Altus Group Limited

Ladies and gentlemen, thank you for joining us and welcome to Altus Group's first quarter 2026 financial results conference call and webcast. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Camilla Bartosiewicz, Chief Communications Officer. Camilla, please go ahead.

Thank you, Jade. Hi, everyone, and welcome to the conference call and webcast discussing Altus Group's first quarter results for the period ended March 31st, 2026. Our press release, MD&A financial statements, and the slides accompanying our prepared remarks are 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, Mike Gordon, and our CFO, Pavan Chhabra. Turning to our disclaimer slide, some of our remarks on this call and in our disclosures may contain forward-looking information based on certain assumptions and are therefore subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the forward-looking information disclaimer in today's materials. We also use certain non-GAAP financial measures, ratios, capital management measures, and supplementary and other financial measures as defined in National Instrument 52112. We believe these measures provide useful additional insight into our performance and may assist investors in evaluating our shares. However, they are not standardized under IFRS and may differ from similarly titled measures used by other issuers and may not be comparable. They should not be considered in isolation or as a substitute for IFRS measures. Further details are provided in today's IR materials. Unless otherwise noted, all percentage and basis point growth rates discussed on today's call are presented on a constant currency basis relative to the comparable period in 2025. Before we start, I would like to point out that the development advisory business was moved under discontinued operations this quarter. Accordingly, our results for Q1 and the comparative period are presented without it. However, certain metrics like net cash provided by operating activities and free cash flow still include contribution from the development advisory business. Additionally, on April 30th, we sold the 111 managed services business, which was part of the analytics segment. This business line did not qualify for discontinued operations accounting treatment, so just keep in mind that on a go-forward basis, The revenue contribution of 111 managed services, approximately $5.2 million in 2025, including $3.9 million of which went into the recurring revenue line, will still remain in the comparative period of the, and then the Q2 results will include partial contribution up to April 30th. Okay, and with that, I'll now turn it over to Mike.

