D2L Inc. Announces Fourth Quarter and Fiscal 2025 Financial Results

Total revenue in Q4 increased 12% year-over-year to US$53.3 million; full-year revenue grew 13% to US$205.3 million

Q4 subscription and support revenue grew 11% year-over-year to US$46.8 million; full-year subscription and support revenue grew 11% to US$180.6 million

Constant Currency Annual Recurring Revenue1 reached US$205.3 million at year-end, up 9% over the prior year-end

Cash flow from operating activities of US$27.9 million in Fiscal 2025, an increase of US$12.2 million from the prior year

Q4 Adjusted EBITDA2 of US$9.4 million (17.7% Adjusted EBITDA Margin), versus US$3.5 million (7.3% Adjusted EBITDA Margin) in the prior year

TORONTO, April 2, 2025 /CNW/ - D2L Inc. (TSX:DTOL) ("D2L" or the "Company"), a leading global learning technology company, today announced financial results for its Fiscal 2025 fourth quarter and full year ended January 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.

"We reported a strong fourth quarter that underscores our effective execution in Fiscal 2025, with revenue and Adjusted EBITDA exceeding guidance," said John Baker, CEO of D2L. "We have strengthened our core learning platform and meaningfully broadened our product portfolio. Our investments in AI capabilities with D2L Lumi and improving the learning experience with Creator+ are hitting the mark and helping customers improve learning outcomes. As organizations navigate the near-term macroeconomic conditions, we are competitively well positioned as a strategic partner to help them implement a modern learning platform that is increasingly mission-critical."

Fourth Quarter and Fiscal 2025 Financial Highlights 

Total revenue of $53.3 million increased by 12% over the same period in the prior year and Constant Currency Revenue1 increased by 14% to $54.3 million.  

Subscription and support revenue was $46.8 million, an increase of 11% over the same period of the prior year, reflecting growth from new customers and strong revenue retention and expansion from existing customers.

Annual Recurring Revenue1 as at January 31, 2025 increased by 6% year-over-year to $200.2 million and Constant Currency Annual Recurring Revenue1 grew by 9% over the prior year to $205.3 million, with approximately $4.0 million of this $4.9 million foreign exchange impact happening in Q4 2025.  

Adjusted Gross Profit2 increased by 15% to $37.1 million (69.6% Adjusted Gross Margin2) from $32.2 million (67.7% Adjusted Gross Margin) in the same period of the prior year.

Adjusted EBITDA2 of $9.4 million, up from Adjusted EBITDA of $3.5 million for the comparative period in the prior year.

Income for the period was $19.9 million, compared with $0.6 million for the comparative period of the prior year.

Cash flow used in operating activities improved to $0.1 million, versus cash flow used in operating activities of $5.5 million in the same period in the prior year.  

Free Cash Flow2 was negative $0.6 million, compared to Free Cash Flow of negative $6.1 million in the same period in the prior year. Full-year Free Cash Flow grew to $27.0 million, up from $9.9 million in Fiscal 2024.

Constant Currency Net Revenue Retention Rate1 was 102.7% for Fiscal 2025, up from 102.1% for Fiscal 2024.

Strong balance sheet at quarter end, with cash and cash equivalents of $99.2 million and no debt. 

During Fiscal 2025, the Company repurchased and canceled 401,480 Subordinate Voting Shares under its Normal Course Issuer Bid ("NCIB").

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 and Reconciliation of Non-IFRS Financial Measures" section of this press release.

Fourth Quarter and Full Year Fiscal 2025 Financial Results, Selected Financial Measures(in thousands of U.S. dollars, except for percentages)

Three months ended January 31

 

Year ended January 31

 

2025

2024

Change

Change

2025

2024

Change

Change

$

$

$

%

$

$

$

%

Subscription & Support Revenue

46,846

42,187

4,659

11.0 %

180,569

162,232

18,337

11.3 %

Professional Services & Other Revenue

6,467

5,382

1,085

20.2 %

24,707

20,148

4,559

22.6 %

Total Revenue

53,313

47,569

5,744

12.1 %

205,276

182,380

22,896

12.6 %

Constant Currency Revenue1

54,277

47,569

6,708

14.1 %

206,403

182,380

24,023

13.2 %

Gross Profit

36,523

32,035

4,488

14.0 %

139,964

122,196

17,768

14.5 %

Adjusted Gross Profit1

37,121

32,185

4,936

15.3 %

141,560

122,807

18,753

15.3 %

Adjusted Gross Margin1

69.6 %

67.7 %

69.0 %

67.3 %

Income (Loss) for the period

19,865

563

19,302

3,428.4 %

25,722

(3,542)

