Le Lézard
Classified in: Science and technology, Business
Subject: ERN

D2L Inc. Announces Third Quarter Fiscal 2023 Financial Results & Updated Outlook


TORONTO, Dec. 7, 2022 /CNW/ - D2L Inc. (TSX: DTOL) ("D2L" or the "Company"), a leading global learning technology company, today announced financial results for its fiscal 2023 third quarter ended October 31, 2022. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

"We continued to expand our customer base and presence in multiple markets during the third quarter. Our growing market share and win rate in higher education positions us well for renewed market activity, as institutions make strategic investment decisions to address the need for flexible, high-quality, digital learning experiences," said John Baker, CEO of D2L. "Subsequent to quarter end, we also launched Brightspace Creator+ to solve a clear customer need by simplifying creation of engaging digital course content, while at the same time expanding the revenue opportunity from our existing customer base. We are effectively navigating the near-term macroeconomic challenges and are moving forward with confidence in the resilience of our end markets, the long-term demand outlook, our strong business fundamentals, and our accelerated path to profitability."

Third Quarter Fiscal 2023 Financial Highlights

1 A non-IFRS financial measure or non-IFRS ratio. Please refer to "Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures" section of this press release.
2 Please refer to "Key Performance Indicators" section of this press release.

Third Quarter Fiscal 2023 Financial Results

Selected Financial Measures


Three months ended October 31

Nine months ended October 31


2022

2021

Change

Change

2022

2021

Change

Change

$

$

$

%

$

$

$

%

Subscription & Support Revenue

36,565

34,930

1,635

4.7 %

108,149

98,497

9,652

9.8 %

Professional Services & Other
Revenue

6,103

4,214

1,889

44.8 %

17,563

11,977

5,586

46.6 %

Total Revenue

42,668

39,144

3,524

9.0 %

125,712

110,474

15,238

13.8 %










Constant Currency Revenue1

44,174

39,144

5,030

12.8 %

128,683

110,474

18,209

16.5 %

Gross Profit

27,505

17,016

10,489

61.6 %

80,444

61,431

19,013

31.0 %

Adjusted Gross Profit 1

27,609

25,125

2,484

9.9 %

80,705

69,602

11,103

16.0 %

Adjusted Gross Margin1

64.7 %

64.2 %



64.2 %

63.0 %



Loss for the period

(2,625)

(41,543)

38,918

93.7 %

(12,191)

(93,793)

81,602

87.0 %

Adjusted EBITDA (loss)1

(359)

(291)

(68)

-23.4 %

(3,329)

631

(3,960)

-627.6 %

Cash Flows from (used in)
Operating Activities

8,131

3,526

4,605

130.6 %

9,058

4,077

4,981

122.2 %

Free Cash Flow1

7,339

3,200

4,139

129.3 %

7,153

3,377

3,776

111.8 %

1 A non-IFRS financial measure or non-IFRS ratio.  Please refer to the "Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures" section of this press release for more details.

Business & Operating Highlights

Financial Outlook
The Company is updating its previous guidance for the 12 months ended January 31, 2023 (provided in its Q2 results press release dated September 7, 2022) to reflect improved  Adjusted EBITDA loss as the Company pursues an accelerated path to profitability. For fiscal 2023, the Company is expecting Adjusted EBITDA loss in the range of $4 million to $6 million, rather than its previous guidance of Adjusted EBITDA loss in the range of $6 million to $8 million. This revision is reflective of continued cost optimization and a measured prioritization of investments, combined with favourable fluctuations in foreign exchange rates. 

D2L's fiscal 2023 revenue guidance is unchanged. The Company is expecting total revenue in the range of $168 million to $170 million, implying growth of 11% to 12% over the year ended January 31, 2022 (12% to 14% on a constant currency basis).  

Conference Call & Webcast
D2L management will host a conference call on Thursday, December 8, 2022 at 8:30 am ET to discuss its third quarter fiscal 2023 financial results.

Date:


Thursday December 8, 2022

Time:


8:30 am (ET)

Dial in number:


Canada: 1 (844) 200-6205
United States: 1 (646) 904-5544

Access code: 917701

Webcast:


A live webcast will be available at ir.d2l.com/events-and-presentations/events/

Replay:


Canada: 1 (226) 828-7578 or US: 1 (866) 813-9403
(replay code: 028041)

Available until December 15, 2022

Forward-Looking Information
This press release includes statements containing "forward-looking information" within the meaning of applicable securities laws. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", "budget", "scheduled", "estimates", "outlook", "target", "forecasts", "projection", "potential", "prospects", "strategy", "intends", "anticipates", "seek", "believes", "opportunity", "guidance", "aim", "goal" or variations of such words and phrases or statements that certain future conditions, actions, events or results "may", "could", "would", "should", "might", "will", "can", or negative versions thereof, "be taken", "occur", "continue" or "be achieved", and other similar expressions. Statements containing forward-looking information are not historical facts, but instead represent management's expectations, estimates and projections regarding future events or circumstances.

