D2L (DTOL) investor relations material

Executive summary

• Achieved 10% subscription and support revenue growth for the year, with ARR reaching $219.8 million and free cash flow of $44.4 million.

• Ended the year with $119.2 million in cash and no debt, supporting over 21 million users across 1,500+ organizations in 40+ countries.

• Higher churn in U.S. K-12 market impacted near-term revenue, but core markets (higher ed, corporate, international) showed strong demand and pipeline.

• Won new customers across all main competitors and received industry recognition for product leadership.

• Significant expansion of AI capabilities, with 40% attach rate for new higher ed customers and strong adoption of D2L Lumi.

Financial highlights

• Q4 total revenue grew 5% to $55.8 million; full-year revenue up 5.9% to $217.5 million.

• Subscription and support revenue up 9% in Q4 to $51.1 million; full-year up 10% to $198.4 million.

• ARR increased 10% to $219.8 million (7% in constant currency); core markets saw 11% Q4 ARR growth in constant currency.

• Adjusted gross margin for Q4 was 68.7% (down from 69.6%); full-year adjusted gross margin expanded 60 bps to 69.6%.

• Adjusted EBITDA for Q4 was $8.1 million (14.5% margin); full-year adjusted EBITDA up 17% to $32.9 million (15.1% margin).

• Free cash flow for the year grew 63% to $44.4 million.

• Q4 net loss of $1.4 million due to prior year non-recurring tax recovery and fair value adjustment; full-year net income $9 million.

• Professional services and other revenue decreased 27% in Q4 to $4.7 million, reflecting a one-time adjustment and cautious U.S. market spending.

Outlook and guidance

• Fiscal 2027 guidance: subscription and support revenue of $212–$214 million (7–8% growth), total revenue of $231–$234 million (6–8% growth), adjusted EBITDA of $33–$35 million (15% margin midpoint).

• Expect margin and revenue growth to accelerate in the second half of fiscal 2027 as database migration costs subside.

• Medium-term targets for fiscal 2028: 10–15% revenue growth and 18–20% adjusted EBITDA margin.

• Revenue growth rates for Fiscal 2027 are impacted by prior-year churn in the U.S. K-12 market.