D2L Inc.

Welcome to the D2L Inc. Fiscal 2022 Third Quarter Results Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. You may ask a question by pressing star followed by one on your telephone keypad. If anyone has any difficulty hearing the conference, you may press star zero for operator assistance at any time. Listeners are reminded that portions of today's discussion will include statements that contain forward-looking information. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information. Further, certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. For identification and discussion of such risks, uncertainties, factors and assumptions, as well as further information concerning forward-looking statements, please refer to the summary of factors affecting our performance section of the companies MD&A for the three and nine months ended October 31st, 2021, and in the risk factors section of the company's IPO perspectives, which are both posted under the company's profile on SEDAR. In addition, during this call, reference will be made to various non-IFRs financial measures, including annual reoccurring revenues, or ARR, adjusted gross profits, adjusted gross margin, adjusted EBITDA, free cash flow and free cash flow margin. These non-IFRs financial measures do not have any standardized meanings prescribed by IFRs and may not be comparable to similar measures presented by other public companies. Please refer to the company's MD&A for the three and nine months ended October 31st, 2021 for more information about these and certain other non-IFRs financial measures including, where applicable, a reconciliation of historical non-IFRs financial measures to the most directly comparable IFRs financial measures from our financial statement. This morning's call is being recorded on Thursday, December 9th, 2021 at 8.30am Eastern Time. I would now like to turn the call over to Mr. John Baker, President and Chief Executive Officer of D2L. Please go ahead, sir.

