D2L Inc. Announces Fourth Quarter and Fiscal Year 2022 Financial Results

Kitchener, Ontario, CANADA


  • Total revenue grows 22% for Q4 to US$41.4 million and 20% for full year to US$151.9 million
  • Subscription and support revenue increases by 19% for Q4 to US$36.2 million and by 19% for full year to US$134.7 million

TORONTO, March 28, 2022 (GLOBE NEWSWIRE) --  D2L Inc. (TSX: DTOL) (“D2L” or the “Company”), a global learning technology leader, today announced financial results for its fiscal 2022 fourth quarter and year ended January 31, 2022. All amounts are in U.S. dollars and all figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

“We had a strong fourth quarter to close out an excellent year, which saw us complete our public offering, achieve our target of 20% top-line growth, add roughly $25 million in new annual recurring revenue, and significantly grow our base of customers across our key verticals,” said John Baker, President and CEO of D2L. “Our record results speak to increasing new customer momentum and the sustained tailwinds in our markets.”

Mr. Baker added: “As we look ahead to a new fiscal year, our outlook for sustained growth is supported by increasing demand for better learning experiences as evidenced by robust RFP activity both in North America and internationally. With a strong balance sheet, we are pursuing a strategy to press our advantage by making significant investments in both direct and indirect go-to-market strategies and enhancements to our platform that will bring even greater value to educators, employers, and learners.”

Fourth Quarter Fiscal 2022 Financial Highlights

  • Total revenue of $41.4 million, up 22% from the comparative period in the prior year.
  • Subscription and support revenue of $36.2 million, an increase of 19% over the prior year.
  • Annual Recurring Revenue2 increased by $25.0 million or 19% year-over-year to $154.5 million as at Jan 31, 2022, compared with $129.5 million as at January 31, 2021.
  • Continued success retaining and expanding revenue from the existing customer base, with Net Revenue Retention2 of 107% at year end, consistent with the prior year.
  • Gross Profit of $26.5 million (64.0% of revenue), an increase of 34% from Gross Profit of $19.8 million (58.5% of revenue) in the prior year.
  • Adjusted Gross Profit1 of $26.5 million (Adjusted Gross Margin1 of 64.1%), an increase of 34% from Adjusted Gross Profit of $19.9 million (Adjusted Gross Margin of 58.5%) in the prior year.
  • Adjusted EBITDA1 loss of $0.4 million, compared to Adjusted EBITDA loss of $1.0 million for the comparative period in the prior year.
  • Loss for the period decreased to $3.9 million, compared with a loss for the period of $11.2 million in the same quarter of the prior year. The year-over-year improvement was mainly attributable to an increase in gross profit and the fact the prior year period included an $8.1 million loss on redeemable convertible preferred shares.
  • Cash flow used in operating activities of $4.0 million, versus $1.3 million in the prior year, and negative Free Cash Flow1 of $4.1 million, compared with negative $1.6 million in the prior year.
  • In November 2021, completed initial public offering (IPO) for total gross proceeds of $120.1 million (C$150.0 million), $69.8 million (C$88 million) to D2L after factoring the secondary offering and underwriter commissions.
  • Strong balance sheet at year end, with cash of $114.7 million and no debt.

