D2L Inc. Announces First Quarter 2026 Financial Results

Published: 2025-06-10 17:16:10 ET DTOL.TO

Published on 06/10/2025 at 17:16

TORONTO, June 10, 2025 /CNW/ - D2L Inc. (TSX: DTOL) ("D2L" or the "Company"), a leading global learning technology company, today announced financial results for its Fiscal 2026 first quarter ended April 30, 2025. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards ("IFRS") unless otherwise indicated.

"We are executing successfully in the current environment, delivering efficient growth and strengthening our fundamentals, as seen in our SaaS revenue growth and further improvements in gross margins and operating leverage this quarter," said John Baker, CEO of D2L. "As organizations navigate the macroeconomic volatility, our modern, AI-first learning platform is an important solution to enhance learner engagement, drive retention, and enable new learning modalities with greater efficiency. We remain focused on balancing near-term performance with strategic investments in platform innovation and market expansion, as we work to become the leader in targeted education markets globally and establish ourselves as the next-generation learning platform for corporate upskilling."

First Quarter Fiscal 2026 Financial Highlights

1 Refer to "Key Performance Indicators" section of this press release.

2 A non-IFRS financial measure or non-IFRS ratio. Refer to "Non IFRS Financial Measures" section of this press release.

First Quarter Fiscal 2025 Financial Results – Selected Financial Measures(in thousands of U.S. dollars, except for percentages)

Q1 2026

Q1 2025

Change

Subscription & Support Revenue

47,735

42,954

4,781

11.1 %

Professional Services & Other Revenue

5,100

5,541

(441)

(8.0 %)

Total Revenue

52,835

48,495

4,340

8.9 %

Constant Currency Revenue1

53,608

48,495

5,113

10.5 %

Gross Profit

37,030

32,677

4,353

13.3 %

Adjusted Gross Profit1

37,667

32,839

4,828

14.7 %

Adjusted Gross Margin1

71.3 %

67.7 %

Income for the period

3,268

572

2,696

471.3 %

Adjusted EBITDA1

9,305

4,019

5,286

131.5 %

Cash Flows from (used in) Operating Activities

(1,856)

(14,826)

12,970

87.5 %

Free Cash Flow1

(1,841)

(14,952)

13,111

87.7 %

1 A non-IFRS financial measure or non-IFRS ratio. Refer to the "Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures" section of this press release for more details.

First Quarter Business & Operating Highlights

Financial Outlook

The Company is maintaining its previous financial guidance for the year ended January 31, 2026 as follows:

The Company presented a Medium Term Target Operating Model that it expects to achieve by Fiscal 2028 in the Company's Management's Discussion and Analysis ("MD&A") for the years ended January 31, 2025 and 2024 (the "Annual MD&A"). This Medium Term Target Operating Model remains unchanged as of April 30, 2025.

For additional details on the Company's outlook and Medium Term Target Operating Model, including the principal underlying assumptions and risk factors regarding achievement, refer to the "Financial Outlook" section of the Company's Annual MD&A, as well as the "Forward-Looking Information" section therein and in the Company's MD&A for the three months ended April 30, 2025 (the "Interim MD&A").

Conference Call & Webcast

D2L management will host a conference call on Wednesday, June 11, 2025 at 8:30 am ET to discuss its first quarter Fiscal 2026 financial results.

Date:

Wednesday, June 11, 2025

Time:

8:30 am (ET)

Dial in number:

Canada/US: 1 (833) 470-1428

International: 1 (404) 975-4839

Access code: 016623

Webcast:

A live webcast will be available at ir.d2l.com/events-and-presentations/events/

The webcast will also be archived

Forward-Looking Information

This press release includes statements containing "forward-looking information" within the meaning of applicable securities laws. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", "budget", "scheduled", "estimates", "outlook", "target", "forecasts", "projection", "potential", "prospects", "strategy", "intends", "anticipates", "seek", "believes", "opportunity", "guidance", "aim", "goal" or variations of such words and phrases or statements that certain future conditions, actions, events or results "may", "could", "would", "should", "might", "will", "can", or negative versions thereof, "be taken", "occur", "continue" or "be achieved", and other similar expressions. Statements containing forward-looking information are not historical facts, but instead represent management's expectations, estimates and projections regarding future events or circumstances.