Thanks, Camilla. Good evening, everyone, and thank you for joining us. Over the past quarter, I've spent a lot of time visiting our offices, meeting with customers, and having candid conversations with many of our largest shareholders. Those discussions have sharpened my view of what's working well and where we still need to continue to improve. And for those of you who know me, you know I like to move decisively. We've already begun aligning the organization around this clear set of priorities to drive our next phase of growth. Our teams are energized and I'm encouraged by the feedback we heard at our recent Altus Connect user conference where we unveiled Argus Assist, our latest AI capability and agentic AI experience on the Argus Intelligence platform and walked clients through the evolution of that platform. We demonstrated capabilities that are built and ready to deploy and rebuild our new upcoming capabilities. customers are looking for a single platform that connects users and data across multiple capabilities throughout the CRE lifecycle. Based on client feedback, we are accelerating our roadmap to move the key capabilities of our other standalone software products onto the platform by early 2027. I'm very excited to capture new opportunities coming out of the Altus Connect conference. With that conference and that context, let me spend a moment on Argus Assist. At its core, it's a conversational interface built directly into Argus Intelligence. It lets our users interact with their Argus data more naturally, ask a question about an asset, and Argus Assist can draw on relevant models, workflows, and data to return an informed answer. Instead of navigating multiple screens, tools, calculations, users can generate insights, run analyses, retrieve information through a single interface. Work that previously took days can now be surfaced in moments. Argus Assist leverages our proprietary and patented Knowledge Graph technology, which helps organize data from multiple sources to a common Altus ID for the asset. This enables faster, more flexible access to high-quality data across the platform with added AI capabilities through Argus Assist. This is one of the things that makes what we're building transformative to this industry. Unlike generic AI tools, Argus Assist is purpose-built for commercial real estate. It leverages Argus's structured cash flow models, valuation workflows, and market data. So insights are grounded in the rigor and standard CRE professionals rely on and the outputs that they can stand behind when they take something to investment committees. Because it's based off well established valuation grade workflows backed by our decades of industry and domain experience and pulling from trusted high value Argus data, it doesn't just provide an answer, it provides an answer that they can trust and defend. Argus Assist is designed to expand over time as we build out our family of agents across our platform. The latest agent is our valuation agent, built to support valuation with accuracy, rigor, and defensibility our customers expect. And we know it passes the test because our VMS team, one of the most respected authorities in CRE valuation, has helped shape it. I'm very encouraged by the positive client reception, including customers reaffirming on stage that it delivers a superior AI solution to anything they could have ever attempted to do themselves in-house, precisely because it's underpinned by our data and workflows. It's early days, but about 30% of our customers who attended Altus Connect are in the process of signing up for Argus Assist. As I step back and look at where we are today, our platform is solid. Wherever there's a step change in technology, the conversation naturally turns to disruption. But in my experience, the companies that win are the ones that are already embedded in their customers' most important decisions. And that's exactly where we at Altus operate. Our data, our valuation-grade workflows, and the trust we have earned across commercial real estate aren't easily replicated. And they give us a real advantage as AI becomes part of how this industry works. With Argus Assist, we're not asking clients to rethink how they do business. We're making what they already do better, faster, and more insightful. When you combine that with our sharper focus, our strong free cash flow profile, and a disciplined approach to capital allocation, I'm confident we're strengthening Altus's competitive position and building a more durable, higher quality business for the long term. And you should be pleased to know that we're consistently executing against the commitments we laid out at Investor Day. Demand for our flagship offerings remain solid, supporting steady ARR growth in the first quarter. With improving platform engagement, we feel good about being able to expand cross-sell and off-sell opportunities across our client set. A key priority this year is onboarding more assets to Argus Intelligence, both through new client additions and by helping existing clients bring their portfolios onto the platform. With each asset organized under a unique Altus ID on our knowledge graph. This is foundational to our vision so that we can deliver better analytics and drive more value for our customers. Earlier this year, we set up a dedicated team to help move our customers and their models onto the platform. And we're using our AI and data curation technology to help them move faster. As a result, we're seeing a good quarterly cadence building upon the hundreds of thousands of assets that are already on the Argus intelligence platform. It's certainly a big step up from last year. Our portfolio rationalization also remains on track. After the sale of the appraisals business in Q1, we've also recently sold the 111 managed services business line, and we expect to sell the development advisory business by year end. Our continuing operations financials are already providing a simpler, clearer view of performance and the potential we see ahead. As you'll hear from Publin shortly, we're increasing our guidance based on the simplicity of our operations and performance of our underlying business doing well. we can offset the loss of 111 revenues with increased analytics growth expectations in addition we're making steady progress improving our operating leverage and reducing operating expenses these actions are driving strong adjusted ebitda growth and margin expansion with more benefits expected to flow through the coming quarters this supports our confidence in the trajectory to our exit 2027 as a Rule 40 company and has enabled us to increase our EBITDA margin guidance as well. We're also on a strong trajectory to deliver robust free cash flow, one of our key KPIs and the North Star for many of the operational enhancements underway. Following the completion of our recent substantial issuer bid, we've returned approximately $400 million to shareholders year to date. These capital returns have already reduced our outstanding share count by 18% thus far this year, with more to come. And as we prepare for our U.S. dual listing next year, I expect Altus to enter the U.S. capital markets with a stronger operating posture and an improved financial profile, positioning Altus as the leading analytics business that we are. We are moving with intent. We're balancing urgency with discipline as we execute against a compelling value creation opportunity. And with that, I'll turn things over to Pavan to walk through our quarterly results. Pavan?

