Altus Group (TSE:AIF) executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight steady recurring revenue growth, continued margin expansion, and a sharpened strategic focus following the recently announced sale of its appraisal business to Newmark.
Management noted that beginning with the Q4 release, Altus has introduced new disclosures and published a supplemental document recasting historic results to help investors update models under the new reporting format. The appraisal business has been moved to discontinued operations, and results discussed on the call reflected continuing operations. The company also said it plans to eliminate its corporate cost line in reporting at some point in 2026.
Management’s view on AI and product direction
Gordon said Altus is enhancing “agentic” capabilities across the valuation workflow—covering data ingestion and validation, scenario analysis, and recommendation engines—while positioning ARGUS as a system of record supported by large-scale datasets and benchmarking depth. He also pointed to a strategic shift toward asset-based pricing as reducing vulnerability compared with seat-based models.
On internal efficiency, Gordon said Altus has demonstrated that automation using its valuation agent capabilities could reduce “time to valuation by up to 90%,” and added that increased AI coding could optimize R&D expenses and speed innovation. He later told analysts the company has evaluated compute costs for agentic AI and believes the features can be delivered with gross margins comparable to other ARGUS Intelligence lines.
2025 results: margin expansion and portfolio simplification
Gordon characterized 2025 as a year of “steady revenue growth and excellent retention,” adding that cost discipline and operating leverage drove a 310 basis point improvement in consolidated margins. CFO Pawan Chhabra said the company delivered its sixth consecutive quarter of margin expansion, with operating leverage strengthening and recurring revenue continuing to grow.
Within the Analytics segment, Chhabra said software revenue grew 5.4% in Q4, with ARGUS Intelligence delivering double-digit growth. VMS revenue grew 9.8% in the quarter, though Chhabra attributed part of that to a one-time timing benefit from an operational efficiency that shifted work into Q4; excluding the shift, he said underlying growth was “in the 5% range.”
Chhabra said Analytics margins expanded 360 basis points in Q4 and 270 basis points for the full year, finishing at 33% adjusted EBITDA margins. He attributed margin improvement to revenue growth, portfolio optimization, efficiency gains through a global service center, restructuring benefits, and disciplined expense management. Management reiterated an objective to reach “Rule of 40” by the end of 2027.
On innovation, Gordon said Altus bolstered ARGUS Intelligence with Benchmark Manager and an “advanced valuation agent,” and noted the company has been approved for a patent on the Altus Knowledge Graph. He described the Knowledge Graph as connecting disparate asset-level data using an Altus ID to form a “common golden record,” calling it foundational for collaboration and data collation in ARGUS Intelligence.
Divestitures, restructuring, and go-to-market changes
Altus reiterated that it is rationalizing its portfolio. Management referenced the sale of the Canadian appraisal business and said additional divestitures are underway that could close in the first half of 2026. Gordon said the company has “recently signed an LOI for the Canadian Development Advisory business” and has identified select non-core analytics businesses for potential divestiture as it prepares for a U.S. listing in 2027.
On the call, executives provided more detail on the composition of the former AD&A segment. Chhabra said appraisals historically represented about 30% of that segment’s revenue and Development Advisory about 70%; within Development Advisory, he said revenue was roughly 70% North America and 30% APAC. In response to a follow-up, management clarified the breakdown was on revenue, not EBITDA. Later, management also noted that appraisals generated CAD 31 million in revenue last year.
Gordon said Altus initiated a restructuring program and other cost actions earlier in the month that are expected to deliver “millions of dollars in annualized savings,” alongside targeted go-to-market refinements. In describing the commercial changes, he said the company has moved toward taking its valuation solutions to market “in one motion,” rather than separate motions for software, VMS, and data, and highlighted the appointment of Rich Sarkis as Chief Commercial Officer. Gordon said the company is seeing increased executive sessions with customers and expects to further advance messaging at its upcoming Connect conference.
When asked about churn, Gordon said the ARGUS business typically sees growth retention “in and around or above 95%,” with churn mainly in long-tail customers such as funds that come and go. He also said data experienced somewhat higher churn last year but that the company has a strategy to address it, while VMS retention is “incredibly high,” with performance more often reflected in upsell and downsell activity than churn.
Outlook, cash generation, and capital returns
Chhabra said guidance is presented on an organic basis for continuing operations only (excluding the appraisal business). He outlined a growth framework in which approximately 80% of growth is expected to come from volume and pricing, and 20% from new logos. He said software is expected to remain the strongest grower with “solid high single-digit growth,” while ARGUS Intelligence is expected to grow at double-digit rates within that category, offset by headwinds from other software categories being resolved onto the platform over time.
Chhabra said the company is not underwriting a market rebound for VMS, and expects sustained growth consistent with current market conditions. He added that data has opportunities for improvement, with progress expected to build over the next couple of quarters. Management said guidance may be updated as additional divestitures are completed.
On margins, management said it expects sustained adjusted EBITDA margin expansion driven primarily by operating efficiencies and expense management, reflecting recent cost actions. In Q&A, Chhabra agreed with an analyst’s characterization that margin expansion should progress steadily through 2026 as the company works toward the margin profile discussed at its Investor Day for 2027.
Executives also emphasized cash generation and balance sheet flexibility. Chhabra said Q4 continued a pattern of strong cash generation with “double-digit growth driven by record conversion,” and said the company expects to move toward a funded debt-to-EBITDA target of roughly 2.5x over time.
On capital returns, Gordon said the board approved an increase to annual plans, giving Altus flexibility to deploy up to CAD 800 million during the year through methods including its normal course issuer bid and potential substantial issuer bids. Management said it is evaluating ways to return up to an additional CAD 450 million to shareholders within the first half of 2026, with a plan to be in the market over the next 100 days. Gordon added that Altus views the current market environment as an attractive opportunity to allocate capital into its own shares.
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.
