Dye & Durham Limited

For the first half of fiscal 2026, revenue was $215.3 million, down $16.8 million or 7% year over year. Adjusted EBITDA was $100.8 million, down 24% year over year. Legal software contributed $161.5 million and Banking Technology contributed $53.8 million. Net cash provided by operating activities was $73.8 million versus $62.3 million in the prior year period. Cash on hand was $37.8 million excluding cash held for sale and the $185 million in escrow for the convertible debentures. Capital expenditures were $9 million. Management said it identified $15 million to $20 million in annualized EBITDA savings, with approximately 60% targeted to be actioned by the end of the fiscal year. After quarter-end, Credas was sold for approximately $146.3 million gross proceeds, with a $30 million revolver repayment and a USD 27.3 million Term Loan B repayment already completed. No quarterly revenue or EPS figure was stated in the transcript, and no formal next-quarter or full-year financial guidance was provided.

George Tsivin framed the quarter as part of a broader reset, saying the business has strong underlying assets but has suffered from fragmentation, pricing misalignment, customer disruption and operational complexity. He described the strategy as a multi-year transformation to simplify, modernize and integrate the legal software portfolio into a unified global operating platform, with a stated goal of moving from roughly 40 products to one platform. His tone was candid and corrective, emphasizing that the company must rebuild trust, improve execution and manage transition risk, including the possibility of some customer loss during product migration.

Sandra Bell focused on the half-year financial picture and balance sheet actions. She said revenue fell 7% year over year to $215.3 million and adjusted EBITDA declined 24% to $100.8 million, reflecting legal software pressure, reinvestment in labor and IT infrastructure, and a lower capitalization rate. She highlighted $73.8 million of operating cash flow, $37.8 million of cash on hand excluding cash held for sale, $9 million of capital expenditures, and the use of Credas proceeds to reduce debt, including a $30 million revolver repayment and a USD 27.3 million Term Loan B repayment. She also said one-time costs tied to the OSC review, restatement and bank waiver process should come down significantly.

Analysts pressed for more detail on the strategic review, customer retention in Canadian legal, competitive dynamics, and the impact of contract renewals and one-time costs. George said the company is considering deleveraging options, a possible sale of the entire business, or sales of pieces of the business, but has no meaningful incremental update yet. On Canadian legal, he said the market decline is only 2% to 3% of the problem and that most decline comes from price and volume, while acknowledging lower-priced entrants that are offering more value. Management also said contract renewals remain ongoing on a three-year cycle, and Sandra said higher one-time costs were largely related to the OSC review, restatement and bank waiver process rather than Credas.