Altus Group Reports Q2 Results, Raises Full-Year Outlook

Altus Group (TSX: AIF ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

Access the full call at Summary Altus Group reported a 6% revenue growth, a 34% increase in adjusted EBITDA, and a 36% rise in adjusted EPS for Q2 2026, driven by strong performance in software and VMS offerings. The company completed four divestitures, including the sale of its development advisory business to Newmark, and plans to focus on higher-growth, higher-margin businesses. Altus Group raised its revenue outlook by 25 basis points and increased its margin expansion outlook by 60 basis points for the full year, suggesting strong momentum into the second half.

The acquisition of Valos AI, a UK-based platform, aims to enhance Altus Group's valuation and lending workflows with AI capabilities, integrating it into their existing suite to drive strategic growth. The company's capital allocation strategy includes returning over $450 million to shareholders and executing strategic tuck-in acquisitions like Valos AI while optimizing its capital structure. Full Transcript OPERATOR Ladies and gentlemen, thank you for joining us and welcome to Altus Group's Q2 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 Kamila Bertoszewicz, Chief Communications Officer. Kamila, please go ahead.

Kamila Bertoszewicz, Chief Communications Officer Thank you, operator. Hi everyone, and welcome to the conference call and webcast discussing Altus Group's second quarter results for the period ended June 30, 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 SEDAR+ after market close this afternoon. I'm joined today by our CEO Mike Gordon, Pavan Chhabra and our new CFO, Katie Royce.

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 52-112. 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 therefore 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.

With that, I'll now turn it over to Pavan to cover our Q2 results. Pavan Chhabra Good evening everyone and thank you for joining us. Our second quarter results reflect the continued progress we're making towards a more focused, higher-growth, higher-margin business. Revenue grew 6%, adjusted EBITDA increased 34%, margins expanded by 540 basis points and adjusted EPS increased 36%.

As a reminder, the prior period included 111. Excluding 111 from the comparative period, both revenue and recurring revenue grew 7%, reflecting stronger underlying performance. In the reported results, net income declined year over year, driven primarily by items outside of our core operating performance. 2 million of one-time costs related to strategic corporate initiatives and activities supporting our divestitures.

Turning to the revenue by line, growth was once again led by our flagship offerings, Argus Intelligence and VMS. Software revenue grew double digits for a second consecutive quarter, driven by strong Argus Intelligence sales. As Mike will discuss shortly, we're seeing encouraging improvements in sales execution. VMS revenue grew 7%, underscoring its critical role in supporting our clients' compliance and valuation workflows.

It also serves as an important entry point to Argus Intelligence, creating opportunities to deepen client relationships over time. In Data, which reflects our standalone market data offerings, churn continues to trend in the right direction and we expect that progress to be increasingly reflected in revenue as we move toward year end. Services revenue declined year over year; excluding 111 from the prior period, revenue would have been down modestly. Overall, we're encouraged by the continued strength in software and VMS and the improving trends we're seeing in Data.

Our KPIs remain healthy and continue to support the strength of our recurring revenue model. 9%, consistent with our long-term growth profile. Approximately 80% of the growth came from volume and pricing, with new logo acquisition contributing to the balance. VMS metrics also remain strong, underscoring the critical role VMS plays in our clients' valuation and reporting workflows.

Overall, these operating metrics reinforce the predictability and resilience of our recurring revenue base. Turning to the P&L, we continue to make progress towards our target operating model. Gross margins expanded by 190 basis points, reflecting revenue growth and operating leverage in the business. G&A declined by 360 basis points as a percentage of revenue, driven by our restructuring actions, portfolio simplification and disciplined management of corporate costs.

We also continue to invest in growth. Sales and marketing expense increased and included the impact of Altus Connect, our annual client conference. R&D increased modestly as we continue bringing more solutions onto the Argus Intelligence platform. The result is meaningful margin expansion while continuing to invest in our growth priorities.

