D2L Inc. Announces First Quarter 2027 Financial Results

D2L Inc. Announces First Quarter 2027 Financial Results Canada NewsWire TORONTO, June 9, 2026 Subscription and support revenue grew 10% year-over-year to US$52.7 million Annual Recurring Revenue1 reached US$225.2 million at quarter end, up 9% over the prior year Total revenue increased 8% year-over-year to US$57.1 million Adjusted EBITDA2 was US$8.3 million, versus US$9.3 million in the prior year Announces Substantial Issuer Bid of up to CAD $20.0 million TORONTO, June 9, 2026 /CNW/ - D2L Inc. (TSX: DTOL) ("D2L" or the "Company"), a leading global learning technology company, today announced financial results for its Fiscal 2027 first quarter ended April 30, 2026. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards ("IFRS") unless otherwise indicated. "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," said John Baker, Founder and CEO of D2L. "This outcome reflects the reflects the continued performance of our core business and stronger competitive positioning in the market. 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. Our continued investment in the platform is reinforcing D2L's leadership position and supports our ability to win more and expand customer relationships. As organizations invest in the next generation of learning technology, D2L is well positioned as a trusted, long-term partner." First Quarter Fiscal 2027 Financial Highlights Subscription and support revenue was $52.7 million, an increase of 10% over the same period of the prior year, reflecting growth from new customers, coupled with expansion from existing customers, and was partially moderated by previously disclosed churn from the U.S. K-12 market. Total revenue of $57.1 million, up 8% from the same period in the prior year. Annual Recurring Revenue1 ("ARR") as at April 30, 2026 increased by 9% year-over-year, from $206.2 million to $225.2 million, and Constant Currency Annual Recurring Revenue1 increased 8% to $221.9 million. Excluding the K-12 market, ARR increased by approximately 13.2% over the same period of the prior year and Constant Currency ARR grew by 11.4% over the same period of the prior year. Adjusted Gross Profit2 increased by 7% to $40.4 million (70.7% Adjusted Gross Margin2) from $37.7 million (71.3% Adjusted Gross Margin) in the same period of the prior year. Adjusted Gross Margin was negatively impacted by the previously disclosed migration of a database technology, which did not affect the comparable period in Fiscal 2026. Adjusted EBITDA2 of $8.3 million (14.5% Adjusted EBITDA Margin2), compared with $9.3 million (17.6% Adjusted EBITDA Margin) in the same period of the prior year and income for the period was $1.7 million, versus income of $3.3 million for the comparative period of the prior year. The period-over-period decreases are largely explained by the database technology migration. Cash flows used in operating activities were $16.8 million, compared with $1.9 million for the same period in the prior year, and Free Cash Flow2 was negative $16.9 million, compared to Free Cash Flow of negative $1.8 million in the same period in the prior year. The year-over-year increase in cash used was primarily attributable to working capital movements, including higher payments to vendors and lower collections from customers in the current period following strong collections in the fourth quarter ended January 31, 2026. These impacts are timing-related in nature. Cash flow from operations typically have a seasonal low in the first quarter and are expected to improve meaningfully in the second and third quarters, consistent with historical patterns. Strong balance sheet at quarter end, with cash and cash equivalents of $95.7 million and no debt.  During the three months ended April 30, 2026, the Company repurchased and cancelled 444,300 (2025 – 168,800) Subordinate Voting Shares under its Normal Course Issuer Bid ("NCIB"). For the trailing 12-month period ended April 30, 2026, the Company has repurchased and cancelled 1,268,200 Subordinate Voting Shares (2025 – 438,900), representing the cancellation of 4.2% (2025 – 1.6%) of the opening Subordinate Voting shares outstanding over the past twelve months.  Subsequent to quarter end, the Company announced a substantial issuer bid ("SIB") pursuant to which the Company will offer to purchase for cancellation up to C$20.0 million of its Subordinate Voting Shares at a price of not less than C$10.50 and not more than C$11.50 per share. Additional information on the SIB is disclosed in a separate press release issued on June 9, 2026. 