Altus Group (TSE:AIF) reported second-quarter results that showed higher revenue, adjusted EBITDA and adjusted earnings per share as the company continued to simplify its portfolio and focus on valuation software, data and workflow tools for commercial real estate customers.
Revenue rose 6% year over year on a constant-currency basis, while adjusted EBITDA increased 34% and adjusted EBITDA margin expanded by 540 basis points, according to former Chief Financial Officer Pawan Chhabra. Adjusted EPS increased 36%. Chhabra said the prior-year comparison included One11, and that excluding One11 from the comparable period, revenue and recurring revenue each grew 7%.
Software and VMS Lead Growth
Software revenue grew at a double-digit rate for the second consecutive quarter, led by sales of the company’s ARGUS Intelligence platform. Valuation Management Solutions, or VMS, revenue increased 7%, while standalone data offerings continued to improve, management said. Services revenue declined year over year, although the decline was modest when excluding One11 from the prior-year period.
Software annual recurring revenue increased 10.4% to C$206.8 million, and net revenue retention was 106.9%. Chhabra said roughly 80% of ARR growth came from customer volume and pricing, with new-logo acquisitions accounting for the remainder.
Chief Executive Officer Mike Gordon said Altus is seeing stronger cross-selling activity as it adds products and capabilities to the ARGUS Intelligence platform. Second-quarter software cross-sell activity was three times the level of a year earlier, he said, while ARGUS gross retention exceeded 95%.
During the question-and-answer session, Chhabra said 87% of the company’s ARGUS customer base had moved to ARGUS Intelligence, up from 84% in the prior quarter. He added that 48% of the ARGUS Intelligence base was using asset-based pricing, compared with 44% in the previous quarter.
Gordon said more than 90% of VMS employees are trained and using ARGUS Intelligence in customer portfolio reviews. The internal adoption is intended to improve VMS efficiency, support advisory work and help the company cross-sell software into its VMS client base.
Portfolio Simplification and Capital Returns
Gordon said Altus completed four divestiture transactions since the start of the year, including the sale of its remaining legacy interest in the GeoVerra joint venture for C$26.7 million. He said the portfolio simplification program established at the start of the year is now complete.
The company also sold its development advisory business to Newmark. As part of that transaction, Altus entered an enterprise agreement with Newmark covering ARGUS Intelligence and add-on capabilities including ARGUS Assist. Gordon said the arrangement creates an opportunity to support Newmark professionals with faster workflows and portfolio insights, though management did not disclose the financial contribution of the agreement.
Altus has returned approximately C$450 million to shareholders year to date, reducing its share count by roughly 20% to 34.7 million shares outstanding. The company ended the quarter with C$61.9 million in cash, funded debt to EBITDA of 2 times and approximately C$364 million of available capital. Management said it expects leverage to settle in the mid-2-times range over time and intends to return additional capital during the second half of the year.
Year-to-date underlying cash generation improved by approximately C$7 million before interest and taxes, driven by stronger billings and collections, Chhabra said.
Higher Outlook as Cost Actions Advance
Altus raised its full-year organic constant-currency revenue growth outlook by 25 basis points to a range of 5.25% to 7.25%. It also increased its expected adjusted EBITDA margin expansion by 60 basis points to between 510 and 610 basis points.
The updated outlook implies adjusted EBITDA of approximately C$127 million to C$131 million for the year, compared with C$98 million in the prior year. Management expects the fourth quarter to be stronger than the third quarter, consistent with the company’s typical seasonal pattern.
Gordon said restructuring initiatives completed year to date are expected to generate approximately C$15 million in annualized savings. He also cited additional efficiency opportunities from completing divestitures, consolidating older product platforms and deploying AI-enabled tools. Management said it plans to continue investing in data, AI agents, lender-focused offerings and user-interface improvements.
Asked about its longer-term “Rule of 40” objective, which combines growth and profitability measures, Gordon said the company expects to progress through both margin improvement and revenue growth. He said Altus believes it can reach that goal without relying on a meaningful market recovery.
Valos.ai Acquisition Adds Lending Workflow Capabilities
Altus also announced the acquisition of Valos.ai, a U.K.-based platform that connects property valuers and lenders in commercial real estate valuation workflows. Gordon described Valos as a relatively small but strategic tuck-in acquisition that is not material to current financial guidance.
Valos enables lenders to initiate and manage valuation requests, allows valuers to access data and prepare reports, and automatically checks reports against lender requirements. The platform also converts valuation information into structured data that can be used for credit decisions, portfolio monitoring, risk management and reporting.
Gordon said the acquisition expands Altus’ presence in lender workflows, adds AI capabilities designed for valuation documents and lender requirements, and provides a data source that could support the company’s Altus Knowledge Graph. In the near term, Altus plans to support Valos’ U.K. growth and pursue cross-selling opportunities, including in Canada. Management expects to integrate Valos into the ARGUS Intelligence platform in 2027.
New CFO Katie Royce said she joined Altus as the company approaches the end of its multiyear transformation. She cited the company’s technology, data assets and opportunity to deepen its role in customer workflows, while emphasizing disciplined capital allocation, scalable growth and progress toward long-term financial targets.
About Altus Group (TSE:AIF)
Altus Group Ltd operates in the Canadian real estate sector. Its services can be summed up as advisory services, software and data solutions to the property and real estate industry. The company has three reportable segments namely Altus Analytics, Commercial Real Estate Consulting, and Geomatics. It generates maximum revenue from the Commercial Real Estate Consulting segment. A part of its revenue is also derived from the United States, Europe, and the Asia Pacific.
