D2L Inc. Announces Fourth Quarter And Fiscal 2025 Financial Results

D2L Inc. (TSX: DTOL) ("D2L" or the "Company"), a leading global learning technology company, today announced financial results for its Fiscal 2025 fourth quarter and full year ended January 31, 2025. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards ("IFRS") unless otherwise indicated.

"We reported a strong fourth quarter that underscores our effective execution in Fiscal 2025, with revenue and Adjusted EBITDA exceeding guidance," said John Baker, CEO of D2L. "We have strengthened our core learning platform and meaningfully broadened our product portfolio. Our investments in AI capabilities with D2L Lumi and improving the learning experience with Creator+ are hitting the mark and helping customers improve learning outcomes. As organizations navigate the near-term macroeconomic conditions, we are competitively well positioned as a strategic partner to help them implement a modern learning platform that is increasingly mission-critical."

Fourth Quarter and Fiscal 2025 Financial Highlights

• Total revenue of $53.3 million increased by 12% over the same period in the prior year and Constant Currency Revenue1 increased by 14% to $54.3 million.
• Subscription and support revenue was $46.8 million, an increase of 11% over the same period of the prior year, reflecting growth from new customers and strong revenue retention and expansion from existing customers.
• Annual Recurring Revenue1 as at January 31, 2025 increased by 6% year-over-year to $200.2 million and Constant Currency Annual Recurring Revenue1 grew by 9% over the prior year to $205.3 million, with approximately $4.0 million of this $4.9 million foreign exchange impact happening in Q4 2025.
• Adjusted Gross Profit2 increased by 15% to $37.1 million (69.6% Adjusted Gross Margin2) from $32.2 million (67.7% Adjusted Gross Margin) in the same period of the prior year.
• Adjusted EBITDA2 of $9.4 million, up from Adjusted EBITDA of $3.5 million for the comparative period in the prior year.
• Income for the period was $19.9 million, compared with $0.6 million for the comparative period of the prior year.
• Cash flow used in operating activities improved to $0.1 million, versus cash flow used in operating activities of $5.5 million in the same period in the prior year.
• Free Cash flow was negative $0.6 million, compared to Free Cash Flow of negative $6.1 million in the same period in the prior year. Full-year Free Cash Flow grew to $27.0 million, up from $9.9 million in Fiscal 2024.
• Constant Currency Net Revenue Retention Rate1 was 102.7% for Fiscal 2025, up from 102.1% for Fiscal 2024.
• Strong balance sheet at quarter end, with cash and cash equivalents of $99.2 million and no debt.
• During Fiscal 2025, the Company repurchased and cancelled 401,480 Subordinate Voting Shares under its Normal Course Issuer Bid ("NCIB").

Fourth Quarter Business & Operating Highlights

• D2L's learning platform had more than 20 million users at year end, up from 18 million at the beginning of the year. D2L's customer list grew to more than 1,430 as at January 31, 2025 (up from over 1,310 as at January 31, 2024), representing a broad cross-section of colleges, universities, K-12 school districts and companies in more than 40 countries.
• D2L continued to grow its customer base in global education, adding Roger Williams University, Salta Group, and Desh Bhagat University.
• D2L expanded its corporate customer portfolio, adding Buesa Energy LLC, Alberta Law Enforcement Response Teams Ltd., and Sheppard & Company.
• In January, D2L appointed Andrew Datars as its Chief Technology Officer.
• D2L Brightspace received numerous accolades, including being named a top Learning Management System ("LMS") by both Training Industry and the Craig Weiss Group, and as a winner in the Best Enterprise LMS by Talented Learning. D2L Brightspace also won four Brandon Hall Awards, including gold for best advancement in content authoring technology for the All-New Creator+ tool.
• D2L was selected as one of the winners for its newest artificial intelligence (AI)-powered tool, D2L Lumi, in the Primary, Secondary and Higher Education categories in the Tech & Learning Awards of Excellence: Best of 2024.
• D2L was named on the Forbes 2025 list of Canada's best employers.

In addition, the Company announced that Stephen Laster, President, is departing D2L on May 9th, 2025. Stephen is taking on a new opportunity as CEO of a private company that does not compete with D2L.

Financial Outlook
D2L is initiating financial guidance for the year ending January 31, 2026 ("Fiscal 2026"). D2L plans to continue making measured investments for growth in Fiscal 2026 while scaling its operations towards increasing levels of profitability. Specifically, for Fiscal 2026 the Company is issuing the following guidance:

• Subscription and support revenue in the range of $194 million to $196 million, implying growth of 7-9% over Fiscal 2025, and 9-10% growth on a constant currency basis;
• Total revenue in the range of $219 million to $221 million, implying growth of 7-8% over Fiscal 2025, and 8-9% growth on a constant currency basis; and
• Adjusted EBITDA in the range of $32 million to $34 million, implying an Adjusted EBITDA Margin of 15%.

"For this fiscal year, our expected growth rates reflect the impact of foreign exchange rates and the current macroeconomic environment, which we view as transitory in nature," said Josh Huff, Chief Financial Officer. "We continue to see robust growth drivers for the company over the medium term, which we expect will lead to higher revenue growth along with further Adjusted EBITDA Margin expansion as we increase NRR 1, continue to grow our customer base and market share, and consider additional strategic acquisitions."

These targets demonstrate the Company's continued emphasis on balancing growth and profitability, including increased revenue and Adjusted EBITDA in Fiscal 2026 relative to Fiscal 2025. Further, these targets are based upon the current operations of the Company and do not include the impact of any future incremental acquisition transactions, which, if any occur, would be expected to be additive to the revenue and profits earned by D2L in the period. The achievement of the Adjusted EBITDA guidance is based upon continued efficiencies and scale in our operations as we grow our revenue. The anticipated revenue growth rates in Fiscal 2026 are informed in part by the levels of sales activity that occurred during Fiscal 2025, and the resulting impact of such activity on the corresponding revenue recognition in Fiscal 2026. The anticipated revenue growth rates in Fiscal 2026 are also informed by the current macroeconomic environment and its impact on foreign exchange rates and our selling activities.

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 K-12, higher education and business at www.D2L.com.

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