DTOL D2L Inc

D2L Inc. (TSX: DTOL) (“D2L” or the “Company”), a global learning technology leader, today announced financial results for its fiscal 2022 third quarter ended October 31, 2021.

“We’re having a strong year at D2L, and we experienced continued momentum across the business during the third quarter,” said John Baker, President and CEO of D2L. “Our results reflect an increase in new customers and expanded relationships with existing customers – early returns from our investments in sales – as well as sustained adoption of digital learning experiences across our core markets. Our year-to-date performance puts us on track to achieve approximately 20% revenue growth for the full year.”

Mr. Baker added: “In our more than 20-year history, the market backdrop and opportunity have never been stronger. D2L’s mission to transform the way the world learns is also more vital than ever, as we work with educators to tackle learning loss from the pandemic and support employers to meet the pressing need for upskilling in the workforce. With new growth capital from the recent IPO, we are executing on an expanded strategy to press our advantage and become the category leader in learning.”

Third Quarter Fiscal 2022 Financial Highlights (All amounts are in U.S. dollars unless otherwise indicated)

• Annual Recurring Revenue1 increased by $25.0 million or 20% year-over-year to $149.6 million as at October 31, 2021, compared with $124.6 million as at October 31, 2020.
• Revenue of $39.1 million, up 18% from the comparative period in the prior year.
• Subscription and support revenue of $34.9 million, an increase of 20% over the same period in the prior year.
• Adjusted Gross Profit1 of $25.1 million (64.2% of revenue), an increase of 30% from Adjusted Gross Profit of $19.3 million (58.1% of revenue) in the prior year.
• Gross Profit of $17.0 million, compared with $19.3 million in the prior year. Gross profit in the current period included one-time, non-cash stock-based compensation expenses of $8.1 million related to the unwinding of an Employee Stock Trust as part of the Company’s initial public offering (“IPO”).
• Adjusted EBITDA1 loss of ($0.3) million, compared to Adjusted EBITDA of $2.1 million for the comparative period in the prior year.
• Net loss of $41.5 million, compared with a net loss of $28.1 million in the same quarter of the prior year. The higher net loss mainly reflects one-time, non-cash stock-based compensation expenses of $65.8 million related to the unwinding of the Employee Stock Trust. These were partly offset by a one-time fair value gain of $25.9 million on the Company’s redeemable convertible preferred shares, also related to the IPO.
• Cash flow from operating activities of $3.5 million, versus $10.1 million in the prior year, and Free Cash Flow1 of $3.2 million, compared with $9.5 million in the prior year.
• Subsequent to quarter end, D2L completed its IPO for total gross proceeds of C$150.0 million (C$88 million to D2L after factoring the secondary offering and underwriter commissions).

1 Please refer to “Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures” section of this press release.

Third Quarter Fiscal 2022 Business & Operating Highlights

• Signed a new customer agreement with the State University of New York (SUNY), the largest comprehensive education system in the U.S., to deliver the D2L Brightspace learning environment to 400,000 learners across SUNY’s 64 colleges and universities.
• Signed a new customer agreement with the University of Groningen, one of the oldest in the region and one of the most prestigious in the world, serving more than 34,000 students. D2L Brightspace was selected to replace a legacy learning platform. D2L now supports >40% of the top universities across the Netherlands.
• Signed a new customer agreement with Lee Valley Tools, a Canadian business serving customers around the world, to help onboard, train and engage employees across the country using D2L Brightspace.
• Expanded a customer agreement with Energy Safety Canada, the national safety association for Canada’s oil and gas industry. D2L Brightspace will be used to help develop and deliver health and safety training courses to ensure workers are ready to work safely.
• Acquired exclusive course content, development tools, and talent from Bayfield Design, a provider of digital learning courseware, expanding cross-sell opportunities within the Company’s K-12 customer base.
• Expanded a strategic partnership with Ellucian to better serve customers with an integrated platform that unites people, processes, data and technology to create highly personalized learning experiences.  
• D2L Wave welcomed University of Manitoba, McMaster University, the University of Guelph and York University as academic partners. D2L Wave provides working professionals with opportunities to upskill and reskill through access to an online catalog of high-quality education options from leading educational institutions. 
• Launched a new Parent and Guardian App to enhance learning collaboration post-pandemic – making it easier than ever for teachers and families to connect, stay informed, and receive notifications to support learning. 
• Subsequent to quarter end, signed a new customer agreement with British Columbia’s Ministry of Education to help deliver Brightspace’s exceptional, flexible learning experiences for up to 670,000 learners in K-12 across the province. 

