D2L completes initial public offering, raising about $120M

Dive Brief:

D2L, a learning management system company, announced Wednesday that it raised roughly $120 million (150 million Canadian dollars) in its initial public offering. The company's shares began trading the same day on the Toronto Stock Exchange under the symbol DTOL.
The company has seen demand for its services grow during the coronavirus pandemic, with its customer count worldwide rising from 730 in 2020 to 970 in 2021. That includes more than 500 colleges and universities, 150 K-12 schools and districts, and over 300 businesses and healthcare institutions.
D2L is just the latest ed tech firm to go public amid heightened interest in online learning during the pandemic. Instructure, another LMS company, raised $250 million when it went public this summer, while MOOC providers Coursera and Udemy raised even larger sums in their IPOs this year — $519 million and $421 million, respectively.

Dive Insight:

In D2L's prospectus, the company contends the coronavirus has sped the adoption of online and hybrid learning experiences and underscored the need to retrain the workforce. "As a result of the pandemic, tens of millions in the workforce have lost their jobs, creating a pressing need for upskilling and reskilling," D2L President and CEO John Baker wrote in a message.

The company had originally planned to sell shares between CA$19 to CA$21, which would have raised as much as CA$200 million, but later dialed back the price to CA$17, BNN Bloomberg reported.

D2L, which was founded in 1999, has the fourth most popular LMS in North America, called Brightspace, according to a market analysis by Phil Hill, a partner at ed tech consultancy MindWires. It held 13% of North America's market share by mid-2021, trailing behind Instructure's Canvas, Blackboard and Moodle.

But it's been gaining ground in the region. While Canvas picked up the most LMS adoptions out of all tracked providers, D2L came in second. Most of its new business came from institutions that previously used Blackboard or Moodle.

The company's revenue has also been on the rise over the past year, increasing from $109 million in 2020 to $126 million in 2021. It expects annual revenue to grow by 20% to 25% by the 2025 fiscal year, according to the prospectus.

However, the company has struggled to break even in recent years. It swung to a $1.8 million operating profit for the 2021 fiscal year, which ended in January, up from a $5.6 million operating loss the year before.

D2L outlined strategies for growth in its prospectus. It plans to expand its customer base while deepening its relationships with existing clients. It's also hoping to expand more internationally, noting that 20% of its total revenue in fiscal 2021 came from outside North America.

And it's betting on the demand for corporate education to increase.

"To gain a competitive edge, businesses seek individuals with a high degree of skill mastery, and workers will need to consistently learn new concepts, skills, and tools to stay relevant in a fast-changing workplace," the prospectus states.