Dye & Durham TSE: DND reported a 12% decline in first-quarter fiscal 2027 revenue as weaker real estate activity, lower customer transactions and pricing pressure weighed on its business. Management said it is focused on stabilizing operations while continuing a strategic review and a search for a permanent chief executive.
Revenue for the three months ended September 30 was CAD 94.9 million, down from the prior-year period. Excluding the impact of the disposal of U.K. subsidiary Credas in fiscal 2026, revenue fell 8%, Interim Chief Financial Officer Steve Waszak said on the earnings call.
Adjusted EBITDA declined 8% to CAD 46.6 million, or 5% excluding Credas. The adjusted EBITDA margin improved to approximately 49% from 46.6% a year earlier as the company reduced costs. Adjusted EBITDA is a non-IFRS measure.
The net loss narrowed to CAD 11.1 million from CAD 38.3 million. Waszak attributed much of the improvement to lower finance costs, which fell to approximately CAD 19.6 million from CAD 45.9 million, reflecting lower debt and non-cash foreign exchange and fair value items. Lower amortization also contributed.
Market pressures weigh on revenue
Combined technology and operations, general and administrative, and sales and marketing costs were approximately CAD 48 million, down CAD 10 million, or 17%, from a year earlier. Waszak said planned reductions in marketing, entertainment and IT services costs partly offset revenue pressures and other expenses.
Canada, which management described as the company’s core market, generated revenue of CAD 56.3 million, down approximately 10% year over year and 14% from the preceding quarter. Canadian segment adjusted EBITDA fell 12% to CAD 31 million.
In the U.K. and Ireland, revenue fell 23% to approximately CAD 21 million, primarily reflecting the Credas disposal and market conditions. Australian revenue declined 3% to CAD 17.1 million, while segment adjusted EBITDA rose 17% to CAD 8.8 million.
Interim Chief Executive Officer and Chief Operating Officer Todd Schulte said he estimated that 70% to 75% of the shortfall discussed in response to a question about Canadian real estate was related to market and macroeconomic conditions.
Waszak said weakness in real estate activity was also affecting banking software. Schulte added that macroeconomic headwinds were present across the company’s regions to varying degrees.
Customer trends and pricing
Asked whether the customer base was stabilizing, Schulte said the decline had slowed but the business was not yet fully stable. He said reduced transaction volumes were a larger factor than customers leaving outright.
“This is more of a situation of dual sourcing or just a decrease in transaction,” Schulte said. He also noted that one financial services customer reduced its activity during the quarter, describing the situation as dual sourcing rather than a complete loss of the customer.
Waszak said the company is moving away from contracts with straight minimum payments toward volume-based arrangements in which customers receive different pricing as they reach transaction thresholds. Revenue from minimums is no longer a material matter, he said, citing both commercial changes and revenue recognition practices.
Strategy and balance sheet
Schulte outlined a plan to stabilize the business, centralize products and operations, and use artificial intelligence and automation in products and internal workflows. He expects the transition to continue through fiscal 2027.
Following recent board changes, Schulte said he did not foresee an overall strategy change in the next few quarters. He said the search for a permanent CEO remained ongoing without an end date, and the strategic process involving financial services was also continuing. He did not provide further details on the review.
Waszak said the company was compliant with financial maintenance covenants under its senior debt agreements as of September 30. Asked about the next quarter, he declined to comment prospectively on covenant compliance but said management had improved visibility and control over cash flows and was conducting scenario planning.
About Dye & Durham (TSE:DND)
Dye & Durham Limited provides premier practice management solutions empowering legal professionals every day, delivers vital data insights to support critical corporate transactions and enables the essential payments infrastructure trusted by government and financial institutions. The company has operations in Canada, the United Kingdom, Ireland, Australia, and South Africa.
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