Thank you, Operator. Good morning, and thank you for joining us today on our inaugural earnings call. I'm pleased to be joined by Melissa Howison, our CFO. After the close of markets yesterday, we released our Q3 fiscal 2022 financial results for the period ending October 31st, 2021. You can find these results on our investor section of our website at d12.com. I will highlight at the outset that the results we discussed today are in US dollars, unless we indicate otherwise. Now, before we get started, I wanted to quickly acknowledge the incredible work of our D2L team for helping us complete this successful IPO and for their enthusiasm in our next chapter as a public company. We're also excited to welcome our new shareholders and analysts. Thanks to your support, we're well positioned to make the most of favorable long-term market conditions. We're seeing accelerating growth in digital adoption and growing demand for improved learning experiences. The past two years of Shawna Light on the need for a better, more resilient learning system, both in education and in adult learning. Our team is helping to navigate this change and build the future of work and learning, whether it's working with educators to tackle learning loss or supporting employers to meet the pressing need for better onboarding experiences and upskilling. We believe our work to transform learning has never been more important to help people around the world to achieve more with their life. And the demand outlook is robust. The learning environment market, as defined by Holland IQ, is expected to more than triple from 2019 to 2025, reaching $43 billion. And against this market backdrop, we're having a strong year at D2L and a momentum continued during the third quarter. Our subscription and support revenue grew 20% to $35 million this quarter, and our annual recurring revenue increased by 20%, or by $25 million to just under $150 million at the end of Q3. In our view, ARR is the best leading indicator of continued strength in the expansion of our business. Our revenue and ARR growth reflect an increase in number of new customer wins and growth within existing customers. We're expanding our go-to-market teams and seeing returns from these investments. We have achieved meaningful scales, We have strong growth in ARR, and at the same time, we've continued to generate free cash flow. And Melissa will provide more details on this shortly. We serve well over 1,000 customers today, and through them, we reach over 15 million users globally. Our customer base and pipeline have been growing across all markets. And as a reminder, we target three core markets, K-12 education, higher education, and corporate. And we're unique in how we support all markets, and all stages of digital adoption with one learning platform called Brightspace. In education, we serve more than 700 organizations across K-12 and higher education. While some segments and regions are better established with digital solutions, there is a huge runway for growth. Remember that the global education market is less than 5% digitized. In higher education, which represents the largest portion of our revenue, we support more than half the top universities in Canada, leading institutions like the NYU, Vanderbilt, Purdue, University of Arizona, and hundreds of other top universities and colleges globally. Our win rate has improved across all markets, and in higher education, it's more than tripled. Why are we winning? Simply put, we make it easier to learn with a better cloud offering, better accessibility for students who are blind or deaf, and a better mobile experience. And our people matter. we ranked number one for customer experience in the entire ed tech sector as awarded by the Software and Information Industry Association for the service that we're providing our clients. And during three, we've added some great new customers. We won a highly competitive process for the largest comprehensive university system in North America, higher education. That's the State University of New York, or SUNY for short. And after all our main competitors were being used, SUNY selected D2L Brightspace to support their 400,000 learners across 64 colleges and universities. International expansion is another important growth pillar for the company. And in Q3, we signed a new agreement with the University of Groningen, one of the oldest in the region and one of the most prestigious universities in the world. They're located in the Netherlands and they serve more than 34,000 students. Brightspace was selected to replace a legacy platform. And with the addition of the University of Groningen, We now have more than 40% of the top-tier universities across the Netherlands as customers. In the K-12 category, we work with over 150 different virtual schools and school district clients, including the largest districts both in Canada and in the United States, such as the Ministry of Education in Ontario and the New York City Department of Education, which is by far the largest school district in the U.S. They signed an enterprise deal this summer for their 1.1 million students. In K-12, the stakes are high. The World Bank estimated that learning loss from this pandemic could materialize into more than a $10 trillion impact in terms of lost earnings potential for this next generation. We're working to turn learning loss into learning growth through the innovations in our platform and the work that we do with our customers. Our pipeline in K-12 is building, and this is in a market that's largely greenfield if you look globally. We announced another significant win in November as British Columbia's Ministry of Education selected D2L Brightspace for up to 670,000 learners across the province. BC school districts and the government were looking for a modern learning platform that delivered the very best learning experience for the learners and educators in and outside of the traditional classroom. In addition to solving important challenges in the education market, we're helping over 300 employers transition to the future of work. This is a fast-growing market for our company, and among the highlights during the third quarter, we signed a new customer agreement with Lee Valley Tools, a Canadian business serving customers around the world, to help them onboard, train, and engage employees across the country using our D12 Brightspace learning platform. We also extended a customer agreement with the Energy Safety Canada Group. This is a national safety association for Canada's oil and gas industry. D12 Brightspace will be used to help develop and deliver health and safety training courses to ensure workers are ready to work safely. There's a huge addressable market in corporate, and we're working hard to build our pipeline. Most companies are just getting started on upskilling, moving from watching videos for compliance to a better model that targets developing the right new competencies and skills mastery. We are complementing new wins with a land and expand strategy with our client base. More than a third of our customers buy two or more of our products. We now have over 40 customer success professionals who are helping our clients derive full value from our platform while also generating new opportunities within our large client base. We can grow in multiple ways with new products, new users, higher adoption, and by supporting new use cases. With customers in both education and corporate markets on a common platform, Over time, we also expect to capture value at the intersection of these markets. D2L Wave is our new offering designed to help organizations develop their employees with upskilling from our academic client base. One of the first priorities with this product is to build out our academic partnerships. During the third quarter, we welcome the University of Manitoba, McMaster, the University of Guelph, and York University to our catalog of top tier academic partners. Adding university offerings drives interest from our corporate customers, and we're now starting to sign up companies to adopt D2L Wave. I'll pause here to introduce Melissa, who's going to discuss our financial results in more detail. Thanks, Melissa.

