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D2L Inc. Announces First Quarter 2025 Financial Results

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Total revenue increased 10% year-over-year to US$48.5 millionSubscription and support revenue grew 10% year-over-year to US$43.0 millionAnnual Recurring Revenue1 reached US$190.3 million, up 11% over the prior year, and Constant Currency Annual Recurring Revenue1 grew 12%Adjusted EBITDA2 grew 43% over the prior year to US$4.0 million (8.3% margin)

TORONTO, June 4, 2024 /CNW/ – D2L Inc. (TSX: DTOL) (“D2L” or the “Company”), a leading global learning technology company, today announced financial results for its Fiscal 2025 first quarter ended April 30, 2024. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards (“IFRS”) unless otherwise indicated.

“It was a solid start to Fiscal 2025, highlighted by strong growth in our subscription and support revenue and Annual Recurring Revenue and meaningful gains in our operating profitability. These results put us on a path to achieve our full-year growth outlook, which includes exiting the year with low-to-mid-teen Adjusted EBITDA Margin,” said John Baker, CEO of D2L. “In our 25th year of transforming the way the world learns, with sustained momentum and high win rates in our core markets, a strong and growing cash position, and a world-class team, we have never been more encouraged by the outlook and opportunity for D2L.”

First Quarter Fiscal 2025 Financial Highlights

Total revenue of $48.5 million, up 10% from the same period in the prior year.Subscription and support revenue was $43.0 million, an increase of 10% over the same period of the prior year, reflecting growth from new customers and strong revenue retention and expansion from existing customers.Annual Recurring Revenue1 (“ARR”) as at April 30, 2024 increased by 11% year-over-year, from $170.9 million to $190.3 million. Constant Currency Annual Recurring Revenue1 increased 12% to $191.4 million.Gross profit increased 9% to $32.7 million (67.4% gross profit margin) from $29.9 million (67.6% gross profit margin) in the same period of the prior year.Gross profit margin for subscription and support revenue increased to 72.2%, from 71.3% in the same period of the prior year.Adjusted EBITDA2 increased to $4.0 million, up from $2.8 million for the comparative period in the prior year.Income for the period was $0.6 million, compared with income of $1.1 million for the comparative period of the prior year. The Q1 2025 results included approximately $1.5 million in one-time expenses unrelated to the continuing operations of the business.Cash flow used in operating activities was $14.8 million, versus $17.0 million in the same period in the prior year, and Free Cash Flow2 was negative $15.0 million, compared to Free Cash Flow of negative $18.7 million in the same period in the prior year. Cash flows from operations have a seasonal low in the first quarter each year and a seasonal high in the second quarter each year.Strong balance sheet at quarter end, with cash and cash equivalents of $98.9 million and no debt.During the quarter ended April 30, 2024, the Company repurchased and canceled 131,380 Subordinate Voting Shares under its normal course issuer bid (“NCIB”).

1 Refer to “Key Performance Indicators” section of this press release.
2 A non-IFRS financial measure or non-IFRS ratio.  Refer to “Non IFRS Financial Measures” section of this press release.

First Quarter Fiscal 2025 Financial Results – Selected Financial Measures
(in thousands of U.S. dollars, except for percentages)

Q1 2025

Q1 2024

Change

Change

$

$

$

%

Subscription & Support Revenue

42,954

39,190

3,764

9.6 %

Professional Services & Other Revenue

5,541

5,038

503

10.0 %

Total Revenue

48,495

44,228

4,267

9.7 %

Constant Currency Revenue1

48,450

44,228

4,222

9.5 %

Gross Profit

32,677

29,880

2,797

9.4 %

Adjusted Gross Profit1

32,823

29,991

2,832

9.4 %

Adjusted Gross Margin1

67.7 %

67.8 %

Income for the period

572

1,110

(538)

-48.5 %

Adjusted EBITDA1

4,019

2,811

1,208

43.0 %

Cash Flows used in Operating Activities

(14,826)

(17,035)

2,209

12.9 %

Free Cash Flow1

(14,952)

(18,684)

3,732

20.0 %

1 A non-IFRS financial measure or non-IFRS ratio.  Refer to the “Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures” section of this press release for more details.

First Quarter Business & Operating Highlights

D2L continued to grow its customer base in education in North America, including the additions of Hawaii University, University of Central Missouri and Madison Area Technical College.The Company continued to expand its international customer base, including Utrecht University and Hogeschool Leiden.D2L signed new corporate customers, including Royal Institute of British Architects.D2L received two 2024 SIIA CODiE Awards for best learning management system (LMS) and best customer education LMS, and G2 named D2L Brightspace the easiest LMS to use overall.D2L welcomed Brian Finnerty as its new Chief Marketing Officer.D2L continued to lead the way with security by design and privacy by design efforts in the learning sector. D2L teamed with Sinclair College to launch a free cybersecurity course designed to help meet the unique needs of school system leaders in understanding and responding to the growing cybersecurity threat.D2L was again celebrated as one of Canada’s best diversity employers and one of Canada’s top employers for young people by Mediacorp Canada. D2L also achieved Platinum Club status in Deloitte’s Best Managed Companies awards program.As previously announced, the Company entered into an agreement to spin-out the D2L Wave offering into a new independent, partially-owned standalone company, SkillsWave Corporation (“SkillsWave”), with an expected mid-year closing date.

