D2L Inc. Announces First Quarter 2027 Financial Results

• Subscription and support revenue grew 10% year-over-year to US$52.7 million
• Annual Recurring Revenue¹ reached US$225.2 million at quarter end, up 9% over the prior year
• Total revenue increased 8% year-over-year to US$57.1 million
• Adjusted EBITDA² was US$8.3 million, versus US$9.3 million in the prior year
• Announces Substantial Issuer Bid of up to CAD $20.0 million

TORONTO, June 9, 2026 /CNW/ - D2L Inc. (TSX: DTOL) ("D2L" or the "Company"), a leading global learning technology company, today announced financial results for its Fiscal 2027 first quarter ended April 30, 2026. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards ("IFRS") unless otherwise indicated.

"We are off to a good start this year, with strong execution in new bookings across our core growth markets and a healthy pipeline to support the year ahead," said John Baker, Founder and CEO of D2L. "This outcome reflects the reflects the continued performance of our core business and stronger competitive positioning in the market. Further, we are building meaningful momentum in the deployment of responsible AI, as evidenced by accelerating growth in D2L Lumi ARR and increasing adoption as organizations embrace our AI-first approach to enhance learning outcomes and drive operational efficiency. Our continued investment in the platform is reinforcing D2L's leadership position and supports our ability to win more and expand customer relationships. As organizations invest in the next generation of learning technology, D2L is well positioned as a trusted, long-term partner."

First Quarter Fiscal 2027 Financial Highlights

• Subscription and support revenue was $52.7 million, an increase of 10% over the same period of the prior year, reflecting growth from new customers, coupled with expansion from existing customers, and was partially moderated by previously disclosed churn from the U.S. K-12 market.
• Total revenue of $57.1 million, up 8% from the same period in the prior year.
• Annual Recurring Revenue¹ ("ARR") as at April 30, 2026 increased by 9% year-over-year, from $206.2 million to $225.2 million, and Constant Currency Annual Recurring Revenue¹ increased 8% to $221.9 million. Excluding the K-12 market, ARR increased by approximately 13.2% over the same period of the prior year and Constant Currency ARR grew by 11.4% over the same period of the prior year.
• Adjusted Gross Profit² increased by 7% to $40.4 million (70.7% Adjusted Gross Margin²) from $37.7 million (71.3% Adjusted Gross Margin) in the same period of the prior year. Adjusted Gross Margin was negatively impacted by the previously disclosed migration of a database technology, which did not affect the comparable period in Fiscal 2026.
• Adjusted EBITDA² of $8.3 million (14.5% Adjusted EBITDA Margin²), compared with $9.3 million (17.6% Adjusted EBITDA Margin) in the same period of the prior year and income for the period was $1.7 million, versus income of $3.3 million for the comparative period of the prior year. The period-over-period decreases are largely explained by the database technology migration.
• Cash flows used in operating activities were $16.8 million, compared with $1.9 million for the same period in the prior year, and Free Cash Flow² was negative $16.9 million, compared to Free Cash Flow of negative $1.8 million in the same period in the prior year. The year-over-year increase in cash used was primarily attributable to working capital movements, including higher payments to vendors and lower collections from customers in the current period following strong collections in the fourth quarter ended January 31, 2026. These impacts are timing-related in nature. Cash flow from operations typically have a seasonal low in the first quarter and are expected to improve meaningfully in the second and third quarters, consistent with historical patterns.
• Strong balance sheet at quarter end, with cash and cash equivalents of $95.7 million and no debt. 
• During the three months ended April 30, 2026, the Company repurchased and cancelled 444,300 (2025 – 168,800) Subordinate Voting Shares under its Normal Course Issuer Bid ("NCIB"). For the trailing 12-month period ended April 30, 2026, the Company has repurchased and cancelled 1,268,200 Subordinate Voting Shares (2025 – 438,900), representing the cancellation of 4.2% (2025 – 1.6%) of the opening Subordinate Voting shares outstanding over the past twelve months. 
• Subsequent to quarter end, the Company announced a substantial issuer bid ("SIB") pursuant to which the Company will offer to purchase for cancellation up to C$20.0 million of its Subordinate Voting Shares at a price of not less than C$10.50 and not more than C$11.50 per share. Additional information on the SIB is disclosed in a separate press release issued on June 9, 2026.

¹ Refer to "Key Performance Indicators" section of this press release.

² A non-IFRS financial measure or non-IFRS ratio.  Refer to "Non IFRS Financial Measures" section of this press release.