Thanks, John, and good morning. Q3 was another strong quarter for D2L, and with new growth capital from the IPO, we moved forward in a very solid financial position to take advantage of the tailwinds in our industry. To begin, I will highlight that two sizable one-time non-cash charges had a significant effect on the reported results for the quarter. In particular, we recognized a non-recurring stock-based compensation expense of $65.8 million related to the unwinding of the Employee Stock Trust as part of the IPO. These charges are in several places throughout the income statement. To help readers understand our underlying performance, we have quantified these charges and presented adjusted numbers. I will focus my comments mostly on the adjusted numbers and would encourage you to refer to the specifics in our MD&A. Total revenue for Q3 increased by 18% to $39.1 million. Recurring subscription and support revenue, which is just under 90% of the total, was $34.9 million. up by $5.7 million or 20% over the same period last year. This continues a trend of robust growth this fiscal year. For the year to date, total revenue increased by 20% to $110.5 million and subscription and support revenue grew 19% to $98.5 million. This growth reflects new customers, strong revenue retention, and expansion from existing customers and the broader effect of accelerating digital adoption. This success is also reflected in our ARR, which reached $149.6 million at quarter end, up 20%. Growing ARR, when combined with our long-term contracts and high revenue retention, gives our business high revenue visibility and stability. Our year-to-date performance puts us on track to achieve our target of approximately 20% top-line growth for the full year as we outlined with the IPO. Professional services and other revenue reached $4.2 million in the quarter, an increase of 7% over the prior year. We will see variability in the specific revenue line from quarter to quarter. For the year-to-date period, professional services and other revenue grew by 22% to $12 million. Moving down the income statement, cost of subscription and support revenue was $11.5 million in the quarter, consistent with the prior year period when you exclude the impact of the one-time charges. In last year's Q3, we experienced increased system usage with learners spending much more time on our platform during lockdowns. COVID-19 restrictions were less of a factor in the current period, resulting in decreased relative hosting and support costs, which are among the largest expenses. Cost of professional services and other revenue included a $7.6 million charge for stock-based compensation. Excluding this impact, cost of professional services and other revenue was consistent with the same period last year. These one-time stock-based compensation charges impact reported gross profit, so we have included adjusted gross profit and adjusted gross margin in our disclosures. Adjusted gross profit increased by 30% to $25.1 million, and adjusted gross margin was 64.2% up from 58.1% last year. As I mentioned, the gross margins in last year's Q3 were impacted by higher costs of delivery during lockdowns and closures, whereas hosting and support costs to serve were lower in the current period. For the fiscal year to date, adjusted gross margin was 63% versus 62% in the comparable period last year. We continue to focus on sustainable gross margin improvements over time, driven partly by further optimization of our cloud delivery. However, we may see some modest variability quarter to quarter as we have this fiscal year. Operating expenses increased substantially from prior periods due to the recognition of the stock-based compensation expense of $57.7 million, which is spread among the key OPEX categories. Excluding this impact, operating expenses were $26.6 million, an increase of 46% over last year, mainly due to higher employee headcount. We are investing heavily in growth, which is reflected in the increases in sales and marketing, R&D, and G&A. With the IPO behind us, our plans call for further investments in talent. Another key difference to highlight in the year-over-year performance is interest and other income, which was a $25.8 million gain this quarter compared to an expense of $29.4 million last year. This was due to a fair value gain of $25.9 million on the redeemable convertible preferred shares in the current period compared to a loss of $28.7 million last year. With the closing of the IPO, these preferred shares were automatically converted to subordinate voting shares or multiple voting shares, so you will no longer see these fair value gains and losses in the income statement. In terms of operating profitability, Q3 adjusted EBITDA was a loss of 0.3 million or negative 0.7% of revenue, compared to a gain of 2.1 million or 6.3% of revenue last year. The decrease reflects the planned increase in our OPEX to support our growth plans. We generated cash flow from operating activities of 3.5 million in the current period versus 10.1 million in the prior year. The year-over-year difference reflects the timing of cash receipts from two larger customers combined with our growth investments. Cash flows from operations generally have a seasonal low in the first quarter each year and a seasonal high in the second and third quarters, due to the timing of annual invoicing with our end customers. Because of the low capital intensity of our business model and the structure of our contracts, we have historically generated healthy free cash flow even during periods of investment. Q3 free cash flow was $3.2 million or 8.2% margin, compared with $9.5 million or 28.5% margin in the prior year. Our balance sheet will look quite a bit different the next time we report, given we closed the IPO just a few days into our fourth quarter. A few key differences. One, the shareholder loan under current assets was repaid. Two, all our outstanding preferred shares, Class O common shares, and Class T shares were converted into subordinate voting shares or multiple voting shares. And third, while we finished the quarter with $42.9 million in cash, Subsequently, we generated net proceeds of $88 million Canadian with the IPO, putting us in a solid cash position. In summary, we are financially very well positioned to take advantage of the favorable long-term growth trends in our market. Thank you for participating in today's call, and with that, I'll pass it back to John.

