D2L (DTOL) Q2 2027 earnings summary

Executive summary

• Subscription and support revenue reached $50.9 million, up 2% year-over-year, with growth from new and existing customers offset by U.S. K-12 churn.

• Annual Recurring Revenue (ARR) rose 5% year-over-year to $223.4 million; excluding K-12, ARR grew 10%, marking the fourth consecutive quarter of double-digit growth in core markets.

• Adjusted EBITDA was $6.5 million, down from $7.5 million in the prior year, reflecting margin pressure but continued profitability.

• Significant share buyback activity, with approximately 2 million shares repurchased in the quarter, representing 11.2% of opening shares outstanding over the trailing 12 months.

• Strong balance sheet with $106.4 million in cash and no debt as of July 31, 2026.

Financial highlights

• Total revenue for the quarter was $55.6 million, up 1.5% year-over-year.

• Adjusted Gross Profit increased 1% to $39.1 million, with Adjusted Gross Margin at 70.4%.

• Income for the period was negative $3.1 million, compared to positive $2.7 million last year, mainly due to a $4.8 million non-cash fair value adjustment on a loan receivable.

• Free Cash Flow for the quarter was $28.5 million, up from $15.2 million year-over-year, driven by working capital movements.

• Trailing 12-month Free Cash Flow was $42.7 million, up from $24.1 million in the prior period.

Outlook and guidance

• Updated full-year guidance: subscription and support revenue expected between $211–$213 million (6–7% growth), total revenue $228–$231 million (5–6% growth), and Adjusted EBITDA $33–$35 million (15% margin midpoint).

• Revenue outlook revised downward due to softer demand in advisory professional services and delayed customer deployment, but Adjusted EBITDA guidance maintained due to cost optimization.

• Second half performance expected to improve, with 7% subscription revenue growth and 16% Adjusted EBITDA Margin at mid-point guidance.