This forward-looking information relates to the Company's future financial outlook and anticipated events or results and includes, but is not limited to, statements under the heading "Financial Outlook" and information regarding the Company's financial position, financial results, business strategy, performance, achievements, prospects, objectives, opportunities, business plans and growth strategies.

Forward-looking information is based on certain assumptions, expectations and projections, and analyses made by the Company in light of management's experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate, including the following: the Company's ability to win business from new customers and expand business from existing customers; the timing of new customer wins and expansion decisions by existing customers; the Company's ability to generate revenue and expand its business while controlling costs and expenses; the Company's ability to manage growth effectively; the Company's assumptions regarding the principal competitive factors in our markets; the Company's ability to hire and retain personnel effectively; the effects of foreign currency exchange rate fluctuations on our operations; the ability to seek out, enter into and successfully integrate acquisitions, including the acquisition of H5P Group AS ("H5P"); business and industry trends, including the success of current and future product development initiatives; positive social development and attitudes toward the pursuit of higher education; the Company's ability to maintain positive relationships with its customer base and strategic partners; the Company's ability to adapt and develop solutions that keep pace with continuing changes in technology, education and customer needs; the Company's ability to predict future learning trends and technology; the ability to patent new technologies and protect intellectual property rights; the Company's ability to comply with security, cybersecurity and accessibility laws, regulations and standards; the assumptions underlying the judgments and estimates impacting on financial statements; certain accounting matters, including the impact of changes in or the adoption of new accounting standards; the Company's ability to retain key personnel; the factors and assumptions discussed under the "Financial Outlook" section of the Annual MD&A; and that the list of factors referenced in the following paragraph, collectively, do not have a material impact on the Company.

Although the Company believes that the assumptions underlying such forward-looking information were reasonable when made, they are inherently uncertain and are subject to significant risks and uncertainties and may prove to be incorrect. The Company cautions investors that forward-looking information is not a guarantee of the future and that actual results may differ materially from those made in or suggested by the forward-looking information contained in this press release. Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks, uncertainties and other factors, including but not limited to the risks identified herein, including "Summary of Factors Affecting Our Performance" of the Annual MD&A, or in the "Risk Factors" section of the Company's most recently filed annual information form, in each case filed under the Company's profile on SEDAR+ at www.sedarplus.com. If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking information prove incorrect, actual results might vary materially from those anticipated in the forward-looking information.

Given these risks and uncertainties, investors are cautioned not to place undue reliance on forward-looking information, including any financial outlook. Any forward-looking information that is contained in this press release speaks only as of the date of such statement, and the Company undertakes no obligation to update any forward-looking information or to publicly announce the results of any revisions to any of those statements to reflect future events or developments, except as required by applicable securities laws. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

About D2L Inc. (TSX: DTOL)

D2L is transforming the way the world learns—helping learners of all ages achieve more than they dreamed possible. Working closely with customers all over the world, D2L is supporting millions of people learning online and in person. Our global workforce is dedicated to making the best learning products to leave the world better than they found it. Learn more at www.D2L.com.

D2L INC.Condensed Consolidated Interim Statements of Financial Position(In U.S. dollars)

As at April 30, 2025 and January 31, 2025(Unaudited)

April 30, 2025

January 31, 2025

Assets

Current assets:

Cash and cash equivalents

$ 92,526,834

$ 99,184,514

Trade and other receivables

24,372,457

26,430,586

Uninvoiced revenue

2,969,131

2,756,998

Prepaid expenses

7,789,390

7,564,837

Deferred commissions

5,139,987

5,106,976

132,797,799

141,043,911

Non-current assets:

Other receivables

400,458

422,589

Prepaid expenses

314,523

308,235

Deferred income taxes

15,872,360

18,115,730

Right-of-use assets

8,026,078

7,450,545

Property and equipment

7,049,725

7,125,272

Deferred commissions

6,954,101

6,909,439

Loan receivable from associate

9,295,669

9,123,399

Intangible assets

17,852,622

17,135,529

Goodwill

27,019,307

25,286,222

Total assets

$ 225,582,642

$ 232,920,871

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable and accrued liabilities