Third Quarter Fiscal 2022 Financial Results

Selected Financial Measures

	Three months ended October 31,								Nine months ended October 31,
	2021		2020		Change		Change		2021		2020		Change		Change
	$		$		$		%		$		$		$		%
Subscription & Support Revenue	34,930		29,219		5,711		19.5%		98,497		82,626		15,871		19.2%
Professional Services & Other Revenue	4,214		3,953		261		6.6%		11,977		9,810		2,167		22.1%
Total Revenue	39,144		33,172		5,972		18.0%		110,474		92,436		18,038		19.5%
Gross Profit	17,016		19,261		(2,245)		-11.7%		61,431		57,239		4,192		7.3%
Adjusted Gross Profit 1	25,125		19,278		5,847		30.3%		69,602		57,294		12,308		21.5%
Adjusted Gross Margin1	64.2%		58.1%						63.0%		62.0%
Net Income (loss)	(41,543)		(28,081)		(13,462)		47.9%		(93,793)		(30,329)		(63,464)		-209.3%
Adjusted EBITDA (loss)1	(291)		2,102		(2,393)		-113.8%		631		7,041		(6,410)		-91.0%
Cash Flow from Operating Activities	3,526		10,120		(6,594)		-65.2%		4,077		18,151		(14,074)		-77.5%
Free Cash Flow1	3,200		9,469		(6,269)		-66.2%		3,377		16,736		(13,359)		-79.8%

1 Please refer to “Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures” section of this press release.

Conference Call & WebcastD2L management will host a conference call on Thursday, December 9, 2021 at 8:30 am ET to discuss its third quarter fiscal 2022 financial results.

Date:		Thursday, December 9, 2021
Time:		8:30 a.m. (ET)
Dial in number:		Canada: 1 (226) 828-7575 or 1 (833) 950-0062 United States: 1 (844) 200-6205Access code: 097764
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: 991447) Available until December 27, 2021

Forward-Looking InformationThis press release includes statements containing “forward-looking information” within the meaning of applicable securities laws. Forward-looking information may relate to our future financial outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. 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. The Company has based the forward-looking information on its current expectations and projections about future events and financial trends that it believes might affect its financial condition, results of operations, business strategy and financial needs.

This forward-looking information includes, but is not limited to, statements regarding industry trends; our growth rates and growth strategies; addressable markets for our products and solutions; expansion of our product offerings; expectations regarding the growth of our customer base; expectations regarding our revenue and revenue generation potential; our business plans and strategies; and our competitive position in our industry.

Forward-looking information is based on certain assumptions 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 generate revenue 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 Bayfield Acquisition; 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; and the Company’s ability to retain key personnel.

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. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which it operates are consistent with the forward-looking information contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. 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 factors described in the “Risk Factors” section of the Company’s final long form prospectus dated October 27, 2021. 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. 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. Condensed Consolidated Interim Balance Sheets (In U.S. dollars)

As at October 31, 2021 and January 31, 2021 (Unaudited)

