Multi-year transformation: New CEO George Tsivin is simplifying and modernizing Dye & Durham’s acquisition-fragmented legal software portfolio into a unified global platform (fewer SKUs, integrated workflows and APIs) with early proof points like the “Unity” launch and a longer-term shift toward more subscription-style offerings.
Weaker results but strong cash flow: First-half revenue was CAD 215.3 million (down 7% y/y) and adjusted EBITDA was CAD 100.8 million (down 24%), while operating cash flow improved to CAD 73.8 million.
Deleveraging and cost targets: Management expects CAD 15–20 million in annualized EBITDA savings from efficiency and automation, completed a ~CAD 146.3 million Creditas sale with proceeds used for debt repayments, and is evaluating further asset-sale or strategic options to reduce leverage.
Dye & Durham (TSE:DND) executives used the company’s second-quarter fiscal 2026 earnings call to outline a multi-year transformation plan aimed at simplifying its product portfolio, improving customer alignment, and strengthening financial flexibility as the company works through pressured legal software revenue and a leveraged balance sheet.
Chief Executive Officer George Tsivin said that after taking the role in June 2025, the company focused on building a leadership team, completing a diagnostic review, and defining a disciplined path forward. Tsivin described Dye & Durham’s core assets as a “strong core legal software franchise” serving small and mid-sized law firms and a “high-margin financial services business” that he said continues to grow organically.
However, Tsivin said the company’s rapid acquisition-driven expansion over prior years increased operational complexity and left systems fragmented. He also pointed to disruption tied to prior pricing actions, cost reductions, and leadership volatility. Tsivin said pricing actions in core products—combined with minimum volume commitments and limited product investment—created a disconnect between customer-perceived value and cost, and he said this dynamic allowed competitors to enter the market and made prior margins “unsustainable in the long term.”
Tsivin said the company’s strategy is to simplify, modernize, and integrate its legal software portfolio into a unified global operating platform. He emphasized plans to significantly reduce the number of product SKUs and converge toward global product lines, describing the target state as an integrated practice management platform with embedded workflow applications, API-enabled data and due diligence, and a unified customer experience.
Tsivin cited the launch of “Unity” in British Columbia on February 9 as an early proof point, saying it demonstrates how modernization and integration can improve automation, adoption, engagement, and retention. He also referenced upcoming launches in Canada, including wills and estates and accounting, with an intent to scale capabilities globally on a single platform.
On the cost side, Tsivin said the company has identified CAD 15 million to CAD 20 million in annualized EBITDA savings from structural efficiency initiatives, with about 60% targeted to be actioned by the end of the fiscal year. He said approximately 40% of the savings are expected to come from consolidating global delivery and service teams and rationalizing the company’s footprint, while roughly 60% is expected from automation and process standardization, including reducing manual workflows and eliminating duplicative systems.
Interim Chief Financial Officer Sandra Bell reported that for the first half of fiscal 2026, revenue was CAD 215.3 million, down CAD 16.8 million, or 7% year-over-year. Bell said the decline was primarily driven by continued market softness and customer turnover impacting legal software platforms, partially offset by growth in banking technology and contributions from the Affinity business in Australia.
Adjusted EBITDA for the six months ended December 31, 2025, was CAD 100.8 million, down 24% year-over-year. Bell attributed the decline to revenue pressure in legal software, targeted reinvestment in labor and IT infrastructure, and a lower capitalization rate as certain expenditures were temporarily shifted from capitalized software development to maintenance expense.
By revenue mix for the first half, Bell said legal software contributed CAD 161.5 million and banking technology contributed CAD 53.8 million. She described banking technology as stable and recurring, helping offset softer transactional volumes in parts of legal software.
Canada: Revenue declined 10% year-over-year for the first half, with segment adjusted EBITDA down 25%. Bell cited a broader market downturn, reduced customer volumes and pricing in practice management and data insights, the lower capitalization rate, and investments in sales, customer service, and IT infrastructure.
U.K. and Ireland: Revenue declined 6% due to softness in search platforms, with segment adjusted EBITDA down 26% year-over-year.
Australia: Revenue increased 2% year-over-year, driven primarily by the Affinity acquisition and partially offset by declines in search and mortgage services. Segment adjusted EBITDA declined 14%, largely due to higher labor costs.
Despite the profit decline, Bell said operating cash flow was strong. Net cash provided by operating activities was CAD 73.8 million for the six months ended December 31, 2025, compared with CAD 62.3 million in the prior-year period, helped by lower cash taxes, lower net interest paid, and favorable working capital movement. The company ended the period with CAD 37.8 million in cash on hand (excluding cash held for sale) and CAD 185 million in investments held in escrow to settle outstanding convertible debentures. Capital expenditures were CAD 9 million for the first half.
Bell said that subsequent to quarter end, the company completed the sale of “Creditas” for approximately CAD 146.3 million in gross proceeds and has applied a portion to debt reduction, including a CAD 30 million repayment on the revolving facility and a $27.3 million repayment on Term Loan B. She said the company launched an excess proceeds offer on February 9 that expires March 9.
In the Q&A, Tsivin and Chairman Edward Smith said the company is evaluating strategies to delever, including opportunistic consideration of selling the entire business or pieces of it, while also preparing to operate the business under its transformation plan.
On Canadian legal software, Tsivin said macro market decline was a smaller contributor—about 2% to 3%—with most of the decline coming from price and volume. He said in some cases the company is losing volume and in others it is conceding price to preserve volume. He also confirmed that there is less revenue coming from unfulfilled minimum volume contracts.
Management said contract renewals are ongoing on a typical three-year cycle and that new controls have been implemented to simplify contracting and improve consistency for customers and internal accounting.
On competition, Tsivin said the Canadian conveyancing business continues to face competition from lower-priced entrants “delivering more value,” while the financial technology business remains strong and is benefiting from a post-COVID refinance wave.
Management also addressed audit delays and regulatory review. Tsivin said the audit involved multiple issues, including a review by the Ontario Securities Commission (OSC) and “long-standing issues with external parties,” and said time was required to validate accounting around numerous variations of minimum volume contracts. Bell said the OSC’s initial review focused on purchase accounting disclosures and goodwill impairment analysis, which resulted in expanded acquisition disclosures and an impairment in South Africa of roughly CAD 14 million.
Finally, Tsivin said the company stopped emphasizing certain metrics such as ARR because, after reviewing the business, management views it as “a volume and not a subscription business” at present, and he said prior minimum contracts and ARR framing created complexity and misimpressions. He said the company intends to pursue more subscription opportunities over time as it migrates customers to a global platform and adds more value to bundles.
Dye & Durham Ltd is engaged in providing cloud-based software and technology solutions designed to improve efficiency and increase productivity for legal and business professionals. The company has business operations in Canada and the United Kingdom. The customers include law firms, financial service institutions, and government organizations.