First Quarter Fiscal 2027 Financial Results – Selected Financial Measures
(in thousands of U.S. dollars, except for percentages)

	Q1 2027	Q1 2026	Change	Change
	$	$	$	%
Subscription & Support Revenue	52,723	47,735	4,988	10.4 %
Professional Services & Other Revenue	4,407	5,100	(693)	(13.6 %)
Total Revenue	57,130	52,835	4,295	8.1 %
Constant Currency Revenue^1	55,682	52,835	2,847	5.4 %
Gross Profit	39,654	37,030	2,624	7.1 %
Adjusted Gross Profit^1	40,366	37,667	2,699	7.2 %
Adjusted Gross Margin^1	70.7 %	71.3 %
Income for the period	1,670	3,268	(1,598)	(48.9 %)
Adjusted EBITDA^1	8,261	9,305	(1,044)	(11.2 %)
Cash Flows used in Operating Activities	(16,829)	(1,856)	(14,973)	(806.7 %)
Free Cash Flow^1	(16,873)	(1,841)	(15,032)	(816.5 %)

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

First Quarter Business & Operating Highlights

• D2L continued to grow its customer base in North American education, including the additions of Humber Polytechnic, Loyola University Chicago, Midwestern University, Wiley University, StraighterLine, and École Louis Legrand. 
• D2L expanded its corporate customer base in North America by adding several new customers, including Royal Conservatory of Music, American Traffic Safety Services Association, and a leading professional body for plastic surgeons.
• D2L continued to grow its global customer base, adding GME Education in the Middle East, a major education provider in Mexico, and a leading trade and investment agency in APAC.
• D2L Brightspace was recognized by G2 as one of the Best Education Software Products and D2L was named among the Best Canadian Software Companies for 2026. 
• D2L Lumi was recognized as an Award-Winning Education Product in the 2026 Artificial Intelligence Excellence Awards presented by Business Intelligence Group.
• D2L was named one of Canada's Best Diversity Employers for 2026 by Mediacorp Canada. 
• Together with WCET and Opened Culture, D2L released AI Literacies in Practice: A Comprehensive Playbook for Higher Education to help institutions develop AI literacies.

Financial Outlook

The Company is maintaining its previous financial guidance for the year ended January 31, 2027 as follows:

• Subscription and support revenue in the range of $212 million to $214 million, implying growth of 7-8% over Fiscal 2026;
• Total revenue in the range of $231 million to $234 million, implying growth of 6-8% over Fiscal 2026; and
• Adjusted EBITDA in the range of $33 million to $35 million, implying an Adjusted EBITDA margin of 15%.

For additional details on the Company's outlook, including the principal underlying assumptions and risk factors regarding achievement, refer to the "Financial Outlook" section of the Company's MD&A for the year ended January 31, 2026 (the "Annual MD&A"), as well as the "Forward-Looking Information" section therein and in the Company's MD&A for the three months ended April 30, 2026 (the "Interim MD&A").

Q1 Conference Call & Webcast

D2L management will host a conference call on Wednesday, June 10, 2026 at 8:30 am ET to discuss its first quarter Fiscal 2027 financial results.

Date:		Wednesday, June 10, 2026
Time:		8:30 am (ET)
Dial in number:		Canada: 1 [phone] United States: 1 [phone] Access code: 628059232
Webcast:		A live webcast will be available at ir.d2l.com/events-and-presentations/events/ The webcast will also be archived for replay.

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; expected improvements in gross margin; the Company's budgets, operations and taxes; judgments and estimates impacting the financial statements; the markets in which the Company operates; industry trends and the Company's competitive position; expansion of the Company's product offerings; the anticipated impacts of future acquisitions; trends in research and development expenses, sales and marketing expenses, and general and administrative expenses, each as a percentage of revenue; planned expenditures in sales and marketing and research and development activities; the timing and pace for achieving scalability; expectations regarding the growth of the Company's customer base, revenue, and revenue generation potential and expectations regarding costs, including as a percentage of revenue; and the Company's equity investment in, and loan to, SkillsWave Corporation ("SkillsWave").

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 assumptions regarding the principal competitive factors in our markets; the Company's ability to hire and retain personnel effectively; the effects of foreign currency exchange rate fluctuations 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, including demand for AI; the Company's ability to predict future learning trends and technology; 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 assumptions underlying the judgments and estimates impacting on financial statements; certain accounting matters, including the impact of changes in or the adoption of new accounting standards; the Company's ability to retain key personnel; the factors and assumptions discussed under the "Financial Outlook" section of the Annual MD&A; 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 in our Annual MD&A, including "Summary of Factors Affecting Our Performance" or in the "Risk Factors" section of the Company's most recently filed annual information form, in each case filed under the Company's profile on SEDAR+ at www.sedarplus.com. 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 achieve more than they dreamed possible. Working closely with customers all over the world, D2L is on a mission to make learning more inspiring, engaging and human. Find out how D2L helps transform lives and delivers outstanding learning outcomes in higher education, corporate and K-12 at www.D2L.com.