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" section of this press release. First Quarter Fiscal 2027 Financial Results – Selected Financial Measures (in thousands of U.S. dollars, except for percentages) Q1 2027 Q1 2026 Change Change $ $ $ % Subscription & Support Revenue 52,723 47,735 4,988 10.4 % Professional Services & Other Revenue 4,407 5,100 (693) (13.6 %) Total Revenue 57,130 52,835 4,295 8.1 % Constant Currency Revenue1 55,682 52,835 2,847 5.4 % Gross Profit 39,654 37,030 2,624 7.1 % Adjusted Gross Profit1 40,366 37,667 2,699 7.2 % Adjusted Gross Margin1 70.7 % 71.3 % Income for the period 1,670 3,268 (1,598) (48.9 %) Adjusted EBITDA1 8,261 9,305 (1,044) (11.2 %) Cash Flows used in Operating Activities (16,829) (1,856) (14,973) (806.7 %) Free Cash Flow1 (16,873) (1,841) (15,032) (816.5 %) 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. First Quarter Business & Operating Highlights D2L continued to grow its customer base in North American education, including the additions of Humber Polytechnic, Loyola University Chicago, Midwestern University, Wiley University, StraighterLine, and École Louis Legrand.  D2L expanded its corporate customer base in North America by adding several new customers, including Royal Conservatory of Music, American Traffic Safety Services Association, and a leading professional body for plastic surgeons. D2L continued to grow its global customer base, adding GME Education in the Middle East, a major education provider in Mexico, and a leading trade and investment agency in APAC. D2L Brightspace was recognized by G2 as one of the Best Education Software Products and D2L was named among the Best Canadian Software Companies for 2026.  D2L Lumi was recognized as an Award-Winning Education Product in the 2026 Artificial Intelligence Excellence Awards presented by Business Intelligence Group. D2L was named one of Canada's Best Diversity Employers for 2026 by Mediacorp Canada.  Together with WCET and Opened Culture, D2L released AI Literacies in Practice: A Comprehensive Playbook for Higher Education to help institutions develop AI literacies. Financial Outlook The Company is maintaining its previous financial guidance for the year ended January 31, 2027 as follows: Subscription and support revenue in the range of $212 million to $214 million, implying growth of 7-8% over Fiscal 2026; Total revenue in the range of $231 million to $234 million, implying growth of 6-8% over Fiscal 2026; and Adjusted EBITDA in the range of $33 million to $35 million, implying an Adjusted EBITDA margin of 15%. For additional details on the Company's outlook, including the principal underlying assumptions and risk factors regarding achievement, refer to the "Financial Outlook" section of the Company's MD&A for the year ended January 31, 2026 (the "Annual MD&A"), as well as the "Forward-Looking Information" section therein and in the Company's MD&A for the three months ended April 30, 2026 (the "Interim MD&A"). Q1 Conference Call & Webcast D2L management will host a conference call on Wednesday, June 10, 2026 at 8:30 am ET to discuss its first quarter Fiscal 2027 financial results. Date: Wednesday, June 10, 2026 Time: 8:30 am (ET) Dial in number: Canada: 1 (365) 657-4084 United States: 1 (833) 461-5787 Access code: 628059232 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 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; expected improvements in gross margin; 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; trends in research and development expenses, sales and marketing expenses, and general and administrative expenses, each as a percentage of revenue; planned expenditures in sales and marketing and research and development activities; the timing and pace for achieving scalability; 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; and the Company's equity investment in, and loan to, SkillsWave Corporation ("SkillsWave"). 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, ; 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, including demand for AI; 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 in our Annual MD&A, including "Summary of Factors Affecting Our Performance" 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 achieve more than they dreamed possible. Working closely with customers all over the world, D2L is on a mission to make learning more inspiring, engaging and human. Find out how D2L helps transform lives and delivers outstanding learning outcomes in higher education, corporate and K-12 at www.D2L.com.   D2L INC. Condensed Consolidated Interim Statements of Financial Position (In U.S. dollars) As at April 30, 2026 and January 31, 2026 (Unaudited) April 30, 2026 January 31, 2026 Assets Current assets: Cash and cash equivalents $    95,699,241 $    119,210,190 Trade and other receivables 29,461,310 26,446,779 Uninvoiced revenue 3,153,391 3,365,404 Prepaid expenses 9,463,596 8,929,070 Deferred commissions 5,959,787 6,046,380 143,737,325 163,997,823 Non-current assets: Other receivables 227,312 274,542 Prepaid expenses 511,635 480,900 Deferred income taxes  14,480,657 16,447,851 Right-of-use assets 7,527,005 7,879,566 Property and equipment 6,320,549 6,712,449 Deferred commissions 7,009,682 7,111,530 Loan receivable from associate 4,821,800 4,821,800 Intangible