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  5. DTOL: Please comment on the recent results. [D2L Inc. Subordinate Voting Shares]
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Q: Please comment on the recent results. Is it a sell, buy or hold? I am down 35% on this one. Thank you
Asked by Mariusz on May 09, 2025
5i Research Answer:

EPS of $0.27 beat estimates of $0.258 and sales of $57.3M missed expectations of $58.59M. Subscription revenue grew 13%, representing 95% of its total sales, and gross profits grew 11%. Gross margins fell slightly, and net income fell year-over-year, but a main piece of news that caused the sharp decline in share price is that AWS advised DCBO its decision to not renew its Order Form. AWS represented less than 2% of its reported ARR, but investors likely did not view this as a sign of confidence in the name. Management is guiding for total revenue growth of 9% to 10% for FY2025 and adjusted EBITDA margins of 17% to 18%. We think investors are concerned about its moderate growth, its declining margins, and AWS not renewing its contract. The valuation is OK, but we would prefer a more robust name in the same space, DTOL.