This forward-looking information relates to the Company's future financial outlook and anticipated events or results and includes, but is not limited to, statements under the heading "Financial Outlook" and information regarding: the Company's financial position, financial results, business strategy, performance, achievements, prospects, objectives, opportunities, business plans and growth strategies; the Company's budgets, operations and taxes; the markets in which the Company operates; industry trends and the Company's competitive position; expansion of the Company's product offerings; trends in research and development expenses as a percentage of revenue; the timing and pace for achieving profitability; and expectations regarding the growth of the Company's customer base, revenue and revenue generation potential.

Forward-looking information is based on certain assumptions, expectations and projections, and analyses made by the Company in light of management's experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate, including the following: the Company's ability to win business from new customers and expand business from existing customers; the timing of new customer wins and expansion decisions by existing customers; the Company's ability to generate revenue and expand its business while controlling costs and expenses; the Company's ability to manage growth effectively; the Company's ability to hire and retain personnel returning to levels consistent with historical experiences; the effects of foreign currency exchange rate fluctuations on our operations; the effects of inflation on our operations; the ability to seek out, enter into and successfully integrate acquisitions; business and industry trends, including the success of current and future product development initiatives; positive social development and attitudes toward the pursuit of higher education; the Company's ability to maintain positive relationships with its customer base and strategic partners; the Company's ability to adapt and develop solutions that keep pace with continuing changes in technology, education and customer needs; the ability to patent new technologies and protect intellectual property rights; the Company's ability to comply with security, cybersecurity and accessibility laws, regulations and standards; the Company's ability to retain key personnel; the factors and assumptions referenced under "Financial Outlook" of the Company's MD&A for the three and nine months ended October 31, 2022 and that the list of factors referenced in the following paragraph, collectively, do not have a material impact on the Company.

Although the Company believes that the assumptions underlying such forward-looking information were reasonable when made, they are inherently uncertain and are subject to significant risks and uncertainties and may prove to be incorrect. The Company cautions investors that forward-looking information is not a guarantee of the future and that actual results may differ materially from those made in or suggested by the forward-looking information contained in this press release. Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks, uncertainties and other factors, including but not limited to the risks identified herein, including at "Summary of Factors Affecting Our Performance" of the Company's MD&A for the three and nine months ended October 31, 2022, or in the "Risk Factors" section of the Company's AIF. If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking information prove incorrect, actual results might vary materially from those anticipated in the forward-looking information.

Given these risks and uncertainties, investors are cautioned not to place undue reliance on forward-looking information, including any financial outlook. Any forward-looking information that is contained in this press release speaks only as of the date of such statement, and the Company undertakes no obligation to update any forward-looking information or to publicly announce the results of any revisions to any of those statements to reflect future events or developments, except as required by applicable securities laws. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

About D2L Inc. (TSX: DTOL)
D2L is transforming the way the world learns?helping learners of all ages achieve more than they dreamed possible. Working closely with customers all over the world, D2L is supporting millions of people learning online and in person. Our global workforce is dedicated to making the best learning products to leave the world better than they found it. Learn more at?www.D2L.com

D2L Inc.
Condensed Consolidated Interim Balance Sheets
(Unaudited)
(In U.S. dollars)

As at October 31, 2022 and January 31, 2022


October 31,

January 31,



2022

2022


Assets








Current assets:





Cash and cash equivalents

$   117,979,531

$   114,675,495



Trade and other receivables

20,279,168

26,155,906



Uninvoiced revenue

2,323,611

2,253,146



Prepaid expenses

5,339,711

7,930,462



Deferred commissions

3,599,998

3,711,334




149,522,019

154,726,343






Non-current assets:





Prepaid expenses

145,968

178,585



Deferred income taxes

105,309

139,101



Right-of-use assets

11,523,238

1,323,017



Property and equipment

2,838,447

2,323,708



Deferred commissions

7,276,128

7,510,242



Intangible assets

4,830,692

5,537,024



Goodwill 

6,980,304

7,474,647






Total assets

$   183,222,105

$   179,212,667







Liabilities and Shareholders' Equity








Current liabilities:





Accounts payable and accrued liabilities

$    21,000,062

$    24,340,115



Deferred revenue

90,051,222

82,915,871



Lease liabilities

685,111

1,199,013



Provisions

?