$ 35,417,661

$ 30,504,085

Deferred revenue

85,411,389

97,454,306

Lease liabilities

1,545,432

1,201,604

Contingent consideration

5,005,457

4,927,193

127,379,939

134,087,188

Non-current liabilities:

Deferred income taxes

4,031,858

4,110,030

Lease liabilities

10,391,849

9,977,941

14,423,707

14,087,971

141,803,646

148,175,159

Shareholders' equity:

Share capital:

367,125,848

367,487,956

Additional paid-in capital

45,380,347

48,263,266

Accumulated other comprehensive loss

(4,696,131)

(7,456,599)

Deficit

(324,031,068)

(323,548,911)

83,778,996

84,745,712

Related party transactions

Investment in associate

Total liabilities and shareholders' equity

$ 225,582,642

$ 232,920,871

D2L INC.Condensed Consolidated Interim Statements of Comprehensive Income (Loss)(In U.S. dollars)

For the three months ended April 30, 2025 and 2024(Unaudited)

2025

2024

Revenue:

Subscription and support

$ 47,735,572

$ 42,953,475

Professional services and other

5,099,599

5,541,417

52,835,171

48,494,892

Cost of revenue:

Subscription and support

11,840,420

11,946,610

Professional services and other

3,964,545

3,870,868

15,804,965

15,817,478

Gross profit

37,030,206

32,677,414

Expenses:

Sales and marketing

13,668,739

12,904,939

Research and development

11,459,714

12,290,771

General and administrative

8,386,362

8,099,431

33,514,815

33,295,141

Income (loss) from operations

3,515,391

(617,727)

Interest and other income (expenses):

Interest expense

(220,129)

(160,660)

Interest income

717,052

1,084,045

Other income

315,059

59,476

Foreign exchange gain

1,536,516

230,781

2,348,498

1,213,642

Income before income taxes

5,863,889

595,915

Income taxes expense (recovery):

Current

571,177

50,745

Deferred

2,024,408

(27,096)

2,595,585

23,649

Income for the period

3,268,304

572,266

Other comprehensive gain (loss):

Foreign currency translation gain (loss)

2,760,468

(795,690)

Comprehensive income (loss)

$ 6,028,772

$ (223,424)

Earnings per share – basic

$ 0.06

$ 0.01

Earnings per share – diluted

0.06

0.01

Weighted average number of common shares – basic

54,689,330

54,015,602

Weighted average number of common shares – diluted

56,137,363

55,723,344

D2L INC.Condensed Consolidated Interim Statements of Changes in Shareholders' Equity(In U.S. dollars)

For the three months ended April 30, 2025 and 2024(Unaudited)

Share Capital

Additional paid-in capital

Accumulated other comprehensive loss

Deficit

Total

Amount

Balance, January 31, 2025

54,653,174

$ 367,487,956

$ 48,263,266

$ (7,456,599)

$ (323,548,911)

$ 84,745,712

Issuance of Subordinate Voting Shares on exercise of options

13,734

120,279

(88,253)

—

32,026

Issuance of Subordinate Voting Shares on settlement of restricted share units

370,200

1,328,952

(5,292,603)

—

(3,963,651)

Stock-based compensation

—

3,213,041

—

3,213,041

Reduction in excess tax benefit on stock-based compensation

—

(715,104)

—

(715,104)

Repurchase of share capital for cancellation under NCIB

(168,800)

(1,811,339)

—

(1,811,339)

Share repurchase commitment under the ASPP

—

(3,750,461)

Other comprehensive income

—

2,760,468

—

2,760,468

Income for the period

—

3,268,304

Balance, April 30, 2025

54,868,308

$ 367,125,848

$ 45,380,347

$ (4,696,131)

$ (324,031,068)

$ 83,778,996

Balance, January 31, 2024

53,978,085

$ 364,830,884

$ 47,485,107

$ (4,998,317)

$ (350,437,401)

$ 56,880,273

Issuance of Subordinate Voting Shares on exercise of options

206,299

1,739,261

(900,761)

—

838,500

Issuance of Subordinate Voting Shares on settlement of restricted share units

194,483

965,967

(2,587,799)

—

(1,621,832)

