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Operator: Good day, everyone. Welcome to Altus Group's Q4 and Full Year 2025 Financial Results Conference Call. At this time, I would like to hand things over to Camilla. Please go ahead.
Camilla Bartosiewicz: Thank you, Lisa. Hi, everyone, and welcome to the conference call and webcast discussing Altus Group's fourth quarter and year-end financial results for the period ended December 31, 2025. 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; and our CFO, Pawan Chhabra. Before we get started, I wanted to point out a couple of things. As discussed at our Investor Day, beginning with our Q4 results, we have rolled out some of our new disclosures. To help investors and analysts rebuild their models under our new reporting format, we have published a supplemental document that shows a representation of our historic results, posted on the Investors section of our website along with the other materials I referenced. Earlier this week, we announced the sale of our appraisal business to Newmark. This business has been moved under discontinued operations for our results. And accordingly, our results for continuing operations exclude the Appraisals business revenue and adjusted EBITDA contribution. Also of note, we plan to eliminate the corporate cost line in our reporting at some point in 2026. 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, total segment measures, 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 they may assist investors in evaluating our shares. However, they are not standardized under the measures of IFRS and may differ from similarly titled measures used by other issuers and may not be comparable. They should not be considered in isolation or as a substitute for IFRS measures. Further details are provided in our IR materials as well. And finally, 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 '24. I would also like to point out that the supplemental document includes the majority of those numbers on an as-reported basis. And with that, I'll now turn it over to Mike.
Michael Gordon: Thanks, Camilla, and hello, everyone. Before we begin, there's been a lot of market discussion around how AI may reshape the software landscape. Let me take a moment to address how we view this at Altus and why we believe our position is well protected. From our perspective, AI reinforces our strategic direction and strengthens the advantages that already differentiate our business. In commercial real estate, valuation, accuracy, auditability and trusted data are nonnegotiable. These decisions influence significant capital deployment and involve robust scrutiny and fiduciary responsibility. Outcomes must be explainable, defensible and grounded in high-quality data. That's precisely where Altus stands apart. So first, our solutions are trusted in CRE valuation to the point where "ARGUS it" is commonly used as a verb in the industry. When a product becomes shorthand for the task itself, it signals our position in critical client workflows and market trust that goes well beyond the software features. Second, our strength is amplified by our network effects arising from significant value provided to our customers. Our valuation solutions are core to the valuation collaboration across investors, lenders, owners, appraisers, asset managers and auditors. We are not just a tool used by one stakeholder. We serve as a platform that facilitates the creation, review and use of valuation information by multiple stakeholders in the CRE industry. Every additional participant in this ecosystem reinforces the value of the platform for all others, and this is not something that can be easily replicated. Third, as AI evolves, our role becomes even more strategic. We are enhancing our agentic capabilities to do more than just generate insights but rather perform critical actions within the valuation workflow. From data ingestion and validation to scenario analysis and recommendation engines, our platform will increasingly act as the orchestration layer that connects and coordinates every stakeholder in the valuation process. And finally, across the CRE ecosystem, ARGUS is the system of record for valuations. We support tens of thousands of users globally, stewarding valuations on portfolios and funds worth millions and billions of dollars in value. That scale creates proprietary data sets, historical context and benchmarking depth that is extremely difficult to replicate via AI. So when we at Altus think about AI, we don't see disruption to our model, but we see acceleration. AI systems are only as powerful as the data, the context and the workflow integration behind them. Those are precisely our advantages. Additionally, with our strategic shift to asset-based pricing, we see ourselves as less vulnerable to the disruption risks associated with seat-based models. We also believe that our increasing use of AI internally has potential to unlock tremendous efficiencies. As we demonstrated at our Investor Day, the internal use of our valuation agent capabilities will free up our VMS experts' time and significantly reduce manual work and focus on higher-value tasks. We demonstrated how automating the valuation process can decrease the time to valuation by up to 90%. This is on top of AI deployment within our R&D teams where increased use of AI coding will further optimize our R&D expenses, increase our speed of innovation, rapidly increase the value and the delivery of our products to our customers. Again, we see AI as the accelerator to our strategic efforts, not a threat. Now turning to our full year financial results. 