29,264

826.2 %

Adjusted EBITDA1

9,428

3,463

5,965

172.2 %

28,080

7,862

20,218

257.2 %

Cash Flows from (used in) Operating Activities

(135)

(5,512)

5,377

97.6 %

27,902

15,659

12,243

78.2 %

Free Cash Flow1

(588)

(6,077)

5,489

90.3 %

26,979

9,932

17,047

171.6 %

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.

Fourth Quarter Business & Operating Highlights

D2L's learning platform had more than 20 million users at year end, up from 18 million at the beginning of the year. D2L's customer list grew to more than 1,430 as at January 31, 2025 (up from over 1,310 as at January 31, 2024), representing a broad cross-section of colleges, universities, K-12 school districts and companies in more than 40 countries.

D2L continued to grow its customer base in global education, adding Roger Williams University, Salta Group, and Desh Bhagat University.

D2L expanded its corporate customer portfolio, adding Buesa Energy LLC, Alberta Law Enforcement Response Teams Ltd., and Sheppard & Company.

In January, D2L appointed Andrew Datars as its Chief Technology Officer.

D2L Brightspace received numerous accolades, including being named a top Learning Management System ("LMS") by both Training Industry and the Craig Weiss Group, and as a winner in the Best Enterprise LMS by Talented Learning. D2L Brightspace also won four Brandon Hall Awards, including gold for best advancement in content authoring technology for the All-New Creator+ tool.

D2L was selected as one of the winners for its newest artificial intelligence (AI)-powered tool, D2L Lumi, in the Primary, Secondary and Higher Education categories in the Tech & Learning Awards of Excellence: Best of 2024.

D2L was named on Forbes 2025 list of Canada's best employers.

In addition, the Company announced that Stephen Laster, President, is departing D2L on May 9th, 2025.  Stephen is taking on a new opportunity as CEO of a private company that does not compete with D2L.

Financial OutlookD2L is initiating financial guidance for the year ended January 31, 2026 ("Fiscal 2026"). D2L plans to continue making measured investments for growth in Fiscal 2026 while scaling its operations towards increasing levels of profitability. Specifically, for Fiscal 2026 the Company is issuing the following guidance:

Subscription and support revenue in the range of $194 million to $196 million, implying growth of 7-9% over Fiscal 2025, and 9-10% growth on a constant currency basis;

Total revenue in the range of $219 million to $221 million, implying growth of 7-8% over Fiscal 2025, and 8-9% growth on a constant currency basis; and

Adjusted EBITDA in the range of $32 million to $34 million, implying an Adjusted EBITDA Margin of 15%.

"For this fiscal year, our expected growth rates reflect the impact of foreign exchange rates and the current macroeconomic environment, which we view as transitory in nature," said Josh Huff, Chief Financial Officer. "We continue to see robust growth drivers for the company over the medium term, which we expect will lead to higher revenue growth along with further Adjusted EBITDA Margin expansion as we increase NRR 1, continue to grow our customer base and market share, and consider additional strategic acquisitions."

These targets demonstrate the Company's continued emphasis on balancing growth and profitability, including increased revenue and Adjusted EBITDA in Fiscal 2026 relative to Fiscal 2025. Further, these targets are based upon the current operations of the Company and do not include the impact of any future incremental acquisition transactions, which, if any occur, would be expected to be additive to the revenue and profits earned by D2L in the period. The achievement of the Adjusted EBITDA guidance is based upon continued efficiencies and scale in our operations as we grow our revenue. The anticipated revenue growth rates in Fiscal 2026 are informed in part by the levels of sales activity that occurred during Fiscal 2025, and the resulting impact of such activity on the corresponding revenue recognition in Fiscal 2026. The anticipated revenue growth rates in Fiscal 2026 are also informed by the current macroeconomic environment and its impact on foreign exchange rates and our selling activities. 