3,265,449




111,736,395

111,720,448







Non-current liabilities:





Deferred income taxes

392,024

418,403



Lease liabilities

12,137,826

693,921




12,529,850

1,112,324




124,266,245

112,832,772


Shareholders' equity:





Share capital

355,272,944

354,277,986



Additional paid-in capital

47,114,521

41,686,794



Accumulated other comprehensive loss

(4,986,097)

(3,330,708)



Deficit

(338,445,508)

(326,254,177)



58,955,860

66,379,895


Contingencies




Related party transactions








Total liabilities and shareholders' equity

$   183,222,105

$   179,212,667









D2L Inc.
Condensed Consolidated Interim Statements of Comprehensive Loss
(Unaudited)
(In U.S. dollars)

For the three and nine months ended October 31, 2022 and 2021


Three months ended October 31

Nine months ended October 31


2022

2021

2022

2021






Revenue:






Subscription and support

$   36,565,449

$   34,929,904

$  108,149,237

$   98,496,847


Professional services and other

6,102,894

4,213,973

17,562,617

11,977,090



42,668,343

39,143,877

125,711,854

110,473,937

Cost of revenue:






Subscription and support

11,582,242

11,471,144

34,424,394

32,813,759


Professional services and other

3,581,305

10,656,842

10,844,154

16,229,651



15,163,547

22,127,986

45,268,548

49,043,410







Gross profit

27,504,796

17,015,891

80,443,306

61,430,527







Expenses:






Sales and marketing

13,801,928

31,285,484

40,880,791

52,479,274


Research and development

10,770,445

17,826,481

32,506,410

35,720,869


General and administrative

6,523,976

35,141,364

19,509,478

44,075,555



31,096,349

84,253,329

92,896,679

132,275,698







Loss from operations

(3,591,553)

(67,237,438)

(12,453,373)

(70,845,171)







Interest and other income (expenses):






Interest expense

(152,617)

(58,729)

(556,474)

(234,572)


Interest income

272,586

120,860

447,667

142,966


Other expenses

(1,280)

?

(1,280)

?


Gain (loss) on redeemable convertible preferred shares

?

25,896,597

?

(22,028,112)


Foreign exchange gain (loss)

976,109

(207,129)

797,751

(447,901)



1,094,798

25,751,599

687,664

(22,567,619)







Loss before income taxes

(2,496,755)

(41,485,839)

(11,765,709)

(93,412,790)







Income taxes (recovery):






Current

73,266

7,112

428,362

123,434


Deferred

55,275

50,950

(2,740)

257,013



128,541

58,062

425,622

380,447







Loss for the period

(2,625,296)

(41,543,901)

(12,191,331)

(93,793,237)







Other comprehensive gain (loss):






Foreign currency translation gain (loss)

(1,455,134)

(68,413)

(1,655,389)

1,108,557

Comprehensive loss

$   (4,080,430)

$  (41,612,314)

$  (13,846,720)

$  (92,684,680)







Loss per share ? basic

$  (0.05)

$  (1.48)

$  (0.23)

$  (3.37)

Loss per share ? diluted

(0.05)

(1.48)

(0.23)

(3.37)






Weighted average number of common shares ? basic

53,032,726

27,997,960

53,008,544

27,794,246

Weighted average number of common shares ? diluted

53,032,726

27,997,960

53,008,544

27,794,246

D2L Inc.
Condensed Consolidated Interim Statements of Shareholders' Equity (Deficiency)
(Unaudited)
(In U.S. dollars)

For the nine months ended October 31, 2022 and 2021


Share Capital

Additional paid-in
capital

Accumulated other

comprehensive
loss

Deficit

Total


Shares

Amount








Balance, January 31, 2022

52,912,502

$   354,277,986

$    41,686,794

$  (3,330,708)

$  (326,254,177)

$     66,379,895

Issuance of Subordinate Voting Shares
    on exercise of options

120,224

994,958

(368,690)

?

?

626,268

Stock-based compensation

?

?

5,796,417

?

?

5,796,417

Other comprehensive loss

?

?

?

(1,655,389)

?

(1,655,389)

Loss for the period

?