2025 was a year where steady revenue growth and excellent retention reinforced the strategic importance of our solutions. Even in the softer market, we demonstrated that demand for our solutions remains resilient and driven by client needs, not market cycles. The team also demonstrated strong cost discipline and operating leverage, driving a 310 basis point improvement in consolidated margins. As you'll hear from Pawan shortly, we see more opportunity to drive margin improvements in this coming fiscal year. We are also beginning to see the cash generation potential of the business come through, which gives us confidence as we look to enhance our capital return plans. The team executed well against our strategic initiatives, driving value for clients, delivering innovation and optimizing our corporate structure and capital allocation to unlock shareholder value. Upgrading ARGUS Enterprise clients to ARGUS Intelligence remained a major focus for us. We closed the year with the vast majority of our clients recontracted and are now turning our attention to driving deeper engagement on the platform and adoption of our add-on capabilities. On the innovation front, we bolstered ARGUS Intelligence with Benchmark Manager and advanced Valuation Agent. For those of you who missed the demo, we have advanced our AI capabilities to make the valuation process faster, more accurate and insightful. This is already being tested internally with our VMS professionals. AI complements the professional judgment of our valuation experts, helping reduce their effort while at the same time increasing the amount of information used to reach conclusions. Our AI capabilities are quickly evolving from optimization and information analysis to more complex agent-led workflows for decisioning. We have a deep road map on continuing to enhance both agentic and decision-making AI and see a significant opportunity to drive efficiency and value for clients. We also delivered numerous feature enhancements throughout the year. As of note, we have been approved for a patent on the Altus Knowledge Graph, reinforcing the R&D investments over the past years. The Altus Knowledge Graph, which is built on our AI, enables us to connect disparate asset-level data to form a common golden record using an Altus ID. It is a foundational component of ARGUS Intelligence, as we help our customers collaborate with each other and collate their data. Strategically, we're doubling down on the simplification of Altus, both through portfolio and organizational optimization, as we enhanced our capital allocation framework with a higher weighting towards capital returns. We kept the momentum going starting the year at an accelerated pace. We opened the year on a high note with some client announcements. I'm pleased to share that we now have big brokers upgraded to ARGUS Intelligence, including JLL, Newmark and Cushman, and we are currently migrating their data to the platforms using our integration data solutions. We are also making meaningful progress on our portfolio rationalization. We announced the sale of the Canadian Appraisal business and have a couple of additional divestitures underway that we anticipate could close in the first half of 2026, including having recently signed an LOI for the Canadian Development Advisory business. In addition to the AD&A (sic) [ A&DA ] segment, we have identified select noncore Analytics businesses for potential divestiture. Our objective is to sharpen our focus and simplify the portfolio as we continue our transformation and prepare for a U.S. listing in 2027. On the cost side, we took decisive steps to streamline operations, reduce unnecessary layers and align our cost structure with our future direction. Earlier this month, we initiated a restructuring program and other cost actions that will deliver millions of dollars in annualized savings. Alongside this, we implemented targeted go-to-market refinements designed to better support client needs and drive growth. These decisions are never taken lightly, but they are important to ensure we operate with focus and discipline. And then finally, we remain committed to returning capital to shareholders and announced that the Board approved an increase to our annual plans, giving us the flexibility to deploy up to $800 million this year. We can do this through a combination of various methods, including our NCIB and potential SIB tenders. We're evaluating methods to return up to an additional $450 million to shareholders within the first half of 2026. Our plan is to be in the market over the next 100 days, returning that capital. We believe the current market environment presents an opportunity to allocate capital at attractive return levels, and our best investment continues to be on Altus itself. It's certainly been a busy period, but that pace reflects our ambition. We are moving with urgency and discipline because we see the real opportunity to create value. I'll now turn things over to Pawan to dive into our quarterly results. Pawan?