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

Fourth Quarter Business & Operating Highlights

  • D2L’s customer list grew to 1,150 at January 31, 2022 (from over 970 as at January 31, 2021) representing a broad cross-section of colleges, universities, K-12 school districts and companies in more than 40 countries.
  • Appointed seasoned technology executive Stephen Laster as Chief Operating Officer, to lead D2L’s product and services teams focusing on building an extraordinary client experience and a learning platform that helps people achieve more than they dreamed possible.
  • Built on progress with the agreement signed in fall 2021 with the State University of New York (SUNY) to make D2L Brightspace available to its full network of campuses, with 57 campuses already electing to migrate, allowing faculty and approximately 370,000 students with access to a single, flexible and streamlined learning innovation platform.
  • Signed a new customer agreement with the University of Phoenix to help support their upcoming direct-assessment, competency-based education programs.
  • Signed a new customer agreement with Pittsburgh Technical College to deliver D2L Brightspace to more than 1,500 learners across more than 30 associate, bachelor’s and certificate programs.
  • Signed a new customer agreement with University of Cape Town, the oldest higher education institution in South Africa, to deliver D2L Brightspace to nearly 29,000 students who come from over 100 countries across the globe.
  • Signed a new customer agreement with British Columbia’s Ministry of Education to help deliver D2L Brightspace’s exceptional, flexible learning experiences for up to 670,000 K-12 learners across the province. 
  • Signed a new customer agreement with the University of Florida’s Lastinger Center to improve outcomes across three K-12 education milestones and grow its US professional learning reach.
  • Renewed existing customer agreements with the University System of Georgia and Minnesota State University to continue delivering exceptional learning experiences across these systems.
  • Signed a new customer agreement with the International Sports Sciences Association, a leading fitness and exercise certification association, to train and certify professional fitness trainers, personal trainers, strength and conditioning coaches, and nutritionists.
  • Signed a new customer agreement with Supporting Families Together Association, an organization that provides services and supports to member agencies positively impacting children, parents and childcare providers, to help deliver employee training and continuing education programs.
  • Received the following awards and recognition: the Glassdoor Employees’ Choice Award, which recognizes the Best Places to Work in 2022 in Canada; the 2021 Candidate Experience Award for employers in the small employee category and the number four employer overall in North America – ahead of other major brands and companies; and named as one of Canada’s Top Employers for Young People in 2021.

Fourth Quarter and Full Year Fiscal 2022 Financial Results
        
Selected Financial Measures

          
 Three months ended January 31, Fiscal year ended January 31,
 2022 2021 ChangeChange 2022 2021 ChangeChange
 $$$% $$$%
Subscription & Support Revenue36,191 30,290 5,901 19.5% 134,688 112,916 21,772 19.3%
Professional Services & Other Revenue5,215 3,646 1,569 43.0% 17,192 13,456 3,736 27.8%
Total Revenue41,406 33,936 7,470 22.0% 151,880 126,372 25,508 20.2%
          
Gross Profit26,516 19,841 6,675 33.6% 87,947 77,080 10,867 14.1%
Adjusted Gross Profit 126,544 19,864 6,680 33.6% 96,146 77,158 18,988 24.6%
Adjusted Gross Margin164.1%58.5%   63.3%61.1%  
Loss for the period(3,860)(11,167)7,307 65.4% (97,653)(41,496)(56,157)-135.3%
Adjusted EBITDA (loss)1(433)(1,021)588 57.6% 136 6,020 (5,884)-97.7%
Cash Flows from (used in) Operating Activities(3,965)(1,343)(2,622)-195.2% 112 16,808 (16,696)-99.3%
Free Cash Flow1(4,061)(1,604)(2,457)-153.2% (684)15,132 (15,186)-100.4%

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

Financial Outlook

D2L is initiating financial guidance for fiscal 2023 (12 months ended January 31, 2023) as a supplement to the target operating model in the Management’s Discussion and Analysis for the year ended January 31, 2022, which reflects the operating levels the Company expects to achieve by fiscal 2025 and maintain thereafter. Consistent with the expectations outlined during its IPO, D2L plans to make significant growth investments in fiscal 2023, including investing in sales and marketing go-to-market activities, and product development, to capitalize on the growth opportunity available in its addressable market. Specifically, for fiscal 2023 the Company is issuing the following guidance:

  • Total revenue in the range of $179 million to $182 million, implying growth of 18% to 20% over fiscal 2022; and
  • Adjusted EBITDA loss in the range of $12 million to $14 million.

Conference Call & Webcast
D2L management will host a conference call on Tuesday, March 29, 2022 at 8:30 am ET to discuss its fourth quarter fiscal 2022 financial results.

Date: Tuesday, March 29, 2022
Time: 8:30 a.m. (ET)
Dial in number: Canada: 1 (226) 828-7575 or 1 (833) 950-0062
  United States: 1 (844) 200-6205
  Access code: 856621
Webcast: A live webcast will be available at ir.d2l.com/events-and-presentations/events/
Replay: Canada: 1 (226) 828-7578 or US: 1 (866) 813-9403
  (replay code: 992139)
  Available until April 5, 2022

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, information regarding: new, renewed and expanded customer relationships; and the statements under the heading “Financial Outlook”.