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

Medium-Term Outlook and Target Operating Model

In September 2022, management presented an updated target operating model to evolve the business toward balanced growth and profitability, based upon the Company's outlook at that time and which reflected the operating levels that the Company expected to achieve by Fiscal 2025. Overall, our Fiscal 2025 performance was consistent with this previously presented target operating model. Since our original presentation of this model during Fiscal 2023, we have delivered meaningful top-line and bottom-line growth, with an Adjusted EBITDA improvement of approximately $31 million comparing Fiscal 2023 to Fiscal 2025 (using actual Fiscal 2025 Adjusted EBITDA of $28.1 million to actual Adjusted EBITDA of negative $2.9 million in Fiscal 2023). Our progress in Fiscal 2025 should position us well to continue to deliver top-line and bottom-line growth as we look out over the medium term.  

With the previously presented multi-year target operating model concluding with the Fiscal 2025 results, management is presenting an updated Medium Term Target Operating Model, which reflects the year-over-year revenue growth and Adjusted EBITDA Margin the Company expects to achieve by Fiscal 2028 (the year ending January 31, 2028). Over the medium term, the Company will continue to balance growth and profitability, including making measured investments in growth opportunities and optimizing the operations for increased profitability.

Fiscal 2028

Revenue Growth 

10% to 15%

Adjusted EBITDA Margin 

18% to 20%

Our target operating model is based on assumptions and factors that we believe are reasonable in the circumstances, given the applicable time periods, our current and past growth rates, current and past foreign exchange rates and the impact on our results, our current customer contractual commitments and renewal experience and historic results, as well as our view of the drivers of our growth, estimated growth in our target addressable market, and our expectations for our growth strategies.

For additional details on the Company's outlook, refer to the "Financial Outlook" section of the Company's Management's Discussion and Analysis ("MD&A") for the years ended January 31, 2025 and 2024. The principal assumptions and factors underlying this are discussed below. See also the assumptions and factors noted at "Forward-Looking Information".

The foregoing information has been prepared by management of the Company and has been outlined assuming accounting policies that are generally consistent with our current accounting policies. This information is based on underlying assumptions and factors that management believes are reasonable in the circumstances, given the applicable time periods, as well as the Company's capabilities and business plans, current and past growth rates, current customer contractual commitments, customer purchasing history, renewal experience and historic results, management's assessment of market dynamics and views of the drivers of growth, estimated growth in the target addressable market, expectations concerning growth strategies and opportunities, and ability to scale operations and realize cost efficiencies as the Company grows revenues. The foregoing is also based on assumptions relating to external factors that may be beyond our control, including general economic conditions remaining stable, the industry trends described in the "Industry Overview and Trends" section of the Company's Annual Information Form ("AIF"), the outcome of our international expansion, offering expansion, and partner ecosystem expansion initiatives, and cost savings from efficiency improvements and operating leverage.  However, there can be no assurance that we will be successful in achieving the increases in performance set out above. Nor can any assurances be given regarding the realization of our expectations and drivers that anticipated growth and margin improvements are based on.

The purpose of disclosing our medium-term outlook is to provide investors with additional information concerning the Company's operating focus and expected performance over the medium term. However, there can be no assurance that we will be successful in achieving that which is set out above. For example, our strategy may evolve in response to changes in external factors outside our control such as changes in the markets that our customers operate in or general economic conditions, and these factors may affect our ability to achieve these increases in performance over the medium term.  Our views on the medium-term outlook is also forward-looking information for the purposes of applicable securities laws in Canada and readers are therefore cautioned that actual results may vary materially from that discussed above. See also "Summary of Factors Affecting our Performance" and "Forward-Looking Information" set out in the Company's MD&A and "Risk Factors" in the Company's AIF for a description of other assumptions underlying the forward-looking information and of the risks and uncertainties that generally impact our business and that could cause actual results to vary materially.

Conference Call & WebcastD2L management will host a conference call on Thursday, April 3, 2025 at 8:30 am ET to discuss its fourth quarter and full-year Fiscal 2025 financial results.

Date:

Thursday, April 3, 2025

Time:

8:30 am (ET)

Dial in number:

Canada/US: 1 (833) 470-1428

International: 1 (404) 975-4839

Access code: 088343

Webcast:

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

The webcast will also be archived for replay.

Forward-Looking InformationThis 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; 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; and 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.

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 above; 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 Company's MD&A for the years ended January 31, 2025 and 2024, or in the "Risk Factors" section of the Company's most recently filed AIF, 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 ...