D2L Inc. reported total revenue of $55.6 million for the second quarter of fiscal 2027, a 2% year‑over‑year increase. Subscription and support revenue rose to $50.9 million, also up 2% from the prior year. Annual recurring revenue (ARR) reached CAD 223.4 million, up 5% (6% in constant currency). Excluding the K‑12 segment, ARR grew more than 10% year over year, marking the fourth consecutive quarter of double‑digit growth in the company’s core higher‑education and corporate markets.
Adjusted EBITDA fell to CAD 6.5 million, representing 11.6% of revenue, down from CAD 7.5 million a year earlier. Adjusted gross margin slipped slightly to 70.4% from 70.6% previously. Net loss widened to CAD 3.1 million after a net income of CAD 2.7 million in the comparable quarter. Operating cash flow surged 92% to CAD 28.8 million, and free cash flow rose 87% to CAD 28.5 million, with twelve‑month free cash flow totaling CAD 42.7 million. The balance sheet held CAD 106.4 million in cash and cash equivalents and carried no debt.
During the quarter the company repurchased roughly 2 million subordinate voting shares, including about 1.9 million via a substantial issuer bid and 131,000 through a normal‑course issuer bid. Over the trailing twelve months, share repurchases exceeded 3 million shares, or 11% of opening subordinate voting shares. A non‑cash fair‑value loss of CAD 4.8 million was recorded on the SkillsWave loan receivable, reducing its value to zero as of July 31, 2026. Foreign‑exchange movements created an estimated $2 million headwind on ARR, and a delayed customer go‑live implementation cost approximately CAD 0.8 million in subscription and support revenue.
Product updates included D2L Lumi surpassing CAD 5 million of ARR and being attached to more than 40% of new higher‑education deployments. Creator+ adoption exceeded 35% among existing customers.
Guidance for fiscal 2027 was revised downward: subscription and support revenue is now expected between CAD 211 million and CAD 213 million (previously CAD 212‑214 million), and total revenue is projected at CAD 228‑231 million (previously CAD 231‑234 million). Adjusted EBITDA guidance remains at CAD 33‑35 million, implying a mid‑point margin of roughly 15%. For fiscal 2028, the company reaffirmed a target revenue growth of 10%‑15% and adjusted EBITDA margins of 18%‑20%.
The stock traded unchanged at $10.15 per share during the call, within a 52‑week range of $7.70 to $18.72. InvestingPro assigned D2L a "GREAT" Financial Health Score of 3.05 out of 5.
CEO John Baker highlighted the continued double‑digit ARR growth outside K‑12 and described the shift to an AI‑first learning platform as a long‑term opportunity. CFO Josh Huff noted expectations that K‑12 retention and growth would normalize in the third quarter, removing the ARR headwind.
