D2L Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Doug Taylor - Canaccord Genuity - Analyst : I'll start with a question a bigger-picture question for John or for Stephen. There's been some more activity from private equity in and around the edutech market of late. I know PowerSchool isn't necessarily a competitor, but it's a comparable anyways. But a good reminder that most of the players you do see are regularly are PE controller back. So I wanted to just refresh the discussion on the overall competitive landscape and what you see is the competitive response to D2L continuing to take share away from legacy players in both North American and increasingly international markets.

Question: Doug Taylor - Canaccord Genuity - Analyst : Thanks for that color. Could you just in case I might have missed it, can you update us a little bit on the spin-out transaction timetable if you've got any more specificity there? And what's remaining to be done to affect that transaction?

Question: Doug Taylor - Canaccord Genuity - Analyst : Okay. And then one more from me maybe for Josh, just to clarify what you said about the gross margin profile here. I think you said 100 basis points of one-time partner-related fees in the quarter. Is it fair for us then as we look to Q2 and beyond, then you add 100 basis points to just the (inaudible) the subscription and support portion of the margin profile and then continue to gradually expand from there. Is that what you're trying to communicate with that statement?

Question: Doug Taylor - Canaccord Genuity - Analyst : Okay. A steady quarter. I'll pass the line.

Question: Christian Sgro - Eight Capital - Analyst : For my first question, I want to ask a follow-on to Justin's first question earlier. Back to ARR and that bridge to the revenue profile, would you encourage us to think of the quarterly ARR as a measure of, call it, 6-month or 12-month subscription revenue growth? How much would you encourage us or not encourage us to look at the ARR metric in the near term, especially given the pointed guidance for the full year that helps to guide financial picture. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 12:30PM, DTOL.TO - Q1 2025 D2L Inc Earnings Call

Question: Christian Sgro - Eight Capital - Analyst : That's helpful, Josh. And the second one, I'll poke at the inorganic strategy, opportunity to consolidate the market, was there any change to what you're looking for there in terms of product or each and just what you're seeing maybe from a valuation perspective or if that might depend on the asset? Just any color there would be helpful.

Question: Brian Peterson - Raymond James - Analyst : Thanks and congrats on the quarter, guys. So I just wanted to hit on the pipeline of opportunities in North America, I know that's been up for debate. I would love to understand. I know again, I know first quarter is not a big one for bookings, but what are you seeing from the pipeline overall in North America and what are you expecting this year?

Question: Brian Peterson - Raymond James - Analyst : That's great. And obviously, it's great to see the Hawaii win, but it also -- I think in the Netherlands in some large win activity overseas like are there certain markets where you're making a more calculated bets? How do we think about that balance going to attack those markets, but also understanding that you guys are focusing on margin expansion. How do we think about that balance?

Question: Brian Peterson - Raymond James - Analyst : Great. Thanks, John.

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : You touched on AI in your prepared remarks. I'm sure we're going to hear more about it and your recent (multiple speakers) developments at the upcoming user conference. But in general, can you talk about the role that AI is starting to play in RFPs and your competitive positioning in that regard against your (inaudible) competitors.

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Great. Going back to your comments on the macro and how it's looking better for you guys, does that apply to both higher ed and corporate. Just I mean, given some of the recent data points in the corporate markets, some of the companies are having challenges, obviously but you're also seeing a bit of a bounce back in corporate as well.

Question: Suthan Sukumar - Stifel - Analyst : Wanted to touch on adoption and upsell traction with Creator+ and Performance+. Could you provide update on how those -- how that up from expense motion has been trending within the base?

Question: Suthan Sukumar - Stifel - Analyst : Great. Thanks for that color. And as guys look ahead for growth this year and beyond, how are you guys thinking about the mix of net new versus expansions as part of your growth looking forward?

Question: John Shao - National Bank Financial - Analyst : Could you please give us some colors on your partnership channels? More specifically, it's been won in the quarter since the announcement of the new [benefit] partnership, so any updates from that relationship so far?

Question: John Shao - National Bank Financial - Analyst : The new benefits partnership the one you announced last quarter.

Question: John Shao - National Bank Financial - Analyst : Okay. Thanks. I have a question to Josh on professional services. The margin was down year over year. Just wondering that's a more of a one-off given the nature of the current projects.