		October 31, 2021			January 31, 2021
Assets
Current assets:
	Cash and cash equivalents	$	42,855,903		$	45,219,561
	Trade and other receivables		28,637,213			14,620,383
	Uninvoiced revenue		1,690,331			3,090,154
	Prepaid expenses		5,403,177			5,355,166
	Deferred commissions		3,737,876			3,441,396
	Shareholder loan receivable		16,361,988			–
			98,686,488			71,726,660
Non-current assets:
	Restricted cash		–			84,383
	Other receivables		–			207,018
	Prepaid expenses		188,718			1,079,974
	Deferred income taxes		162,539			237,809
	Right-of-use assets		1,732,711			2,932,487
	Property and equipment		2,728,885			2,917,308
	Deferred commissions		6,706,555			6,174,607
	Intangible assets		7,938,950			340,719
	Goodwill		4,939,896			–
Total assets		$	123,084,742		$	85,700,965
Liabilities and Shareholders' Deficiency
Current liabilities:
	Accounts payable and accrued liabilities	$	22,792,245		$	21,779,773
	Deferred revenue		89,517,304			68,679,553
	Lease liabilities		1,704,238			2,092,319
	Consideration payable		9,041,810			–
	Redeemable convertible preferred shares		200,211,647			–
			323,267,244			92,551,645
Non-current liabilities:
	Deferred income taxes		416,037			232,915
	Lease liabilities		784,709			2,021,425
	Redeemable convertible preferred shares		–			178,183,535
			1,200,746			180,437,875
			324,467,990			272,989,520
Shareholders' deficiency:
	Share capital:
	Class A common shares		1			1
	Class O common shares		18,150,136			217,632
	Additional paid-in capital		105,942,854			45,285,371
	Accumulated other comprehensive loss		(3,081,902	)		(4,190,459	)
	Deficit		(322,394,337	)		(228,601,100	)
			(201,383,248	)		(187,288,555	)
Borrowings on credit facility Commitments and contingencies
Related party transactions
Subsequent events
Total liabilities and shareholders' deficiency		$	123,084,742		$	85,700,965

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

For the three and nine months ended October 31, 2021 and 2020 (Unaudited)

		Three months ended October 31				Nine months ended October 31
		2021		2020		2021		2020
Revenue:
	Subscription and support	34,929,904		29,219,116		98,496,847		82,626,402
	Professional services and other	4,213,973		3,953,043		11,977,090		9,809,505
		39,143,877		33,172,159		110,473,937		92,435,907
Cost of revenue:
	Subscription and support	11,471,144		10,901,699		32,813,759		28,306,474
	Professional services and other	10,656,842		3,009,078		16,229,651		6,890,992
		22,127,986		13,910,777		49,043,410		35,197,466
Gross profit		17,015,891		19,261,382		61,430,527		57,238,441
Expenses:
	Sales and marketing	31,285,484		7,537,595		52,479,274		22,380,325
	Research and development	17,826,481		7,534,606		35,720,869		22,220,285
	General and administrative	35,141,364		3,054,930		44,075,555		8,312,041
		84,253,329		18,127,131		132,275,698		52,912,651
Income (loss) from operations		(67,237,438	)	1,134,251		(70,845,171	)	4,325,790
Interest and other income (expense):
	Interest expense	(58,729	)	(55,652	)	(234,572	)	(175,167	)
	Interest income	120,860		14,947		142,966		74,349
	Gain (loss) on redeemable convertible preferred shares	25,896,597		(28,661,178	)	(22,028,112	)	(35,061,178	)
	Foreign exchange gain (loss)	(207,129	)	(650,184	)	(447,901	)	633,755
		25,751,599		(29,352,067	)	(22,567,619	)	(34,528,241	)
Loss before income taxes		(41,485,839	)	(28,217,816	)	(93,412,790	)	(30,202,451	)
Income taxes (recovery):
	Current	7,112		182,378		123,434		256,480
	Deferred	50,950		(319,488	)	257,013		(129,942	)
		58,062		(137,110	)	380,447		126,538
Loss for the period		(41,543,901	)	(28,080,706	)	(93,793,237	)	(30,328,989	)
Other comprehensive income (loss):
	Foreign currency translation income (loss)	(68,413	)	1,036,369		1,108,557		(148,900	)
Comprehensive loss		(41,612,314	)	(27,044,337	)	(92,684,680	)	(30,477,889	)
Loss per share – basic		(1.48	)	(1.06	)	(3.37	)	(1.15	)
Loss per share – diluted		(1.48	)	(1.06	)	(3.37	)	(1.15	)
Weighted average number of common shares – basic		27,997,960		26,467,265		27,794,246		26,467,217
Weighted average number of common shares – diluted		27,997,960		26,467,265		27,794,246		26,467,217

