Inside the Toronto legal-software firm's final fiscal 2026 quarter — the revenue split by country, the Credas effect, a $32.5-million restatement of Q3 and what management says comes next.
The Dye & Durham Q4 results released on September 29, 2026 gave investors two very different stories to weigh at once: an operating quarter that improved on almost every profitability line, and an admission that the Toronto company’s internal controls over financial reporting were not effective at the end of its fiscal year.
Dye & Durham Limited (TSX: DND), a provider of cloud-based legal practice management software with operations in Canada, the United Kingdom, Ireland, Australia and South Africa, reported revenue of $104.2 million for the three months ended June 30, 2026 — a decline of $1.0 million, or 1%, from the same quarter a year earlier. Adjusted EBITDA, a non-IFRS measure the company uses to track operating performance, rose 15% to $55.1 million.
The Quarter in Numbers: Revenue Flat, Profitability Up
Net loss for the fourth quarter narrowed to $19.9 million from $29.6 million a year earlier. Cash flow provided by operating activities climbed to $65.2 million in the quarter, up from $56.8 million in the comparable period — a figure management singled out as evidence that the business is converting its improved margins into cash.
| Metric (C$000s) | Q4 FY2026 | Q4 FY2025 | FY2026 | FY2025 |
|---|---|---|---|---|
| Revenue | 104,171 | 105,173 | 410,677 | 440,730 |
| Net loss | (19,862) | (29,552) | (38,518) | (87,960) |
| Cash flow from operating activities | 65,175 | 56,815 | 153,432 | 148,200 |
| Adjusted EBITDA (non-IFRS) | 55,099 | 47,744 | 198,753 | 232,809 |
For the full twelve months, revenue of $410.7 million was down $30.1 million, or 7%. Adjusted EBITDA for fiscal 2026 fell 15% to $198.8 million. The one unambiguously positive full-year line was the bottom line: the annual net loss of $38.5 million was less than half the $88.0 million loss recorded in fiscal 2025.
How the Credas Disposal Reshapes the Growth Math
Much of the quarter’s commentary hinges on a single divestiture. Dye & Durham disposed of Credas Technologies Ltd., and when that business is stripped out of all comparison periods the quarterly picture flips from contraction to expansion.
- Quarterly revenue: down 1% as reported, but up $3.5 million or 4% excluding Credas from every period.
- Quarterly adjusted EBITDA: up $7.4 million or 15% as reported, and up $8.5 million or 18% excluding Credas.
- Full-year revenue: down 7% as reported and down $24.6 million, or 6%, on the same adjusted basis.
- Full-year adjusted EBITDA: down 15% as reported and down $32.4 million, or 14%, excluding Credas.
In other words, the disposal explains part of the headline softness but not the bulk of the full-year decline. On an annual basis the business shrank with or without Credas in the comparison; it is only in the final quarter that the adjusted figures show revenue returning to growth.
Canada Supplies Nearly Two-Thirds of Quarterly Revenue
Segment disclosure for the quarter underscores how concentrated the company remains in its home market. Canada contributed $65.5 million of fourth-quarter revenue, with the United Kingdom and Ireland at $20.8 million and Australia at $17.1 million.
| Segment | Q4 FY2026 revenue (C$ millions) |
|---|---|
| Canada | 65.5 |
| United Kingdom & Ireland | 20.8 |
| Australia | 17.1 |
That concentration matters because Dye & Durham’s Canadian revenue base is tied closely to the volume of legal, corporate and property transactions flowing through law firms — activity that tracks the wider domestic economy. Readers following the demand backdrop may find useful context in our reporting on how Statistics Canada’s latest findings show population growth slowing, a trend with direct consequences for transaction-driven service businesses.
A $32.5-Million Correction to Third-Quarter Figures
The fourth-quarter net loss figure comes with an asterisk. Dye & Durham disclosed that certain stock-based compensation and finance cost items were recorded in the fourth quarter but actually relate to the three months ended March 31, 2026, and have been adjusted back into that earlier period.
The effect was substantial: the restated third-quarter net loss decreased by $32.5 million. That total breaks down into a $29.9 million reduction in stock-based compensation expense (recovery) and a $2.6 million reduction in net finance costs.