And finally, a recap of cash generation and the balance sheet. On a year-to-date basis, underlying cash generation improved by approximately 7 million year over year before interest and taxes, driven by stronger billings and collections. The year-over-year comparison is also affected by the inclusion of businesses classified as discontinued operations, taxes related to the property tax sale and lower interest income following the return of excess cash to shareholders. Our balance sheet remains a source of strength.

9 million of cash, funded debt to EBITDA of 2 times and approximately 364 million of available capital. We continue to optimize our capital structure and expect leverage to settle in the mid-2-times range over time. 7 million shares outstanding. Before I hand it over to Mike, I'd like to thank the entire Altus team for their hard work and commitment over the years.

I'd also like to thank our shareholders, clients, analysts and the broader investment community for their engagement and support. I am proud of what we've accomplished together and the results that we've delivered. With that, I'll turn it over to Mike. Mike Gordon — Chief Executive Officer Thanks, Bevan.

Before we move on, I just want to take a moment to thank you for everything you've contributed to Altus Group over your time with the company. You've helped strengthen our financial foundation, supported a significant transformation, and played an important role in positioning Altus Group for the next phase of growth. Many of these things our shareholders value today, including a more focused portfolio, a disciplined capital return program, better visibility into business performance, and greater transparency with the investment community. This all reflects the work that you've helped drive.

We're grateful for the steady leadership, discipline, and partnership that you've brought to the role and for the support you're providing through this transition. As the saying goes, leave it better than you found it. And Pavan, you did exactly that. So on behalf of the board, the leadership team, and everyone at Altus Group, thank you.

We wish you all the best in what comes next. As you can probably tell from our recent news flow, it's been an exceptionally active and productive period for Altus Group. At the beginning of the year we laid out our objectives for our value creation plan. A foundational element was simplifying the portfolio to sharpen focus on the market-leading valuation solutions.

S. listing in 2027. I am pleased to say that we have been executing ahead of plan since the start of the year. 7 million.

Before I go any further, I'd like to recognize the many Altus Group team members who worked tirelessly to make this happen. Executing transactions on this scale and complexity on an accelerated timeline is no small accomplishment, and their efforts have been instrumental in transforming Altus Group ahead of schedule. While we always maintain a disciplined approach to portfolio management and capital allocation, I am pleased to say that the portfolio simplification work we set out to accomplish this year is now complete.

Altus Group is now a much more focused company with a business model centered on the areas where we see the greatest long-term opportunity to create value. And the benefits of that simplified model are already showing up in our financial profile. We now have a higher-quality earnings stream that will drive stronger adjusted EBITDA-to-free-cash-flow conversion. These are tangible proof points that the operating model that we've been building toward is taking hold.

Importantly, the sale of our development advisory business to Newmark has also created new commercial opportunities. Our new enterprise agreement with Newmark includes ARGUS Intelligence and several of its add-on capabilities, including ARGUS Assist. We're helping their professionals work more efficiently, generate insights faster, and deliver greater value to their clients. Workflows that once took days can now be completed in moments, which speaks directly to the value our technology can deliver.

The divestitures have also enabled us to deliver on our capital return objectives. As Pavan just mentioned, we've already returned more than 450 million and brought down our float by 20%. With a strong balance sheet in hand, we remain committed to returning additional capital in the second half of the year. Another benefit of simplifying the business is showing up in our cost structure.

Delivering the work ahead of plan has allowed us to capture efficiencies sooner than expected, which gives us the confidence to increase our adjusted EBITDA margin expansion outlook by an additional 60 basis points this year. At the same time, we've remained disciplined in balancing our cost reductions with investments that support future growth. As we continue to reshape the organization around our strategic priorities, our year-to-date restructuring initiatives will generate approximately 15 million in annualized savings.

With the final divestitures now behind us, coupled with our AI enablement initiative, we are seeing additional opportunities to further improve the efficiency and the effectiveness of this business. Our sales motion is also getting sharper, and we're starting to see our investments in sales and go-to-market translate into stronger execution. New sales are tracking in line with our plan, with momentum building as we move into the second half. The team is also getting better at cross-selling and winning larger deals across ARGUS and VMS.