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

For the nine months ended October 31, 2021 and 2020 (Unaudited)

	Class ACommon Shares					Class OCommon Shares					Additionalpaid-incapital			Accumulatedothercomprehensiveloss			Deficit			Total
	Shares		Amount			Shares		Amount
Balance, January 31, 2021	26,447,059		$	1		21,709		$	217,632		$	45,285,371		$	(4,190,459	)	$	(228,601,100	)	$	(187,288,555	)
Issuance of Class O common shares on exercise of options	–		–			1,543,462		17,932,504			(6,502,427		)	–			–			11,430,077
Stock-based compensation	–		–			–		–			67,159,910			–			–			67,159,910
Other comprehensive loss	–		–			–		–			–			1,108,557			–			1,108,557
Loss for the period	–		–			–		–			–			–			(93,793,237		)	(93,793,237		)
Balance, October 31, 2021	26,447,059		$	1		1,565,171		$	18,150,136		$	105,942,854		$	(3,081,902	)	$	(322,394,337	)	$	(201,383,248	)
Balance, January 31, 2020	26,447,059		$	1		20,134		$	204,586		$	44,534,317		$	(3,976,580	)	$	(187,105,218	)	$	(146,342,894	)
Stock-based compensation	–		–			–		–			425,156			–			–			425,156
Other comprehensive income	–		–			–		–			–			(148,900		)	–			(148,900		)
Loss for the period	–		–			–		–			–			–			(30,328,989		)	(30,328,989		)
Balance, October 31, 2020	26,447,059		$	1		20,134		$	204,586		$	44,959,473		$	(4,125,480	)	$	(217,434,207	)	$	(176,395,627	)

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

For the nine months ended October 31, 2021 and 2020 (Unaudited)

			2021		2020
Operating activities:
	Loss for the period		(93,793,237	)	(30,328,989	)
	Items not involving cash:
		Depreciation of property and equipment	1,074,877		918,230
		Depreciation of right-of-use assets	1,168,675		1,358,322
		Amortization of intangible assets	218,269		13,122
		Interest on lease liabilities	160,163		174,562
		Interest on Shareholder Loan	(105,851	)	–
		Fair value loss on redeemable convertible preferred shares	22,028,112		35,061,178
		Deferred income tax expense (recovery)	257,013		(129,942	)
		Stock-based compensation	67,159,910		425,156
	Changes in operating assets and liabilities:
		Trade and other receivables	(13,521,310	)	(4,703,001	)
		Uninvoiced revenue	1,447,632		(549,864	)
		Prepaid expenses	(2,118,343	)	(1,428,727	)
		Deferred commissions	(699,259	)	(2,186,137	)
		Accounts payable and accrued liabilities	491,557		4,127,719
		Deferred revenue	20,316,131		15,442,844
		Lease assets and liabilities	(6,880	)	(43,484	)
	Cash flows from operating activities		4,077,459		18,150,989
Financing activities:
	Payment of lease liabilities		(1,781,057	)	(1,756,980	)
	Proceeds from issuance of common shares		11,430,077		–
	Borrowings on credit facility		7,000,003		–
	Repayments to credit facility		(7,000,003	)	–
	Cash flows from (used in) financing activities		9,649,020		(1,756,980	)
Investing activities:
	Purchase of property and equipment		(699,897	)	(1,414,811	)
	Issuance of shareholder loan		(16,498,329	)	–
	Repayment of shareholder loan		242,191		–
	Acquisition of business from related party		(645,844	)	–
	Cash flows used in investing activities		(17,601,879	)	(1,414,811	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			1,427,359		203,177
Increase (decrease) in cash, cash equivalents and restricted cash			(2,448,041	)	15,182,375
Cash, cash equivalents and restricted cash, beginning of period			45,303,944		31,468,089
Cash, cash equivalents and restricted cash, end of period			42,855,903		46,650,464
Supplemental disclosure of cash flows:
	Interest paid		16,303		–
	Income taxes paid		393,484		339,761

 

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

The information presented in this press release refers to certain non-IFRS financial measures including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, and Free Cash Flow, as well as key performance indicators used by management, such as Annual Recurring Revenue and Net Revenue Retention Rate. These measures are not recognized measures under International Financial Reporting Standards (“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 companies. 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 and key performance indicators in the evaluation of issuers. The Company’s management also uses non-IFRS financial measures and key performance indicators in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and assess our ability to meet our capital expenditures and working capital requirements.