Forward-looking information, including the Company’s guidance for fiscal 2023 total revenue and Adjusted EBITDA, 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 ability to seek out, enter into and successfully integrate acquisitions, including the acquisition of Bayfield Design Inc.; 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 Company’s ability to retain key personnel; 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, assumptions and other factors, including but not limited to the risks identified in the Company’s annual management’s discussion and analysis or in the subsequently-filed annual information form for fiscal 2022, in each case as filed under the Company’s profile on SEDAR at www.sedar.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 clients all over the world, D2L is supporting millions of people learning online and in person. Our growing global workforce is dedicated to making the best learning products to leave the world better than they found it. Learn more about D2L for K-12, higher education and businesses at www.D2L.com.

For further information, please contact:
Craig Armitage, Investor Relations
IR@D2L.com
(416) 347-8954

D2L Inc.
Consolidated Balance Sheets
(In U.S. dollars)

As at January 31, 2022 and 2021

                         January 31, 2022January 31, 2021
Assets
   
Current assets:  
 Cash and cash equivalents$114,675,495 $45,219,561 
 Trade and other receivables 26,155,906  14,620,383 
 Uninvoiced revenue 2,253,146  3,090,154 
 Prepaid expenses 7,930,462  5,355,166 
 Deferred commissions 3,711,334  3,441,396 
   154,726,343  71,726,660 
    
Non-current assets:  
 Restricted cash   84,383 
 Other receivables   207,018 
 Prepaid expenses 178,585  1,079,974 
 Deferred income taxes 139,101  237,809 
 Right-of-use assets 1,323,017  2,932,487 
 Property and equipment 2,323,708  2,917,308 
 Deferred commissions 7,510,242  6,174,607 
 Intangible assets 5,537,024  340,719 
 Goodwill 7,474,647   
   
Total assets$179,212,667 $85,700,965 
    
Liabilities and Shareholders' Deficiency
    
Current liabilities:  
 Accounts payable and accrued liabilities$24,340,115 $21,779,773 
 Deferred revenue 82,915,871  68,679,553 
 Lease liabilities 1,199,013  2,092,319 
 Provisions 3,265,449   
   111,720,448  92,551,645 
    
Non-current liabilities:  
 Deferred income taxes 418,403  232,915 
 Lease liabilities 693,921  2,021,425 
 Redeemable convertible preferred shares   178,183,535 
   1,112,324  180,437,875 
   112,832,772  272,989,520 
Shareholders' equity (deficiency):  
 Share capital 354,277,986  217,633 
 Additional paid-in capital 41,686,794  45,285,371 
 Accumulated other comprehensive loss (3,330,708) (4,190,459)
 Deficit (326,254,177) (228,601,100)
  66,379,895  (187,288,555)
Commitments and contingencies  
Related party transactions  
Subsequent events  
    
Total liabilities and shareholders' equity (deficiency)$179,212,667 $85,700,965 

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

Years ended January 31, 2022 and 2021

   2022  2021 
    
Revenue:  
 Subscription and support$134,688,176 $112,916,372 
 Professional services and other 17,191,887  13,455,856 
   151,880,063  126,372,228 
Cost of revenue:  
 Subscription and support 43,962,815  39,284,128 
 Professional services and other 19,970,476  10,008,565 
   63,933,291  49,292,693 
    
Gross profit 87,946,772  77,079,535 
    
Expenses:  
 Sales and marketing 65,404,852  32,293,778 
 Research and development 46,599,481  30,816,826 
 General and administrative 50,656,674  12,188,037 
   162,661,007  75,298,641 
    
Income (loss) from operations (74,714,235) 1,780,894 
    
Interest and other income (expense):  
 Interest expense (295,175) (233,998)
 Interest income 170,143  83,121 
 Other income -  18,732 
 Loss on redeemable convertible preferred shares (22,028,109) (43,183,531)
 Foreign exchange gain (loss) (949,755) 228,617 
   (23,102,896) (43,087,059)
    
Loss before income taxes (97,817,131) (41,306,165)
    
Income taxes expense (recovery):  
 Current 245,446  293,848 
 Deferred (409,500) (104,131)
   (164,054) 189,717 
    
Loss for the year (97,653,077) (41,495,882)
    
Other comprehensive income (loss):  
 Foreign currency translation income (loss) 859,751  (213,879)
Comprehensive loss$(96,793,326)$(41,709,761)
    
Loss per share – basic$(2.88)$(1.57)
Loss per share – diluted$(2.88)$(1.57)
   
