Altus Group Limited

Revenue in our appraisals and development advisory segment came in below guidance, reflecting softer market conditions across both businesses. The appraisals business, which operates exclusively in Canada, is particularly impacted by muted transaction activity and ongoing uncertainty related to tariffs. Despite these headwinds, our performance continues to improve, driven by a deliberate focus on higher margin value added engagements. Adjusted EBITDA increased by .6% with a 130 basis point expansion in margins, supported by enhanced delivery efficiency through our offshore global shared services team. The Canadian commercial real estate market remains stable through Q2, but continues to navigate a challenging environment shaped by tariff uncertainty, inflationary pressures, and evolving monetary policy. These factors are contributing to a more cautious lending landscape. While we anticipate stronger momentum in the U.S. market in the second half of the year, Canadian transaction activity is expected to remain subdued until market conditions stabilize. In the meantime, we remain focused on disciplined execution and driving margin improvements across the segment. Turning to the balance sheet. We ended the quarter with $382.7 million in cash and $157.3 million in bank debt, resulting in a funded debt to EBITDA ratio of 1.26x. We returned $101.7 million to shareholders through our share buyback program this quarter, fully utilizing our current NCIB and reducing our outstanding share count to $43.2 million. Year to date, we've repurchased approximately 3.3 million shares, representing $179 million in gross proceeds. We're pleased with the strength of our cash conversion, which continues to be driven by disciplined working capital management and a focused effort on improving operational efficiencies across the business. With profitability and earnings quality continuing to improve, we are well positioned to deliver consistent cash flow generation and support long-term growth. With that, I'll turn it over to Jim.

Thanks, Pavan. As Pavan outlined, the team delivered another strong quarter, both financially and operationally. We made progress against our growth initiatives, and we're positioning ALTAS as the essential intelligence platform for CRE performance. To reiterate and call out some of the highlights from the quarter, recurring revenue growth was fueled by double digit growth in Argus Enterprise, which is now Argus Intelligence. We expect this latest upgrade cycle and new product introductions to drive double digit growth for the next several years. Our transition to Argus Intelligence is proceeding as planned, with clients renewing on the platform and adding new capabilities. We now have 1,900 clients contracted on Argus Intelligence, including a ramp of portfolio manager and benchmark manager products. Our asset-based pricing model continues to be well received, and by design is translated to a growing user base in the Argus ecosystem. As clients migrate to Argus Intelligence, they have the choice to stay on perceived pricing or move to asset-based pricing, which allows clients to add users with no additional costs. New recurring bookings were strong, both for software and VMS. We're now on three consecutive quarters of recurring new bookings above the $20 million mark. We returned capital to shareholders by repurchasing $101.7 million of our shares in Q2, exhausting our 2025 buyback program for the year. We reduced our outstanding shares by .5% year over year. And as Pavan pointed out, our operational improvements and ongoing portfolio simplification translate to higher quality earnings compared to a year ago. This has been and will continue to be the driver of cash flow improvements. Turning to our business outlook, we're refining our guidance here at the mid-year mark. Notably, we're increasing our consolidated margin range while modestly lowering revenue. To be clear, we're calling up the low end of our adjusted EBITDA guidance. Our business unit forecasts are still at the low end of our original revenue range. That said, and in the spirit of being prudent, we're reflecting the continued uncertainty around the macroeconomic environment. This uncertainty has kept some of our VMS clients on the sidelines longer than we anticipated at the beginning of the year. As we've demonstrated over the last several years, we run the company with multiple paths to achieving our EBITDA, and this year's no different. Overall, there's a growing sense of optimism in our client base. Transaction volumes are stabilizing, and transaction dollar volumes are increasing. Capital is available, and valuations are improving across most sectors of CRA. All good signs for the fourth quarter and next year. And with the operating and product enhancements we've been driving, we're strongly positioned for the future. We remain confident in our ability to drive double-digit revenue growth at about 35% adjusted EBITDA margins in fiscal 2026 at the analytics segment. We expect a continual ramp of revenues in Q3 at analytics. Q4 benefits from favorable seasonality, pricing actions, and a large number of Argus renewals. We remain bullish on the long-term prospects for Altus Group driven by strong secular trends in the commercial real estate market, compelling new product innovations, a refined pricing model which drives client adoption, an exceptionally strong balance sheet, and of course, a dedicated team committed to delivering value. So finally, before I open up the line for questions, I just want to share that our next Investor Day will be on November 20th in New York. It's a change from what I said last quarter due to some scheduling conflicts, but stay tuned for more details, and we hope you can join us. Okay, let's open up the line for questions now, Julian.

Thank you. As a reminder to ask a question, please press star followed by the number 1 on your telephone keypad. Our first question comes from Yuri Lake from Canaccord Genuity. Please go ahead, your line is open.