D2L Inc. Announces First Quarter 2027 Financial Results

Executive Summary

• D2L Inc. reported Q1 Fiscal 2027 financial results demonstrating top-line revenue growth and strong ARR expansion, offset by a decline in Adjusted EBITDA and negative free cash flow driven by working capital timing and a database technology migration.
• The company maintained its full-year Fiscal 2027 financial guidance, projecting total revenue growth of 6-8% and an Adjusted EBITDA margin of 15%.
• Post-quarter, D2L announced a Substantial Issuer Bid to repurchase up to CAD $20.0 million of its shares, while continuing active share cancellations under its Normal Course Issuer Bid.
• The company expanded its customer base across education, corporate, and global markets, with notable recognition for its AI-driven D2L Lumi product.

Key Details

• Revenue: Total revenue increased 8% YoY to US$57.1 million. Subscription & support revenue grew 10% to US$52.7 million. Professional services & other revenue declined 13.6% to US$4.4 million. Constant currency revenue grew 5.4% to US$55.7 million.
• ARR: Annual Recurring Revenue reached US$225.2 million at quarter-end, up 9% YoY (Constant Currency ARR up 8% to US$221.9 million). Excluding the K-12 market, ARR grew approximately 13.2% YoY.
• Profitability: Adjusted Gross Profit rose 7% to US$40.4 million (70.7% margin). Adjusted EBITDA was US$8.3 million (14.5% margin), down from US$9.3 million in the prior year. Net income for the period was US$1.7 million versus US$3.3 million prior year.
• Cash Flow: Cash flows used in operating activities were US$16.8 million (vs. US$1.9 million prior year). Free Cash Flow was negative US$16.9 million (vs. negative US$1.8 million prior year), primarily due to timing-related working capital movements (higher vendor payments and lower customer collections).
• Balance Sheet: Strong liquidity position with US$95.7 million in cash and cash equivalents and zero debt.
• Share Repurchases: Repurchased and cancelled 444,300 shares under the NCIB in Q1. Trailing 12-month repurchases totaled 1,268,200 shares, representing 4.2% of opening shares outstanding.
• Subsequent Event: Announced a Substantial Issuer Bid (SIB) to purchase up to CAD $20.0 million of Subordinate Voting Shares at a price between C$10.50 and C$11.50 per share.
• Financial Guidance: Maintained FY2027 guidance: Subscription & support revenue of $212M–$214M (7-8% growth), Total revenue of $231M–$234M (6-8% growth), and Adjusted EBITDA of $33M–$35M (15% margin).
• Business & Product Highlights: Added new customers including Humber Polytechnic, Loyola University Chicago, Royal Conservatory of Music, and GME Education. D2L Lumi recognized in the 2026 AI Excellence Awards. Released "AI Literacies in Practice" playbook with WCET and Opened Culture.

Notable Quotes

• John Baker, Founder and CEO: "We are off to a good start this year, with strong execution in new bookings across our core growth markets and a healthy pipeline to support the year ahead... Further, we are building meaningful momentum in the deployment of responsible AI, as evidenced by accelerating growth in D2L Lumi ARR and increasing adoption as organizations embrace our AI-first approach to enhance learning outcomes and drive operational efficiency."