Altus Group Limited ((TSE:AIF)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Altus Group Limited revealed a mixed sentiment, highlighting both positive strides and challenges. While the company celebrated growth in recurring revenue and margins, alongside a robust performance from ARGUS Intelligence, it also faced leadership changes and a softer performance in certain segments. The downward revision of guidance and restructuring efforts underscore the hurdles ahead, yet they also hint at potential improvements in the future.
Recurring Revenue Growth
Altus Group Limited reported a 5.2% increase in recurring revenue, primarily driven by ARGUS Intelligence, which achieved double-digit growth for the second consecutive quarter. This growth underscores the strength of ARGUS Intelligence in maintaining its momentum and contributing significantly to the company’s revenue stream.
Consolidated Margin Expansion
The company experienced a notable expansion in consolidated margins, which grew by 230 basis points to 19.2%. Year-to-date, margins have increased by 440 basis points, reflecting the company’s ability to enhance operational efficiency and profitability.
Strong Cash Flow Generation
Altus Group demonstrated strong cash flow generation, with cash provided by operating activities rising by 22.8% and free cash flow increasing by 36.5% in the quarter. Additionally, free cash flow per share saw a substantial increase of 45.7%, indicating robust financial health and liquidity.
Adjusted EBITDA and EPS Growth
The company reported a 16.1% year-over-year rise in adjusted EBITDA, while adjusted EPS doubled from the previous year to $0.38. These figures highlight Altus Group’s improved profitability and efficient cost management.
ARGUS Intelligence Positive Performance
ARGUS Intelligence continued to perform exceptionally well, with high double-digit growth and net revenue retention levels above 100%. The platform also enjoyed strong renewals, reinforcing its value proposition and customer satisfaction.
CEO Departure and Leadership Changes
In a significant leadership shift, CEO Jim Hannon departed the company, with Mike Gordon stepping in as Executive Chair and set to assume the CEO role in Q1 2026. This transition marks a pivotal moment for the company’s strategic direction.
Softer Performance in Appraisals and Development Advisory
The Appraisals and Development Advisory segment faced challenges, particularly in Canada, due to tariff uncertainty, inflationary pressures, and evolving monetary policy. This softness impacted overall performance and necessitated a more cautious outlook.
Guidance Revision
Altus Group revised its fiscal 2025 guidance downward, citing ongoing softness in the Appraisal and Debt Advisory segment and adopting a more conservative stance on revenue and consolidated adjusted EBITDA margins. Despite these adjustments, the company remains optimistic about ARGUS Intelligence’s continued strong performance into 2026.
Restructuring Costs
The company recorded $6.6 million in restructuring costs during the quarter, related to headcount reduction and termination of leases and other contracts. These measures are part of the company’s efforts to streamline operations and improve future performance.
Forward-Looking Guidance
Looking ahead, Altus Group’s fiscal 2025 business outlook reflects a more conservative view on revenue due to ongoing challenges in certain segments. However, optimism persists for ARGUS Intelligence, which is expected to maintain its robust growth trajectory into 2026. The company ended the quarter with a strong cash position and a favorable debt-to-EBITDA ratio, positioning it well for future endeavors.
In summary, Altus Group Limited’s earnings call presented a balanced view of achievements and challenges. While the company faces hurdles in specific segments and leadership transitions, its strong recurring revenue growth, margin expansion, and cash flow generation provide a solid foundation for future growth. The continued success of ARGUS Intelligence remains a bright spot, offering optimism for the company’s long-term prospects.