- Subscription Revenue Growth Subscription and support revenue increased 6% to $49.4 million, with annual recurring revenue (ARR) up 6% to $213.4 million.
- International Expansion International ARR growth exceeded 15% year-over-year, driven by strong performance in targeted global markets.
- Share Repurchase Program 223,500 shares repurchased in Q3, totaling 600,000 shares year-to-date under the NCIB program.
- Adjusted EBITDA Guidance Full-year adjusted EBITDA projected at $32–33 million (15% margin), up 33% year-to-date despite prior-year true-up impacts.
- Competitive Win Rate Maintained a win rate of over 50%, with new customers including University of Central Arkansas and Oregon Health & Science University.
Revenue Growth and Pipeline Generation
The company's pipeline generation has been better than forecast for multiple consecutive quarters and remains healthy, with strong indicators reinforcing confidence heading into Q4 and the year ahead. The sales team has been hired for next year, ensuring capacity to deliver, and new hires are expected to drive improvement in deal flow and ARR build starting early next year.
Segment Performance
In North America Higher Education, D2L is seeing a gradual improvement in market conditions, with early signs of increased activity as institutions redirect attention to investments that improve outcomes. Internationally, the company's teams continue to perform well, expanding D2L's footprint across targeted countries, with year-over-year international ARR growth exceeding 15% in Q3. The corporate market is also showing promise, with a focus on employee training and upskilling.
Competitive Landscape and Outlook
The competitive landscape in higher education has changed with Anthology's Chapter 11 filing and Blackboard's bankruptcy, but D2L's pipeline continues to grow, and its win rate is increasing. The company is well-positioned to be competitive in this market, with a strong global competitive position, a healthy balance sheet, and growing cash flow. Analysts estimate next year's revenue growth at 0.7%, which is relatively modest.
Valuation
Using the provided valuation metrics, D2L's P/E Ratio is 18.22, P/B Ratio is 6.81, and EV/EBITDA is 21.22. These metrics suggest that the market is pricing in a certain level of growth and profitability. With a Return on Equity (ROE) of 39.8% and Return on Invested Capital (ROIC) of 24.79%, D2L is demonstrating strong profitability. The Net Debt / EBITDA ratio of -4.03 indicates a healthy balance sheet with significant cash reserves.