Pawan Chhabra: Thank you, Mike. We closed the year with momentum and disciplined execution. Recurring revenue continued to grow steadily, and we delivered our sixth consecutive quarter of margin expansion as operating leverage strengthened across the business. Turning to the Analytics segment. We delivered another quarter of steady revenue growth and margin expansion. Performance was led by our flagship solutions, ARGUS Intelligence and VMS, which continue to drive strong customer adoption and renewal activity. Overall, software revenue grew 5.4% with ARGUS Intelligence delivering double-digit growth. As Mike noted, our portfolio optimization efforts will streamline noncore products that are dilutive to growth and retention, strengthening the long-term profile of the segment. Quarter also included a heavier renewal mix toward the end of Q4, which can affect quarterly comparability but doesn't change the segment's trajectory. VMS grew at 9.8% in the quarter. That result includes a onetime benefit from an operational efficiency that allowed us to complete the valuation work earlier than usual, shifting that revenue into Q4 on a go-forward basis. Excluding that shift, underlying growth was in the 5% range. Our margins expanded by 360 basis points in the quarter and 270 basis points for the full year. We finished at 33% adjusted EBITDA margins, reflecting the discipline in how we operate and the leverage we're unlocking as we scale, putting us in strong position as we work towards Rule of 40 by end of 2027. The margin expansion reflects a combination of factors: revenue growth, ongoing portfolio optimization, enhanced delivery efficiency through our global service center, benefits from restructuring initiatives and disciplined expense management. Turning to some of our recently introduced operating metrics for the Analytics segment. All of our KPIs are trending in the right direction. Recurring revenue was up, software and VMS ARR were up and our retention metrics remain strong. This reflects the durable high-quality nature of our key recurring revenue streams. This quarter, we also rolled out our new disclosures across the P&L to better align our reporting with other technology companies. We're steadily progressing towards our target model, and the improvements we saw in Q4 are encouraging. In particular, we're benefiting from the optimization of R&D and G&A, which will increasingly reflect the impact of our restructuring activities, product portfolio rationalization and third-party cost optimization. This quarter continued our pattern of strong cash generation with double-digit growth driven by record conversion. As Mike mentioned, we're seeing the cash generation strength of this business come through consistently, which reinforces our confidence in our capital return plans. We ended the year with a very strong balance sheet, giving us the flexibility to execute those plans while maintaining financial strength. As discussed at our Investor Day, we believe the business can comfortably operate with modest incremental leverage over time, and we intend to progress towards our funded debt-to-EBITDA target of roughly 2.5x to support those returns. And finally, I'll wrap with an overview of our business outlook, which we're presenting on an organic basis for continuing operations only without the Appraisal business. As you can see on this slide, we're expecting steady top line growth and sustained margin expansion. To be very clear, the constant currency growth rates represented our guidance, but we've also presented the indicative dollar range for easier comparison. The implied dollar ranges are based on our January FX assumptions, which are subject to fluctuations and will cause the dollar figures to differ from what we ultimately report. Our expectations are based on our target growth algorithm, which expects roughly 80% of the growth to be driven by volume and pricing and 20% by new logos. Adjusted EBITDA margin expansion is expected to be driven primarily by improved operating efficiencies and expense management, reflecting the actions we took this past month that Mike just discussed. Within that framework, we expect software to remain our strongest grower, maintaining solid high single-digit growth. For VMS, we're not underwriting a market rebound. Our outlook assumes sustained growth consistent with current market conditions. And in data, we see opportunities to improve growth, and we expect that progress to build over the next couple of quarters. Given the ongoing plans for other divestitures, we'll update our guidance throughout the year as additional transactions get completed. With that, Lisa, let's open up the line for questions now.
Operator: [Operator Instructions] Your first question comes from Erin Kyle, CIBC.
Erin Kyle: I first wanted to just ask on the guidance here. I just want to get some help comparing apples to apples. And maybe for the full year guidance, I understand it excludes Appraisals. But maybe can you help us understand where you expect the Development Advisory business to land from a revenue and EBITDA standpoint for 2026? I think most estimates at this point still include both Appraisals and Development Advisory.