Financial Outlook

D2L maintained its previously issued financial guidance for the year ended January 31, 2025 (“Fiscal 2025”) as follows:

Subscription and support revenue in the range of $177 million to $180 million, implying growth of 10% at the midpoint over Fiscal 2024;Total revenue in the range of $197 million to $201 million, implying growth of 9% at the midpoint over Fiscal 2024; andAdjusted EBITDA in the range of $21 million to $23 million, implying Adjusted EBITDA margin of 11% at the midpoint.

The Company expects revenue and Adjusted EBITDA to increase as Fiscal 2025 progresses, enabling the Company to exit the year with low-to-mid-teen Adjusted EBITDA Margin. 

For additional details on the Company’s outlook, including the principal underlying assumptions and risk factors regarding achievement, refer to the “Financial Outlook” section of the Company’s Management’s Discussion and Analysis for the three and 12 months ended January 31, 2024 (the “Annual MD&A”), as well as the “Forward-Looking Information” section therein, below and in the Company’s Management’s Discussion and Analysis for the three months ended April 30, 2024 (the “Interim MD&A”).

Conference Call & Webcast

D2L management will host a conference call on Wednesday, June 5, 2024 at 8:30 am ET to discuss its first quarter Fiscal 2025 financial results.

Date:

Wednesday, June 5, 2024

Time:

8:30 am (ET)

Dial in number:

Canada/US: 1 (833) 470-1428

International: 1 (404) 975-4839

Access code: 496346

Webcast:

A live webcast will be available at ir.d2l.com/events-and-presentations/events/

The webcast will also be archived

Forward-Looking Information

This press release includes statements containing “forward-looking information” within the meaning of applicable securities laws. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects”, “budget”, “scheduled”, “estimates”, “outlook”, “target”, “forecasts”, “projection”, “potential”, “prospects”, “strategy”, “intends”, “anticipates”, “seek”, “believes”, “opportunity”, “guidance”, “aim”, “goal” or variations of such words and phrases or statements that certain future conditions, actions, events or results “may”, “could”, “would”, “should”, “might”, “will”, “can”, or negative versions thereof, “be taken”, “occur”, “continue” or “be achieved”, and other similar expressions. Statements containing forward-looking information are not historical facts, but instead represent management’s expectations, estimates and projections regarding future events or circumstances.  

This forward-looking information relates to the Company’s future financial outlook and anticipated events or results and includes, but is not limited to, statements under the heading “Financial Outlook” and information regarding: the Company’s financial position, financial results, business strategy, performance, achievements, prospects, objectives, opportunities, business plans and growth strategies; the Company’s budgets, operations and taxes; judgments and estimates impacting on financial statements; and the proposed spin-out of D2L Wave. 

Forward-looking information is based on certain assumptions, expectations and projections, and analyses made by the Company in light of management’s experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate, including the following: the Company’s ability to win business from new customers and expand business from existing customers; the timing of new customer wins and expansion decisions by existing customers; the Company’s ability to generate revenue and expand its business while controlling costs and expenses; the Company’s ability to manage growth effectively; the Company’s ability to hire and retain personnel effectively; the effects of foreign currency exchange rate fluctuations on our operations; the ability to seek out, enter into and successfully integrate acquisitions; business and industry trends, including the success of current and future product development initiatives; positive social development and attitudes toward the pursuit of higher education; the Company’s ability to maintain positive relationships with its customer base and strategic partners; the Company’s ability to adapt and develop solutions that keep pace with continuing changes in technology, education and customer needs; the ability to patent new technologies and protect intellectual property rights; the Company’s ability to comply with security, cybersecurity and accessibility laws, regulations and standards; the assumptions underlying the judgments and estimates impacting on financial statements; and the Company’s ability to retain key personnel; the factors and assumptions discussed under the “Financial Outlook” of the Annual MD&A; that the conditions to completing the spin-out of D2L Wave are achieved or waived in a timely manner; and that the list of factors referenced in the following paragraph, collectively, do not have a material impact on the Company.

Although the Company believes that the assumptions underlying such forward-looking information were reasonable when made, they are inherently uncertain and are subject to significant risks and uncertainties and may prove to be incorrect. The Company cautions investors that forward-looking information is not a guarantee of the future and that actual results may differ materially from those made in or suggested by the forward-looking information contained in this press release. Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks, uncertainties and other factors, including but not limited to the risk of non-completion of the D2L Wave spin-out, or completion on the terms other than those initially negotiated, due to an inability to achieve satisfaction of applicable closing conditions, or obtain such third party consents as considered desirable by the parties and the further risks identified herein, or at “Summary of Factors Affecting Our Performance” of the Company’s Interim MD&A or in the “Risk Factors” section of the Company’s most recently filed annual information form, in each case filed under the Company’s profile on SEDAR+ at www.sedarplus.com. If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking information prove incorrect, actual results might vary materially from those anticipated in the forward-looking information.

Given these risks and uncertainties, investors are cautioned not to place undue reliance on forward-looking information, including any financial outlook. Any forward-looking information that is contained in this press release speaks only as of the date of such statement, and the Company undertakes no obligation to update any forward-looking information or to publicly announce the results of any revisions to any of those statements to reflect future events or developments, except as required by applicable securities laws. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data. 

About D2L Inc. (TSX: DTOL)

D2L is transforming the way the world learns—helping learners of all ages achieve more than they dreamed possible. Working closely with customers all over the world, D2L is supporting millions of people learning online and in person. Our global workforce is dedicated to making the best learning products to leave the world better than they found it. Learn more at www.D2L.com. 