D2L INC.
Condensed Consolidated Interim Statements of Financial Position
(In U.S. dollars)

As at April 30, 2026 and January 31, 2026
(Unaudited)

		April 30, 2026	January 31, 2026
Assets
Current assets:
	Cash and cash equivalents	$    95,699,241	$    119,210,190
	Trade and other receivables	29,461,310	26,446,779
	Uninvoiced revenue	3,153,391	3,365,404
	Prepaid expenses	9,463,596	8,929,070
	Deferred commissions	5,959,787	6,046,380
		143,737,325	163,997,823
Non-current assets:
	Other receivables	227,312	274,542
	Prepaid expenses	511,635	480,900
	Deferred income taxes	14,480,657	16,447,851
	Right-of-use assets	7,527,005	7,879,566
	Property and equipment	6,320,549	6,712,449
	Deferred commissions	7,009,682	7,111,530
	Loan receivable from associate	4,821,800	4,821,800
	Intangible assets	15,829,945	16,577,630
	Goodwill	27,319,436	27,619,673
Total assets		$   227,785,346	$    251,923,764
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable and accrued liabilities	$    31,174,963	$    40,057,268
	Deferred revenue	96,177,276	111,638,604
	Lease liabilities	1,592,050	1,641,257
		128,944,289	153,337,129
Non-current liabilities:
	Deferred income taxes	3,356,839	3,487,856
	Lease liabilities	9,739,747	10,118,128
		13,096,586	13,605,984
		142,040,875	166,943,113
Shareholders' equity:
	Share capital:	360,660,505	359,412,845
	Additional paid-in capital	44,981,734	49,129,311
	Accumulated other comprehensive loss	(4,272,450)	(3,954,805)
	Deficit	(315,625,318)	(319,606,700)
		85,744,471	84,980,651
Related party transactions Investment in associate Subsequent event
Total liabilities and shareholders' equity		$   227,785,346	$    251,923,764

D2L INC.
Condensed Consolidated Interim Statements of Comprehensive Income
(In U.S. dollars, except per share amounts)                                           

For the three months ended April 30, 2026 and 2025
(Unaudited)

		2026				2025
Revenue:
	Subscription and support	$		52,722,709		$	47,735,572
	Professional services and other	4,406,906				5,099,599
		57,129,615				52,835,171
Cost of revenue:
	Subscription and support	13,848,832				11,840,420
	Professional services and other	3,627,306				3,964,545
		17,476,138				15,804,965
Gross profit		39,653,477				37,030,206
Expenses:
	Sales and marketing	15,523,375				13,668,739
	Research and development	13,077,156				11,459,714
	General and administrative	8,046,967				8,386,362
		36,647,498				33,514,815
Income from operations		3,005,979				3,515,391
Interest and other income (expense):
	Interest expense	(149,871)				(220,129)
	Interest income	756,914				717,052
	Other income	7,106				142,789
	Fair value gain on loan receivable from associate		--			172,270
	Foreign exchange gain	120,650				1,536,516
		734,799				2,348,498
Income before income taxes		3,740,778				5,863,889
Income taxes expense:
	Current	312,761				571,177
	Deferred	1,758,346				2,024,408
		2,071,107				2,595,585
Income for the period		1,669,671				3,268,304
Other comprehensive (loss) income:
	Foreign currency translation (loss) gain	(317,645)				2,760,468
Comprehensive income		$		1,352,026		$	6,028,772
Earnings per share – basic		$			0.03	$		0.06
Earnings per share – diluted		$			0.03	$		0.06
Weighted average number of common shares – basic			54,399,915			54,689,330
Weighted average number of common shares – diluted			56,467,387			56,137,363

D2L INC.
Condensed Consolidated Interim Statements of Shareholders' Equity
(In U.S. dollars, except per share amounts)

For the three months ended April 30, 2026 and 2025
(Unaudited)