Pawan Chhabra: Yes. It's a fair question, Erin, and great hearing from you. So as you noted, our guidance now has flipped to recurring and continued operations. The continued operations drops out the Analytics guide, which we moved to discontinued operations. Post the divestitures that Mike outlined in terms of the noncore businesses and DA, we're essentially going to be an analytics company. So we're just getting ahead of it in regards to how we're formulating our guidance. As it relates to the Development Advisory business, historically, you've seen that as a combined segment. Appraisals represented about 30% of that number. Development Advisory was about 70% of that number. And then when you break apart Development Advisory, it was -- it's about 70% North America and about 30% APAC. So hopefully, that gives you a little bit of clarity in regards to how to compare it to how you guys have modeled it in the past in regards to just the overall revenue contribution to the total number. Our plan in regards to guidance is, as we sign definitive LOIs, we'll start moving these businesses over to discontinued operations, which will lead us to then recast our guidance to just help you guys continue to drive that level of clarity.
Erin Kyle: Okay. And is that 70-30 split on both a revenue and EBITDA basis or just revenue?
Pawan Chhabra: Yes, so the numbers that I gave you were on the revenue component.
Erin Kyle: Okay. And then on the adjusted EBITDA side, I just wanted to ask about some add-backs in the quarter. There were $17.5 million in other operating expenses added back. Can you maybe just clarify what's included in there? I see $12 million allocated to corporate initiatives and strategic projects in the quarter, so maybe that specifically, if you could just expand on what's in there.
Pawan Chhabra: I'm sorry, Erin, did you say in the other operating category?
Erin Kyle: Yes, the other operating expenses in the adjusted EBITDA.
Pawan Chhabra: Yes. So the other operating, as you mentioned, includes a host of different elements in it. Give me a second. So we've got the -- some degree of transitional costs in that $18.5 million related to some of our onetime corporate initiatives and strategic projects that we've run. We also benefited from about $6.5 million of realized and unrealized FX gains in Q4 of last year, and so that is obviously part of that $18.5 million higher on a year-over-year basis.
Erin Kyle: Okay. That's helpful. And I'll squeeze one more in here, maybe for Mike. Just on the AI disruption risk, I appreciate you touched on it earlier on the call. I just wanted to expand on it a little bit in terms of some of the commentary we maybe heard out of some of the larger real estate brokerages last week just discussing ways to leverage their own proprietary data internally with AI. And I realize we did just see -- you signed a licensing agreement with Newmark for Portfolio Manager and Benchmark Manager as well. So maybe just how are you thinking about, yes, some of your customers looking to go in-house with their own data?
Michael Gordon: So I think from the standpoint, we're not seeing that trend per se, Erin. What we're being pushed on by our customers is with the value that they see in ARGUS Intelligence is that they are wanting to get their data loaded into ARGUS Intelligence so that they can collaborate with others more quickly. I think that as we have very good data protection rights for our customers, we do a very good job of curating their data. And from the perspective of them leveraging the solution, I think that they look at us as an extension of what they would see as in-house as well. So where you have like alignment is that we see that our customers, especially the ones that I mentioned, are eager to use the new concepts that we have and use some of the tools that we have, the AI tools, and we have a number of like what we would call white box and gray box AI tools that they can go ahead and leverage going forward as well. So we -- I think we're looking as an extension to them versus just being in competition with them.
Operator: The next question comes from Paul Treiber, RBC Capital Markets.
Paul Treiber: I was hoping you can dig a bit further into 2026 guidance. Just for the 4% to 6% revenue growth, you mentioned a couple of moving parts there with VMS versus ARGUS Intelligence. Can you just elaborate further on the growth that you expect for ARGUS Intelligence and the drivers of that, particularly with ARR was quite healthy this quarter, up 11%? How do you see that translating into ARGUS Intelligence growth in '26?