Stock-based compensation

—

2,332,754

—

2,332,754

Repurchase of share capital for cancellation under NCIB

(131,380)

(1,021,919)

—

(1,021,919)

Share repurchase commitment under the ASPP

—

284,181

Other comprehensive loss

—

(795,690)

—

(795,690)

Income for the period

—

572,266

Balance, April 30, 2024

54,247,487

$ 366,514,193

$ 46,329,301

$ (5,794,007)

$ (349,580,954)

$ 57,468,533

D2L INC.Condensed Consolidated Interim Statements of Cash Flows(In U.S. dollars)

For the three months ended April 30, 2025 and 2024(Unaudited)

2025

2024

Operating activities:

Income for the period

$ 3,268,304

$ 572,266

Items not involving cash:

Depreciation of property and equipment

392,558

436,493

Depreciation of right-of-use assets

347,334

286,692

Amortization of intangible assets

557,631

27,967

Gain on disposal of property and equipment

(16,825)

(45,803)

Stock-based compensation

3,213,041

2,332,754

Net interest income

(496,923)

(923,385)

Income tax expense

2,595,585

23,649

Fair value gain on loan receivable from associate

(172,270)

—

Changes in operating assets and liabilities:

Trade and other receivables

3,684,970

(2,528,272)

Uninvoiced revenue

(133,791)

168,438

Prepaid expenses

153,112

2,116,314

Deferred commissions

369,573

(191,409)

Accounts payable and accrued liabilities

(1,189,037)

(6,008,716)

Deferred revenue

(14,399,467)

(12,109,523)

Right-of-use assets and lease liabilities

—

(43,743)

Interest received

710,627

1,077,425

Interest paid

(1,633)

(12,633)

Income taxes paid

(738,303)

(4,239)

Cash flows used in operating activities

(1,855,514)

(14,825,725)

Financing activities:

Payment of lease liabilities

(487,522)

(405,727)

Proceeds from exercise of stock options

32,026

838,500

Taxes paid on settlement of restricted share units

(3,963,651)

(1,621,832)

Repurchase of share capital for cancellation under NCIB

(1,811,339)

(1,021,919)

Cash flows used in financing activities

(6,230,486)

(2,210,978)

Investing activities:

Purchase of property and equipment

(1,737)

(171,869)

Proceeds from disposal of property and equipment

16,825

45,803

Cash flows from (used in) investing activities

15,088

(126,066)

Effect of exchange rate changes on cash and cash equivalents

1,413,232

(929,583)

Decrease in cash and cash equivalents

(6,657,680)

(18,092,352)

Cash and cash equivalents, beginning of period

99,184,514

116,943,499

Cash and cash equivalents, end of period

$ 92,526,834

$ 98,851,147

Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures

The information presented within this press release refers to certain non-IFRS financial measures (including non-IFRS ratios) including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Margin, and Constant Currency Revenue. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Non-IFRS financial measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS and are unlikely to be comparable to similar measures presented by other issuers. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations, financial performance and liquidity from management's perspective and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of the Company. The Company's management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to assess our ability to meet our capital expenditures and working capital requirements.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA is defined as income (loss), excluding interest, taxes, depreciation and amortization (or EBITDA), adjusted for stock-based compensation, foreign exchange gains and losses, non-recurring expenses, transaction-related costs, fair value adjustment of acquired deferred revenue, income (loss) from equity accounted investee, change in fair value on the loan receivable from associate, impairment charges and other income and losses. Adjusted EBITDA Margin is calculated as Adjusted EBITDA expressed as a percentage of total revenue. For an explanation of management's use of Adjusted EBITDA and Adjusted EBITDA Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted EBITDA and Adjusted EBITDA Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein.

The following table reconciles Adjusted EBITDA to income for the period, and discloses Adjusted EBITDA Margin, for the periods indicated:

(in thousands of U.S. dollars, except for percentages)

Three months ended April 30

2025

2024

Income for the period

3,268

572

Stock-based compensation

3,213

2,333

Foreign exchange gain

(1,537)

(231)

Non-recurring expenses(1)

471

821

Transaction-related costs(2)

440

672

Fair value adjustment of acquired deferred revenue(3)

225

—

Change in fair value of loan receivable from associate(4)

(172)

—

Net interest income

(497)

(923)

Income tax expense

2,596

Depreciation and amortization

1,298

751

Adjusted EBITDA

9,305

4,019

Adjusted EBITDA Margin

17.6 %

8.3 %

Notes:

(1)

These expenses relate to non-recurring activities, such as certain legal fees incurred that are not indicative of continuing operations, and changes of workforce or technology whereby certain functions were realigned to optimize operations.