D2L Inc.
Condensed Consolidated Interim Statements of Financial Position
(In U.S. dollars)

As at April 30, 2024 and January 31, 2024
(Unaudited)

April 30, 2024

January 31, 2024

Assets

Current assets:

Cash and cash equivalents 

$    98,851,147

$    116,943,499

Trade and other receivables

25,287,892

23,025,690

Uninvoiced revenue 

3,747,084

3,971,861

Prepaid expenses

8,232,470

10,517,226

Deferred commissions 

5,346,539

5,334,864

141,465,132

159,793,140

Non-current assets:

Other receivables

517,782

537,056

Prepaid expenses

109,989

119,872

Deferred income taxes 

520,153

529,674

Right-of-use assets

8,963,572

8,774,960

Property and equipment

8,009,367

8,427,734

Deferred commissions

7,757,724

7,730,724

Intangible assets 

732,871

770,707

Goodwill

10,274,106

10,440,091

Total assets

$    178,350,696

$    197,123,958

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable and accrued liabilities

$    25,973,683

$    32,635,926

Deferred revenue

80,973,649

93,727,368

Lease liabilities

1,289,542

1,002,464

Contingent consideration

256,946

271,479

108,493,820

127,637,237

Non-current liabilities:

Deferred income taxes 

557,168

587,075

Lease liabilities

11,518,505

11,707,534

Contingent consideration

312,670

311,839

12,388,343

12,606,448

120,882,163

140,243,685

Shareholders’ equity:

Share capital

366,514,193

364,830,884

Additional paid-in capital

46,329,301

47,485,107

Accumulated other comprehensive loss

(5,794,007)

(4,998,317)

Deficit

(349,580,954)

(350,437,401)

57,468,533

56,880,273

Total liabilities and shareholders’ equity

$    178,350,696

$    197,123,958

D2L Inc.
Condensed Consolidated Interim Statements of Comprehensive (Loss) Income
(In U.S. dollars)

For the three months ended April 30, 2024 and 2023
(Unaudited)

2024

2023

Revenue:

Subscription and support

$  42,953,475

$   39,189,661

Professional services and other

5,541,417

5,038,278

48,494,892

44,227,939

Cost of revenue:

Subscription and support

11,946,610

11,240,740

Professional services and other

3,870,868

3,107,304

15,817,478

14,348,044

Gross profit

32,677,414

29,879,895

Expenses:

Sales and marketing

12,904,939

12,440,667

Research and development

12,290,771

11,145,353

General and administrative

8,099,431

6,189,503

33,295,141

29,775,523

(Loss) income from operations

(617,727)

104,372

Interest and other income (expenses):

Interest expense

(160,660)

(156,008)

Interest income

1,084,045

876,107

Other income

59,476

15,463

Foreign exchange gain

230,781

430,172

1,213,642

1,165,734

Income before income taxes

595,915

1,270,106

Income taxes (recovery):

Current

50,745

74,642

Deferred

(27,096)

85,013

23,649

159,655

Income for the period

572,266

1,110,451

Other comprehensive loss:

Foreign currency translation loss

(795,690)

(211,211)

Comprehensive (Loss) income

$  (223,424)

$  899,240

Earnings per share – basic

$  0.01

$  0.02

Earnings per share – diluted

0.01

0.02

Weighted average number of common shares – basic

54,015,602

53,224,007

Weighted average number of common shares – diluted

55,723,344

54,752,509

D2L Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
(In U.S. dollars)

For the three months ended April 30, 2024 and 2023
(Unaudited)

Share Capital

Additional paid-in
capital

Accumulated other
comprehensive loss

Deficit

Total

Shares

Amount

Balance, January 31, 2024

53,978,085

$  364,830,884

$  47,485,107

$  (4,998,317)

$  (350,437,401)

$  56,880,273

Issuance of Subordinate Voting Shares on exercise of options

206,299

1,739,261

(900,761)

—

—

838,500

Issuance of Subordinate Voting Shares on settlement of restricted share units

194,483

965,967

(2,587,799)

—

—

(1,621,832)

Stock-based compensation

—

—

2,332,754

—

—

2,332,754

Repurchase of share capital for cancellation under NCIB

(131,380)

(1,021,919)

—

—

—

(1,021,919)

Change in share repurchase commitment under ASPP

—

—

—

—

284,181

284,181

Other comprehensive loss

—

—

—

(795,690)

—

(795,690)

Income for the period

—

—

—

—

572,266

572,266

Balance, April 30, 2024

54,247,487

$  366,514,193

$  46,329,301

$  (5,794,007)

$  (349,580,954)

$  57,468,533

Balance, January 31, 2023

53,146,530

357,639,824

46,084,161

(5,001,805)

(344,630,902)

54,091,278

Issuance of Subordinate Voting Shares on exercise of options

128,073

1,111,373

(450,449)

—

—

660,924

Issuance of Subordinate Voting Shares on settlement of restricted share units

24,097

297,619

(397,164)

—

—

(99,545)

Stock-based compensation

—

—

2,074,223

—

—

2,074,223

Other comprehensive loss

—

—

—

(211,211)

—

(211,211)

Income for the period

—

—

—

—

1,110,451

1,110,451

Balance, April 30, 2023

53,298,700

$  359,048,816

$  47,310,771

$  (5,213,016)

$  (343,520,451)

$  57,626,120

D2L Inc.
Condensed Consolidated Interim Statements of Cash Flows
(In U.S. dollars)

For the three months ended April 30, 2024 and 2023
(Unaudited)

2024

2023

Operating activities:

Income for the period

$  572,266

$  1,110,451

Items not involving cash:

Depreciation of property and equipment

436,493

291,732

Depreciation of right-of-use assets

286,692

321,071

Amortization of intangible assets

27,967

4,376

Gain on disposal of property and equipment

(45,803)

