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Highlights
- D2L generated USD 49.4 million in subscription and support revenue in Q3 Fiscal 2026, a 6% increase year over year.
- Annual Recurring Revenue (ARR) rose to USD 213.4 million, representing 6% year-over-year growth.
- The quarter closed with USD 110.5 million in cash and cash equivalents and no debt.
D2L Inc. (TSX:DTOL), a global learning technology company, has released its financial results for the third quarter of Fiscal 2026, ended October 31, 2025. The company reported subscription revenue growth, stable total revenue, continued profitability, and updated full-year guidance aligned with current market conditions.
Subscription Growth Supports Quarterly Performance
D2L reported USD 49.4 million in subscription and support revenue for the quarter, an increase of 6% compared with the same period last year. The company attributed this rise to new customer additions and upsell expansion within its existing customer base. Total revenue for the quarter was USD 54.1 million, remaining relatively unchanged year over year. Professional services and other revenue declined to USD 4.7 million, reflecting the absence of a one-time USD 1.2 million adjustment recorded in the prior year and a cautious U.S. market environment.
ARR Expansion and Profitability Metrics
Annual Recurring Revenue increased to USD 213.4 million, up 6% from USD 201.7 million one year earlier. Excluding the U.S. K-12 segment, ARR grew 10%. Adjusted Gross Profit for the quarter was USD 36.7 million, compared with USD 38.0 million in the prior year. The subscription and support gross margin was 71.1%, affected by additional costs tied to a planned database technology migration. The company noted that these costs are expected to scale down during Fiscal 2027.
Adjusted EBITDA was USD 7.9 million, compared with USD 10.4 million in the prior year. Income for the period totaled USD 4.4 million, versus USD 5.5 million a year earlier. Operating cash flow rose to USD 17.2 million, and free cash flow increased to USD 18.8 million, compared with USD 11.3 million in the same quarter last year. At quarter end, D2L held USD 110.5 million in cash and cash equivalents and reported no debt.
Customer Growth and Operational Developments
During the quarter, D2L expanded its presence in global education markets by adding institutions such as the University of Central Arkansas, St. Ambrose University, Oregon Health & Science University, and the University of the West of Scotland. The company also grew its corporate portfolio, adding the Florida Center for Nursing, a global banking institute, and one of the largest nursing unions and professional bodies.
Additional operational developments included the appointment of Kevin Capitani as Senior Vice President of Employee Training and Strategic Initiatives, a partnership with 1EdTech to streamline certification access, and recognition through multiple industry awards. D2L was also named to the 2026 GSV 150 list of companies in digital learning and workforce skills.
Updated Fiscal 2026 Outlook
D2L updated its full-year guidance for the fiscal year ending January 31, 2026. Subscription and support revenue is projected to be USD 198 million to USD 199 million, implying 10% year-over-year growth. Total revenue is expected to range from USD 217 million to USD 218 million, and Adjusted EBITDA is projected between USD 32 million and USD 33 million, representing a 15% margin. The guidance incorporates current market demand trends and the contribution of professional services.