assets 15,829,945 16,577,630 Goodwill 27,319,436 27,619,673 Total assets $   227,785,346 $    251,923,764 Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued liabilities $    31,174,963 $    40,057,268 Deferred revenue 96,177,276 111,638,604 Lease liabilities 1,592,050 1,641,257 128,944,289 153,337,129 Non-current liabilities: Deferred income taxes 3,356,839 3,487,856 Lease liabilities 9,739,747 10,118,128 13,096,586 13,605,984 142,040,875 166,943,113 Shareholders' equity: Share capital: 360,660,505 359,412,845 Additional paid-in capital 44,981,734 49,129,311 Accumulated other comprehensive loss (4,272,450) (3,954,805) Deficit (315,625,318) (319,606,700) 85,744,471 84,980,651 Related party transactions Investment in associate Subsequent event Total liabilities and shareholders' equity $   227,785,346 $    251,923,764 D2L INC. Condensed Consolidated Interim Statements of Comprehensive Income (In U.S. dollars, except per share amounts)                                            For the three months ended April 30, 2026 and 2025 (Unaudited) 2026 2025 Revenue: Subscription and support $ 52,722,709 $ 47,735,572 Professional services and other 4,406,906 5,099,599 57,129,615 52,835,171 Cost of revenue: Subscription and support 13,848,832 11,840,420 Professional services and other 3,627,306 3,964,545 17,476,138 15,804,965 Gross profit 39,653,477 37,030,206 Expenses: Sales and marketing 15,523,375 13,668,739 Research and development 13,077,156 11,459,714 General and administrative 8,046,967 8,386,362 36,647,498 33,514,815 Income from operations 3,005,979 3,515,391 Interest and other income (expense): Interest expense (149,871) (220,129) Interest income 756,914 717,052 Other income 7,106 142,789 Fair value gain on loan receivable from associate — 172,270 Foreign exchange gain 120,650 1,536,516 734,799 2,348,498 Income before income taxes 3,740,778 5,863,889 Income taxes expense: Current 312,761 571,177 Deferred 1,758,346 2,024,408 2,071,107 2,595,585 Income for the period 1,669,671 3,268,304 Other comprehensive (loss) income: Foreign currency translation (loss) gain (317,645) 2,760,468 Comprehensive income $ 1,352,026 $ 6,028,772 Earnings per share – basic $ 0.03 $ 0.06 Earnings per share – diluted $ 0.03 $ 0.06 Weighted average number of common shares – basic 54,399,915 54,689,330 Weighted average number of common shares – diluted 56,467,387 56,137,363 D2L INC. Condensed Consolidated Interim Statements of Shareholders' Equity (In U.S. dollars, except per share amounts) For the three months ended April 30, 2026 and 2025 (Unaudited) Share Capital Additional paid-in capital Accumulated other comprehensive loss Deficit Total Shares Amount Balance, January 31, 2026 54,472,285 $  359,412,845 $  49,129,311 $  (3,954,805) $  (319,606,700) $  84,980,651 Issuance of Subordinate Voting Shares on exercise of options 163 2,064 (2,064) — — — Issuance of Subordinate Voting Shares on settlement of restricted share units 475,529 4,301,869 (7,721,557) — — (3,419,688) Stock-based compensation — — 3,630,599 — — 3,630,599 Reduction in excess tax benefit on stock-based compensation — — (54,555) — — (54,555) Repurchase of share capital for cancellation under the NCIB (444,300) (3,056,273) — — — (3,056,273) Change in share repurchase commitment under the ASPP — — — — 2,311,711 2,311,711 Other comprehensive loss — — — (317,645) — (317,645) Income for the period — — — — 1,669,671 1,669,671 Balance, April 30, 2026 54,503,677 $  360,660,505 $  44,981,734 $  (4,272,450) $  (315,625,318) $  85,744,471 Balance, January 31, 2025 54,653,174 $  367,487,956 $  48,263,266 $  (7,456,599) $  (323,548,911) $  84,745,712 Issuance of Subordinate Voting Shares on exercise of options 13,734 120,279 (88,253) — — 32,026 Issuance of Subordinate Voting Shares on settlement of restricted share units 370,200 1,328,952 (5,292,603) — — (3,963,651) Stock-based compensation — — 3,213,041 — — 3,213,041 Reduction in excess tax benefit on stock-based compensation — — (715,104) — — (715,104) Repurchase of share capital for cancellation under the NCIB (168,800) (1,811,339) — — — (1,811,339) Change in share repurchase commitment under the ASPP — — — — (3,750,461) (3,750,461) Other comprehensive income — — — 2,760,468 — 2,760,468 Income for the period — — — — 3,268,304 3,268,304 Balance, April 30, 2025 54,868,308 $  367,125,848 $  45,380,347 $  (4,696,131) $  (324,031,068) $  83,778,996 D2L INC. Condensed Consolidated Interim Statements of Cash Flows (In U.S. dollars) For the three months ended April 30, 2026 and 2025 (Unaudited) 2026 2025 Operating activities: Income for the period $  1,669,671 $  3,268,304 Items not involving cash: Depreciation of property and equipment 415,737 392,558 Depreciation of right-of-use assets 390,517 347,334 Amortization of intangible assets 559,411 557,631 Gain on disposal of property and equipment (402) (16,825) Stock-based compensation 3,630,599 3,213,041 Net interest income (607,043) (496,923) Income tax