The stock-based compensation piece is a non-cash accounting item. According to the company, it arose primarily from reversing an incorrectly recorded compensation recovery linked to certain vested options held by former employees that were later forfeited or expired. The finance cost adjustment stems from a remeasurement of fair value tied to changes in credit risk on repayment of convertible debentures due March 2026, plus a settlement loss on repayments made against the company’s Term Loan B and Senior Secured 2029 Notes.
Dye & Durham characterised the changes as technical corrections with no effect on its financial health or performance, noting they do not touch its ongoing cash position, reported revenue, cash flow from operating activities or adjusted EBITDA for the third quarter.
Why the Material Weakness Disclosure Carries Weight
The more consequential disclosure sits alongside those corrections. In connection with the adjustments, the company’s chief executive and chief financial officer concluded that internal controls over financial reporting were not effective as at June 30, 2026 because of a material weakness. Because the underlying items relate to the third quarter, Dye & Durham determined the same weakness also existed as at March 31, 2026.
A material weakness is a deficiency, or combination of deficiencies, significant enough that a material misstatement might not be prevented or detected on a timely basis. Flagging one does not by itself mean reported figures are wrong, but it does mean the company has told the market that the process producing those figures needs repair. Details of the weakness and the planned remediation steps are set out in the company’s management discussion and analysis for fiscal 2026.
For shareholders, this is the item most likely to shape questions on the analyst call, because control remediation typically runs over several reporting periods before auditors and management can declare it closed.
Leverage at 5.17x and Covenant Compliance at Year-End
Debt remains central to the Dye & Durham story. The company confirmed it was in compliance with the financial maintenance covenants under its senior credit agreement as of June 30, 2026.
At the same date, $28.5 million was drawn on the revolving credit facility, and the Consolidated First Lien Net Leverage ratio — as that term is defined in the senior credit agreement — stood at approximately 5.17 times. Over the year the company made repayments toward its Term Loan B and its Senior Secured 2029 Notes, and repaid convertible debentures that came due in March 2026.
Leverage at that level keeps borrowing costs squarely in focus for a company whose cash generation is improving but whose revenue base is still contracting on an annual view. Interest rate direction is a live variable for all heavily leveraged Canadian issuers, and our coverage of the Bank of Canada’s finely balanced October rate decision sets out the current policy backdrop.
Todd Schulte’s Plan for a Single Global Operating Model
Interim Chief Executive Officer Todd Schulte framed the quarter as proof that the company’s restructuring is starting to show up in the numbers, pointing to the return to growth excluding Credas, the improvement in adjusted EBITDA and margin, and the strength of operating cash flow.
Schulte described fiscal 2026 as the beginning of a significant transition, saying the company exited the year as a more focused business and has started bringing its regional operations together under one global operating model intended to serve customers more consistently and run more efficiently. He said further cost reductions are expected through increased automation, including artificial intelligence, and additional consolidation, with the transition continuing through fiscal 2027.
Translated into plain terms: the margin gains reported this quarter are being presented as the early output of a cost programme that management expects to extend for at least another full year.
Reading the Non-IFRS Measures in This Release
Both adjusted EBITDA and segment adjusted EBITDA are non-IFRS measures. They are not recognised under IFRS, have no standardised definition, and are therefore unlikely to be directly comparable with similarly named measures reported by other companies.
Dye & Durham’s adjusted EBITDA adds back finance costs, amortisation, depreciation and impairment, income tax expense or recovery, gain on disposal of a subsidiary, stock-based compensation expense or recovery, loss or gain on contingent receivables, acquisition and reorganisation expenses, integration and operational restructuring costs, and other non-recurring expenses. Segment adjusted EBITDA adds back corporate cost allocations on top of that.
That list is why the 15% quarterly increase in adjusted EBITDA sits beside a reported net loss. Investors assessing the Dye & Durham Q4 results should read the adjusted figures alongside the IFRS statements and the reconciliations filed on SEDAR+, rather than in place of them. Figures in this article are the company’s own; this is reporting, not investment advice.
The September 30 Conference Call and Replay Window
Senior management scheduled a conference call for Wednesday, September 30, 2026 at 4:30 p.m. ET to discuss the business, followed by a question-and-answer session. A taped replay was made available until October 7, 2026.
The call is where the material weakness, the remediation timetable and the pace of the global operating-model consolidation are most likely to be tested. The company’s full fiscal 2026 management discussion and analysis, including the segment reconciliations and the risk factor disclosure, is filed under its profile on SEDAR+.
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