Weighted average number of common shares – basic 33,918,112  26,467,458 
Weighted average number of common shares – diluted 33,918,112  26,467,458 

D2L Inc.
Consolidated Statements of Shareholders' Equity (Deficiency)
(In U.S. dollars)

Years ended January 31, 2022 and 2021

 Share CapitalAdditional paid-in Accumulated other DeficitTotal
 SharesAmountcapitalcomprehensive loss
  
       
Balance, January 31, 202026,467,193$204,587 $44,534,317 $(3,976,580)$(187,105,218)$(146,342,894)
Issuance of Class O common shares on exercise of options1,575 13,046  (4,920)     8,126 
Stock-based compensation   755,974      755,974 
Other comprehensive loss     (213,879)   (213,879)
Loss for the year       (41,495,882) (41,495,882)
       
Balance, January 31, 202126,468,768$217,633 $45,285,371 $(4,190,459)$(228,601,100)$(187,288,555)
Issuance of Class O common shares on exercise of options1,543,462 17,932,504  (6,502,427)     11,430,077 
Stock-based compensation   68,821,936      68,821,936 
Conversion of Series A and Series B Preferred shares, Class A common shares, Class O common shares and Class T shares to Subordinate Voting Shares and Multiple Voting Shares19,381,248 266,034,420  (65,822,119)     200,212,301 
Issuance of Subordinate Voting Shares upon IPO5,489,757 75,069,071        75,069,071 
Share issuance costs (5,229,322)       (5,229,322)
Issuance of Subordinate Voting                
Shares on exercise of options29,267 253,680  (95,967)     157,713 
                 
Other comprehensive income     859,751    859,751 
Loss for the year      (97,653,077) (97,653,077)
Balance, January 31, 202252,912,502$354,277,986 $41,686,794 $(3,330,708)$(326,254,177)$66,379,895 
       


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

Years ended January 31, 2022 and 2021

    2022  2021 
Operating activities:  
 Loss for the year$(97,653,077)$(41,495,882)
 Items not involving cash:  
  Depreciation of property and equipment 1,505,476  1,248,324 
  Depreciation of right-of-use assets 1,570,267  1,869,832 
  Amortization of intangible assets 423,396  17,727 
  Interest expense on lease liabilities 161,866  225,230 
  Fair value loss on redeemable convertible preferred shares 22,028,109  43,183,531 
  Stock-based compensation 68,821,936  755,974 
  Gain on disposal of property and equipment ––  (3,331)
  Loss on disposal of ROU assets 14,543  –– 
  Net interest income, less lease liability interest (36,834) (74,353)
  Income tax expense (recovery) (164,054) 189,717 
 Changes in operating assets and liabilities:  
  Trade and other receivables (11,440,504) (102,621)
  Uninvoiced revenue 881,396  (2,479,634)
  Prepaid expenses (4,829,078) (2,098,667)
  Deferred commissions (1,674,427) (2,129,580)
  Accounts payable and accrued liabilities 2,815,053  5,899,196 
  Provisions 3,265,449  

 
  Deferred revenue 14,790,210  11,652,805 
  ROU assets and liabilities (6,880) 121,498 
 Interest received 170,143  83,121 
 Interest paid (133,309) (8,768)
 Income taxes paid (397,430) (46,835)
 Cash flows from operating activities 112,251  16,807,284 
     
Financing activities:  
 Payment of lease liabilities (2,349,105) (2,146,651)
 Proceeds from exercise of stock options 11,587,790  8,126 
 Borrowings on credit facility 7,000,003   
 Repayments to credit facility (7,000,003)  
 Proceeds from issuance of Subordinate Voting Shares upon IPO 75,069,071   
 Share issuance costs (5,229,322)  
 Net proceeds from Secondary Offering 42,984,983   
 Remittance of taxes withheld on Secondary Offering (34,996,572)  
 Secondary Offering funds applied towards Shareholder Loan on behalf of Shareholder (7,988,411)  
 Cash flows from (used in) financing activities 79,078,434  (2,138,525)
     
Investing activities:  
 Purchase of property and equipment (795,958) (1,676,196)
 Issuance of shareholder loan (16,143,854)  
 Repayment of shareholder loan 12,290,894   
 Acquisition of business from related party (5,566,118)  
 Cash flows used in investing activities (10,215,036) (1,676,196)
     