Thanks, Melissa. Our balance sheet is one of the many strengths we will leverage to pull away from our competitors. With the IPO behind us, we are pursuing a multi-pronged strategy to press our advantage. We're continuing to expand our customer base, adding new logos across all markets. We're investing both in direct and indirect go-to-market strategies to continue these new customer momentum wins. Once we land a customer, we're working hard to deepen the relationship and grow our revenue per user by helping our clients with additional products and services to solve bigger challenges. We see significant opportunity to expand internationally, which represented less than 20% of our revenue last fiscal year, The global opportunity for education and training is vast, with several markets still in the very early stages of adopting modern learning platforms. And we will continue to expand our platform and offerings. D2L is the innovator in our space. We have a long track record of breaking down access barriers to high-quality learning. We invested 24% of total revenue into R&D in fiscal 21, and we will continue to invest to enhance and expand our platform as we aim to increase our win rates in our markets globally. D2L has a rich history, and we're excited about the road ahead. We're still in the opening act. Education is vastly under-digitized, and the corporate market is just awakening to the pressing need for upskilling and better models for onboarding and competency-based learning. We believe we have the team, track record, and technology, and the plan to become the category leader in learning. And with that, I'll be happy to take your questions. Back to you, Operator.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind and would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Our first question comes from Daniel Chan from TD Securities. Daniel, please go ahead. Your line is now open.

All right. Good morning, guys, and congrats on all the recent big wins. How much of the total potential opportunity at SUNY was in the quarter with respect to revenue and ARR, and what's the pace of the deployment across the rest of this customer?

It's a great question, Daniel. So SUNY was a great win for D12. There's not a lot of ARR in the quarter. We are expecting that to build into the Q4 and Q1 of next year as more campuses go live. We're very excited about that opportunity. It's a great university system. It's the largest comprehensive university system in North America, and we're doing everything we can to make sure that that's a very successful implementation. Thanks for the question, Dan.

Okay, and then BC was one after the course. That's not in the AR metric yet. Can you give us a sense of the size of that deal and the pace of that rollout?

Absolutely. So you're right. The BC deal was not in our Q3 ARR. It closed just after quarter end, so it's part of our Q4. And it has great potential to grow, as you saw, a large number of students. We do expect it to be a significant amount of revenue, but it's going to roll out over a while. Given a large contract like that, they usually do take a large amount of time to implement. So we will expect to see the revenue for that coming in later, the latter part of next fiscal year. And it will have opportunity to grow from there as they expand across the different districts within the system.

Okay, thanks. That's helpful. And one last one for me. Margins were a lot better than expected and continue to expand. Your MD&A cited lower usage relative to the peak of the pandemic a year ago, helping the gross margin. Can you comment on how the usage is relative to pre-pandemic levels and how you're seeing the LMS being used as students are brought back into the classroom? Thank you.

Yeah, yeah, great question. So we have a couple of things here. For sure, at the beginning of COVID, there was difference in usage that was happening, and we still do see a similar and a growing number of users using the system, but the usage patterns are what are changing, and we're starting to see some normalization of usage patterns compared to what they were at the beginning. That is most predominant in K-12 segment, for instance, where a lot of more students are back in the classroom and learning. The other improvements that we've seen there, we've seen ongoing progressive improvements quarter over quarter in gross margins. And a reminder, our AWS migration was only completed two years ago, and so we've continued to work on those ongoing optimizations. So we still see strong numbers of users using the system, but patterns have definitely started to normalize, and that's affecting things combined with the optimizations that we've been working on.

Thank you.

Thank you, Danielle. Our next question comes from Thanos Mothpolos from BMO Capital Market. Thanos, please go ahead. Your line is now open.

