What Altus Group (AIF) Said on Its Q3 Earnings Call

Key Points

• Altus raised its full-year profitability outlook after Q3 revenue grew 6.8% and adjusted EBITDA increased 42%, lifting the margin by 790 basis points to 32.1%. It now expects full-year adjusted EBITDA margin expansion of 600–620 basis points and aims to reach the “Rule of 40” by year-end, a year ahead of plan.
• Software led growth: constant-currency software revenue rose 14.6%, while software ARR grew nearly 15%, including an initial contribution from Valos. Retention also improved, with gross revenue retention at 91.9% and net retention at 107.5%.
• Altus said more than 60 customers have signed up for its AI-powered ARGUS Assist, and it plans further product launches. It has also returned CAD 522 million to shareholders through October and is preparing for a U.S. dual listing in 2027.

Altus Group TSE: AIF raised its full-year profitability outlook after reporting higher third-quarter revenue and a sharp increase in adjusted earnings, helped by software growth and operating efficiencies.

The commercial real estate software and services company reported revenue growth of 6.8% on both a total and organic constant-currency basis, at the high end of its guidance range. Adjusted EBITDA rose 42%, while the adjusted EBITDA margin expanded by 790 basis points to 32.1%.

CEO Mike Gordon said he expects Altus to reach the “Rule of 40” by the end of the fourth quarter, a year ahead of its target. The company exited the third quarter at Rule 39, combining 6.8% organic constant-currency revenue growth with its adjusted EBITDA margin.

Adjusted earnings per share rose 87% on an as-reported basis to CAD 0.71, reflecting stronger earnings and a lower share count. Altus said it had returned CAD 522 million to shareholders through October, including dividends, reducing its share count by about 22%.

Software Growth Leads Results

Software revenue grew 14.6% on a constant-currency basis, led by ARGUS Intelligence. Valuation management services, or VMS, revenue increased 5.9%, while data revenue fell 6.8%.

Recurring revenue grew 7.9% to CAD 112.2 million and represented about 96% of revenue for the year to date, CFO Katie Royce said. She noted that some one-time revenue expected in the fourth quarter arrived in the third quarter instead, although results would still have been within the company’s guidance range without it.

Software annual recurring revenue grew almost 15%, including an initial contribution from the acquired Valos business. Excluding that effect, software ARR still grew by double digits for a fourth consecutive quarter. Royce said underlying software ARR growth accelerated from the second quarter but declined to quantify it.

Software gross revenue retention improved by 150 basis points to 91.9%, and net retention rose by 110 basis points to 107.5%. Royce attributed the improvement to stronger retention and cross-selling, particularly for ARGUS Intelligence.

In the data business, Altus is investing in how Reonomy and Data Studio reach customers and fit into their workflows. Gordon said Reonomy data is now being pulled into ARGUS Intelligence, with similar work planned for Data Studio early next year.

Outlook Raised as Margins Expand

For the full year, Altus narrowed its constant-currency organic revenue growth forecast to 6.4%–7%, from 5.25%–7.25%. It raised its expected adjusted EBITDA margin expansion to 600–620 basis points, from 510–610 basis points, implying a full-year margin of 28.8%–29%.

For the fourth quarter, the company forecast organic constant-currency revenue growth of 5%–7%, as-reported revenue of CAD 119.5 million to CAD 122 million, and an adjusted EBITDA margin of 33.5%–34.5%. Its as-reported revenue outlook includes inorganic contributions and updated foreign-exchange rates.

Gordon said the first quarter typically has the company’s lowest EBITDA margin of the year, but he expects the first quarter of 2027 to improve on the same period in 2026. Altus also expects to benefit next year from a full year of savings from work completed in 2026.

Royce said it was too early to provide a free-cash-flow conversion target. Operating cash flow for the first nine months was CAD 36.9 million and included transformation, divestiture and acquisition costs. She expects meaningful improvement next year, with some cash costs continuing into 2027 and further improvement possible in 2028.

New Products and Customer Adoption

Gordon said more than 60 customers had signed up for ARGUS Assist since early September. The AI-powered offering is part of Altus’ broader effort to help customers reduce manual work and analyze real estate data.

The company plans to launch an ARGUS Assist MCP connector at the beginning of December and formally introduce Investment Manager, which connects asset-level cash flows to fund structures and investor returns, in early 2027. Gordon said a select group of customers is already using Investment Manager and providing feedback.

Responding to an analyst’s question, Gordon said a standard ARGUS Intelligence bundle that includes ARGUS Assist, Asset Manager and Portfolio Manager carries a pricing uplift. He said bundling simplifies the sales message while providing customers with more value.

Altus is preparing for a U.S. dual listing in 2027 and plans to hold its next investor day on April 28 in New York, alongside its Altus Connect customer conference.

About Altus Group (TSE:AIF)

Altus Group is a leading provider of CRE intelligence, anchored by ARGUS - the industry's go-to software for valuation and performance analytics. For more than two decades, Altus Group has played a vital role in empowering CRE professionals with the analytics and trusted advice they need to make high-impact decisions with confidence. The world's CRE leaders rely on our market-leading solutions and expertise to drive performance and manage risk. Our people around the world are driving meaningful impact in an industry undergoing unprecedented change - helping shape the cities where we live, work, and build thriving communities.

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