(15,463)

Stock-based compensation

2,332,754

2,074,223

Net interest (income) expense

(923,385)

(720,099)

Income tax expense

23,649

159,655

Changes in operating assets and liabilities:

Trade and other receivables

(2,528,272)

(3,582,301)

Uninvoiced revenue

168,438

(807,077)

Prepaid expenses

2,116,314

448,517

Deferred commissions

(191,409)

(231,019)

Accounts payable and accrued liabilities

(6,008,716)

(5,551,696)

Deferred revenue

(12,109,523)

(11,383,125)

Right-of-use assets and lease liabilities

(43,743)

—

Interest received

1,077,425

876,107

Interest paid

(12,633)

(7,522)

Income taxes paid

(4,239)

(22,509)

Cash flows used in operating activities

(14,825,725)

(17,034,679)

Financing activities:

Payment of lease liabilities

(405,727)

(132,994)

Proceeds from exercise of stock options

838,500

660,924

Taxes paid on settlement of restricted share units

(1,621,832)

(99,545)

Repurchase of share capital for cancellation under NCIB

(1,021,919)

—

Cash flows (used in) from financing activities

(2,210,978)

428,385

Investing activities:

Purchase of property and equipment

(171,869)

(1,664,474)

Proceeds from disposal of property and equipment

45,803

15,463

Cash flows used in investing activities

(126,066)

(1,649,011)

Effect of exchange rate changes on cash and cash equivalents

(929,583)

(384,923)

Decrease in cash and cash equivalents

(18,092,352)

(18,640,228)

Cash and cash equivalents, beginning of period

116,943,499

110,732,236

Cash and cash equivalents, end of period

$  98,851,147

$  92,092,008

Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures

The information presented within this press release refers to certain non-IFRS financial measures (including non-IFRS ratios) including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Margin, and Constant Currency Revenue. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Non-IFRS financial measures should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS and are unlikely to be comparable to similar measures presented by other issuers. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations, financial performance and liquidity from management’s perspective and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of the Company. The Company’s management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to assess our ability to meet our capital expenditures and working capital requirements.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA is defined as net income (loss), excluding interest, taxes, depreciation and amortization (or EBITDA), adjusted for stock-based compensation, foreign exchange gains and losses, non-recurring expenses, transaction-related expenses, impairment charges and other income and losses. Adjusted EBITDA Margin is calculated as Adjusted EBITDA expressed as a percentage of total revenue. For an explanation of recent changes to and management’s use of Adjusted EBITDA and Adjusted EBITDA Margin see “Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted EBITDA and Adjusted EBITDA Margin” section in the Company’s Interim MD&A , which section is incorporated by reference herein.

The following table reconciles Adjusted EBITDA to income (loss) for the period, and discloses Adjusted EBITDA Margin, for the periods indicated:

(in thousands of U.S. dollars, except for percentages)

Three months ended April 30

2024

2023

Income for the period

572

1,110

Stock-based compensation

2,333

2,074

Foreign exchange gain

(231)

(430)

Non-recurring expenses

821

—

Transaction-related expenses

672

—

Net interest income

(923)

(720)

Income tax expense

24

160

Depreciation and amortization

751

617

Adjusted EBITDA

4,019

2,811

Adjusted EBITDA Margin

8.3 %

6.4 %

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit is defined as gross profit excluding related stock-based compensation expenses. Adjusted Gross Margin is calculated as Adjusted Gross Profit expressed as a percentage of total revenue. For an explanation of management’s use of Adjusted Gross Profit and Adjusted Gross Margin see “Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted Gross Profit and Adjusted Gross Margin” section in the Company’s Interim MD&A , which section is incorporated by reference herein.

The following table reconciles Adjusted Gross Margin to gross profit expressed as a percentage of revenue, for the periods indicated:

(in thousands of U.S. dollars, except for percentages)

Three months ended April 30

2024

2023

Gross profit for the period

32,677

29,880

Stock-based compensation

146

111

Adjusted Gross Profit

32,823

29,991

Adjusted Gross Margin

67.7 %

67.8 %

Free Cash Flow and Free Cash Flow Margin

Free Cash Flow is defined as cash provided by (used in) operating activities less net additions to property and equipment. Free Cash Flow Margin is calculated as Free Cash Flow expressed as a percentage of total revenue. For an explanation of management’s use of Free Cash Flow and Free Cash Flow Margin see “Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Free Cash Flow and Free Cash Flow Margin” section in the Company’s Interim MD&A , which section is incorporated by reference herein.

The following table reconciles our cash flow from (used in) operating activities to Free Cash Flow, and discloses Free Cash Flow Margin, for the periods indicated:

(in thousands of U.S. dollars, except for percentages)

Three months ended April 30

2024

2023

Cash flow used in operating activities

(14,826)

(17,035)

Net addition to property and equipment

(126)

(1,649)

Free Cash Flow

(14,952)

(18,684)

Free Cash Flow Margin

-30.8 %

-42.2 %

Constant Currency Revenue

Constant Currency Revenue is defined as foreign-currency-denominated revenues translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional currency. For an explanation of management’s use of Constant Currency Revenue see “Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Constant Currency Revenue” section in the Company’s Interim MD&A , which section is incorporated by reference herein.

