Annual Recurring Revenue ("ARR")2 of US$213.4 million, up 6% over the prior year
Total revenue was relatively unchanged year-over-year at US$54.1 million
Adjusted EBITDA1 was US$7.9 million (14.7% Adjusted EBITDA Margin1), versus US$10.4 million (19.2% Adjusted EBITDA Margin) in the prior year; year-to-date Adjusted EBITDA increased 33% to $24.8 million
Income for the period was US$4.4 million, versus US$5.5 million for the comparative period of the prior year
Strong balance sheet at quarter end, with cash and cash equivalents of $110.5 million and no debt
TORONTO, Dec. 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 third quarter ended October 31, 2025. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards ("IFRS") unless otherwise indicated.
"While Q3 proved more challenging than anticipated due to higher churn among U.S. K-12 clients, we remain on track to meet our full-year guidance for SaaS revenue and Adjusted EBITDA," said John Baker, CEO of D2L. "We're encouraged by strong indicators in ARR bookings and better-than-expected pipeline generation, which reinforce our confidence heading into Q4 and the year ahead. Our global competitive position has never been stronger, and we're accelerating adoption of new innovations in our learning platform, including our AI solution, Lumi, and Creator+."
Third Quarter Fiscal 2026 Financial Highlights
Subscription and support revenue of $49.4 million, an increase of 6% over the same period of the prior year, reflecting revenue from new customers coupled with strong upsell expansion from existing customers, and was partially offset by higher-than-typical churn within the U.S. K-12 market.
Professional services and other revenue decreased by 38% to $4.7 million, reflecting a $1.2 million a one-time revenue true-up adjustment included in the prior year and a generally cautious spending environment in the U.S. market due to current macroeconomic conditions.
Total revenue of $54.1 million, relatively unchanged from the same period in the prior year.
ARR2 as at October 31, 2025 increased by 6% year-over-year, from $201.7 million to $213.4 million. Continued strength in ARR bookings from the Company's global Higher Education and Corporate markets was partially offset by churn in the U.S. K-12 market. Excluding the K-12 market, ARR increased by 10% from the comparative period in the prior year.
Adjusted Gross Profit1 decreased by 3% to $36.7 million (67.8% Adjusted Gross Margin1) from $38.0 million (69.9% Adjusted Gross Margin) in the same period of the prior year.
Gross Profit Margin for subscription and support revenue decreased to 71.1% from 72.7% in the same period of the prior year. The decrease mainly reflects additional costs for the planned migration of a database technology, which had a roughly 200 basis point impact on margins. The Company expects these additional costs to scale down over the course of Fiscal 2027 and for this technology change to create incremental margin benefits in Fiscal 2028 and beyond.
Adjusted EBITDA1 decreased to $7.9 million, from $10.4 million for the comparative period in the prior year.
Income for the period was $4.4 million, versus $5.5 million for the comparative period of the prior year.
Cash flows from operating activities was $17.2 million, versus $11.4 million during the same period in the prior year, and Free Cash Flow1 was $18.8 million, compared to Free Cash Flow of $11.3 million in the same period in the prior year.
Strong balance sheet at quarter end, with cash and cash equivalents of $110.5 million and no debt.
During the quarter ended October 31, 2025, the Company repurchased and canceled 223,500 Subordinate Voting Shares under its normal course issuer bid ("NCIB"), bringing the total for the fiscal year to 636,900 Subordinate Voting Shares as of October 31, 2025. Subsequent to quarter end, the Company announced that the Toronto Stock Exchange has accepted the Company's notice to launch a new NCIB, commencing on December 12, 2025.
1 A non-IFRS financial measure or non-IFRS ratio. Refer to "Non IFRS Financial Measures" section of this press release.
2 Refer to "Key Performance Indicators" section of this press release.
Third Quarter Fiscal 2026 Financial Results, Selected Financial Measures(in thousands of U.S. dollars, except for percentages)
Three months ended October 31
Nine months ended October 31
2025
2024
Change
Change
2025
2024
Change
Change
$
$
$
%
$
$
$
%
Subscription & Support Revenue
49,389
46,752
2,637
5.6 %
147,268
133,723
13,545
10.1 %
Professional Services & Other Revenue
4,679
7,547
(2,868)
(38.0 %)
14,407
18,240
(3,833)
(21.0) %
Total Revenue
54,068
54,299
(231)
(0.4 %)
161,675
151,963
9,712
6.4 %
Constant Currency Revenue1
54,075
54,299
(224)
(0.4 %)
162,132
151,963
10,169
6.7 %
Gross Profit
36,070
37,390
(1,320)
(3.5 %)
111,188
103,441
7,747
7.5 %
Adjusted Gross Profit 1
36,657
37,964
(1,307)
(3.4 %)
113,017
104,439
8,578
8.2 %
Adjusted Gross Margin1
67.8 %
69.9 %
69.9 %
68.7 %
Income for the period
4,386
5,547
(1,161)
(20.9 %)
10,335
5,857
4,478
76.5 %
Adjusted EBITDA1
7,941
10,420
(2,479)
(23.8 %)
24,754
18,652
6,102
32.7 %
Cash Flows From Operating Activities
17,241
11,420
5,821
51.0 %
30,412
28,037
2,375
8.5 %
Free Cash Flow1
18,812
11,296
7,516
66.5 %
32,200
27,912
4,288
15.4 %
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.
