Canada's D2L Q2 swings to loss on non-cash fair value adjustment; cuts FY27 guidance

D2L

09/09/2026 22:19

Overview
Canada learning technology firm's fiscal Q2 subscription revenue grew 2% yr/yr, impacted by K-12 churn
D2L swings to loss of $3.1mln, due to a non-cash fair value adjustment 
Company repurchased about 2 mln Subordinate Voting shares during the quarter

Outlook
D2L sees FY27 subscription and support revenue at $211 mln to $213 mln, down from $212 mln to $214 mln prior guidance
Company expects FY27 total revenue of $228 mln to $231 mln, down from $231 mln to $234 mln prior guidance
D2L maintains FY27 adjusted EBITDA guidance at $33 mln to $35 mln, or 15% margin at midpoint

Result Drivers
K-12 CHURN - Co said subscription and support revenue growth was limited by previously disclosed U.S. K-12 customer churn
HIGHER ED AND CORPORATE GROWTH - Excluding K-12, ARR grew by about 10% yr/yr, driven by new customer wins and expansion in higher education and corporate markets
AI PRODUCT ADOPTION - Broader adoption of D2L Lumi, the co's AI offering, contributed to increased value of customer relationships

Company press release: ID:nCNWkDzf4a

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
Q2 Net Loss
 
$3.06 mln
 
Q2 Adjusted EBITDA
 
$6.45 mln
 
Q2 Adjusted Gross Margin
 
70.40%
 
Q2 Free Cash Flow
 
$28.50 mln
 
Q2 Gross Profit
 
$38.56 mln
 

Analyst Coverage
The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"
The average consensus recommendation for the software peer group is "buy"
Wall Street's median 12-month price target for D2L Inc is C$14.00, about 40.7% above its September 8 closing price of C$9.95
The stock recently traded at 18 times the next 12-month earnings vs. a P/E of 16 three months ago

Reuters Recommended Reads
Sept 9 - Canadian printing firm Transcontinental's Q3 adj profit misses estimates
Sept 8 - Canada's North West Q2 revenue rises as same-store sales grow

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)