D2L Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the D2L Inc Fiscal 2025 Second 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. The instructions will be provided for you at the time for questions. If anyone has 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 risk 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, uncertainty factors and assumptions, as well as further information concerning forward-looking statements, please refer to the company's annual and interim management discussion and analysis and most recent filed annual information form. In each case, as filed under the company's profile on CEDAR at www.cedarplus.com. In addition, during this call, reference will be made to various non-IFRS financial measures, including consistent currency revenue, adjusted EBITDA, adjusted growth profit, adjusted growth margin, and free cash flow. These non-IFRS financial measures do not have any standardized meaning prescribed by the IFRS and may not be comparable to similar measures presented by other public companies. Please refer to the companies MD&A for the three and six months ending July 31st, 2024. 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 September 5th 2024 at 8 30 a.m eastern time I would now like to turn the conference call over to Mr. John Baker, Chief Executive Officer of D2L. Please go ahead, sir.

Thank you, operator, and thank you, everyone, for joining us for our Q2 earnings call. We released financial results after markets closed yesterday, which you can find on the investor relations section of our website at D2L.com. Please note that the results we're discussing today are in U.S. dollars. I'm joined this morning by Stephen Laster, our president, and Josh Huff, our CFO, and I'm pleased to report it was another strong quarter for D2L. We achieved important milestones on our key growth pillars, and our financial results put us squarely on target for fiscal 2025. Total revenue increased 11% to $49.2 million, and our SaaS revenue grew 12%. New customer growth was strong, and importantly, adoption with existing clients continues to grow. Just recently, we surpassed 20 million users on our platform, evidence of our growing scale and impact. Annual recurring revenue grew 11% year over year to 198.3 million, and 12% on a constant currency basis. Adjusted EBITDA increased to 4.2 million, up from a loss of a half a million in Q2 of last year. And we're seeing strong cash flow growth For the trailing 12-month period, free cash flow rose to $24 million, a $22 million increase from the equivalent 12-month comparative period. In short, our team continues to execute well on our plan of balancing growth and profitability, and this sets us up well for the second half of this fiscal year. As Josh will review, we raised our fiscal 2025 guidance, and we have a clear path to exiting this fiscal year with low to mid-teens adjusted EBITDA margin, and even higher free cash flow margin, which is typically several percentage points higher. In July, we held our annual Fusion Users Conference, this year sold out. It was in Toronto, and nearly 1500 people from across the globe joined this in-person event. An additional 1800 people attended virtually. It was an inspiring opportunity to meet and connect with so many world-class experts, educators, and leaders, and to explore how we can create an even greater impact in achieving better outcomes and deepening the human connection to learning. The conference theme was built around our learning transformation, and the agenda highlighted how learning can be transformed with product innovation, improved accessibility, greater personalization, and a more human-centric approach to artificial intelligence. We unveiled exciting product announcements, including the launch of D2L Lumi, our next-gen AI capability, and other new products that underscore our commitment to being a partner of choice in learning transformation. We also closed our latest acquisition and our largest to date with H5P, which is a leading SaaS learning solution and provider of interactive content creation software. Stephen is going to elaborate on this acquisition in a moment. With an expanded product portfolio, we're bringing even more value to our customers and end users, helping them solve important challenges. And at the same time, we're growing the addressable market and revenue opportunities for D2L, positioning us for even better win rates and a higher net revenue retention as we continue to grow with our customers over time. gaining market share rapidly in higher education adding these capabilities gives us new growth leads and continues to strengthen our moat our strong balance sheet and growing cash flows allows us to make organic and inorganic investments in products that delight customers while balancing our growth and profitability this is a formula we're going to continue to lean on to strengthen our leadership among our competitors and to become the clear category leaders A special thanks to all detailers for their work in delivering these important milestones in Q2 and for helping us with a very successful back to school launch this fall. It was also gratifying to deepen our partnership with key customers this quarter at Fusion and all around the globe. It's clear they see us as a key strategic partner in transforming their learning experience. And with that, I'm going to now turn over the call to Stephen.