Pawan Chhabra: Yes. It's great hearing from you. Hope all is well. Just it's a great question. As you know, externally, we've created the categories of software, data services and VMS. Software includes all of our software components, and so when I talk about high single-digit revenue growth, we're talking about all of the software categories, including ARGUS Intelligence and our other software categories. But if you were to break that apart and look at ARGUS Intelligence specifically, we are seeing great traction on there. You see that from the ARR growth rates, particularly high from a full year perspective. It was very strong in quarter as well, too. And so within the software category, we expect ARGUS Intelligence to be double-digit growth within that paradigm with some headwinds from the other software categories as we continue to resolve those onto the platform over time but very bullish in regards to the progress that we've seen in ARGUS Intelligence, both in terms of the ARR growth in the quarter as well as the continued strong retention metrics, both on a gross and on a net basis. So very, very pleased with that progress. We have, I would say, at this point, 80% of our ARGUS Enterprise ARR is sitting on ARGUS Intelligence, and we continue to move the needle in regards to moving more and more of our business to asset base. So roughly 40% of our business in ARGUS Intelligence is sitting on asset base. And when you look at that from a total segment perspective, keep in mind, VMS is all asset-based. So the percentage of our business that's sitting on asset base now is the lion's share of our revenue.
Paul Treiber: That's helpful. The second question is just on -- previously disclosed the proportion of customers that have contracted to use the cloud, and I think it was the vast majority. The -- what proportion of those have actually migrated over to the cloud and where you can start mining or using some of that data for your analytics products?
Pawan Chhabra: Yes. So the majority of our clients are now sitting on ARGUS Intelligence, and we're working very closely with our delivery teams, our services teams and the clients to provision those models that they've migrated over to be able to leverage the tools and technologies that are available to them through Benchmark Manager, Portfolio Manager. There is a degree of data cleansing that has to happen. It's really a change in user behavior in regards to hardening the data so that it can become referenceable and something that we can benchmark. And so there's a lot of effort in regards to working with our clients to resolve kind of this last mile element of getting their models ready for full benchmarking.
Michael Gordon: Yes, Paul, one other thing that we've done and just the -- when we talk about the patent that we just got. As we leverage the customers' information for them on ARGUS Intelligence, we're now doing it by asset versus by valuation. And so we're now building out probably a fuller view of that asset for those customers and as a result, a view that is not only greater in the intensity of the data looking at things but also goes horizontally with time so that they can start looking at time series as well. So from this perspective, we think we're giving them like a better 360-degree view of what that has done not only today, but where it has been and where it's going.
Operator: Gavin Fairweather from ATB Cormark has the next question.
Gavin Fairweather: Maybe we can just dig in on the go-to-market refinements that you referenced, Mike. I remember back in 2020 or 2021, the last time you did a bit of a go-to-market overhaul, it led to a pretty meaningful increase in sales productivity. So maybe you can just discuss the changes that you're making and what impact you'd expect that to make?
Michael Gordon: Sure. I think -- and thanks for remembering that. It makes me feel good. The thing that we have is we've had historically a business that -- even in Analytics, the different parts of the business went together separately. So our VMS team, our software sales team, our data sales teams, while they try to coordinate, they did go and separately do things, and their quotas and how we would pay them were really set up on their own opportunities. What we've changed and with us putting Rich Sarkis into the role of Chief Commercial Officer, our entire suite of valuation solutions now go to market in one motion. Now there's work to be done to make sure that, that motion works in a consistent, coherent way. But what we believe is what we have is now, instead of having maybe 60 software sales guys and a few guys looking at VMS and data, we have probably over 600 people in our organization focusing on the customer every day, while they're acting either in the sales function, a customer support or a customer success function or just an account management function or delivery function. And so as we've done that, we've also focused on making them focus on the customer first, whether it's for their product or their solution or something else. And so what we've seen -- and we just ran our sales kickoff. What we've seen is, as we've been training these guys around it, it's not only talking about the value that their solutions bring but how they can bring total solutions as customers are asking for it. And we're starting to see good pickup in executive sessions with our customers. Just like everything's happened to everybody over the last 4 to 6 weeks, we're seeing a lot of them ask questions on where we can fit in and how we can help them solve some of the problems with their internal staff. So I would look at it as we are -- it's easy to say that we're doing a consultative or value-based sell, but we see those things really driving pretty well. And we have our Connect conference happening in about -- maybe about just under 2 months from now, and we'll be pulling that together even further for that conference.
