Net income for the three and nine months ended March 31, 2026 of $66.0 million and $5.9 million, respectively.
Adjusted EBITDA(1) for the three and nine months ended March 31, 2026 of $42.9 million and $143.7 million, respectively.
TORONTO, May 19, 2026 /CNW/ - Dye & Durham Limited (the "Company" or "Dye & Durham") (TSX:DND), a leading provider of cloud-based legal practice management software, today announced its financial results for the three and nine months ended March 31, 2026.
"Our third quarter results reflect the progress we are making to stabilize the business," said George Tsivin, Chief Executive Officer, Dye & Durham. "While market headwinds continue to affect parts of our portfolio, we reduced debt and improved net income in the quarter. We are executing against our transformation program, driving cost savings and reinvesting in the core business. We remain focused on operational discipline, product innovation, and customer value - positioning Dye & Durham as a stronger company with a clearer path to sustainable value creation."
Third Quarter Fiscal 2026 Highlights ($ presented in thousands)
Consolidated highlights
Selected key metrics:
Three months ended March 31,
Nine months ended March 31,
2025
2025
2026
(Restated)
2026
(Restated)
$
$
$
$
Revenue
91,180
103,420
306,506
335,557
Net income (loss)
66,001
(23,449)
5.939
(58,408)
Cash flow from operating activities
14,081
29,122
87,875
91,388
Adjusted EBITDA(1)
42,867
52,862
143,654
185,065
Certain comparative figures for the three and nine months ended March 31, 2025 have been restated. See "Restatement of Prior Period Comparative Information" in Note 2 of the Condensed Consolidated Interim Financial Statements for the three and nine months ended March 31, 2026.
(1) Represents a non-IFRS measure. See "Non-IFRS Measures."
Revenue for the three months ended March 31, 2026, was $91.2 million, representing a decrease of $12.2 million, or 12%, or, excluding the impact of the divestiture of Credas Technologies Ltd. ("Credas"), $8.2 million, or 8%, compared to the three months ended March 31, 2025. The decrease in revenue was primarily driven by a combination of market downturn and the impact of lower volumes and pricing from customer losses affecting practice management and data insights platforms.
Revenue for the nine months ended March 31, 2026, was $306.5 million, representing a decrease of $29.1 million, or 9%, or, excluding the impact of the divestiture of Credas, $27.8 million, or 9%, compared to the equivalent period in the prior year. The decrease was primarily driven by a combination of market downturn, the impact of lower volumes and pricing from both the loss of customers and contract renewal terms affecting practice management and data insights platforms, partially offset by growth in Banking Technology and Affinity.
Net income for the three months ended March 31, 2026, was $66.0 million, compared to a net loss of $23.5 million for the equivalent period in the prior year. Net income for the nine months ended March 31, 2026, was $5.9 million, compared to a net loss of $58.4 million for the equivalent period in the prior year. The higher income for the three months ended March 31, 2026 was primarily driven by the gain on the disposal of Credas, improved gross margin, lower stock-based compensation recovery, rather than expense, as a result of the forfeitures of stock options by the Company's former CEO, and lower amortization and depreciation expense, offset by lower revenue, higher finance cost and higher acquisition, restructuring and other costs. The income for the nine months ended March 31, 2026 as compared to a loss in the prior period was primarily driven by the gain on the disposal of Credas, lower amortization and depreciation expense, lower finance costs and lower acquisition, restructuring and other costs, offset by lower revenue, lower stock-based compensation recovery, and higher technology and operations costs.
Net cash provided by operating activities for the three months ended March 31, 2026, was $14.1 million, compared to $29.1 million for the equivalent period in the prior year. The year-over-year decline in net cash provided by operating activities was driven by lower contributions from working capital, offset by lower financing costs and lower taxes paid.
Adjusted EBITDA(1) for the three months ended March 31, 2026, was $42.9 million, a decrease of $10.0 million, or 19%, or, excluding the impact of the divestiture of Credas, $8.7 million, or 17%, compared to the three months ended March 31, 2025. The decrease was primarily driven by the impacts of revenue described above, professional fees incurred (relating to audit matters), and strategic reinvestments necessary to stabilize the business, predominantly with respect to labour and IT infrastructure, partially offset by cost reductions resulting from operational efficiencies.
For the nine months ended March 31, 2026, and 2025, Adjusted EBITDA(1) was $143.6 million and $185.1 million, respectively, a decrease of $41.4 million, or 22%. Excluding the impact of the divestiture of Credas, Adjusted EBITDA(1) decreased by $40.9 million, or 23%, for the nine months ended March 31, 2026, compared to the equivalent period in the prior year. The decrease was primarily driven by revenue impacts described above, professional fees incurred (relating to audit matters), and strategic reinvestments necessary to stabilize the business, predominantly with respect to labour, IT infrastructure, and lower capitalization rates in the first half of the fiscal year as the Company temporarily shifted certain expenditures from capitalized projects to maintenance expense. The increase in costs was partially offset by operational efficiencies largely realized in the period.
The Company was in compliance with the financial maintenance covenant under its senior credit agreement with respect to the three months ended March 31, 2026. At March 31, 2026, the Company had drawn $31.5 million on the revolving credit facility and the Consolidated First Lien Net Leverage Ratio (as such term is defined in the senior credit agreement) was approximately 5.52x.