Effect of exchange rate changes on cash, cash equivalents and restricted cash 395,902  843,292 
Increase in cash, cash equivalents and restricted cash 69,371,551  13,835,855 
Cash, cash equivalents and restricted cash, beginning of year 45,303,944  31,468,089 
Cash, cash equivalents and restricted cash, end of year$114,675,495 $45,303,944 

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 and non-IFRS ratios including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow and Free Cash Flow Margin. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Non-IFRS financial measures and non-IFRS ratios 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 and key performance indicators 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), as adjusted for changes in the fair value of redeemable preferred shares, stock-based compensation, foreign exchange gains and losses, transaction-related expenses and other income and losses. Adjusted EBITDA Margin is calculated as Adjusted EBITDA expressed as a percentage of total revenue.

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

(in thousands of U.S. dollars, except for percentages)
Three months ended
January 31
 Fiscal year ended
January 31
 2022 2021  2022 2021 
Loss for the period (3,860) (11,167)  (97,653)(41,496)
Loss on redeemable convertible preferred shares- 8,123  22,028 43,184 
Stock-based compensation(1)1,662 331  68,822 756 
Foreign exchange loss (gain)502 405  950 (229)
Transaction-related costs(2)737 347  2,529 347 
Other (income) loss (3)- (19) - (19)
Interest income net of interest expense33 50  125 151 
Income tax expense (recovery)(544)63  (164)190 
Depreciation and amortization1,037 846  3,499 3,136 
Adjusted EBITDA (433) (1,021)  136  6,020 
Revenue41,406 33,936  151,880 126,372 
Adjusted EBITDA Margin-1.0%-3.0% 0.1%4.8%

(1) In Fiscal 2022, these expenses were impacted by non-cash, stock-based compensation (as discussed in Note 15 of the Company’s consolidated audited financial statements) which affects the year-over-year comparisons.
(2) These costs include professional, legal, consulting and accounting fees incurred in connection with the IPO, which closed on November 3, 2021 and related other activities, and are not considered indicative of continuing operations. These costs did not meet the criteria for capitalization and thus were expensed in the Company’s consolidated statements of comprehensive loss. Share issuance costs that met the criteria for capitalization are described in Note 13(b) of the Company’s consolidated audited financial statements.
(3) Represents gains recognized from subleasing activities and are considered non-recurring and not reflective of continuing operations.

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.

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

 Three months ended
January 31
 Fiscal year ended
January 31
(in thousands of U.S. dollars, except for percentages)2022 2021  2022 2021 
Gross profit for the period26,516 19,841  87,947 77,080 
Stock based compensation28 23  8,199 78 
Adjusted Gross Profit26,544 19,864  96,146 77,158 
Revenue41,406 33,936  151,880 126,372 
Adjusted Gross Margin64.1%58.5% 63.3%61.1%
          

Free Cash Flow and Free Cash Flow Margins

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.

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

 Three months ended
January 31
 Fiscal year ended
January 31
(in thousands of U.S. dollars, except for percentages)2022 2021  2022 2021 
Cash flow (used in) from operating activities(3,965)(1,343) 112 16,808 
Purchase of property and equipment,net of proceeds on disposal(96)(261) (796)(1,676)
Free Cash Flow(4,061)(1,604) (684)15,132 
Revenue41,406 33,936  151,880 126,372 
Free Cash Flow Margin-9.8%-4.7% -0.5%12.0%
          

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: 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 an 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. Annual recurring revenue as at January 31, 2022 was $154.5 million ($129.5 million as at January 31, 2021).
  • Net Revenue Retention Rate: We define Net Revenue Retention Rate for a fiscal year by considering all customers at the beginning of a fiscal year, and dividing our annual subscription revenue attributable to this group of customers at the end of the fiscal year, by the annual subscription revenue attributable to this group of customers in the prior fiscal year. By implication, this ratio, expressed as a percentage, excludes any sales from new customers acquired during the fiscal year, but does include incremental sales from the existing base of customers during the fiscal year being measured. We believe that measuring the ability to retain and expand revenue generated from the existing customer base is a key indicator of the long-term value that we provide to customers. Net Revenue Retention Rate for the fiscal year ended January 31, 2022 was 107% (107% for the fiscal year ended January 31, 2021).


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