	Share Capital		Additional paid-in capital	Accumulated other comprehensive loss	Deficit	Total
	Shares	Amount
Balance, January 31, 2026	54,472,285	$  359,412,845	$  49,129,311	$  (3,954,805)	$  (319,606,700)	$  84,980,651
Issuance of Subordinate Voting Shares on exercise of options	163	2,064	(2,064)	--	--	--
Issuance of Subordinate Voting Shares on settlement of restricted share units	475,529	4,301,869	(7,721,557)	--	--	(3,419,688)
Stock-based compensation	--	--	3,630,599	--	--	3,630,599
Reduction in excess tax benefit on stock-based compensation	--	--	(54,555)	--	--	(54,555)
Repurchase of share capital for cancellation under the NCIB	(444,300)	(3,056,273)	--	--	--	(3,056,273)
Change in share repurchase commitment under the ASPP	--	--	--	--	2,311,711	2,311,711
Other comprehensive loss	--	--	--	(317,645)	--	(317,645)
Income for the period	--	--	--	--	1,669,671	1,669,671
Balance, April 30, 2026	54,503,677	$  360,660,505	$  44,981,734	$  (4,272,450)	$  (315,625,318)	$  85,744,471
Balance, January 31, 2025	54,653,174	$  367,487,956	$  48,263,266	$  (7,456,599)	$  (323,548,911)	$  84,745,712
Issuance of Subordinate Voting Shares on exercise of options	13,734	120,279	(88,253)	--	--	32,026
Issuance of Subordinate Voting Shares on settlement of restricted share units	370,200	1,328,952	(5,292,603)	--	--	(3,963,651)
Stock-based compensation	--	--	3,213,041	--	--	3,213,041
Reduction in excess tax benefit on stock-based compensation	--	--	(715,104)	--	--	(715,104)
Repurchase of share capital for cancellation under the NCIB	(168,800)	(1,811,339)	--	--	--	(1,811,339)
Change in share repurchase commitment under the ASPP	--	--	--	--	(3,750,461)	(3,750,461)
Other comprehensive income	--	--	--	2,760,468	--	2,760,468
Income for the period	--	--	--	--	3,268,304	3,268,304
Balance, April 30, 2025	54,868,308	$  367,125,848	$  45,380,347	$  (4,696,131)	$  (324,031,068)	$  83,778,996

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

For the three months ended April 30, 2026 and 2025
(Unaudited)

			2026		2025
Operating activities:
	Income for the period		$  1,669,671		$  3,268,304
	Items not involving cash:
		Depreciation of property and equipment	415,737		392,558
		Depreciation of right-of-use assets	390,517		347,334
		Amortization of intangible assets	559,411		557,631
		Gain on disposal of property and equipment	(402)		(16,825)
		Stock-based compensation	3,630,599		3,213,041
		Net interest income	(607,043)		(496,923)
		Income tax expense	2,071,107		2,595,585
		Fair value gain on loan receivable from associate	--		(172,270)
	Changes in operating assets and liabilities:
		Trade and other receivables	(3,007,365)		3,684,970
		Uninvoiced revenue	225,918		(133,791)
		Prepaid expenses	(591,103)		153,112
		Deferred commissions	146,956		369,573
		Accounts payable and accrued liabilities	(6,586,883)		(1,189,037)
		Deferred revenue	(15,514,330)		(14,399,467)
		Right-of-use assets and lease liabilities	(60,840)		--
	Interest received		752,047		710,627
	Interest paid		(15,165)		(1,633)
	Income taxes paid		(307,301)		(738,303)
	Cash flows used in operating activities		(16,828,469)		(1,855,514)
Financing activities:
	Payment of lease liabilities		(527,655)		(487,522)
	Net proceeds from sub-lease receivable		47,451		--
	Proceeds from exercise of stock options		--		32,026
	Taxes paid on settlement of restricted share units		(3,419,688)		(3,963,651)
	Repurchase of share capital for cancellation under the NCIB			(3,056,273)	(1,811,339)
	Cash flows used in financing activities		(6,956,165)		(6,230,486)
Investing activities:
	Purchase of property and equipment		(44,667)		(1,737)
	Proceeds from disposal of property and equipment		402		16,825
	Cash flows (used in) from investing activities		(44,265)		15,088
Effect of exchange rate changes on cash and cash equivalents			317,950		1,413,232
Decrease in cash and cash equivalents			(23,510,949)		(6,657,680)
Cash and cash equivalents, beginning of period			119,210,190		99,184,514
Cash and cash equivalents, end of period			$  95,699,241		$  92,526,834

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 income (loss), excluding interest, taxes, depreciation and amortization (or EBITDA), adjusted for stock-based compensation, foreign exchange gains and losses, non-recurring expenses, transaction-related costs, fair value adjustment of acquired deferred revenue, income (loss) from equity accounted investee, change in fair value on the loan receivable from associate, impairment charges 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 – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted EBITDA and Adjusted EBITDA Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein.