Hi, good morning. SUNY was obviously a landmark win. Can you speak to what impact that might be having in terms of just overall market awareness in your pipeline, or are you seeing an impact in that regard? It was a little bit early on that front.

Daniel, that was a great question. Thank you very much for being here this morning as well, too. SUNY was a great win. This is 64 different universities and colleges across the state of New York. They've been using all of our main competitors, and they made the choice to centralize on D2L as a single platform to support both on-campus and online experiences. My hope is that that does create an awareness wave of D2L across not only the U.S. market, but also globally, and make sure that we're included in more processes on a global basis. And if you look at our win rate over the course of the last three years, we've seen it more than triple. And if you incorporate the SUNY numbers, it's up almost 5x from three years ago. So this does have a big impact on D2L, and it continues to show the momentum that we're building in the market.

Great. In terms of the VC win, just maybe qualitatively, how should we think about the level of ARR that shows up in the upcoming quarter versus the overall ARR? potential opportunity there? I mean, would you close to like half of the ARR kind of showing up next quarter or just order of magnitude? What should we think about?

So in terms of the ending ARR on BC, it's going to have an initial impact in Q4, but the bigger impact in terms of when it translates into revenue is into second half of next year. There will be some impact in Q4, Q1, Q2, but it will continue to ramp into the second half of next year as more of the school districts go live there in BC. And as you can imagine with the floods, we're not anticipating a quick rush, but in terms of this project being rolled out immediately, but we are expecting things to ramp up in the new year.

And in terms of BC and the... Go ahead, yeah.

Yeah, in terms of the ARR that we expect to see near term versus what it could become longer term based on the size of what they are, we would expect that we will have about, it'll initially be roughly half of what it could become over time. So we'll see some growth there as that adoption grows throughout the whole system.

Okay, that's helpful. And just on gross margins, going back to the hosting discussion, just remind us, is there some seasonality in gross margins depending on platform usage, or is that just going to be overshadowed by the optimizations you're making and I guess the pandemic impact in terms of things normalizing?

So we do see some variability in margins quarter to quarter. That's more predominant in the professional services revenue line. When it comes to the product line item, you will see a little bit of seasonality based on timing of semester starts or when schools maybe are down, but it's generally more normalized and what you'll see there and improvements in the future will mainly be related to the optimizations that we continue to work on. Okay.

Great. Thanks, all. That's fine.

Thank you. Thank you, Sanos. Our next question comes from Christian Sago from 8 Capital. Christian, please go ahead. Your line is now open.

Hi, good morning. On my first question, I wanted to ask a follow-on on usage. I'm just wondering if it plays out over a year or two or more. How a full return to school for students affects the broad business? Is one effect there to think about a benefit to gross margin? You know, students are back in person or other puts and takes across the revenue or margin profile?

This is a great question, Christian. So in terms of the early indication, in terms of impact, we do think the return to school for K-12 has had an impact in terms of improving our gross margin in the quarter, and we expect the levels to be fairly normal going forward. There may be some variability from quarter to quarter as we look out, whether students are pivoting back to more of a fully online experience versus a blended. K-12 today looks a lot more like a traditional, high-quality, blended adoption for school districts versus what it was pre-pandemic. So even though students are largely back in school with K-12 school systems around the world, at least in the ones where students are able to return the adoption in terms of usage looks more like a traditional high-quality blended environment. When you move into higher education, we've seen very little change in terms of year-over-year. The usage patterns look fairly consistent. We do expect there to be more growth in online in higher education as we look forward into the future. And for corporate clients, we're seeing early indication with corporate clients who are well-adopted, increasing usage for onboarding, leadership development, upskilling, that usage pattern looks like it's continuing to climb year over year with those clients that are well-adopted. Does that help answer the question, Christian?

That does. It's a lot of helpful context, Sean. Thank you. I'll ask another question here on maybe more on use of capital and spending priorities. When we think of hiring largely across sales and R&D, should we think of your team as ramping up aggressively in the next couple of quarters, or do you see yourself adding to headcount gradually through the next year or so as opportunities come up?

