest school districts in the U.S. are on board

Two years later Pitchbook estimated the company’s value at $236 million. The problem was that Edmodo had very little revenue – just $1 million for 2017. Edmodo’s basic platform was free, although it offered a paid “Pro” version. By 2018 the investment had dried up (after previous rounds totaling nearly $100 million), and China-based gaming company NetDragon acquired Edmodo for $137.5 million. At the time, NetDragon believed the acquisition would help it become “the world’s largest learning community.”

NetDragon is publicly traded, and its most recent financials showed that the Education segment was growing 31% year-over-year, with revenues of ~$512 million 2, but with core losses of $65 million. NetDragon’s Gaming segment was carrying the company in terms of profit.

The vast majority of the Education segment is for Promethean interactive display boards, but NetDragon has been under pressure to cut costs in Education.

Recent Plans for Edmodo

As of the year-end 2021 earnings report, Edmodo was important to NetDragon in two ways. One is a new business line based on the Metaverse.

The first one we are looking at definitely is what we call EduMetaverse. So, we do believe the concept of social learning will be coming and will be here to stay. So, with the big user base that we have, whether it’s through Promethean or Edmodo, we believe we are in a prime position to take advantage of that. So, we are in more than just planning stage.

Back in the real world, the more concrete usage of Edmodo was for NetDragon’s Ministry of Education (MOE) business that is based on country-wide rollouts of technology. The big win was in Egypt, with 22 million students, which signed up in early 2020 to deploy Edmodo to all students as part of their pandemic mitigation strategy.

NetDragon Websoft Holdings Limited (“NetDragon” or “the Company”, Hong Kong Stock Code: 777), a global leader in building internet communities, wishes to announce that in view of the disruption of education due to the spread of the COVID-19 coronavirus, Edmodo, its global leading online education community, has been selected in an unprecedented move by the Ministry of Education in the Arab Republic of Egypt (“MoE”) to be the designated online learning platform for the K12 education system in Egypt. Starting today, Edmodo will be rolled out to over 22+ million students and over 1+ million teachers in the country to provide distance learning support in the period of school suspension and to enhance learning thereafter.

In 2022, NetDragon had plans to make this LMS adoption more permanent.

We also reached another major milestone in Egypt recently by signing a definitive contract to supply 94,000 Promethean interactiveflat panels to K-12 schools, and meanwhile large-scale adoption of Edmodo is expected in 2022.

Hypothesis

I have not found any information confirming my hypothesis, but I believe that the Edmodo side of the deal in Egypt fell apart. It would make no sense to completely shut down Edmodo if it were still a key part of a paid country-wide deployment to 22 million students; rather, the company could have saved expenses but kept the platform alive by removing the free option.

Why the hasty move with just over a month’s notice? I suspect because NetDragon is a publicly-traded company, and their fiscal 3rd quarter ends September 30th. If my hypothesis about Egypt is correct, then the company will want to also show how they are cutting costs.

The only other explanation that makes sense to me is if Edmodo the platform will be used only as a white labeled back end solution for Egypt. Either way, it looks like the end of the road for Edmodo as a platform was in Egypt.

Meanwhile, millions of K-12 students and teachers globally will likely be migrating to a new LMS with little warning.

1 Data provided by our partners at LISTedTECH.

2 Converting from Chinese Yuan to dollars as of the March 2022 earnings release.