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

(in thousands of U.S. dollars, except for percentages)	Three months ended April 30,
	2026 $	2025 $
Income for the period	1,670	3,268
Stock-based compensation	3,631	3,213
Foreign exchange gain	(121)	(1,537)
Non-recurring expenses^(1)	173	471
Transaction-related costs^(2)	46	440
Fair value adjustment of acquired deferred revenue^(3)	32	225
Change in fair value of loan receivable from associate^(4)	--	(172)
Net interest income	(607)	(497)
Income tax expense	2,071	2,596
Depreciation and amortization	1,366	1,298
Adjusted EBITDA	8,261	9,305
Adjusted EBITDA Margin	14.5 %	17.6 %

Notes:
(1)	These expenses relate to non-recurring activities, such as certain legal fees incurred that are not indicative of continuing operations, and changes in workforce or technology whereby certain functions were realigned to optimize operations.
(2)	These expenses include certain legal and professional fees that are incurred in connection with other strategic transactions. In the prior fiscal year, these expenses include post-combination costs from the acquisition of H5P, and were partially offset by a gain recognized from the reduction in the second anniversary payment owed to the selling shareholders of Connected Shopping Ltd ("Connected Shopping"), a company acquired in Fiscal 2024, which was recorded through Other income. These expenses would not have been incurred if not for these transactions and are not considered to be indicative of expenses associated with the Company's continuing operations.
(3)	At the date of acquisition, the Company recognized a fair value adjustment on the opening deferred revenue balance acquired as part of the H5P acquisition as required under IFRS 3, Business Combinations. This adjustment is not reflective of ordinary operations and is expected to be substantially completed by the end of Fiscal 2027.
(4)	On a quarterly basis, the Company determines the fair value of the loan advanced to SkillsWave. The adjustments to the fair value of the loan are not reflective of the Company's main business operations and will not impact the Company's future results beyond the maturity date of the loan on June 28, 2029. See note 5 of the Interim Financial Statements for further details.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit is defined as gross profit excluding related stock-based compensation expenses and amortization from acquired intangible assets, specifically acquired technology. 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 – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted Gross Profit and Adjusted Gross Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein.

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 April 30,
	2026 $	2025 $
Gross profit for the period	39,654	37,030
Stock-based compensation	272	206
Amortization from acquired intangible assets	440	431
Adjusted Gross Profit	40,366	37,667
Adjusted Gross Margin	70.7 %	71.3 %

Free Cash Flow and Free Cash Flow Margin
Free Cash Flow is defined as cash flows from (used in) operating activities excluding payments of acquisition-related compensation, 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 Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Free Cash Flow and Free Cash Flow Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein.

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

(in thousands of U.S. dollars, except for percentages)	Three months ended April 30,
	2026 $	2025 $
Cash flow used in operating activities	(16,829)	(1,856)
Net (additions) disposal to property and equipment	(44)	15
Free Cash Flow	(16,873)	(1,841)
Free Cash Flow Margin	-29.5 %	-3.5 %

Constant Currency Revenue
Constant Currency Revenue is defined as our total revenue with 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 – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Constant Currency Revenue" section in the Company's MD&A for the years ended January 31, 2026 and 2025, which section is incorporated by reference herein.

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

(in thousands of U.S. dollars)	Three months ended April 30,
	2026 $	2025 $
Total revenue for the period	57,130	52,835
Positive impact of foreign exchange rate changes over the prior period	(1,448)	--
Constant Currency Revenue	55,682	52,835

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.

• Annual Recurring Revenue and Constant Currency Annual Recurring Revenue: We define ARR as the annualized equivalent value of subscription revenue from all existing customer contracts as at the date being measured, exclusive of the implementation period. Our calculation of ARR assumes that customers will renew their contractual commitments as those commitments come up for renewal. We believe ARR provides a reasonable, real-time measure of performance in a subscription-based environment and provides us with visibility for potential growth in our cash flows. We believe that increasing ARR indicates the continued strength in the expansion of our business, and will continue to be our focus on a go-forward basis. We define Constant Currency Annual Recurring Revenue as foreign-currency-denominated ARR translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional currency.

	As at April 30,
(in millions of U.S. dollars, except percentages)	2026	2025	Change
	$	$	%
ARR	225.2	206.2	9.2 %
Constant Currency Annual Recurring Revenue	221.9	206.2	7.6 %

SOURCE D2L Inc.

For further information, please contact: Craig Armitage, Investor Relations, [e-mail], [phone]