Well, that's another great question. So we're definitely seeing really good performance for the team that we have today. We're investing heavily into the enablement for the go-to-market teams, including sales and marketing. And we've got a solid foundation there that enabled us to hire, onboard, ramp new reps, in, I think, a fairly world-class way. Our focus right now is on hiring those quota-bearing reps, targeting those roles in sales and marketing that are going to really have the biggest impact. And we've got, again, good systems in place to help them get to productivity pretty quickly. You know there's a war for talent right now, so we are expecting steady build there over the next couple of quarters as we continue to ramp up or go to market. But we are doing a good job in terms of attracting high caliber talent that's really passionate about the mission to transform the way the world learns. So making really good progress there too, Christian.

Okay, great. I'll ask just one last question on the Bayfield assets and your thoughts on the content offering. You know, a newer offering that'll augment the K-12 growth. But I'm just wondering, you know, into Q4 here in the new year, how you're thinking about to go to market with content, any new ideas since the IPO are ways of getting creative to push that onto your customers?

Yeah, that's a great question again, Christian. So the Bayfield content just launched this September. So we're working with initial clients in Ontario to roll out the technology and the actual content to support helping students get back on the right track, tackling learning loss, helping them really accelerate ahead in terms of their learning. As you know, the pandemic has created a major problem with learning loss. The combination, I think, of a learning platform plus content is resonating well with the teachers that are using it. It's providing them a better path to support that learning growth that's needed for students that have really struggled during the pandemic. And what we're seeing is if this is successfully adopted by clients, it can really help us drive revenue growth But it's still early days. We're not only talking to Ontario, we're now starting to expand those conversations into other jurisdictions around North America. But we do hope that this will be a global strategy, both our own content, but also content from our clients and partners as a way to tackle this big challenge of learning loss globally.

Awesome. That's super helpful, John. Thanks for taking my questions. Thank you.

Thank you, Christian. Our next question comes from Alex Seclar from Raymond James. Alex, please go ahead. Your line is now open.

Great, thank you. John, I wanted to ask about the international higher ed LMS opportunity. We've heard a lot about some of the failures of on-premise systems during the pandemic. So I'm curious if you could talk about kind of what you're seeing from a pipeline growth perspective and how you see cloud LMS adoption curve kind of playing out in some of your international markets.

Again, really good question. So we definitely see a huge opportunity internationally. Traditional players, Moodle, other competitors that are in that space that are largely on-prem implementations globally. So as you can imagine, during the pandemic, those systems have been strained. And if we are right, we are seeing now building pipeline across the different markets that we're serving globally, supporting the case for a move to a more modern learning platform that's cloud-enabled. We've got early indications of that. We're seeing our international growth accelerating beyond what we would normally see, and our pipeline is continuing to grow, not only with individual schools and campuses globally, but with our larger opportunities for statewide or countrywide opportunities, too.

Okay, that's really interesting, the countrywide phenomenon. So the other follow-up for me is, He's on the North America K-12 opportunity. And obviously, we're following the massive amount of stimulus that's coming in, the $190 billion in the U.S. alone that states are kind of now planning for. Can you talk about how D2L is positioned to capture some of that opportunity? And how do you think about the timing there?

Yeah, so we're definitely tracking a lot of different activity on the stimulus front with our prospective clients, as you can imagine. We see those funds rolling over the next three to five years. Some of the prospects that we're talking to are taking a long view. They see the opportunity now to put in place the right technology, and not just because of stimulus funding, but because they want the right learning platform to support a more resilient education system. I also find it interesting that they want to take the time to make sure they're doing this right so that they have the budget for the long term. I think the stimulus funding is certainly acting as a catalyst, but I really am impressed by the fact that the prospects are taking a long view on this.

All right, great. Thank you.

Thank you. Our next question comes from Doug Taylor from Carnicord. Doug, please go ahead. Your line is now open.

Yeah, thank you. Good morning. Let me just ask one more question about the international growth and that growth pillar. Looking through the geographic results, it didn't quite bear out this quarter in terms of growth rates. I wonder, is that just more of a tough comp issue? Perhaps you can speak to whether and when we should expect that segment to contribute to the 20% growth bogey you're tracking towards.