Thanks, Mike, and good evening, everyone. As Camilla mentioned, we're primarily presenting results for continuing operations, which excludes development advisory. Our financials now reflect Altus as a pure play software, data, and analytics company. Our first quarter results highlight the strength of our recurring revenue model and the progress we're making towards a more focused high margin analytics business. As you can see from this slide, we delivered steady top line growth and our discipline cost actions drove meaningful margin expansion. Both recurring revenue and margin expansion came in ahead of our Q1 guidance. With a strong start to the year and consistent execution against our strategic priorities, I shared Mike's confidence in our trajectory to exit 2027 as a Rule of 40 company. Turning to our revenue performance, growth is led by our flagship solutions, Argus Intelligence and VMS, which continue to drive stronger customer adoption and renewal activity. Software revenue was up 12%, driven primarily by Argus Intelligence, with broad-based growth across several of our other solutions, such as ForBerry, which we recently rebranded to Argus Workbook. As previously discussed, our target growth algorithm remains consistent. Roughly 80% growth is expected to come from volume and pricing, and 20% from new logos. We are seeing steady adoption of our asset-based pricing model, which allows clients to roll out the Argus Intelligence platform more broadly across their organizations. Coming off of a seasonal peak with some one-time benefits last quarter, VMS posted steady growth in Q1. As many of you know, VMS is a core component of our client's valuation process, often driven by compliance and investor reporting requirements. We're really pleased with the steady performance, and as the market activity continues to pick up, we're better equipped to scale now that the teams are powered by Argus Intelligence and its latest agentic AI features. The data and services business lines came in softer. The investments we're making there will take some time to come through. We're increasing marketing investments in Reonomy in the U.S., and in Canada, we're investing in our Data Studio product. I'm also very pleased to share that we expanded the role of our Chief Legal Officer, Terry Lynn Devenish, to include Managing Director of Canada. In addition, we hired Jason Lowe, a seasoned CRE executive with deep client relationships, as General Manager of Software and Data for Canada. With this added leadership focus, we are well positioned to accelerate growth in Canada. which is an important geography for Altus where we benefit from a home base advantage. Turning to our operating metrics, all our KPIs are solid. Recurring revenue was up, software and VMS ARR were up, and our retention metrics remain strong. These operating metrics reflect a durable high quality nature of our key recurring revenue streams. Across the P&L lines, we are seeing the benefits of optimization in both R&D and G&A, which have declined as a percentage of revenue. This reflects the impact of our restructuring activities, product portfolio rationalization, and continued third-party cost optimization. In particular, we remain focused on bringing G&A expenses down as we right-size the business. Q1 continued our pattern of strong cash generation and adjusted EBITDA to cash conversion. We are seeing the cash generation strength of the business come through consistently, reinforcing our confidence in our capital return plans. Here today, through two SIBs and an NCID, we returned over $400 million to shareholders. That's ahead of our expectations, and we remain committed to doing more this year. We believe the current market environment presents an opportunity to allocate capital at attractive return levels, and our best investment continues to be in Altus itself. Strong working capital execution drove record collections. We also benefited from increased pre-billing, which lifted deferred revenue and cash. We view this primarily as timing related, and we've adjusted future working capital assumptions accordingly. Rob Leibowitz, Subsequent to the quarter we amended our credit facility ahead of its upcoming expiry in 2027 the amendment extends maturities to march 2029 for participating lenders. Rob Leibowitz, maintains our $550 million of capacity with flexibility to increase to 650 million and preserves our existing leverage covenants. We're very pleased with the outcome. It strengthens our liquidity and preserves financial flexibility and continues to reflect continued lender confidence. You'll notice that the credit facility is classified as a current liability. This is purely a temporary IFRS presentation requirement as the amendment was finalized after quarter end. Importantly, with the extension now in place, There is no impact on our liquidity or leverage profile. And finally, I'll wrap with an overview of our business outlook, which we're presenting on an organic basis for continued operations only at the consolidated level. We've updated our four-year outlook to reflect the removal of development advisory business to discontinued operations and the partial contribution of 111's managed services business through April, which we sold in April, and the results reflect through April 30th. We've also refreshed our implied as reported dollar ranges for current FX rates. With the recurring revenue now representing 95% of total revenues, we've simplified our disclosure to focus on revenue growth and adjusted EBITDA margin expansion. As a result, Prior guidance from recurring revenue is withdrawn, but it will continue to trend in line with our overall revenue guidance. As you can see from this slide, we're increasing our full year revenue growth outlook and range and guidance by one point to five to seven percent. This reflects our new continuing operations profile while also absorbing the loss of 111's contribution which, as Camilla pointed out, remain in the comparative period and represents about one percentage point of headwinds to our growth. Importantly, the underlying analytics business continues to remain strong, which allows us to offset that headwind and still move the growth outlook and guidance higher. We are also increasing margin expansion by 100 basis points to 450 to 550 basis points. This reflects the continued cost discipline alongside a step up in product investment to accelerate the integration of our standalone software products onto the platform by early next year versus over multiple years. With that, Jade, if you will, let's open up the line for questions now.