expense 2,071,107 2,595,585 Fair value gain on loan receivable from associate — (172,270) Changes in operating assets and liabilities: Trade and other receivables (3,007,365) 3,684,970 Uninvoiced revenue 225,918 (133,791) Prepaid expenses (591,103) 153,112 Deferred commissions 146,956 369,573 Accounts payable and accrued liabilities (6,586,883) (1,189,037) Deferred revenue (15,514,330) (14,399,467) Right-of-use assets and lease liabilities (60,840) — Interest received 752,047 710,627 Interest paid (15,165) (1,633) Income taxes paid (307,301) (738,303) Cash flows used in operating activities (16,828,469) (1,855,514) Financing activities: Payment of lease liabilities (527,655) (487,522) Net proceeds from sub-lease receivable 47,451 — Proceeds from exercise of stock options — 32,026 Taxes paid on settlement of restricted share units (3,419,688) (3,963,651) Repurchase of share capital for cancellation under the NCIB (3,056,273) (1,811,339) Cash flows used in financing activities (6,956,165) (6,230,486) Investing activities: Purchase of property and equipment (44,667) (1,737) Proceeds from disposal of property and equipment 402 16,825 Cash flows (used in) from investing activities (44,265) 15,088 Effect of exchange rate changes on cash and cash equivalents 317,950 1,413,232 Decrease in cash and cash equivalents (23,510,949) (6,657,680) Cash and cash equivalents, beginning of period 119,210,190 99,184,514 Cash and cash equivalents, end of period $  95,699,241 $  92,526,834 Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures The information presented within this press release refers to certain non-IFRS financial measures (including non-IFRS ratios) including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Margin, and Constant Currency Revenue. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Non-IFRS financial measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS and are unlikely to be comparable to similar measures presented by other issuers. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations, financial performance and liquidity from management's perspective and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of the Company. The Company's management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to assess our ability to meet our capital expenditures and working capital requirements. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is defined as income (loss), excluding interest, taxes, depreciation and amortization (or EBITDA), adjusted for stock-based compensation, foreign exchange gains and losses, non-recurring expenses, transaction-related costs, fair value adjustment of acquired deferred revenue, income (loss) from equity accounted investee, change in fair value on the loan receivable from associate, impairment charges and other income and losses. Adjusted EBITDA Margin is calculated as Adjusted EBITDA expressed as a percentage of total revenue. For an explanation of management's use of Adjusted EBITDA and Adjusted EBITDA Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted EBITDA and Adjusted EBITDA Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein. The following table reconciles Adjusted EBITDA to income for the period, and discloses Adjusted EBITDA Margin, for the periods indicated: (in thousands of U.S. dollars, except for percentages) Three months ended April 30, 2026 $ 2025 $ Income for the period 1,670 3,268 Stock-based compensation 3,631 3,213 Foreign exchange gain (121) (1,537) Non-recurring expenses(1) 173 471 Transaction-related costs(2) 46 440 Fair value adjustment of acquired deferred revenue(3) 32 225 Change in fair value of loan receivable from associate(4) — (172) Net interest income (607) (497) Income tax expense 2,071 2,596 Depreciation and amortization 1,366 1,298 Adjusted EBITDA 8,261 9,305 Adjusted EBITDA Margin 14.5 % 17.6 % Notes: (1) These expenses relate to non-recurring activities, such as certain legal fees incurred that are not indicative of continuing operations, and changes in workforce or technology whereby certain functions were realigned to optimize operations. (2) These expenses include certain legal and professional fees that are incurred in connection with other strategic transactions. In the prior fiscal year, these expenses include post-combination costs from the acquisition of H5P, and were partially offset by a gain recognized from the reduction in the second anniversary payment owed to the selling shareholders of Connected Shopping Ltd ("Connected Shopping"), a company acquired in Fiscal 2024, which was recorded through Other income. These expenses would not have been incurred if not for these transactions and are not considered to be indicative of expenses associated with the Company's continuing operations. (3) At the date of acquisition, the Company recognized a fair value adjustment on the opening deferred revenue balance acquired as part of the H5P acquisition as required under IFRS 