The following table reconciles our Constant Currency Revenue to revenue, for the periods indicated:

(in thousands of U.S. dollars)

Three months ended April 30

2024

2023

Total revenue for the period

48,495

44,228

Positive impact of foreign exchange rate changes over the prior period

(45)

—

Constant Currency Revenue

48,450

44,228

Key Performance Indicators

Management uses a number of metrics, including the key performance indicators identified below, to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other issuers. These metrics are estimated operating metrics and not projections, nor actual financial results, and are not indicative of current or future performance.

Annual Recurring Revenue and Constant Currency Annual Recurring Revenue: We define Annual Recurring Revenue as the annualized equivalent value of subscription revenue from all existing customer contracts as at the date being measured, exclusive of the implementation period. Our calculation of Annual Recurring Revenue assumes that customers will renew their contractual commitments as those commitments come up for renewal. We believe Annual Recurring Revenue provides a reasonable, real-time measure of performance in a subscription-based environment and provides us with visibility for potential growth to our cash flows. We believe that increasing Annual Recurring Revenue indicates the continued strength in the expansion of our business, and will continue to be our focus on a go-forward basis. We define Constant Currency Annual Recurring Revenue as foreign-currency-denominated Annual Recurring Revenue translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional currency.

As at April 30

(in millions of U.S. dollars, except percentages)

2024

2023

Change

$

$

%

Annual Recurring Revenue

190.3

170.9

11.4 %

Constant Currency Annual Recurring Revenue

191.4

170.9

12.0 %

SOURCE D2L Inc.

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Market grows at a 9.15% CAGR from USD 15.46 billion in 2025; AI genomics and research computing expands 16.71% a year, while North America holds 46.0% of spending

LONDON, Oct. 23, 2026 /PRNewswire/ — The “Healthcare Data Center Market – Growth, Share, Opportunities & Competitive Analysis, 2026-2035” report has been added to the DC Market Insights offering. The global Healthcare Data Center Market was valued at USD 15.46 billion in 2025, is estimated at USD 17.34 billion in 2026, and is projected to reach USD 37.11 billion by 2035, growing at a CAGR of 9.15% from 2025 to 2035. DC Market Insights finds that healthcare infrastructure is splitting between general-purpose EHR workloads that increasingly move to hosted environments and higher-value AI, imaging, research and resilience workloads that require dedicated or colocated capacity.

Healthcare Data Center Market at a Glance

Metric

Value (DC Market Insights estimate)

Market size, 2020

USD 9.77 billion

Market size, 2025 (base year)

USD 15.46 billion

Market size, 2026

USD 17.34 billion (+12.16% year on year)

Market size, 2030

USD 25.10 billion

Market size, 2035

USD 37.11 billion

CAGR 2025-2035

9.15% (low case 7.13%, high case 10.69%)

Largest component

IT hardware, 70.7% of 2025 value

Fastest-growing workload

AI genomics and research computing, 16.71% CAGR

Leading region

North America, 46.0% (USD 7.11 billion)

Fastest-growing region

Asia Pacific, 11.72% CAGR

Largest end user

Hospitals and health systems, 47.0% of 2025 value

Key Takeaways

IT hardware accounts for USD 10.93 billion, or 70.7% of 2025 market value, reflecting the high server, storage and accelerator content of clinical and research workloads.AI genomics and research computing is the fastest workload, rising 16.71% a year from USD 2.30 billion in 2025 to USD 10.78 billion by 2035.Hospitals and health systems remain the largest end user at USD 7.27 billion in 2025, while pharmaceutical and life sciences grows fastest among end users at 11.61% a year.On-premises owned sites hold 60.0% of 2025 value, but wholesale and build-to-suit grows 14.01% a year as research and AI clusters move into purpose-built capacity.North America leads with 46.0% of 2025 spending, while Asia Pacific grows fastest at 11.72%; India is the fastest-growing large country at 18.37% a year.

Scope & Segmentation – Healthcare Data Center Market

The report analyzes the market across the following segments:

Component: IT Hardware; Colocation and Hosting Services; Electrical and Mechanical Infrastructure; Construction and Fit-OutEnd User: Hospitals and Health Systems; Pharmaceutical and Life Sciences; Payers and Health Insurers; Health IT and Medtech Vendors; Public Health and Research InstitutesWorkload: EHR and Clinical Applications; Medical Imaging and PACS; AI Genomics and Research Computing; Claims and Revenue Cycle; Backup and Disaster Recovery; Collaboration and Other WorkloadsDeployment Model: On-Premises Owned Sites; Retail Colocation; Wholesale and Build-to-Suit; Vendor-Hosted Private CloudGeography: North America; Europe; Asia Pacific; Latin America; Middle East and Africa, with 12 country forecasts

Report Updated: Oct. 22, 2026

Get Free Sample Report – Healthcare Data Center Market

“Healthcare data center demand is moving in two directions at once: hospitals are reducing general-purpose owned halls while AI, imaging, research and cyber-resilience requirements add denser, higher-value infrastructure. Our model shows AI genomics and research computing growing 16.71% a year and wholesale or build-to-suit capacity growing 14.01%, while the owned-site share falls from 60.0% in 2025 toward 45.0% by 2035. That makes compliant hosted capacity, AI-ready infrastructure and recoverability the strongest growth pools through the forecast period.”

— Amit Jain, Senior Consultant, ICT & Emerging Technologies, DC Market Insights, report author

Why This Report Matters
Healthcare data centers sit at the intersection of patient-data availability, clinical application performance, medical imaging, pharmaceutical research and cyber resilience. The report helps health systems, life sciences companies, colocation operators, cloud and hosting providers, equipment vendors and investors size infrastructure demand while separating public-cloud migrations that leave the market from leased and owned capacity that remains in scope.

