D2L Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the D2L Incorporation Physical 2024 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided for you at that time for questions. If anyone has any difficulty hearing the conference, you may press star zero for operator assistance at any time. Listeners are reminded that portion 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 projections in the forward-looking information. Further, certain materials, factors or assumptions were applied in drawing a conclusion or making a forecast or projections as reflected in the forward-looking information. For identification and discussion of such weeks, uncertainties, factors and assumptions as well as further information concerning forward-looking statements please refer to the session entitled forward-looking information and the risks identified in the company's annual and interim MD&A or most recently filed annual information form, in each case as filed under the company's profile on SEDA at www.seda.com. In addition, during this call, reference will be made to various non-IFRS financial measures including constant currency revenue, adjusted EBITDA, adjusted gross profit, adjusted gross margin, and free cash flow. 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 management discussion and analysis for the three and six months ended July 31st, 2023 for more information about these and certain other loan IFRS financial measures, including where applicable a reconciliation of historical loan IFRS financial measures to the most directly comparable IFRS financial measures from our financial statements. This morning's call is being recorded on September 7th, 2023 at 8.30 a.m. Eastern Time. I would now like to turn the call over to Mr. John Baker, Chief Executive Officer of D2L. Please go ahead, sir.

Thank you, Operator, and thank you, everyone, for joining our Q2 Fiscal 2024 earnings call. After the markets closed yesterday, we released our financial results for the period ending July 31, 2023. You can find this information on the investor section of our D2L.com website. Please note that the results we're discussing today are in US dollars. I'm pleased to be joined this morning by Stephen Laster, our president, and Josh Huff, our CFO. And consistent with our Q1 conference call, our comments today will focus on three key points. The first, we're generating good top line growth and increasing profitability, consistent with the balanced growth plan that we introduced last year. Second, We're winning great new customers in all our markets and making particularly strong gains in higher education. We're seeing encouraging green shoots for further growth in the corporate market, both for D12 Brightspace and WAVE. And three, we're making good progress on the evolution and expansion of our learning platform in areas such as ease of use, extensibility, and artificial intelligence. This work is allowing us to solve more problems for our customers and helping to pull us away from many of our competitors. Stephen and Josh will expand on these three key themes in their remarks. Quickly looking at the financial performance for the quarter, our results showed growth across multiple key metrics. Our total revenue was $44.5 million, up 8%. This was led by a 10% growth in our subscription and support revenue. Annual recurring revenue increased 13% over last year to $178.5 million. Our Q2 adjusted gross margins increased 230 basis points year over year, led by higher software margins. And we've reported meaningful improvement year over year in adjusted EBITDA. These results put us on plan for our fiscal 2024 outlook, and they support our medium-term model as we look ahead to next year. One of the key highlights of the second quarter was our annual users conference, Fusion, which was held in Anaheim this year. The conference attracted nearly 2,000 people, including leaders from across all sectors and from 16 different countries. There was a real sense of energy and excitement from attendees. During the three days, we explored key issues for the future of learning, from the potential of effective and responsible use of AI, ways to embrace and implement higher accessibility, and the pressing need for skills development in the workforce. These are complicated topics, and we're grateful that our clients are choosing to partner with D2L to navigate them and accelerate their digital transformation. Simply put, the many conversations with customers and prospects at Fusion reinforced our confidence in the long-term growth outlook for D2L. Recently, I was honoured to attend the White House for a summit on another key issue facing our customers, cybersecurity. It was a pleasure to speak to the government, education and technology leaders and highlight our commitment to improving security and privacy for schools, students, and their communities. Building on this longstanding commitment and our adherence to multiple ISO standards, we recently certified with another ISO compliance for privacy information management requirements. This makes D2L the first company among the leading LMS providers to achieve this important privacy certification. We believe our investments in cybersecurity give us another compelling point of differentiation in the market, and it creates an opportunity for additional upskilling internally for our IT professionals and for others across our organization and within our client base. Importantly, we see a commercial opportunity to develop and deliver courses to help our customers improve their cybersecurity readiness and posture. With all of that, I'll now turn the call over to Stephen to provide more color on our sales activity and other key growth pillars. Over to you, Stephen.

Thanks, John, and good morning. The second quarter saw us make meaningful progress against our priorities. I'll focus my comments today on two main topics, our go-to-market activities and the continued evolution of our learning platform. As John mentioned at the outset, the second quarter results were highlighted by robust new customer acquisition activity which is reflected in our highest quarterly additions to reported ARR since the IPO. In higher education, we continued to win at a high rate and added leading institutions to the platform. In North America, we were recently selected by the University of Southern California, a leading private research university with enrollment approaching 50,000 students. They chose D2L to upgrade their teaching and learning experience to Brightspace. In their words, it was based on our user-friendly design, robust accessibility standards, and customer support offerings. Also during the second quarter, we began implementation with the City University of New York, or CUNY, which is the largest urban public university in the U.S. CUNY's 250,000 students across 25 different colleges will transition to Brightspace in phases beginning this month. We're also partnering with multiple other new education customers to build better learning experiences. In the second quarter, these included two polytechnic leaders, the Northern Alberta Institute of Technology with more than 34,000 students, and Niagara College, which turned to D2L to implement a high-quality and scalable learning experience to support their future growth. Internationally, our teams continue to diligently build market leadership in focused countries. A great example is in the Netherlands, where we now have more than 50% university market share in higher ed. Following the recent addition of Han University of Applied Sciences, which serves nearly 40,000 students. We've previously talked about deepening our commitment in India with additional investment and an expanded local presence. We're seeing benefits from this increased focus with a recent addition of a new higher education customer with 40,000 students. And we continue to see a great reception to our offering in a region as we look to build on the more than 40 Indian organizations that have implemented Brightspace already. And in our corporate market, we're demonstrating a strong value proposition within targeted areas and seeing green shoots for further growth. Among the new customers in the second quarter, we welcomed Plant and Moron, one of the largest auditing, accounting, tax, and consulting investment banking and wealth management firms in the U.S., which chose Brightspace for its elegant user experience to offer software training to customers. And IPEC Coaching, which has been providing accredited coach training for more than 20 years. Our sales and marketing teams are doing great work to bring additional focus and an enhanced digital approach to penetrate specific sub-verticals of the large corporate market, areas where we've had success and that are growing their investment and upskilling. We are winning in all our markets because we provide great technology and the services and support to make the technology a success Influenced and informed by feedback from our customers, we continue to enhance our learning platform. I will highlight two examples of innovation. The first is extensibility. During the quarter, we launched D2L Link. This is a one-stop integration hub into enterprise systems that provides easy access to hundreds of D2L Brightspace integrated technologies, resources, and strategic partner solutions. recognizing that D2L operates in the center of a connected ecosystem, we are excited by our investment in LINK to accelerate our customers' digital transformation. The second area of continued investment is artificial intelligence. At Fusion, we showcased how generative AI can help educators with authoring questions for formative assessment, as well as bring more contextualized help and documentation from within D2L Brightspace to assist learners. This builds on our long history of thoughtfully applying machine learning and AI in areas such as video, transcribing, and student success. As a platform, we're also working in close coordination with partners such as CopyLeaks to bring the best technology into a seamless teaching and learning experience. D2L continues to approach AI thoughtfully and carefully to make sure the application of AI advances teaching and learning and makes it easier to build more human learning moments and expand the opportunity for connection. Lastly, I want to thank the entire D2L team for their impact. Together we're making D2L a stronger company while delivering on the mission and vision that John set out many years ago. to transform the way the world learns. I will now turn the call over to Josh for a deeper dive on the financials.