Gavin Fairweather: Appreciate that color. And then maybe just on ARGUS Intelligence, can you discuss the shape of the renewal book through kind of '26 and '27 and where those renewals are stacked up?
Pawan Chhabra: Yes. It's a great question. As you know, we went through a heavy renewal cycle last year, and we purposely -- prior to last year, we're signing up clients to 1-year contracts, so we can move them from seat-based to asset-based pricing. Majority of those clients now that have moved to asset-based pricing are now on 3-year contracts, and so we have a smaller cohort this year of renewals than we did last year. And so a lot of that focus from a sales effort is really focused now on, a, moving the seat-based asset base; and two, ensuring that we can continue very strong motions on our cross-sell and upsell opportunities into those clients.
Michael Gordon: If I added on to that, where we -- when we were doing the analysis earlier this year, the -- our expected renewals this year will be down about 20%, not because we're losing anything because, as Pawan said, they've gone to 3-year contracts, and we would expect that to be down and like average out next year as well. So getting back to the go-to-market motion that I was talking about, the team's got more time focusing on cross-sell or upsell opportunities with them, especially around the different product sets that we have.
Gavin Fairweather: Appreciate that. And then just lastly for me, thanks for the new disclosures. I guess the problem with putting out gross retention, net retention is that it opens up questions about churn. So maybe can you just discuss the primary reasons for churn? And maybe you could talk about like what gross retention looks like if you just focus on the ARGUS business and then how you think ARGUS Intelligence could influence churn going forward as the customers take a broader suite of your solutions.
Michael Gordon: If I start, if I go to the churn on the ARGUS business, the ARGUS business has very little churn. Typically, we see gross retention in and around or above 95%. And where we get any churn is when you get down into like if you think about our very long-tail customers, where we get funds that come and go and they go and they leave, but we're very sticky with that, so that's pretty strong for us. Where we actually -- in some areas, around data last year, we saw a little bit more churn, and part of that is like -- and this was -- we have a strategy to fix that. That business has typically been the feed the beast business. It's very much market to the customers, do work around them. We're starting to see good impacts on net retention. And then if you get into the VAS retention, well, we talked about that at Investor Day. That's incredibly high retention and keeping current customers. That business, though, tends to have a lot of what we look at. We look at net upsell and downsell in that business. We rarely have any churn. Does that help?
Gavin Fairweather: That's great.
Operator: Next up is John Shao, TD Cowen.
John Shao: So could you tell us the pace of your margin expansion throughout 2026? Because it looks like you're going to start with 18% to 19% in Q1, and we'll finish the year with 25% to 26%. So that basically implies a much higher EBITDA margin close to 30% by Q4. Is that a correct thinking?
Pawan Chhabra: Yes. Look, so that is correct. Again, as we talked about our guidance from a kind of midterm perspective at Investor Day, we talked about it in the form of Rule of 40, and that Rule of 40 was a combination of high single-digit revenue growth which would then imply margins by the end of 2027 to get us to that Rule of 40, so low to mid-30s in that range. And so the point of what we're doing here is just we're building a steady pace of improvement. Our revenue is going to continue to steadily improve, and we're taking direct actions to make sure that we're scaling our business appropriately with our growth to drive that margin expansion. And so we have a lot of confidence in regards to our margin expansion capabilities. Mike referenced the fact that we did do some actions in regards to just making sure that we continue to remain in fighting shape as we rightsize the business. It's just good hygiene work for us, but we're going to get the full year benefit of the work that we've done in 2025 into 2026, which will help us get to those measures that you're talking about. So you're thinking about it in the right way. We should see a steady progress throughout 2026 to get us to what we talked about at Investor Day for 2027.
