D2L records rising revenue, net losses in first quarterly report since IPO

D2L’s latest earnings report shows the Kitchener-Waterloo-based EdTech company continues to benefit from the pandemic-fuelled shift to digital learning.

In Q3, the e-learning software company generated about $39 million USD in revenue, growth of 18 percent compared to the same period last year, driven by a combination of new customers and expanded relationships with existing clients. This revenue growth was coupled with a rise in net losses the company attributed to one-time, initial public offering (IPO)-related expenses.

“Our results reflect an increase in new customers and expanded relationships with existing customers.”
-John Baker, D2L

“Our results reflect an increase in new customers and expanded relationships with existing customers – early returns from our investments in sales – as well as sustained adoption of digital learning experiences across our core markets,” said John Baker, D2L’s president and CEO, adding that the company’s performance to date in 2021 places it on track to achieve 20 percent revenue growth this year.

D2L released its fiscal third-quarter 2022 financial results on December 8. D2L’s latest earnings report covers the three months ending October 31, just before it made its Toronto Stock Exchange (TSX) debut under the symbol ‘DTOL.’

Founded by Baker in 1999, D2L is the company behind D2L Brightspace, a software platform for the delivery of courses, learning-based games, and assessments both online and in-person. The Kitchener-Waterloo firm serves over 970 K-12, higher education, and corporate customers, comprising more than 14 million users across 40-plus countries, including many of Canada’s universities and colleges.

D2L’s overall revenue growth was fuelled by a 20 percent rise in the firm’s total subscription and support revenue. In total, D2L said its annual recurring revenue (ARR) had increased to $150 million, representing 20 percent year-over-year growth.

At the same time, D2L generated a net loss of nearly $42 million, compared with net loss of only $28 million during the same period last year.

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This higher net loss reflects its non-cash stock-based compensation expenses of nearly $66 million related to the “unwinding” of an employee stock trust as part of its IPO. According to D2L, these losses were “partly offset” by one-time, IPO-related gain of about $26 million on the company’s redeemable convertible preferred shares.

The EdTech company first filed to go public in early October, before cutting the size and pricing of its IPO later that month to better reflect investor demand. The company went public on the TSX in early November. Baker reflected on the move in a recent interview with BetaKit.

The firm sold 5.4 million subordinate voting shares at $17 apiece as part of its $150 million CAD IPO, which saw the firm raise $88 million in net proceeds. The offering also included a large secondary component as the Desire2Learn Employee Stock Trust sold an additional 3.3 million shares at the same price

“In our more than 20-year history, the market backdrop and opportunity have never been stronger,” said Baker. “D2L’s mission to transform the way the world learns is also more vital than ever, as we work with educators to tackle learning loss from the pandemic and support employers to meet the pressing need for upskilling in the workforce.”

D2L’s third quarter highlights include: inking new customer agreements with the State University of New York, the Netherlands-based University of Groningen, and Lee Valley Tools; its acquisition of course content, development tools, and talent from Bayfield Design; and the launch of a new parent and guardian app designed to connect teachers and families. Since the close of Q3, D2L has also added British Columbia’s Ministry of Education as a customer.

Feature image from D2L via LinkedIn

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories, tracking Canada’s innovation economy and the people and companies building it, and breaking news. His coverage is more complete than his moustache.

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