Yeah, I think sometimes it takes time for AR to translate to revenue for some of these international opportunities. But we are definitely seeing good growth in international markets. It's tracking ahead of the 20% range that we're giving the team. I still think there's a build there that needs to happen. This is not an overnight transition to get to the target of 30%. We did say that that's going to take a little bit of time to get to that level, but we are tracking very well, and as we continue to build up the team, continue to build up the channel partners, see those channel partners continue to mature, I do have a lot of hope for that to be an outsized performance for the international group in the quarters ahead.

Okay, and then shifting gears, I mean, a lot of emphasis on K-12 and higher ed. Can you speak a little bit more about the enterprise market? You've got some so much higher growth, competitors in that market, a bit of different dynamics in that space, and the relative growth rates versus the rest of your business. And when you highlight a number of investments there, similar to international, is that something you expect will take a couple of years to show up in terms of the overall growth rates within that segment?

Yeah, we look at corporate as one of our fastest growing segments in our business. Pipeline there continues to grow. The execution continues to stay strong. As we continue to build out the platform to knock off additional use cases, I don't see any reason why that can't continue to be a very strong part of our business and a big part of our future growth. We have not only won a lot of different smaller organizations in the corporate space, we're also now winning a lot of big enterprises. And I think that trend will help us continue to accelerate growth in the corporate market.

Can you speak to your win rate trends within that space, that market in particular?

Yeah, our win rates in corporate over the last year have continued to increase. So we're winning more opportunities. That's translating into revenue growth. And we do see that being a good positive trend line for the future. You know, there was a number of features that we had to build out into the product to support all of the large enterprises that we were trying to go after. Those features are now starting to be built out or gaps are being closed with partner solutions. So I don't anticipate any slowdown there. That's a good group that's executing really well in our organization. And we do expect to see great progress in the future. And I think there is, just maybe to build on that a little bit, I think there is an opportunity for us to move up market as these enhancements roll out in the product as well, too.

maybe one last question for me i mean we've there's been a lot of talk about these these sizable wins in new york and british columbia um i know you reference a record pipeline overall but maybe i'll ask you to just maybe speak to you know these size rfps you know specifically the near-term pipeline also just maybe remind us about the seasonality of these types of announcements is it you know, relative to the start of the school year and, you know, whether, you know, you know, the quarters we should be expecting, you know, these types of announcements to fall in and the ARR build to happen.

Yeah, there's not a lot of seasonality in terms of our business other than maybe perhaps Q1 might be a slightly lower volume of clients closing deals during that quarter, largely due to vacations and holidays throughout the world. But, you know, there may be some variability from one quarter to the next. But overall, we're seeing the pipeline continue to build. In higher education in K-12, we actually faced a bit of a headwind during COVID where there wasn't as many people coming out with RFPs. We're now starting to see that volume of RFPs really pick up. And overall, the pipeline continues to grow across all these different segments, state-wise, country-wise. Individual universities and colleges, individual school districts, large corporates, small corporates. We're definitely seeing our opportunity to continue to build. We're also winning a larger number of them. Our win rate going up is also very helpful as we continue to scale the business.

It's fantastic to hear. Would BC and New York have been the most sizable potential contracts this year in the market, or are there others of this size that we should be expecting to reach conclusion in the near term?

Well, New York City is the largest school district in all of the U.S., so there's not going to be a larger school district than them that goes out to market, at least in North America. But there are other large statewide or countrywide opportunities globally, some of which are in the U.S. in terms of the state level, and others we're seeing globally that are actually larger than the deals that we've closed in B.C. and other markets. I appreciate the added color. It would also be a great example of a higher ed level as well, too. Thanks for that. I'll pass the line.

Thank you. This concludes our Q&A session. I will now hand back to John Baker for any closing comments.

Well, I just want to say thank you very much for joining us today on our inaugural earnings call. I really wish everyone a happy day and thank you again for joining us.

Thank you for joining everyone. You may now disconnect your lines.