John Shao: Got it. And back to the Rule of 40, how much of your Rule of 40 target by '27 is dependent on a broader market recovery in terms of the macro? Any update since last Investor Day? Do you still think 2026 will be a key year for some recoveries?
Pawan Chhabra: Yes. As I mentioned, our guide is not underwriting a market recovery, and Mike refers to this often with the Board. We're going to have good growth in a down market, and we're going to have great growth in an up market. And so as we think about our guide and its correlation to the market, investment decisions are being highly selective now. While dry powder is up, transaction activity is up. We're seeing a greater degree of selectivity, and that plays right into our strength in regards to helping our clients ensure that they are managing risk appropriately and driving performance and investing in the most profitable and highest return assets. And so we built a plan, and we're executing around the plan where we're going to continue to see steady growth in any market. And if the market has significant tailwinds, then we should have great growth. But we're confident in our path right now in any market.
John Shao: Maybe one last question for me on AI. So if you're going to roll out more agentic AI features, how should we think about -- number one, is the pricing of these additional features. And maybe number two, could you talk about the impact on your margin profile? Because my understanding is the tokens from some of the frontier models can be quite expensive.
Michael Gordon: That's a fair question. So there's 2 ways that we look to do this and just in some of the experience I've had with it. We'll roll it out in a method that it is -- it runs by itself or it runs alongside human intelligence. And so depending on how they will use it, they can use it to support or they can use it to provide reports on that. The key thing that we need to make sure is when we run this is we need to understand the cost to run that based off of the compute power that we have. So as we've looked at this, we've looked at what those costs look like and what those loads look like. So we have a pretty good sense of how those things will run. And we feel like those will be, from a gross margin perspective, as profitable as some of our other lines of business when it comes to ARGUS Intelligence.
Operator: We'll take the next question today from Richard Tse, National Bank Capital Markets.
Richard Tse: In the outlook section, you sort of talked about 80-20 sort of growth from volume pricing and then new logos. How does that mix change under different market conditions for commercial real estate?
Pawan Chhabra: Yes. Look, we've got a tremendous opportunity from a cross-sell and upsell perspective as we continue to roll out new features and functionalities in our product suite, which gives us that opportunity both from a pricing perspective. New logo, [ we were certain ] about 20% of our growth in new logo. There's a lot of efficiencies that we've built within the business to be able to deliver our solution at a better cost point for us, particularly in VMS as we're leveraging a lot of the technology that we're rolling out to the clients where the beta customers internally to adopt those solutions. And so that is giving us the opportunity to expand our VMS from Tier 1 into Tier 2 opportunities to continue to capture the new logo opportunity. But we've got a large base of clients. We've got a whole new suite of offers that we can bring to those clients, and that's going to give us that opportunity from a pricing perspective and from a volume perspective to be able to drive more into existing relationships. Plus, the team selling the full portfolio of solutions plus our scalability from a cost perspective allows us to go after white space and new clients as well.
Richard Tse: And just your perspective kind of on the market in general. Like if you had to sort of rate it on a scale of 1 today in terms of the market conditions for Altus specifically, like where do you think we are right now?
Pawan Chhabra: Yes. Look, I can give you kind of my thoughts on market sentiment, but there are views that people can talk both sides of the coin on. We've seen rate volatility has eased, but trade policy, regulatory uncertainty continues to weigh on the sentiment. Transaction activity, we did see improvement through 2025, and it's fully expected that the transaction activity is going to continue to be good in 2026. But the recovery is uneven across asset types. You're seeing multifamily and industrial continue to lead. Retail is stable, and office is bifurcated between prime space leasing and some of the older commodity stock that continues to reprice. I mentioned we've got near record levels of dry powder that continues to build. But there's going to be a lot of selectivity in regards to how that capital is deployed in the markets, and that's where it's a tailwind for us. It's a very strong opportunity for us to really help the CRE industry maximize the performance and effectively manage the risk and make better and more informed decisions. And so this market environment plays to the strength of exactly the value proposition that we're selling to our clients.
