D2L (DTOL) Q2 2026 earnings summary

Executive summary

• Q2 FY2026 total revenue grew 11% to $54.8M, driven by 14% SaaS and subscription revenue growth to $50.1M, and ARR rose 7% to $212.6M year-over-year.

• Adjusted EBITDA increased to $7.5M (13.7% margin), up from $4.2M (8.6% margin) a year ago.

• Net income improved to $2.7M from a $0.3M loss year-over-year.

• Strong customer wins in higher education and corporate learning, with new clients in North America, India, South Africa, and Australia.

• Continued product innovation, especially in AI (D2L Lumi), and recognition with industry awards.

Financial highlights

• Adjusted Gross Profit increased 15% to $38.7M (70.6% margin), and Gross Profit rose 14% to $38.1M.

• Subscription and support revenue grew 14% to $50.1M; Professional Services revenue declined 10% to $4.6M.

• Free cash flow was $14.9M, impacted by timing of compensation and collections.

• Strong balance sheet with $102.5M in cash and no debt at quarter end.

• Repurchased and canceled 244,600 shares for $2.5M under NCIB.

Outlook and guidance

• SaaS revenue guidance raised to $198M–$200M (10–11% growth), up from $194M–$196M.

• Adjusted EBITDA guidance unchanged due to FX impact on expenses; total revenue guidance unchanged as Professional Services revenue expected to remain soft.

• Expect continued gross margin expansion post-cloud migration, with a temporary 200 bps margin impact through fiscal 2027.

• Medium Term Target Operating Model for FY2028 remains unchanged.

• Guidance reflects strong first-half performance, offset by cautious spending in U.S. Higher Education and currency impacts.