Key Performance IndicatorsManagement uses a number of metrics, including the key performance indicators identified below, to help us evaluate the business, measure performance, identify trends affecting the business, formulate business plans and make strategic decisions. D2L’s key performance indicators are not measures calculated in accordance with IFRS and may be calculated in a manner different than similar key performance indicators used by other companies. Since some of these metrics do not have comparable IFRS measures, the Company is unable to provide quantitative reconciliations of these measures to IFRS measures. 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: D2L defines 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. D2L’s calculation of Annual Recurring Revenue assumes that customers will renew their contractual commitments as those commitments come up for renewal. The Company believes Annual Recurring Revenue provides a reasonable, real-time measure of performance in a subscription-based environment and provides visibility for potential growth to cash flows. The Company believes that an increasing Annual Recurring Revenue indicates the continued strength in the expansion of the business, and will continue to be a focus on a go-forward basis. Annual recurring revenue as at October 31, 2021 was $149.6 million ($129.5 million as at January 31, 2021).
• Net Revenue Retention Rate: D2L defines Net Revenue Retention Rate for a fiscal year by considering all customers at the beginning of a fiscal year, and dividing its 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 added to the existing base of customers during the fiscal year being measured. The Company believes that measuring the ability to retain and expand revenue generated from the existing customer base is a key indicator of the long-term value D2L provides to its customers. Net Revenue Retention Rate for the fiscal year ended January 31, 2021 was 107% (103% for the fiscal year ended January 31, 2020).

Adjusted EBITDAAdjusted 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, and transaction-related expenses.

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 October 31								Nine months ended October 31
		2021		2020					2021		2020
Loss for the period		(41,543	)	(28,081		)			(93,793	)	(30,329		)
Loss (gain) on redeemable convertible preferred shares		(25,897	)	28,661					22,028		35,061
Stock-based compensation(1)		66,364		204					67,160		425
Foreign exchange loss (gain)		207		650					448		(634		)
Transaction-related costs(2)		(449	)	-					1,854		-
Interest income net of interest expense		(62	)	41					92		101
Income tax expense		58		(137		)			380		127
Depreciation and amortization		1,031		764					2,462		2,290
Adjusted EBITDA		(291	)	2,102					631		7,041
Adjusted EBITDA Margin		-0.7	%	6.3		%			0.6	%	7.6		%
________________________

(1)   In the three and nine month periods ended October 31, 2021, these expenses were impacted by non-cash stock-based compensation (as discussed in Note 9 of the condensed consolidated interim financial statements) which affects the year-over-year comparisons.(2)   These expenses include professional, legal, consulting and accounting fees incurred in connection with the Company’s Offering, which closed on November 3, 2021 and related other activities, and are considered non-recurring and not indicative 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 October 31					Nine months ended October 31
(in thousands of U.S. dollars, except for percentages)	2021		2020			2021		2020
Gross profit for the period	17,016		19,261			61,431		57,239
Stock based compensation	8,109		17			8,171		55
Adjusted Gross Profit	25,125		19,278			69,602		57,294
Adjusted Gross Margin	64.2	%	58.1	%		63.0	%	62.0	%

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 endedOctober 31					Nine months ended October 31
(in thousands of U.S. dollars, except for percentages)	2021		2020			2021		2020
Cash flow from operating activities	3,526		10,120			4,077		18,151
Purchase of property and equipment, net of proceeds on disposal	(326	)	(651	)		(700	)	(1,415		)
Free Cash Flow	3,200		9,469			3,377		16,736
Free Cash Flow Margin	8.2	%	28.5	%		3.1	%	18.1		%