Waterloo Region edtech company D2L began trading on the Toronto Stock Exchange (TSX) today after raising CDN$150 million through an initial public offering (IPO).
The company, which trades under the ticker symbol DTOL, had initially hoped to raise CDN$200 million on a price range of $19 to $21 per share but, after testing market interest, scaled that back to $17 per share, for a total raise of CDN$150 million.
Asked about the reduction, founder and CEO John Baker told Tech News that the overall IPO outcome was positive and that he’s focused on building long-term value for shareholders and customers.
“I'm very happy with the result,” he said. “To me, it was nothing short of an amazing outcome… we're not in this for the short term – we're in this for the long term, and we are very confident that we can build value in the long term.
D2L’s share price closed its first day of trading on the TSX at $16.75, down from the $17 IPO price.
According to a news release, $93.3 million of the $150 million raised will go to D2L. The remaining $56.7 million goes to the Desire2Learn Employee Stock Trust to pay income tax and other fees related to the distribution of shares to certain employees and to repay a loan from D2L to a company controlled by Baker.
In an interview, Baker said that the proceeds will help D2L continue to hire talented employees, develop its online learning products and pursue greater market share.
The company’s core product, Brightspace, is a cloud-based software platform that helps users design and deliver educational courses, learning games, assessments and more.
Demand for learning technology has soared since the start of the COVID-19 pandemic as schools, colleges and universities scrambled to deliver teaching and course content online.
The number of D2L customers grew to 970 in fiscal 2021, up 33 per cent from 730 in fiscal 202, according to the company’s IPO prospectus. Customers include more than 500 colleges and universities, over 150 K-12 elementary schools and districts, over 50 professional associations and industry groups, and more than 300 businesses, healthcare institutions and governments in more than 40 countries.
“What used to be a struggle to convince people to embrace online learning has now become a critical requirement for schools, universities and companies all over the world,” Baker said. “So that’s the next chapter for us – focusing on that accelerating growth, focusing on delivering innovations that really make an impact on people's lives, and becoming a world leader in this space.”
The company, which employs more than 1,000 people globally, plans to continue hiring aggressively, Baker said.
D2L also plans to move out of its main office in the Tannery building in downtown Kitchener next August and relocate to the Catalyst137 complex on Glasgow Street, about two kilometres away.
The company’s lease on 131,913 square feet in the Tannery expires July 31, 2022, according to the IPO prospectus. The company recently signed an 11-year lease to take 93,059 square feet at Catalyst137, starting Aug. 1, 2022.
Baker said that D2L has sublet some of its space in the Tannery, so the company’s footprint at Catalyst137 is not much smaller, if at all, than its current office size.
“I love the Tannery; I think I will love Catalyst137, too,” said Baker, adding that his team negotiated a good lease deal for its new space.
In a note about the move, D2L’s IPO prospectus says that Baker did not take part in the lease negotiations because he owns a minority stake in Catalyst137 Kitchener L.P., a private company that represents the Catalyst137 office complex.
Originally known as Desire2Learn, D2L was one of the first tech startups to set up in downtown Kitchener when Baker launched the company in 1999. The area is now home to numerous technology companies, including Google, Vidyard, Bridgit and others, as well as the Communitech Hub.
“I think we were the only technology company in the core, and now look at it – I’m so proud of what the community has done in terms of rallying around technology and really helping us build a great tech ecosystem here,” Baker said.