D2L Inc. Announces Second Quarter 2026 Financial Results

• Total revenue increased 11% year-over-year to US$54.8 million
• Subscription and support revenue grew 14% year-over-year to US$50.1 million
• Annual Recurring Revenue² reached US$212.6 million, up 7% over the prior year
• Adjusted EBITDA¹ increased to US$7.5 million (13.7% Adjusted EBITDA Margin¹), versus US$4.2 million (8.6% Adjusted EBITDA Margin) in the prior year
• Income for the period was US$2.7 million, versus a loss of US$0.3 million for the comparative period of the prior year

TORONTO, Sept. 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 second quarter ended July 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.

“Our second quarter results demonstrated strong SaaS revenue growth, improved year-over-year profitability, and execution on our innovation agenda,” said John Baker, CEO of D2L. “We saw solid performance across our go-to-market teams, driving momentum in the current market environment. We continued to advance our core growth pillars as we work toward market leadership in targeted education sectors and expand our corporate footprint. This quarter, we secured flagship customers across key markets and launched several new products, including transformative AI capabilities that address critical customer needs. These broaden our portfolio and revenue potential, as we build upon the success of our platform strategy to date.”

Second Quarter Fiscal 2026 Financial Highlights

• Total revenue of $54.8 million, up 11% from the same period in the prior year.
• Subscription and support revenue was $50.1 million, an increase of 14% over the same period of the prior year.
• Professional services and other revenue decreased by 10% to $4.6 million, reflecting a continued cautious spending environment in the U.S. market due to current macroeconomic conditions.
• Annual Recurring Revenue² (“ARR”) as at July 31, 2025 increased by 7% year-over-year, from $198.3 million to $212.6 million.
• Adjusted Gross Profit¹ increased by 15% to $38.7 million (70.6% Adjusted Gross Margin¹) from $33.6 million (68.4% Adjusted Gross Margin) in the same period of the prior year.
• Gross Profit increased by 14% to $38.1 million from $33.4 million in the same period of the prior year.
• Gross Profit Margin for subscription and support revenue increased to 75.1%, up 220 basis points from 72.9% in the same period of the prior year.
• Adjusted EBITDA¹ increased to $7.5 million, up from $4.2 million for the comparative period in the prior year.
• Income for the period was $2.7 million, versus a loss of $0.3 million for the comparative period of the prior year.
• Cash flows from operating activities was $15.0 million, versus $31.4 million during the same period in the prior year, and Free Cash Flow¹ was $14.9 million, compared to Free Cash Flow of $31.2 million in the same period in the prior year. The year-over-year decreases primarily reflect a shift in the timing of annual variable incentive compensation payments, which were made in Q2 Fiscal 2026 compared to Q1 Fiscal 2025. Additionally, certain customer collections that are typically received by the end of July extended into Q3 Fiscal 2026. As a result, the Company expects these timing differences to positively impact Free Cash Flow in Q3.
• Strong balance sheet at quarter end, with cash and cash equivalents of $102.5 million and no debt.
• During the quarter ended July 31, 2025, the Company repurchased and canceled 244,600 Subordinate Voting Shares under its normal course issuer bid (“NCIB”) for an aggregate purchase price of $2.5 million.

Second Quarter Fiscal 2026 Financial Results – Selected Financial Measures
(in thousands of U.S. dollars, except for percentages)

Second Quarter Business & Operating Highlights

• D2L continued to grow its customer base in North America education, adding University of the People and Red Deer Polytechnic.
• D2L continued to grow its customer base in global education, adding JIS Group and SASTRA University in India, and North-West University in South Africa.
• D2L expanded its corporate customer portfolio, adding the Project Management Institute and CPA Australia.
• Announced new AI enhancements to D2L Lumi and D2L Brightspace, as well as the launch of D2L Accessibility+ and Createspace at D2L Fusion 2025.
• Named one of Canada’s Best Managed Companies in 2025 for the 13th consecutive year and Canada’s Best Companies 2025 by TIME and Statista.
• Named the Overall LMS Solution Provider of the Year in the LMS Category for the 2025 EdTech Breakthrough Awards.
• Released its annual Sustainability Report highlighting its commitment to transforming education worldwide and contributing to a sustainable future.

Financial Outlook
The Company updated its previous financial guidance for the year ended January 31, 2026 as follows: 

• Subscription and support revenue in the range of $198 million to $200 million, implying growth of 10-11% over Fiscal 2025, and 10-11% growth on a constant currency basis, an increase from previously issued guidance of $194 million to $196 million; 
• Total revenue in the range of $219 million to $221 million, unchanged from previously issued guidance, implying growth of 7-8% over Fiscal 2025, and 7-8% growth on a constant currency basis; and  
• Adjusted EBITDA in the range of $32 million to $34 million, unchanged from previously issued guidance, implying an Adjusted EBITDA margin of 15%. 

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.

Total revenue guidance remains unchanged, which reflects the increase in subscription and support revenue, offset by a decrease in the contribution of professional services and other revenue due to the more cautious spending environment, particularly for curriculum advisory services in the U.S. Higher Education market. The updated subscription and support revenue guidance reflects the strong first half of the year performance and the relative strengthening of certain foreign currencies. This movement in foreign exchange has an offsetting increase to reported operating expenses and therefore Adjusted EBITDA guidance has remained unchanged. 

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 July 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 July 31, 2025 (the “Interim MD&A”).

Conference Call & Webcast
D2L management will host a conference call on Thursday, September 11, 2025 at 8:30 am ET to discuss its second quarter Fiscal 2026 financial results.

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, in the “Summary of Factors Affecting Our Performance” section 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 July 31, 2025 and January 31, 2025
(Unaudited)

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