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question, and if you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Aaron Kyle from CIBC. Please go ahead.

Hi, good evening. Thanks for taking the question. The first one I wanted to ask is just on the guidance here. As you pre-segmented it, it looks like you've removed the corporate cost line as well. So can you just help us reconcile the 2026 margin expansion here? Maybe specifically how much of that lift is driven by structural corporate costs removed versus incremental operating leverage here?

Paul, then you want to start with that one?

Yeah, Aaron, it's a great question. So as you noted, we did increase the EBITDA guidance. You did see a pretty strong print in Q1 in regards to where we are from an EBITDA growth perspective. And to a lot of the conversations that we've had over time, The simplification of our business is allowing us now to present the business in a much cleaner manner. And so the corporate, we're essentially a one segment business at this point at analytics. So we have completely removed the corporate line, which is now reflected as part of our total EBITDA growth number. As you've seen our history, we have a pretty strong track record of being able to take out costs out of the business and continue to scale as our business grows without increasing that cost. There's a lot of opportunity that we have to be able to continue to do that. You know, a key focus areas said in the prepared remarks and we've talked about in the past is we've had a pretty elevated G&A cost across the business that continues to present an opportunity for us really from a function of being able to drive higher productivity across the organizations. But also the simplification of our business helps tremendously on that. And so, you know, from an operational perspective, that continues to drive our margin expansion opportunities. We've got a lot of cost discipline in place in regards to making sure that our spend is accurate. We're leveraging third-party services versus hiring in-house for product and development just to give us more agility and flexibility as we scale and ramp projects. And so we continue to drive forward, Erin, in terms of the opportunities that we have that are in front of us. And there continues to be a significant amount of opportunities. We're going to continue to drive more discipline across our G&A lines, both from a standpoint of just headcount within G&A Tom Connelly- facilities within gna and third party type spend across gna so we're going to continue to drive that lower. Tom Connelly- And again, here we are adopting as Mike mentioned in his prepared remarks. Tom Connelly- For teams are using the software internally, which is driving a significant amount of operational efficiencies for us as well, too, and allows us to drive processes faster. It also allows us to leverage offshore capabilities as well, too, as the work becomes more standardized and more repeatable.

Yeah, if I could pile on the problem for a moment there. I think the big thing as we go forward, we're seeing, you know, we're seeing that expansion of the margin. But in addition, we're also doing that while we continue to transform the business and transform the shape of the business. So like, as we, align our sales organization as we align where we're putting people onto product and R and D. We're also seeing the opportunities to do, to ship those resources around because at this point we, you know, that simplification has helped us and the focus has helped us on where we're going. So from that perspective, that's why we now feel like as we've started to simplify the business, we can make the additional investment into the product set. And at the same point, deliver at a faster point but continue to get that margin expansion.

Okay, that's helpful, Keller. And then maybe just on the discontinued operations, just following the appraisal of divestiture and the pending development advisory sales, what remains, if anything, in the portfolio that's still considered non-core at this point?

Once we're finished with those, we feel pretty comfortable with the business we have left. um there's always opportunities to see if something doesn't feel like non-core but that's that is the definition of non-core for us at this point okay that's helpful i'll pass the line thank you your next question comes from the line of gavin fairweather from coremark please go ahead oh hey thanks for taking my questions maybe just on on the guide nice to see the list despite the 111 headwinds

Maybe you can just discuss, you know, what's coming in ahead of your initial expectations for the business, you know, relative to what you talked about coming out of Key4. Is it asset-based pricing or selling more modules or BMS? Maybe discuss what's strengthening in analytics.

