What Quarterhill (QTRH) Said on Its Q3 Earnings Call

Key Points

• Quarterhill posted its strongest quarterly revenue since 2022, up 9% year over year to $43.2 million, and its fifth consecutive quarter of positive adjusted EBITDA. Adjusted EBITDA rose to $3.9 million as gross margin improved to 29% from 26%.
• The company is working to close its acquisition of Conduent’s tolling business in the fourth quarter, subject to closing conditions, including TSX approval. Quarterhill raised about CAD 51.8 million through a private placement and later repaid its CAD 57.5 million convertible debentures; management said cash will be below the quarter-end balance after repayment.
• Quarterhill reported a $418.9 million revenue backlog and highlighted new transportation contracts, including a potential 14-year L.A. Metro ExpressLanes subcontract. It also plans to launch an AI-enabled platform with its first customer in January.

Quarterhill TSE: QTRH reported its highest quarterly revenue since 2022 and a fifth consecutive quarter of positive adjusted EBITDA, as the transportation technology company worked toward closing its acquisition of Conduent’s tolling business.

Revenue for the third quarter ended September 30, 2026, rose 9% to $43.2 million from $39.7 million a year earlier. Gross profit increased to $12.3 million from $10.5 million, while gross margin improved to 29% from 26%.

Chief Financial Officer David Charron attributed the margin improvement to restructuring, better contract economics and higher revenue from the commercial vehicle and enforcement business. Adjusted EBITDA rose to $3.9 million, or 9% of revenue, from $1.4 million, or 3% of revenue, a year earlier.

All figures are in U.S. dollars unless otherwise noted. Adjusted EBITDA is a non-GAAP measure and may not be comparable with similarly named measures reported by other companies.

Cash used in operations was $8.6 million, compared with $6.4 million generated in the prior-year quarter. Charron said the change was driven primarily by acquisition-related costs, largely tied to the Conduent transaction, with no comparable costs a year earlier.

Conduent deal and balance sheet

Chief Executive Officer Chuck Myers said Quarterhill continued to work toward closing the acquisition of Conduent’s tolling business in the fourth quarter, subject to closing conditions including Toronto Stock Exchange approval. He said the company had made significant progress on integration planning.

Quarterhill’s third-quarter results included no operating contribution from the Conduent business, Charron said, though they did include transaction-related costs. Asked about customer feedback on the planned transition, Myers said customers had been “cautiously optimistic” and were looking forward to changes.

Charron declined to provide a projected cash and debt position following the acquisition, saying it was premature and that more information would be provided when the deal closes.

Quarterhill ended September with $51.6 million in cash, up from $26.2 million at the end of June. The increase primarily reflected a September private placement that raised gross proceeds of approximately CAD 51.8 million through the issuance of about 20.9 million shares at CAD 2.48 each. Company insiders subscribed for roughly CAD 2 million.

After quarter-end, Quarterhill repaid the CAD 57.5 million principal of its 6% convertible debentures, along with accrued interest. The company also sold its remaining 10% interest in WiLAN and received early payment of a $6.25 million earnout related to its original 2023 sale of the business. Those WiLAN transactions generated $8.5 million in aggregate consideration.

Charron said Quarterhill still had a term loan and that cash would be lower than the third-quarter balance because cash was used to repay the debentures.

Contract wins and technology investment

Quarterhill’s revenue backlog was $418.9 million as of September 30. Charron said the figure includes signed contracts and expected extensions of existing programs with defined scope and timing, but excludes pipeline opportunities and unsigned change orders.

Myers highlighted a roughly $28.2 million subcontract to support the L.A. Metro ExpressLanes back-office system alongside a partner. The subcontract could run for up to 14 years. During the question-and-answer session, Myers said the project had been underway for several months and cited the companies’ customer relationships, as well as Quarterhill’s size and reputation, as factors in the win.

The company also received a $5.25 million Oklahoma contract to deploy commercial vehicle screening technology on Interstate 35, including weigh-in-motion, electronic screening and tire anomaly detection. Myers said Quarterhill won multiyear contracts with Pennsylvania and Idaho transportation agencies to maintain and modernize commercial vehicle networks.

Quarterhill is investing in AI capabilities including vehicle identification, automated image review and anomaly detection, Myers said. The company plans a January launch of its next-generation AI-enabled platform with its first customer. The modular platform is designed to automate parts of tolling operations and can be adopted in phases without replacing existing systems, he said.

About Quarterhill (TSE:QTRH)

Quarterhill is a global leader in the Intelligent Transportation System (ITS) industry, advancing mobility through smart infrastructure solutions that reduce congestion, improve roadway safety, and create more sustainable travel. Each year, Quarterhill's platforms process billions of transactions, perform compliance and safety inspections on millions of commercial vehicles, and enable transportation agencies worldwide to optimize thousands of lanes of traffic to improve travel for everyone. Leveraging advanced artificial intelligence and machine learning technologies, Quarterhill's platform delivers automation and predictive insight to help agencies manage transportation networks more efficiently.

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