The quality of our recurring revenue base continues to show through as well. Software net revenue retention at 107% is a clear sign that our cross-sell, upsell, and pricing discipline are working. Underneath that number, the cross-sell momentum is especially encouraging. Q2 software cross-sell was up three times over the past year, reflecting more people on the platform, stronger sales execution, and a faster pace of delivering new product updates.

On top of that, ARGUS gross retention is over 95%. As platform adoption grows, we're consistently bringing more assets on the platform. What's on the platform will fuel better analytics for our clients. Adoption is not only happening with our clients, it is also happening inside of Altus Group, with our VMS team increasingly leveraging ARGUS Intelligence to do their work.

Over 90% of our VMS employees are now trained and using the platform for their customer portfolio reviews. That internal adoption is important because it allows us to bring VMS and ARGUS together more effectively and to scale a co-selling motion that creates opportunities to cross-sell software into that base. Now turning to our business outlook for the year, as a reminder, this relates to continuing operations on an organic basis. 25% organic constant currency growth.

In addition, with our cost actions tracking ahead of plan and driving more efficiencies, we're increasing our margin expansion outlook by 60 basis points to 510 to 610 basis points for the full year. This guidance range would translate into approximately 127 to 131 million in adjusted EBITDA this year, a meaningful step up over last year's 98 million in EBITDA. Looking to the balance of the year, our expectations remain consistent with our typical seasonal pattern, with Q4 anticipated to be stronger than Q3. But our raise in guidance is based on the momentum we're seeing in the second half of the year.

Also, as you might recall, Q3 last year benefited from pricing actions as a large cohort of our ARGUS Enterprise came up for renewal and contracted on ARGUS Intelligence. As mentioned, this guidance is on an organic basis, as the new Valos AI acquisition that we announced today is not material to financial guidance. While Valos has delivered strong ARR growth and is already profitable, it remains relatively small from our financial perspective. All that said, we're feeling really good about our trajectory and a path to becoming a Rule of 40 company even sooner than we originally anticipated.

Now let's shift gears to the Valos AI acquisition. Valos AI is a UK-based company that has quickly become a leading platform for connecting valuers and lenders within the property valuation workflow. In many ways, Valos is highly complementary to what we already do. Similar to how our VMS practice sits at the center of appraisers and investment reporting, Valos sits at the center of the workflow between appraisers and lenders.

Valos started six years ago with a simple idea: valuation report production was just taking too long and costing firms too much. The founders set out to solve that problem, and since then they have built Valos into a market-leading valuation platform used by many firms and surveyors in the UK. What they have built is special — a product that is changing how valuers and lenders work together, and a business that has earned real trust in the market. It is exactly the kind of innovation and client impact we want to support and to scale at Altus Group.

Now that we have finished our divestitures, we are in the market for these types of acquisitions. AI is also deeply embedded across the Valos platform. It helps automate data gathering, read and structure complex documents, support quality assurance, extract comparables, and it can turn fragmented property information into reusable data. In practical terms, this means faster workflows, better accuracy, and a platform that becomes more valuable as more data moves through it.

To help put Valos in context, it's useful to understand the role that it plays in the commercial real estate lending ecosystem. When a lender needs a property valuation to support a financing decision, the process typically involves coordinating with an independent valuer, exchanging large amounts of information, managing compliance requirements, and reviewing the final report before it can be used in a credit and risk decision. Historically, much of that process has been manual, fragmented, and time-consuming. Valos brings that workflow together on a single platform.

A lender can initiate and manage a valuation request directly through Valos, and the selected valuer receives those instructions seamlessly within the same ecosystem. The valuer then uses the platform to access property data, gather comparable evidence, complete the valuation report, and satisfy the lender's specific requirements. Before that report is submitted, Valos automatically checks it against lender requirements, helping improve accuracy and reduce work. Once completed, the valuation is delivered back through the platform, creating a single, transparent workflow for both parties.

What's particularly powerful is that the process doesn't end with the report itself.