3, Business Combinations. This adjustment is not reflective of ordinary operations and is expected to be substantially completed by the end of Fiscal 2027. (4) On a quarterly basis, the Company determines the fair value of the loan advanced to SkillsWave. The adjustments to the fair value of the loan are not reflective of the Company's main business operations and will not impact the Company's future results beyond the maturity date of the loan on June 28, 2029. See note 5 of the Interim Financial Statements for further details. Adjusted Gross Profit and Adjusted Gross Margin Adjusted Gross Profit is defined as gross profit excluding related stock-based compensation expenses and amortization from acquired intangible assets, specifically acquired technology. Adjusted Gross Margin is calculated as Adjusted Gross Profit expressed as a percentage of total revenue. For an explanation of management's use of Adjusted Gross Profit and Adjusted Gross Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted Gross Profit and Adjusted Gross Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein. The following table reconciles Adjusted Gross Margin to gross profit expressed as a percentage of revenue, for the periods indicated: (in thousands of U.S. dollars, except for percentages) Three months ended April 30, 2026 $ 2025 $ Gross profit for the period 39,654 37,030 Stock-based compensation 272 206 Amortization from acquired intangible assets 440 431 Adjusted Gross Profit 40,366 37,667 Adjusted Gross Margin 70.7 % 71.3 % Free Cash Flow and Free Cash Flow Margin Free Cash Flow is defined as cash flows from (used in) operating activities excluding payments of acquisition-related compensation, less net additions to property and equipment. Free Cash Flow Margin is calculated as Free Cash Flow expressed as a percentage of total revenue. For an explanation of management's use of Free Cash Flow and Free Cash Flow Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Free Cash Flow and Free Cash Flow Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein. The following table reconciles Free Cash Flow to cash flow (used in) from operating activities, and discloses Free Cash Flow Margin, for the periods indicated: (in thousands of U.S. dollars, except for percentages) Three months ended April 30, 2026 $ 2025 $ Cash flow used in operating activities (16,829) (1,856) Net (additions) disposal to property and equipment (44) 15 Free Cash Flow (16,873) (1,841) Free Cash Flow Margin -29.5 % -3.5 % Constant Currency Revenue Constant Currency Revenue is defined as our total revenue with foreign-currency-denominated revenues translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional currency. For an explanation of management's use of Constant Currency Revenue see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Constant Currency Revenue" section in the Company's MD&A for the years ended January 31, 2026 and 2025, which section is incorporated by reference herein. The following table reconciles our Constant Currency Revenue to revenue, for the periods indicated: (in thousands of U.S. dollars) Three months ended April 30, 2026 $ 2025 $ Total revenue for the period 57,130 52,835 Positive impact of foreign exchange rate changes over the prior period (1,448) — Constant Currency Revenue 55,682 52,835 Key Performance Indicators Management uses a number of metrics, including the key performance indicators identified below, to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other issuers. These metrics are estimated operating metrics and not projections, nor actual financial results, and are not indicative of current or future performance. Annual Recurring Revenue and Constant Currency Annual Recurring Revenue: We define ARR as the annualized equivalent value of subscription revenue from all existing customer contracts as at the date being measured, exclusive of the implementation period. Our calculation of ARR assumes that customers will renew their contractual commitments as those commitments come up for renewal. We believe ARR provides a reasonable, real-time measure of performance in a subscription-based environment and provides us with visibility for potential growth in our cash flows. We believe that increasing ARR indicates the continued strength in the expansion of our business, and will continue to be our focus on a go-forward basis. We define Constant Currency Annual Recurring Revenue as foreign-currency-denominated ARR translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional currency. As at April 30, (in millions of U.S. dollars, except percentages) 2026 2025 Change $ $ % ARR 225.2 206.2 9.2 % Constant Currency Annual Recurring Revenue 221.9 206.2 7.6 % SOURCE D2L Inc. View original content to download multimedia: http://www.newswire.ca/en/releases/archive/June2026/09/c4203.html Contact: For further information, please contact: Craig Armitage, Investor Relations, [email protected], (416) 347-8954