?

?

?

(12,191,331)

(12,191,331)

Balance, October 31, 2022

53,032,726

$   355,272,944

$    47,114,521

$  (4,986,097)

$  (338,445,508)

$     58,955,860








Balance, January 31, 2021

26,468,768

$       217,633

$    45,285,371

$  (4,190,459)

$  (228,601,100)

$  (187,288,555)

Issuance of Class O common shares on
     exercise of options

1,543,462

17,932,504

(6,502,427)

?

?

11,430,077

Stock-based compensation

?

?

67,159,910

?

?

67,159,910

Other comprehensive gain

?

?

?

1,108,557

?

1,108,557

Loss for the period

?

?

?

?

(93,793,237)

(93,793,237)

Balance, October 31, 2021

28,012,230

$    18,150,137

$   105,942,854

$  (3,081,902)

$  (322,394,337)

$  (201,383,248)

D2L Inc.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
(In U.S. dollars)

For the nine months ended October 31, 2022 and 2021




2022

2021

Operating activities:




Loss for the period

$  (12,191,331)

$  (93,793,237)


Items not involving cash:





Depreciation of property and equipment

1,238,064

1,074,877



Depreciation of right-of-use assets

1,670,289

1,168,675



Amortization of intangible assets

356,344

218,269



Loss on disposal of property and equipment

1,280

?



Fair value loss on redeemable convertible preferred shares

?

22,028,112



Stock-based compensation

5,796,417

67,159,910



Net interest expense

108,807

91,606



Income tax expense

425,622

380,447


Changes in operating assets and liabilities:





Trade and other receivables

5,002,660

(13,521,310)



Uninvoiced revenue

(151,920)

1,447,632



Prepaid expenses

2,199,560

(2,118,343)



Deferred commissions

(365,514)

(699,259)



Accounts payable and accrued liabilities

(2,150,085)

789,014



Provisions

(3,265,449)

?



Deferred revenue

10,050,634

20,316,131



Right-of-use assets and lease liabilities

134,720

(6,880)


Interest received

447,667

37,115


Interest paid

(77,461)

(101,816)


Income taxes paid

(171,960)

(393,484)


Cash flows from operating activities

9,058,344

4,077,459






Financing activities:




Payment of lease liabilities

(1,520,145)

(1,781,057)


Proceeds from exercise of stock options

626,268

11,430,077


Borrowings on credit facility

?

7,000,003


Repayments to credit facility

?

(7,000,003)


Cash flows from (used in) financing activities

(893,877)

9,649,020






Investing activities:




Purchase of property and equipment

(1,905,312)

(699,897)


Issuance of shareholder loan

?

(16,498,329)


Repayment of shareholder loan

?

242,191


Acquisition of business from related party

?

(645,844)


Cash flows used in investing activities

(1,905,312)

(17,601,879)






Effect of exchange rate changes on cash and cash equivalents

(2,955,119)

1,427,359

Increase (decrease) in cash and cash equivalents

3,304,036

(2,448,041)

Cash and cash equivalents, beginning of period

114,675,495

45,303,944

Cash and cash equivalents, end of period

117,979,531

42,855,903

Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures
The information presented within this press release refers to certain non-IFRS financial measures (including non-IFRS ratios) including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Margin, and Constant Currency Revenue. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Non-IFRS financial measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS and are unlikely to be comparable to similar measures presented by other issuers. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations, financial performance and liquidity from management's perspective and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of the Company. The Company's management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to assess our ability to meet our capital expenditures and working capital requirements.

Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is defined as net income (loss), excluding interest, taxes, depreciation and amortization (or EBITDA), adjusted for changes in the fair value of redeemable convertible preferred shares, stock-based compensation, foreign exchange gains and losses, transaction-related expenses, non-recurring activities and other income and losses. Adjusted EBITDA Margin is calculated as Adjusted EBITDA expressed as a percentage of total revenue.  For an explanation of management's use of Adjusted EBITDA and Adjusted EBITDA Margin see "Non-IFRS and Other Financial Measures" section in the Company's MD&A.

The following table reconciles Adjusted EBITDA to loss for the period, and discloses Adjusted EBITDA Margin, for the periods indicated:

(in thousands of U.S. dollars, except for percentages)

Three months ended October 31

Nine months ended October 31

2022

2021

2022

2021

Loss for the period

(2,625)

(41,543)

(12,191)

(93,793)

Loss (gain) on redeemable convertible preferred shares

?

(25,897)

?

