D2L Inc. Announces Third Quarter 2026 Financial Results

Executive Summary

• D2L Inc. reported Q3 FY2026 revenue of US$54.1 M (flat YoY) with subscription revenue up 6% to US$49.4 M.
• Adjusted EBITDA fell to US$7.9 M (‑23.8%) and net income declined to US$4.4 M, but cash flow improved; free cash flow rose 66.5% YoY to US$18.8 M and cash balances reached US$110.5 M with no debt.
• The company updated FY2026 guidance: subscription revenue $198‑199 M (down from prior $198‑200 M), total revenue $217‑218 M (down from $219‑221 M), and Adjusted EBITDA $32‑33 M (narrowly below previous $32‑34 M).

Key Details

• Revenue Highlights
• Subscription & support: US$49.389 M (+5.6% YoY)
• Professional services & other: US$4.679 M (‑38.0% YoY) – includes a $1.2 M one‑time true‑up from prior year.

• Total revenue: US$54.068 M (‑0.4% YoY).

• Profitability

• Adjusted Gross Profit: US$36.657 M (‑3.4% YoY) → Adjusted Gross Margin 67.8% (down from 69.9%).
• Gross profit margin for subscription fell to 71.1% (‑200 bps) due to database migration costs.
• Adjusted EBITDA: US$7.941 M (‑23.8% YoY).

• Net income: US$4.386 M (‑20.9% YoY).

• Cash & Liquidity

• Operating cash flow: US$17.241 M (+51.0% YoY)
• Free Cash Flow: US$18.812 M (+66.5% YoY)

• Cash & cash equivalents: US$110.455 M (up from $99.185 M). No debt outstanding.

• Share Repurchases

• Repurchased and cancelled 223,500 subordinate voting shares in the quarter; total FY repurchase to date 636,900 shares.

• TSX approved a new NCIB commencing Dec 12 2025.

• Operational Updates

• Added several universities (e.g., University of Central Arkansas) and corporate customers (Florida Center for Nursing).
• Hired Kevin Capitani as SVP of Employee Training & Strategic Initiatives.
• Launched partnership with 1EdTech; received eight Brandon Hall Awards and two Tech & Learning Awards.

• Named on GSV 150 list of transformational growth companies.

• Guidance Update (FY2026)

• Subscription & support revenue: $198‑199 M (previously $198‑200 M).
• Total revenue: $217‑218 M (previously $219‑221 M).

• Adjusted EBITDA: $32‑33 M (previously $32‑34 M), implying ~15% margin.

• Conference Call

• Management will discuss results on Thu, Dec 11 2025 at 9:00 am ET (dial‑in details provided).

Notable Quotes

“While Q3 proved more challenging than anticipated due to higher churn among U.S. K‑12 clients, we remain on track to meet our full‑year guidance for SaaS revenue and Adjusted EBITDA,” – John Baker, CEO

All figures are presented in U.S. dollars unless otherwise noted.