Key Attributes

Report attribute

Details

Historical Period

2020-2024

Base Year

2025

Forecast Period

2026-2035

Market Size 2025

USD 15.46 billion

Market Size 2026

USD 17.34 billion

Market Size 2035

USD 37.11 billion

CAGR 2025-2035

9.15% (low 7.13%, high 10.69%)

Leading Region

North America, 46.0%

Report Format

PDF + Excel

How Big Is the Healthcare Data Center Market in 2026?
DC Market Insights values the Healthcare Data Center Market at USD 17.34 billion in 2026, 12.16% above 2025, as backup sites, AI clusters for drug discovery and leased halls for electronic health records are added faster than hospital server rooms close. The model places healthcare IT load at 3,300 MW in 2025 and projects it to double to 6,600 MW by 2035, with accelerator racks taking a larger share of the mix.

Year

Market size

2020

USD 9.77 billion

2025

USD 15.46 billion

2026

USD 17.34 billion (+12.16% year on year)

2030

USD 25.10 billion

2035

USD 37.11 billion

Source: DC Market Insights, Healthcare Data Center Market report, Oct. 22, 2026.

Why Do AI and Research Workloads Raise Healthcare Data Center Spend?
AI infrastructure changes the value of each megawatt. DC Market Insights estimates a conventional healthcare MW carries about USD 3.05 million a year of hardware, while an AI MW carries about USD 8.30 million. That premium comes from GPU systems, high-speed networking, large research datasets and the supporting power and cooling required for accelerated computing. The result is that market value grows faster than healthcare IT load as the accelerator share rises from about 5% in 2025 toward 22% by 2035.

Which Component Leads Healthcare Data Center Spending?
IT hardware remains the largest component, but colocation and hosting services grow faster as providers absorb EHR, imaging, backup and research workloads that institutions no longer want to operate in ageing hospital server rooms.

Component

2025 value

Share 2025

2035 value

CAGR

IT Hardware

USD 10,931.24M

70.7 %

USD 24,479.40M

8.40 %

Colocation and Hosting Services

USD 3,136.32M

20.3 %

USD 9,496.08M

11.72 %

Electrical and Mechanical Infrastructure

USD 967.87M

6.3 %

USD 2,058.14M

7.84 %

Construction and Fit-Out

USD 427.77M

2.8 %

USD 1,078.98M

9.69 %

DC Exclusive: Hospital Data Center Exit Tracker
DC Market Insights tracks 14 named healthcare infrastructure moves from 2014 through 2026. Ten moved workloads to public cloud, two went to colocation and two built new owned sites. The pattern explains why owned data centers can lose share even while the overall market expands: general-purpose EHR estates leave older halls, while AI and research clusters arrive as new owned, wholesale or colocated capacity. The model therefore takes the owned-site share from 60.0% in 2025 toward 45.0% by 2035.

Workload

2025 value

Share 2025

2035 value

CAGR

EHR and Clinical Applications

USD 4,638.95M

30.0 %

USD 8,907.02M

6.74 %

Medical Imaging and PACS

USD 2,783.38M

18.0 %

USD 6,309.14M

8.53 %

AI Genomics and Research Computing

USD 2,297.83M

14.9 %

USD 10,777.50M

16.71 %

Claims and Revenue Cycle

USD 2,010.22M

13.0 %

USD 4,082.39M

7.34 %

Backup and Disaster Recovery

USD 2,164.85M

14.0 %

USD 4,453.51M

7.48 %

Collaboration and Other Workloads

USD 1,567.97M

10.1 %

USD 2,583.04M

5.12 %

Which Region Leads the Healthcare Data Center Market?

North America leads because the United States combines a large installed hospital base, near-universal certified EHR adoption and significant pharmaceutical research infrastructure. Asia Pacific grows fastest as India, China and other markets add local capacity under health-data localization and digital-health programs.

Indicator

2025 / Base

Outlook

Leading region

North America, 46.0% (USD 7.11B)

USD 15.77B by 2035; remains the largest regional spending pool

Fastest-growing region

Asia Pacific, 11.72% CAGR

Reaches USD 9.83B by 2035 as India and China add domestic health-data capacity

Fastest large country

India, 18.37% CAGR

USD 247.41M in 2025 to USD 1.34B by 2035

Largest country

United States, USD 6.49B in 2025

Remains the largest national market through the forecast

How Could the 2035 Forecast Change?

The 2035 outcome depends on how quickly hospital EHR estates move to public cloud, how much pharmaceutical AI is purchased as cloud capacity rather than dedicated infrastructure, and how strongly resilience rules push institutions to maintain recoverable private or colocated capacity.

Scenario

Assumption

2035 value

CAGR 2025-2035

Low

Faster EHR migration to public cloud; more pharma AI bought as cloud capacity

USD 30.80B

7.13 %

Base

Healthcare IT load reaches 6,600 MW; 22% on AI racks; 55% leased

USD 37.11B

9.15 %

High

Stricter 72-hour restore requirements and more drug makers build owned AI factories

USD 42.68B

10.69 %

Competitive Landscape and Recent Developments
The five largest colocation providers account for about 31% of the USD 3.14 billion healthcare colocation and hosting market in 2025, leaving the sector fragmented. Competition spans colocation, EHR hosting, cloud services, AI hardware and the power and cooling systems required for hospital and life-sciences infrastructure.

Companies profiled include:

Equinix; Digital Realty; Iron Mountain Data Centers; CyrusOne; NTT DATA; Epic Systems (Epic Hosting); Oracle (Oracle Health); Microsoft (Nuance); Amazon Web Services; Google Cloud; Dell Technologies; Hewlett Packard Enterprise; NVIDIA; Cisco Systems; Schneider Electric; Vertiv.