22,028

Stock-based compensation

2,153

66,364

5,796

67,160

Foreign exchange loss (gain)

(976)

207

(798)

448

Transaction-related costs(1)

?

(449)

?

1,854

Non-recurring expenses(2)

64

?

64

?

Net interest expense (income)

(120)

(62)

109

92

Income tax expense

128

58

425

380

Depreciation and amortization

1,017

1,031

3,266

2,462

Adjusted EBITDA

(359)

(291)

(3,329)

631

Adjusted EBITDA Margin

-0.8 %

-0.7 %

-2.6 %

0.6 %

(1)

These costs include professional, legal, consulting and accounting fees incurred in connection with the Company's IPO, which closed on November 3, 2021, and related other activities, and are not considered indicative of continuing operations. These costs did not meet the criteria for capitalization and thus were expensed in the Company's consolidated statements of comprehensive loss. Share issuance costs that met the criteria for capitalization are described in Note 13(b) of the Company's annual audited consolidated financial statements for the year ended January 31, 2022. 

(2)

These costs relate to non-recurring activities, such as facility relocations, and related one-time charges that are not considered indicative of continuing operations. The company's head office relocation is expected to be completed in early 2023, which is described in Note 12(f) of the Company's condensed consolidated interim financial statements. These costs did not meet the criteria for capitalization and thus were expensed in the Company's condensed consolidated interim statements of comprehensive loss.

Adjusted Gross Profit and Adjusted Gross Margin
Adjusted Gross Profit is defined as gross profit excluding related stock-based compensation expenses. Adjusted Gross Margin is calculated as Adjusted Gross Profit expressed as a percentage of total revenue. For an explanation of management's use of Adjusted Gross Profit and Adjusted Gross Margin see "Non-IFRS and Other Financial Measures" section in the Company's MD&A.


The following table reconciles Adjusted Gross Margin to gross profit expressed as a percentage of revenue, for the periods indicated:

(in thousands of U.S. dollars, except for percentages)

Three months ended October 31

Nine months ended October 31

2022

2021

2022

2021

Gross profit for the period

27,505

17,016

80,444

61,431

Stock based compensation

104

8,109

261

8,171

Adjusted Gross Profit

27,609

25,125

80,705

69,602

Adjusted Gross Margin

64.7 %

64.2 %

64.2 %

63.0 %

Free Cash Flow and Free Cash Flow Margin
Free Cash Flow is defined as cash provided by (used in) operating activities less net additions to property and equipment. Free Cash Flow Margin is calculated as Free Cash Flow expressed as a percentage of total revenue. For an explanation of management's use of Free Cash Flow and Free Cash Flow Margins see "Non-IFRS and Other Financial Measures" section in the Company's MD&A.

The following table reconciles our cash flow from (used in) operating activities to Free Cash Flow, and discloses Free Cash Flow Margin, for the periods indicated:


(in thousands of U.S. dollars, except for percentages)

Three months ended October 31

Nine months ended October 31

2022

2021

2022

2021

Cash flow from operating activities

8,131

3,526

9,058

4,077

Purchase of property and equipment

(792)

(326)

(1,905)

(700)

Free Cash Flow

7,339

3,200

7,153

3,377

Free Cash Flow Margin

17.2 %

8.2 %

5.7 %

3.1 %

Constant Currency Revenue
Constant Currency Revenue is defined as foreign-currency-denominated revenues translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional currency. For an explanation of management's use of Constant Currency Revenue see "Non-IFRS and Other Financial Measures" section in the Company's MD&A.

The following table reconciles our Constant Currency Revenue to revenue, for the periods indicated:


Three months ended October 31

Nine months ended October 31

(in thousands of U.S. dollars, except for percentages)

2022

2021

2022

2021

$

$

$

$

Total revenue for the period

42,668

39,144

125,712

110,474

Impact of foreign exchange rate changes over the prior period

1,506

?

2,971

?

Constant Currency Revenue

44,174

39,144

128,683

110,474

Key Performance Indicators

Management uses a number of metrics, including the key performance indicators identified below, to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other issuers. These metrics are estimated operating metrics and not projections, nor actual financial results, and are not indicative of current or future performance.

SOURCE D2L Inc.


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Nationally, prices have declined 4.3% from the peak in June, according to data from the American Enterprise Institute's (AEI) Housing Center. While all of the 60 largest metros have begun experiencing year-over-year price declines, Seattle, San...



News published on 7 december 2022 at 17:18 and distributed by: