Kitchener-Waterloo-based e-learning software company D2L has filed to go public on the Toronto Stock Exchange (TSX).
D2L, which was previously known as Desire2Learn, filed its preliminary prospectus on October 12, applying to begin listing on the TSX under the symbol ‘DTOL.’ The edtech firm has not yet determined how many subordinate voting shares it plans to issue as part of its planned initial public offering (IPO), or how it plans to price them.
UPDATE (18/10/21): D2L has filed an updated prospectus outlining plans to sell 9.5 million to 10.5 million shares priced between $19 and $21 CAD apiece. This would generate gross proceeds of approximately $200 million, and give the company a valuation of about $1.1 billion.
D2L, which was previously known as Desire2Learn, filed its preliminary prospectus on October 12.
Through the offering, D2L aims to increase its capitalization, financial flexibility, and visibility in the marketplace, which it believes will bolster its credibility with existing and new customers, and support its various growth strategies.
Founded in 1999 by CEO and President John Baker, a then 22-year-old University of Waterloo engineering student, D2L was bootstrapped until 2012, when it secured $80 million in venture financing.
The company offers D2L Brightspace, a scalable and flexible cloud-based software platform for the delivery of courses, learning-based games, and assessments online or in-person. D2L serves 970 K-12, higher education, and corporate customers, comprising over 14 million users across more than 40 countries. D2L’s clients include clients that, includinges many of Canada’s universities and colleges.
According to The Globe and Mail, which was first to report on D2L’s IPO plans, as of last month, the company expects to raise a nine-figure sum at a valuation of more than $1 billion USD through its IPO.
TD Securities and BMO Capital Markets are set to act as co-lead underwriters and joint bookrunners for the offering, with the support of a syndicate of other underwriters.
With the offering, D2L is set to join cybersecurity software company Magnet Forensics as only the second Waterloo Region tech company to go public in the last 15 years, after Magnet began trading on the TSX in April.
Approximately $20 million CAD of the net proceeds from D2L’s IPO will repay a loan the firm made to a holding company affiliated with Baker earlier this year. The prospectus states this loan was designed to cover $16.6 million in outstanding income tax liabilities connected to a 2012 share distribution that included three of Baker’s siblings, after a 2016 audit by the Canada Revenue Agency. These proceeds will also see these siblings pay $3.6 million in relation to the exercise of D2L share options.
Last year, amid the pandemic-fuelled shift to digital learning, D2L saw strong results, including 33 percent customer growth. The company recorded $138 million USD in revenue during the year ending July 31, a 21 percent increase compared to the previous year. D2L’s annual recurring revenue also grew to $144 million during this period, a rise of 23 percent.
In D2L’s latest fiscal year, which concluded in January, the firm generated a comprehensive loss of nearly $42 million USD, a major increase compared to the almost $6 million it lost the prior year. During the same period, the firm saw revenue growth of 15 percent as it pulled in $126 million.
D2L’s growth strategies include expanding its customer base, deepening its relationship with existing customers, international expansion into new geographies, growing its partner ecosystem through strategic partnerships and tech integrations, expanding its platform and offerings, and pursuing strategic acquisitions and investments.
To accomplish these goals, D2L intends to grow its business development, sales, customer experience, channel sales, partnership, and research and development teams, and invest more in advertising.
In early August, D2L announced its acquisition of assets from Bayfield, Ontario-based digital learning materials creator Bayfield Design. These assets include exclusive course content, development tools, and talent.
Feature image from D2L via LinkedIn