In July 2026, WellSpan Health completed the move of more than 300 applications and 7.5 PB of data to AWS in 17 weeks.In April 2026, the U.S. Department of Veterans Affairs requested USD 4.2 billion for its EHR in fiscal 2027, including USD 745 million for infrastructure readiness.In February 2026, Eli Lilly’s LillyPod AI factory with more than 9,000 petaflops went live in Indianapolis.In February 2026, five Ontario hospitals in Transform Shared Service Organization moved their EHR to Oracle Cloud Infrastructure, cutting page-load time by 71%.In January 2026, NVIDIA and Eli Lilly agreed to invest up to USD 1 billion over five years in an AI co-innovation lab.In November 2025, India notified the DPDP Rules with an 18-month phased timeline.

Frequently Asked Questions

What is the size of the Healthcare Data Center Market?
USD 15.46 billion in 2025 and USD 17.34 billion in 2026, projected to reach USD 37.11 billion by 2035 at a 9.15% CAGR.

Which component leads the market?
IT hardware, with USD 10.93 billion or 70.7% of 2025 spending.

Which workload grows fastest?
AI genomics and research computing, at 16.71% a year through 2035.

Which healthcare end user spends the most?
Hospitals and health systems, with USD 7.27 billion or 47.0% of 2025 market value.

Which region leads?
North America with USD 7.11 billion or 46.0% of 2025 value; Asia Pacific grows fastest at 11.72% a year.

Who are the leading suppliers?
Equinix, Digital Realty, Iron Mountain Data Centers, CyrusOne and NTT DATA are among the leading colocation providers, alongside major healthcare hosting, cloud, hardware and infrastructure vendors.

Methodology

DC Market Insights builds the healthcare data center market bottom-up from 3,300 MW of healthcare IT load in 2025 and spending per MW for hardware, colocation and hosting, electrical and mechanical infrastructure, and construction and fit-out. The model separates conventional and AI MW, applies leased-capacity economics, and reconciles end-user, workload, deployment, regional and country splits to the total market before applying forecast assumptions.

Download Sample Report – Healthcare Data Center Market

Related Reports from DC Market Insights
Data Center Colocation Market
AI Data Center Market
Data Center Outsourcing Market
Multi-Tenant Data Center Market
Data Center Virtualization Market

DC Market Insights Data & Tools

Explore live datasets and decision tools used across DC Market Insights research:

Data Center Database
Data Center Map
Data Center Operators
Global Capacity Tracker
Deal Tracker
Power & Policy Tracker
PUE Calculator
Construction Pipeline
Deal Comps
Site Risk
Electricity Rates
Data Center Footprint

About DC Market Insights

DC Market Insights is a dedicated research and consulting firm that empowers data center leaders with actionable intelligence. We combine rigorous market research, advanced analytics and practical advisory support to help organizations make confident decisions in an increasingly complex digital infrastructure landscape. Our goal is to transform data into clarity, giving clients the ability to act decisively on strategy, investment and execution.

Contact Us
DC Market Insights
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Email: sales@dcmarketinsights.com
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Web: www.dcmarketinsights.com

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City of Hope Cancer Center Chicago Unites Industry Leaders for Health Technology Innovation Roundtable

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CHICAGO, Oct. 23, 2026 /PRNewswire/ — Faster access to care, more affordable treatment and policies that support innovation were central themes of a Health Technology Innovation Roundtable convened by City of Hope® Cancer Center Chicago on Thursday, October 15, at its hospital in Zion.

The discussion brought together Congressman Brad Schneider (IL-10) and leaders from City of Hope, Vantive and Zocdoc to examine how technology can help bend the health care cost curve, connect patients with care sooner and expand access to specialized treatment.

“Thank you to City of Hope in Zion for graciously hosting our recent roundtable to discuss how emerging health technologies are shaping patient care, access, and affordability,” said Schneider. “I am proud to represent a district where so many people work in the life sciences field to advance innovation. This convening was an important opportunity to hear directly from health technology innovators about the progress they are making to better connect patients with lifesaving care and how we can work together. I will continue to partner with City of Hope and the health technology experts throughout our district to ensure more people have access to the cutting-edge treatment and testing they deserve.”

The conversation spanned digital appointment scheduling, home dialysis, surgical robotics, artificial intelligence and remote monitoring. Zocdoc’s digital marketplace connects patients with available appointments, helping fill openings that might otherwise go unused. Vantive’s work in kidney care, including home dialysis, illustrated how technology can expand options for where and how patients receive treatment.  City of Hope’s experience with advanced surgery and wearable devices highlighted opportunities to bring specialized expertise closer to patients and support recovery at home.

“Technological advancements continue to evolve rapidly, and keeping up with them can feel like a job unto itself,” said Pete Govorchin, president of City of Hope Chicago. “Having an opportunity to pause and reflect on the progress we have seen thus far, as well as look ahead to what’s next alongside a distinguished panel of respected professionals, is critical.”

The discussion also addressed barriers that can keep innovation from reaching patients, including state licensing requirements, limited broadband, outdated regulations and reimbursement challenges. Access for rural communities and veterans was a recurring concern, alongside the need to measure how new technologies improve outcomes and reduce avoidable costs.

“As both a developer and adopter of advanced surgical technologies, City of Hope is well positioned to provide practical, evidence-based insights into how robotic surgery and other procedures, delivered remotely, could improve access, enhance quality, and support the future of patient-centered care,” said Dr. Yuman Fong, a City of Hope surgical oncologist.