Quarterly Dividend
During the three and nine months ended March 31, 2026, the Company did not declare or pay any dividends to its shareholders. In the comparable period ended March 31, 2025, the Company paid aggregate dividends of approximately $2.5 million.
The board of directors of the Company (the "Board") has elected to indefinitely suspend the declaration and payment of dividends (quarterly or otherwise) until further notice. The decision by the Board not to reinstate the declaration and payment of dividends at this time is based on the Company's capital allocation priorities—specifically its focus on debt reduction and capital reinvestment. The declaration and payment of future dividends, if any, is at the discretion of the Board and is subject to a number of factors, including the Company's financial performance, cash flow requirements, debt covenants, and any other considerations the Board deems relevant. There can be no assurance that dividends will be declared or paid in any future period.
Update on Q3 2025 Forward-Looking Information and Run-Rate Cost Savings
In connection with the release of the Company's interim financial statements for the three and nine months ended March 31, 2025 and 2024 ("Q3 2025 Results"), the Company disclosed its expectation of both near-term (the "Near-Term FLI") and long-term financial (the "Long-Term FLI") and operational performance. Set out below is an update on (a) the Company's actual results for the last twelve months ended March 31, 2026 ("LTM March 2026") as compared to the Near-Term FLI, (b) the Long-Term FLI, and (c) the run-rate cost savings as previously disclosed on November 26, 2025.
With respect to the Near-Term FLI:
Acquisition, restructuring and other costs for the LTM March 2026 are $50.6 million, as compared to $79.2 million for the last twelve months ended March 31, 2025 ("LTM March 2025"), representing a reduction of $28.6 million during the LTM March 2026 as compared to LTM March 2025. The primary drivers impacting acquisition, restructuring and other costs to date in LTM March 2026 include costs related to the delayed filing of the audited consolidated financial statements for the year ended June 30, 2025 and condensed consolidated interim financial statements for the three months ended September 30, 2025, and 2024, together with other corresponding documents, and the waiver the Company received under its senior credit agreement in December 2025, as well as ongoing efforts to streamline operations.
Net interest for LTM March 2026 is $110.6 million, as compared to net interest reported for LTM March 2025 of $142.5 million, reflecting a reduction of $31.9 million. The reduction in net interest during the period was largely due to the sale of Credas and the application of the proceeds to repay the Company's indebtedness, and the repayment of the Company's 3.75% convertible debentures, which matured on March 1, 2026, as well as broader balance sheet optimization initiatives.
With respect to the Long-Term FLI:
Following review by the Board, the Company has determined to withdraw the Long-Term FLI such that it will no longer provide updates on the Long-Term FLI going forward. Instead, the Company expects to report on its financial performance in a manner that is consistent with its reporting in recent quarters under its current management and Board.
All metrics, other than Organic Revenue Growth, are currently expected to be substantially in line with the previously disclosed Long-Term FLI. With respect to Organic Revenue Growth disclosed in the Long-Term FLI, the Company no longer expects to achieve high single digits Organic Revenue Growth within the three-to-five-year time frame reported in connection with its Q3 2025 Results as a consequence of a combination of factors, including lower than expected transaction volumes in certain of the Company's core business lines, continued softness in real estate market activity, longer sales cycles impacting new customer acquisition, and increased competition from new entrants in the Company's market. As the Company is withdrawing the Long-Term FLI, it will no longer provide updates regarding the Long-Term FLI or a comparison of actual results to the Long-Term FLI.
With respect to Run-Rate Cost Savings:
As disclosed on November 26, 2025, a program to drive cost savings across the business and create reinvestment capacity is underway and being executed over the next two years through initiatives focused on improving operational efficiency, implementing automation, optimizing workflows, and aligning resources to support sustainable growth. Approximately 60% of the annualized run-rate savings are anticipated in fiscal year 2026 ("FY2026") and the remainder are anticipated in fiscal year 2027 ("FY2027").
In calculating the expected annualized run-rate savings, the Company undertook a detailed cost assessment and developed a plan (the "Cost Reduction Plan") to execute cost reductions in both FY2026 and FY2027. The Cost Reduction Plan has identified $11 million of run-rate cost savings to be executed in FY2026 going into FY2027, and an additional $6 to $8 million of run-rate cost savings to be executed in FY2027 going into fiscal year 2028. The categories of run-rate savings in FY2026 are primarily based on offshoring and automation, vendor management and office cost reduction and reduction in sales and marketing expenses. The remainder of the expected savings are primarily based on steps to be taken in FY2027, which include additional office cost optimization and automation.
The Company has considered in detail individually and collectively the nature and timing of these cost cuts and has determined, as of the date hereof, that they are achievable. However, given the risk of timing delays and the potential for certain of these costs reductions to require an initial upfront investment, the Company has provided a range for the annualized run-rate savings and estimated the timing of execution to be approximately 60% in FY2026 (based on the midpoint of the range) and the remainder in FY2027. In calculating the expected annualized run-rate savings, the Company assumed that it could implement the Cost Reduction Plan, that the savings realized would be in line with expected savings, that the cost of replacement services (such as automation) would not materially increase from the date hereof until the date such replacement services are engaged, and that the needs of the Company would not change such that it would become impractical to implement some or all of the initiatives noted above. If any of these assumptions are incorrect or prove to be different, the Company may not be able to implement some or all of the parts of the Cost Reduction Plan that have yet to be implemented and/or may not realize the savings that are expected to be derived from the Cost Reduction Plan.
Conference Call Notification
As previously disclosed, the Company will host a ...