(2)

These expenses include post-combination compensation costs from the acquisition of H5P, and was partially offset by a gain recognized from the reduction in the second anniversary payment owed to the selling shareholders of Connected Shopping Ltd ("Connected Shopping"), a company acquired in Fiscal 2024, which was recorded through Other income. In the prior fiscal year, these expenses included post-combination compensation, legal, professional and other fees related to the acquisition activities of H5P, Connected Shopping, and the divestiture of our majority ownership stake in SkillsWave. These expenses would not have been incurred if not for these transactions and are not considered to be indicative of expenses associated with the Company's continuing operations.

(3)

At the date of acquisition, the Company recognized a fair value adjustment on the opening deferred revenue balance acquired as part of the H5P acquisition as required under IFRS 3, Business Combinations. This adjustment is not reflective of ordinary operations and is expected to be substantially completed by the end of Fiscal 2026.

(4)

On a quarterly basis, the Company determines the fair value of the loan advanced to SkillsWave. The adjustments to the fair value of the loan are not reflective of the Company's main business operations and will not impact the Company's future results beyond the maturity date of the loan on June 28, 2029.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit is defined as gross profit excluding related stock-based compensation expenses and amortization from acquired intangible assets, specifically acquired technology. Adjusted Gross Margin is calculated as Adjusted Gross Profit expressed as a percentage of total revenue. For an explanation of management's use of Adjusted Gross Profit and Adjusted Gross Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted Gross Profit and Adjusted Gross Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein.

The following table reconciles Adjusted Gross Profit to gross profit, and discloses Adjusted Gross Margin, for the periods indicated:

(in thousands of U.S. dollars, except for percentages)

Three months ended April 30

2025

2024

Gross profit for the period

37,030

32,677

Stock-based compensation

206

146

Amortization from acquired intangible assets

431

Adjusted Gross Profit

37,667

32,839

Adjusted Gross Margin

71.3 %

67.7 %

Free Cash Flow and Free Cash Flow MarginFree Cash Flow is defined as cash flows from (used in) operating activities less net additions to property and equipment. Free Cash Flow Margin is calculated as Free Cash Flow expressed as a percentage of total revenue. For an explanation of management's use of Free Cash Flow and Free Cash Flow Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Free Cash Flow and Free Cash Flow Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein.

The following table reconciles Free Cash Flow to cash flow used in operating activities, and discloses Free Cash Flow Margin, for the periods indicated:

(in thousands of U.S. dollars, except for percentages)

Three months ended April 30

2025

2024

Cash flow used in operating activities

(1,856)

(14,826)

Net disposal (additions) to property and equipment

(126)

Free Cash Flow

(1,841)

(14,952)

Free Cash Flow Margin

-3.5 %

-30.8 %

Constant Currency Revenue

Constant Currency Revenue is defined as our total revenue with foreign-currency-denominated revenues translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional currency. For an explanation of management's use of Constant Currency Revenue see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Constant Currency Revenue" section in the Company's Interim MD&A, which section is incorporated by reference herein.

The following table reconciles our Constant Currency Revenue to revenue, for the periods indicated:

(in thousands of U.S. dollars)

Three months ended April 30

2025

2024

Total revenue for the period

52,835

48,495

Negative impact of foreign exchange rate changes over the prior period

773

—

Constant Currency Revenue

53,608

48,495

Key Performance IndicatorsManagement uses a number of metrics, including the key performance indicators identified below, to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other issuers. These metrics are estimated operating metrics and not projections, nor actual financial results, and are not indicative of current or future performance.

As at April 30

(in millions of U.S. dollars, except percentages)

2025

2024

Change

ARR

206.2

190.3

8.4 %

Constant Currency Annual Recurring Revenue

206.8

190.3

8.7 %

SOURCE D2L Inc.