Joining Schneider, Govorchin and Fong were Chris Toth, CEO of Vantive; Kyle Jackson, Vantive’s executive director of government affairs and market development; and Ilyssa Meyer, Zocdoc’s director of government affairs.

“I was proud to be part of an important convening of health technology experts discussing how we can continue to work together to connect more patients to care and innovative treatment. Rep. Schneider’s leadership on the bipartisan, bicameral Health ACCESS Act is an important next step in turning the innovations discussed at the recent roundtable into broader access to care,” added Meyer. “By reducing barriers to digital health services and online appointment scheduling, the bill can help connect more patients with the care they need.”

About City of Hope

City of Hope’s mission is to make hope a reality for all touched by cancer and diabetes. Founded in 1913, City of Hope has grown into one of the largest and most advanced cancer research and treatment organizations in the United States, and one of the leading research centers for diabetes and other life-threatening illnesses. City of Hope research has been the basis for numerous breakthrough cancer medicines, as well as human synthetic insulin and monoclonal antibodies. With an independent, National Cancer Institute-designated comprehensive cancer center that is ranked among the nation’s top cancer centers by U.S. News & World Report at its core, City of Hope’s uniquely integrated model spans cancer care, research and development, academics and training, and a broad philanthropy program that powers its work. City of Hope’s growing national system includes its Los Angeles campus, Orange County, California, campus, a network of clinical care locations across Southern California and cancer treatment centers and outpatient facilities in the Atlanta, Chicago and Phoenix areas. City of Hope’s affiliated group of organizations includes Translational Genomics Research Institute and AccessHope™. For more information about City of Hope, follow us on Facebook, X, YouTube, Instagram and LinkedIn.  

View original content to download multimedia:https://www.prnewswire.com/news-releases/city-of-hope-cancer-center-chicago-unites-industry-leaders-for-health-technology-innovation-roundtable-302917568.html

SOURCE City of Hope Cancer Center Chicago

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Technology

Kin Becomes First U.S. Home Insurer to Enable WebMCP for AI Shopping

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Consumers can now use ChatGPT to efficiently shop Kin’s digital home insurance experience

CHICAGO, Oct. 23, 2026 /PRNewswire/ — Building on its recent announcement that AI shopping agents like Meta’s Muse are welcome to shop on Kin.com, Kin is making its digital home insurance experience even easier for AI to shop. Kin, the direct-to-consumer provider of insurance and home finance solutions for homeowners, today announced that it has enabled WebMCP in its digital quoting experience. The new capability gives ChatGPT a faster and more efficient way to interact with Kin.com on a consumer’s behalf.

Homeowners can go from their AI agent prompt to a customized Kin home insurance quote ready for purchase in minutes due to the data-informed Kin.com quoting process.

“We said that Kin will win the AI shopping experience, and we meant it,” said Kin Founder and CEO Sean Harper. “People are going to increasingly ask AI to do the tedious work of shopping for them. We want someone to be able to tell ChatGPT, ‘Help me shop for home insurance,’ and make it incredibly easy for that AI agent to shop Kin.”

Unlike plug-ins that require installation, WebMCP is an open web standard which lets AI agents work directly with Kin.com, creating a more efficient way to interact with Kin’s digital experience, and making it easier for them to help consumers shop for home insurance. For consumers, that means AI can do more of the repetitive work involved in insurance shopping, while Kin makes its experience easier for those AI agents to navigate. 

Built for the Way Consumers Will Shop

The launch builds on Kin’s announcement that it would welcome Meta’s Muse and other AI shopping agents to Kin.com rather than block them. In Kin’s testing, Muse was able to retrieve home insurance quotes after asking consumers only a handful of questions. Likewise, with ChatGPT, Kin testing found consumers could easily price out home insurance in a clear side-by-side view with minimal questions. The technology improves daily, and Kin is committed to implementing open standards like WebMCP, which ChatGPT supports for paid users on its browser-based platform. While free ChatGPT accounts cannot use this protocol, consumers can still easily get a quote at kin.com.

Kin was built to sell home insurance directly to consumers through a digital experience, without relying on external agents. It also analyzes thousands of data points about individual homes, meaning much of the information needed to generate a quote can already be gathered without asking the homeowner.

“We didn’t have to reinvent Kin for AI shopping,” Harper said. “We already built a direct digital experience, we already have the data to answer most of the questions about a home, and we don’t depend on someone in the middle to sell the product. AI shopping rewards a lot of the things we’ve been building for years.”

A New Way to Shop for Insurance

Kin expects AI agents to become increasingly capable of helping consumers gather information, understand coverage and shop across insurance providers. As those capabilities improve, Kin plans to continue making its digital experience easier for both people and the AI agents working on their behalf.

“Five years from now, opening a bunch of browser tabs and filling out the same information over and over is going to seem pretty antiquated,” Harper said. “You’ll tell your AI what you need and it will go do the work. We’ve built Kin to win in that world.”

About Kin
Kin helps homeowners save money, simplify tasks, and protect their most valuable assets. By offering direct-to-consumer digital home and auto insurance alongside home finance services, the company focuses on supporting underserved homeowners in states with high catastrophic risk. Kin provides more convenient and affordable home and auto insurance coverage by eliminating the need for external agents and analyzing thousands of data points to provide transparent, accurate pricing. Kin’s AI-native technology platform delivers a seamless customer experience, customized options, and fast, high-quality service. To learn more, visit www.kin.com.

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SOURCE Kin Insurance, Inc.

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