Well, good question. So we had a very strong quarter when it came to our software products. As Pavan indicated, we had growth of in and around 12%. And as we look at that, some of that certainly is some of the overhang and still the expansion to asset-based pricing. But to be honest with you, a lot of that has been new opportunities or cross-sell opportunities as people are starting to get onto the platform and starting to use the platform. You know, as we went through the first quarter and, you know, the platform was fairly new at the end of last year and just people using it, we've seen as the quarter went through, Gavin, you know, the number of users increase on the platform by over 20 times. And as Pavan already talked about, we also saw that our VMS teams are actively using the platform as well. And in that 20 times, that doesn't include our guys. And as a result, what we're starting to see is we're starting to see more use of the platform for folks to do their business. So while the software has grown, we also seen good steady growth from VMS. And what we think that we'll start to see as we go through this, more opportunities coming through for that business as we go on through the year. You know, the opportunity then to also kind of expand our product set on the platform gives us more cross sale and opportunity. So we already had a investment manager scheduled to come on later this year. We talked about, um, our four Berry workbook functionality in Argus workbook, but now we're really going to be focusing on pulling in, um, the fairways product to become our debt manager and developer. And when we talked about it at, um, connect a couple of weeks ago, a lot of customers pushed us for that they would like that, that, that, interaction on the platform, and it just made sense for us to doing it. So to summarize again, strong software push, a lot more cross-sell and up-sell, and we hope to continue that going into Q2 and Q3. Hovind, did I miss anything?

No, I think you answered it well, Mike.

Well, thanks, man. That's great. And then it's kind of related, but you talked about getting more assets on the platform. I'm curious, like coming out at Connect, whether you've seen the pace of kind of adoption, you know, picking up and speeding up, given that people want, you know, access to some of the new functionality.

Yeah, our pace has definitely hastened. So like I said earlier on Argus Assist, we got really good take up a Vargas assist at the conference. As I said earlier, 30% of our customers who were there, individual companies, not just all the attendees, were excited to step up to that. But what was really heartening for us is we've seen a lot more work happened over the last couple of weeks as we are helping our customers curate and clean their data. As we talked about at the conference, Steve Besner and his team have really got quite a few capabilities that we have developed with our knowledge graph and the AI that we have to help do that and pull their data on. And we see a lot of customers taking advantage of that. In fact, we've also made that technology available to customers who don't want to use us. And some customers have just taken our cookbook and put that on. So we're seeing a lot of push on that. So a lot of the customers are starting to drive us, which is excellent. So we're seeing a lot of the largest funds push that. But in addition, what we're also seeing is that we're having very good conversations across our different So the funds are eager to do that because they're engaging with all the VMS teams, but our brokerage clients as well, because they can see the value to it. And then even the lenders who have quite a large portfolio on there, we see them starting to jump on as well. So it's across the board, good uptake. And again, this gives us a good opportunity to really improve value for our customers.

And Gavin, just a good proof point, and that would be just looking at the ARR growth that we have on South Florida, you know, more than 10%, close to 11%. And, you know, the other data point that I think would just give you color in regard to the pace of adoption is you see that our GRR continues to remain in the mid-90s, so it's a Those are two really good proof points in regards to just the traction that's building in our adoption and client entrance.

Appreciate it. Thanks so much.

At this time, there are no further questions. I will now turn the call back to Mike Gordon, CEO, for closing remarks.

Thanks, Jade. Everybody, thanks again for joining us on this call this evening. As you can tell, we're excited about where our business is heading and the work that we have ahead of us. But as always, if there are any questions, please don't hesitate to get in touch with Camilla or Martin. And I look forward to talking to you all as we head into finishing this quarter. Have a great one, guys. Thanks.

This concludes today's call. Thank you for attending. You may now disconnect.