2 Refer to "Key Performance Indicators" section of this press release.
Third Quarter Business & Operating Highlights
D2L continued to grow its customer base in global education, adding the University of Central Arkansas, St. Ambrose University, Oregon Health & Science University, and the University of the West of Scotland.
D2L expanded its corporate customer portfolio, adding Florida Center for Nursing, along with a leading global banking institute and one of the largest nursing unions and professional bodies.
Welcomed Kevin Capitani to D2L as SVP of Employee Training and Strategic Initiatives to lead the Company's Corporate market growth and expansion in employee training.
Announced a first-of-its-kind partnership with 1EdTech, streamlining joint certification access for D2L partners.
Jointly received eight Brandon Hall Group HCM Excellence Awards in collaboration with valued customers.
Received two Tech & Learning Awards of Excellence: Back to School 2025 for D2L Brightspace and Accessibility+.
Named on the 2026 GSV 150 list as one of the Most Transformational Growth Companies in Digital Learning and Workforce Skills.
Released its latest AI in Education survey revealing how U.S. higher education professionals perceive and use AI in their careers.
Financial Outlook
The Company is updating its financial guidance for the year ended January 31, 2026 as follows:
Subscription and support revenue in the range of $198 million to $199 million, implying growth of 10% over Fiscal 2025, versus previously issued guidance of $198 million to $200 million;
Total revenue in the range of $217 million to $218 million, implying growth of 6% over Fiscal 2025, versus previously issued guidance of $219 million to $221 million; and
Adjusted EBITDA in the range of $32 million to $33 million, implying an Adjusted EBITDA margin of 15%, versus previously issued guidance of $32 million to $34 million.
This outlook reflects the Company's continued emphasis on balancing growth and profitability. The anticipated revenue growth rates are informed by the current macroeconomic and geopolitical environment and its impact on our selling activities, inclusive of a general slowness in activity within the U.S. Higher Education market.
The updated subscription and support revenue guidance reflects higher-than-typical churn this fiscal year, particularly in our U.S. K-12 market. The updated total revenue guidance reflects both the reduction in subscription and support guidance driven by U.S. K-12 churn and a continued decline in the contribution of professional services revenue due to the more cautious spending environment, particularly for curriculum advisory services in the U.S. Higher Education market.
The Company presented a Medium Term Target Operating Model that we expect to achieve by Fiscal 2028 in the Company's Annual MD&A. This Medium Term Target Operating Model remains unchanged as of October 31, 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 October 31, 2025 (the "Interim MD&A").
Conference Call & Webcast
D2L management will host a conference call on Thursday, December 11, 2025 at 9:00 am ET to discuss its third quarter Fiscal 2026 financial results.
Date:
Thursday, December 11, 2025
Time:
9:00 am (ET)
Dial in number:
Canada: 1 (833) 950-0062
United States: 1 (833) 470-1428
Access code: 056574
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; expected improvements in gross margin; the Company's budgets, operations and taxes; judgments and estimates impacting the financial statements; the markets in which the Company operates; industry trends and the Company's competitive position; expansion of the Company's product offerings; the anticipated impacts of future acquisitions; trends in research and development expenses, sales and marketing expenses, and general and administrative expenses, each as a percentage of revenue; planned expenditures in sales and marketing and research and development activities; the timing and pace for achieving scalability; expectations regarding the growth of the Company's customer base, revenue, and revenue generation potential and expectations regarding costs, including as a percentage of revenue; and the Company's equity investment in, and loan to, SkillsWave Corporation ("SkillsWave").
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 in our Interim MD&A, including "Summary of Factors Affecting Our Performance" 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 achieve more than they dreamed possible. Working closely with customers all over the world, D2L is on a mission to make learning more inspiring, engaging and human. Find out how D2L helps transform lives and delivers outstanding learning outcomes in K-12, higher education and business at www.D2L.com.
For further information, please contact:Craig Armitage, Investor 347-8954
D2L INC.Condensed Consolidated Interim Statements of Financial Position(In U.S. dollars)
As at October 31, 2025 and January 31, 2025(Unaudited)
October 31, 2025
January 31, 2025
Assets
Current assets:
Cash and cash equivalents
$ 110,454,708
$ 99,184,514
Trade and other receivables
20,923,640
26,430,586
Uninvoiced revenue
3,477,381
2,756,998
Prepaid expenses
7,720,645
7,564,837
Deferred commissions
5,179,955
5,106,976
147,756,329
141,043,911
Non-current assets:
Other receivables
311,073
422,589
