D2L Inc. Announces Third Quarter 2025 Financial Results

In This Article:

  • Subscription and support revenue grew 13% year-over-year to US$46.8 million

  • Professional services and other revenue in the quarter increased to US$7.5 million

  • Annual Recurring Revenue1 reached US$201.7 million, up 12% over the prior year

  • Adjusted EBITDA2 of US$10.4 million and Adjusted EBITDA margin2 of 19.2% margin in the quarter

  • Company increases Fiscal 2025 revenue guidance to $204 million to $205 million and increases Adjusted EBITDA guidance to $25.5 million to $26.5M million

TORONTO, Dec. 4, 2024 /CNW/ - D2L Inc. (TSX: DTOL) ("D2L" or the "Company"), a leading global learning technology company, today announced financial results for its Fiscal 2025 third quarter ended October 31, 2024. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards ("IFRS") unless otherwise indicated.

D2L Logo (CNW Group/D2L Inc.)
D2L Logo (CNW Group/D2L Inc.)

"Our strong third-quarter results were highlighted by healthy growth in subscription revenue and significant margin expansion, driving substantial improvement in our 'Rule of 40' performance as we successfully balance growth and market share gains with improving profitability," said John Baker, CEO of D2L. "We continue to benefit from high win rates in our target markets as we navigate the broader macroeconomic conditions. We're making disciplined investments that support our goal of long-term market leadership, and have seen strong customer response and pipeline generation from our recently expanded product portfolio, including our AI offering Lumi and Creator+. These new products make learning experiences better and easier to create for our customers, leading to improved learning outcomes and better learner retention."

Third Quarter Fiscal 2025 Financial Highlights

  • Total revenue was $54.3 million, up 18% from the same period in the prior year.

    • Subscription and support revenue was $46.8 million, an increase of 13% over the same period of the prior year.

    • Professional services and other revenue was $7.5 million, an increase of $2.8 million from the same period of the prior year. During the current quarter, the Company recognized services revenue of $1.2 million from re-evaluating the completion progress of certain professional services engagements. Excluding this revenue, services revenue increased by $1.6 million over the prior year, and total revenue increased by $7.1 million or 15.2% year over year.

  • Annual Recurring Revenue1 as at October 31, 2024 increased by 12% or $21.6 million year-over-year, from $180.1 million to $201.7 million.

  • Cash flow from operating activities was $11.4 million, compared to $15.3 million in the same period in the prior year, and Free Cash Flow2 was $11.3 million, compared to $14.2 million in the same period in the prior year.

  • Cash flow from operating activities for the 9-month period ended October 31, 2024 was $28.0 million, up 32% compared with $21.2 million for the same period in the prior year.

  • Gross profit increased 22% to $37.4 million (68.9% gross profit margin) from $30.6 million (66.4% gross profit margin) in the same period of the prior year. Gross profit margin for subscription and support revenue increased to 72.7%, up 140 basis points from 71.3% in the same period of the prior year.

  • Adjusted EBITDA2 increased to $10.4 million (19.2% Adjusted EBITDA margin2) from $2.1 million (4.6%) for the same period in the prior year. Excluding the additional services revenue of $1.2 million recognized in the quarter, Adjusted EBITDA and Adjusted EBITDA Margin would have been $9.2 million and 17.4%, respectively, for the three months ended October 31, 2024.

  • Income for the period was $5.5 million, compared with a loss of $0.4 million for the comparative period of the prior year.

  • Strong balance sheet at quarter end, with cash and cash equivalents of $108.3 million and no debt.

  • During the third quarter, the Company repurchased and canceled 68,600 Subordinate Voting Shares under its normal course issuer bid ("NCIB"). The Company has repurchased and cancelled 348,080 shares since the inception of the NCIB on December 8, 2023.

  • On December 4, 2024, the Company announced that the Toronto Stock Exchange (the "TSX") accepted the Company's notice to launch a new NCIB, commencing on December 9, 2024.