Q2 2026 D2L Inc Earnings Call Transcript
Key Points
- D2L Inc (DTLIF) reported strong revenue growth of 11% to $54.8 million, with subscription and support revenue increasing by 14% to $50.1 million.
- The company achieved an adjusted gross margin increase of 220 basis points to 71%, and an adjusted EBITDA margin of 13.7%, up 510 basis points from the previous year.
- D2L Inc (DTLIF) continues to expand its international footprint, securing new customers in key regions such as India and South Africa.
- The company is making significant advancements in AI, enhancing its core products to deliver personalized learning experiences and improve educational outcomes.
- D2L Inc (DTLIF) was recognized as one of Canada's best managed companies for the 13th consecutive year and received the title of overall Learning Management System Solution Provider of the year in the 2025 E Tech Breakthrough award.
- Professional services and other revenue decreased by 10% in Q2 to $4.6 million, reflecting reduced demand for larger professional services engagements.
- There was higher than normal churn in the US K-12 market, impacting annual recurring revenue growth.
- The planned migration of backend technology in the cloud delivery system is expected to create a temporary 200 basis point impact on subscription gross margin.
- Gross profit margin for professional services dropped significantly to 9.1% from 24.9% in the previous year, due to decreased revenue and stable capacity.
- The macroeconomic environment continues to present challenges, with clients taking longer to make decisions and budget pressures affecting the education sector.
Good morning and thank you all for attending the D2L in 2nd quarter fiscal 2026 Financial results. My name is Brika, and I will be your moderator for today. (Operator Instructions)
This morning's call is being recorded on September 11, 2025 at 8:30 AM Eastern time, and I would now like to pass the conference over to your host, Craig Armitage Investor Relations. Thank you may proceed, Craig.
Thank you and good morning everyone. Listeners are reminded that portions of today's discussion will include statements obtained forward-looking information. Any such statements are subject to risks and uncertainties. It could cause actual results and differ materially from the conclusion, forecast or projection in the forward-looking information.
Further, certain material factors or assumptions were applied in drawing a conclusion or making a forecast of rejection as reflected in the forward-looking information.
For identification and discussion of such risks and certainty, factors and assumptions, as
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