Stephen, over to you. Thanks, John, and good morning. I'll touch on our go-to-market activities and innovation highlight. It was an eventful quarter in both areas. There was a solid period for new customer acquisition and booking, despite the general macro trend of lower RFP activity. We're sustaining high win rates in our major markets, which is supporting our growth, and we're really proud of the great new clients our team has added this past quarter. In our largest market, higher education, These include University of Texas at Rio Grande Valley, which services roughly 30,000 students. They're replacing a legacy vendor with Brightspace because, in their words, of its outstanding features and functionality, as well as its widespread adoption by other prominent universities. And Stark State College in Ohio is a new customer of D2L as well. They also switched to Brightspace from a legacy vendor because of our track record in innovation, specifically in areas such as mobile responsiveness and the ability to support flexible learning and different pedagogies. Our platform was an optimal choice for Stark State because they differentiate on offering multiple approaches to learning, including 24 fully online degrees, and short noncredit and microcredit credentials. Internationally, we're solidifying our market leadership in key countries, such as Singapore and the Netherlands, where we are now at more than 60% market share in higher education. Building on this success, we recently added Hans University of Applied Sciences, the largest university of applied sciences in Northern Netherlands. In our corporate market, our team continues to expand the customer base in employee learning and in training organizations. We recently won the Ontario Nurses Association, the trade union representing more than 60,000 registered nurses and health professionals across Ontario. We also were selected by a large healthcare not-for-profit serving 50,000 members. In both cases, user experience and ease of use were critical win themes for us, as was our approach to partnership, including our professional service offering and the openness of our platform with respect to integrations. It was a highly productive quarter on the innovation side, culminating at our fusion conference, as John mentioned, where we launched two new product packages, D2L Lumi, a powerful set of human-centric AI capabilities that function across our platform to build better content, assessment, and activities, and that save our educators valuable design and development time. Early adoption stories are compelling, as you can see on our website. And we launched Achievement Plus. Achievement Plus helps our customers make it easy to implement competency-based learning so that their learners advance and master the material and capabilities at a pace that suits the learners best. DTO is gratified to have played a leadership role in competency-based education over the past 20 years. Working in partnership with a world-class organization and with the introduction of Achievement Plus, we've now removed barriers to implementation, make it easier for our customers to adopt this transformational approach to learning. And there's a lot more on our roadmap. We continue to make the right investment in product innovation, doubling down on the voice of the customer and our focus on the learning moment. At the same time, we're also focused on increasing the efficiency of our technology and of our operations. John also highlighted the acquisition of H5P in the quarter. We believe strongly in the power of helping our customers create easy to use learning experiences and providing the creation tools that allow them to evolve the learning moment. We identified the creator space as a strategically important area with the release of the Creator Plus product. And this acquisition propels our offering and roadmap forward considerably. We add best in class suite of over 60 interactive content types. And more importantly, add a talented team to the D2L community that is enabling us to double down on this strategy. We've integrated with H5P for many years and witnessed how well loved their products are. Now with the support of our go-to-market engine, we're excited to put the full capabilities of H5P in the hands of more users around the world and to strengthen our leadership position in the growing interactive learning space. The customer response to this acquisition has been highly encouraging. And we've had early success selling H5P's enterprise product to several Brightspace customers. As you all know, it's back to school time for many of our customers around the world. And we're seeing strong increased utilization by those customers as learners return to their learning environments and campuses. And we're seeing healthy adoption and positive customer satisfaction with our service offerings. From our learning services teams to technical account managers to end user support, we want to give a big thank you to our services support and cloud teams that have partnered with customers to make this back to school highly successful. Our people continue to be the most important part of differentiating D2L, and we can't thank them enough for their persistence, their patience, and their commitment to our customers. I will now turn the call over to Josh for an expanded discussion of the financials.