Altus Group Limited

Ladies and gentlemen, thank you for standing by. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to Altus Group's first quarter 2025 financial results conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. Thank you. And I would now like to turn the conference over to Camilla Bartosiewicz, Chief Communications Officer. Please go ahead.

Thank you, Abby. And hi, everyone. We're sorry for being a couple of minutes behind. We understand there's still a few people trying to get in, so we just wanted to make a little more time. Well, welcome to the conference call and webcast discussing Altus Group's Q1 results for the period ended March 31st, 2025. Our press release MD&A financial statements and the slides that accompany our prepared remarks, they're all available on our website and as required have been filed to Cedar Plus after market close this afternoon. I'm joined today by our CEO, Jim Hannon, our CFO, Pavan Chhabra, as well as Rich Sarkis, the President of Software and Data. Some of our remarks on this call and in our disclosure may contain forward-looking information that is based on certain assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our forward-looking information disclaimer in today's materials. Please be reminded that Altus Group uses certain non-GAAP financial measures, ratios, total of segments measures, capital management measures and supplementary and other financial measures as defined in National Instrument 5212. We believe that these measures may assist investors in assessing our investment in our shares as they provide additional insight into our performance. Readers are cautioned that they are not defined performance measures and do not have any standardized meaning under IFRS and may differ from similar computations as reported by other entities. And accordingly, may not be comparable to financial measures as reported by those entities. These measures should not be considered in isolation or as substitutes for financial measures prepared in accordance with IFRS. An explanation of these measures is detailed in today's IR material. I would also like to point out that unless otherwise specified, all percentage and basis point growth rates we report to on today's call will be on a constant currency basis over the same period in 2024. And okay, over to you, Bevin.

Thanks, Camilla. And thank you, everyone, for joining us today. Altus had a solid start to the year, delivering recurring revenue growth, steady margin expansion, and improvements in cash generation. Let me hit some of the highlights. Analytics total and recurring revenues were up. Consolidated revenue was modestly down, impacted by the appraisals and development advisory segment. Profit from continuing operations improved by 47%. Adjusted EBITDA was up 29.7%, driving a 280 basis point margin improvement. Both cash provided by operating activities and free cash flow were up meaningfully over last year. And the comparative period last year included a contribution from property tax. Turning to the analytics business segment. Total revenue growth was led by Argus Intelligence. As discussed last quarter, we've been winding down some non-recurring revenue lines of business. We're really pleased with the consistent improvement in adjusted EBITDA, which reflects high quality of revenue, operating efficiencies, and our ongoing cost optimization efforts. Recurring revenue is a key metric for our performance. Argus and VMS revenue streams have very low churn with retention rates above 100%. Q1 recurring revenue was up 2.1%. Argus software growth was strong. VMS growth was modest as expected. As you recall, there's seasonality to VMS. Historically, Q4 represents our largest quarter for VMS revenue. Our margins continue to expand up 200 basis points in the quarter above guidance. Drivers of our margin expansion include revenue growth, our portfolio optimization efforts, efficiencies from our global service center, benefits from restructuring activities, and our overall expense growth moderation. We're steadily driving towards our FY2026 target of approximately 35%. Turning to analytics new bookings, this metric reflects new and incremental business. We're pleased with a 34.3% improvement in recurring new bookings, which included strong software bookings and a $5 million of the $15 million three-year subscription agreement with Ryan Tax. Excluding this deal, recurring new bookings growth is 3.1%. Turning briefly to our cloud adoption rate, Having reached 90% of users contracted on the cloud, we are now retiring this metric from our external reporting. Finally, at appraisals and development advisory, as CRE transactions remain muted, revenue came in lighter than guidance. However, our restructuring activities are paying off, driving 1.3 million improvement in adjusted EBITM T1 in line with guidance. Transitioning to the balance sheet. On the sale of the property tax business in January, our cash position at the end of the quarter increased to $491.9 million. We had $158.9 million in bank debt at the end of the quarter, representing a 1.44x funded debt to EBITDA ratio. During the quarter, we deployed $76.3 million towards a share buyback. reducing our outstanding shares to 44.4 million. We also reduced our debt by 127 million and a quarter. Restructuring costs for 6.2 million and dividend payments for 6.5 million. Cash from operations continues to be strong, driven by improvements in working capital. We expect our cash conversion to improve throughout the year as our restructuring efforts take hold. With that, I'll turn it over to Rich Sarkis, President of Software and Data, to discuss Benchmark Manager.