Richard Tse: Great. And just one last quick one for me. With respect to other potential noncore divestitures, specifically in Analytics, can you maybe help us understand a little bit what may be considered noncore? Because in terms of trying to value the stock, we sort of want to see what a run rate business looks like here going forward.
Michael Gordon: Yes. I think, listen, there's not a lot where we would have this in Analytics. But just to be very straightforward, we are in the valuation space. And so as we look at like what we do, anything seen -- any of the products that we have Argus branded to or some of the new products that we've had and we're putting out there or the analytics-based products and our workflow, those are all very much in the valuation space and helps in that platform. That also includes the data that we include and ingest into that platform as well as clearly our VMS team. We look at them as the guys who really get a lot of activity on that platform. If it's a couple of steps removed, it starts to be something that we will be looking at and deciding does it make a lot of sense to keep it. But it's -- there's not going to be a lot of things there. But we just are -- as part of like the review that we started when we talked about at Investor Day, we're still continuing on that, and there'll probably be a couple of small items that we'll move on.
Operator: [Operator Instructions] We'll go to Stephen MacLeod from BMO.
Stephen MacLeod: I just had a couple of questions just regarding the guide given the new reporting and some of the changes to the reportable segments. Just quickly first on the Development Advisory business. So you've signed an LOI, but it's not -- but it's still included in the guidance. Is that right?
Michael Gordon: Yes. Let me answer that. That's right. That is actually -- and it got -- as we talked about, it's in italics. We just got that done. So as we were announcing things, Stephen, I think we wanted to be a little conservative on that. But our belief is that, that will be done, hopefully, more or less by the next 60 to 70 days.
Stephen MacLeod: Right. Okay. Okay. That's helpful. And then just on the advisory -- or sorry, the Appraisals business breakdown, Pawan, did you say it was -- it's roughly 30% of the underlying AD&A business?
Pawan Chhabra: Yes, that's correct. About 70% of the previous development -- the AD&A number was about 70% Appraisals -- I'm sorry, 30% Appraisals, 70% Development Advisory. And within Development Advisory, North America represents about 70% and APAC represents 30%. Yes, so you were correct.
Stephen MacLeod: Okay. That's helpful.
Camilla Bartosiewicz: Put another way, Appraisals did $31 million in revenue last year, if that helps.
Stephen MacLeod: Okay. I saw that in your disclosure. That's helpful. And then maybe just finally, just on now the pre-IFRS 16 basis that you're reporting EBITDA, is -- would you expect your occupancy costs to change much heading into 2026 given some of the cost-saving measures that you've began implementing in 2025?
Pawan Chhabra: Yes. Look, I mean, as we stated on numerous occasions, we do have a wide real estate footprint that we're rationalizing as we continue to simplify the business. So we would expect that to continue to lower as well, too.
Stephen MacLeod: Right. Right. Okay. Okay. That's great. A lot of my other questions have been answered. Lots of great color.
Operator: We'll now take a follow-up from Gavin Fairweather, ATB Cormark.
Gavin Fairweather: Just on capital allocation, you indicated an amount that you'll look to deploy in the first half above and beyond what you've already done. With $800 million, you've left yourself with some additional kind of capacity and room for the back half. I guess I'm just curious kind of under what conditions you'd look to become more aggressive in the back half of the year and increase the amount of capital returns.
Michael Gordon: I think for us, it's going to be something that as we -- we'll continue to watch the market. We'll continue to watch the sentiment. And we believe we have good value in what we're doing, and we will get there fairly quickly. I think that, as we said, we're going to deploy a good portion of that in the first half. I think depending on how the instruments that we use are taken up, that will be dependent upon how we start to deploy in the second half and when we deploy. I think if the market remains a little choppy in -- or similar to as we've seen it, we'll start -- we think that that's still a great buying opportunity for us, and so then we'll continue to leverage that.
Operator: And everyone, at this time, there are no further questions. I'd like to hand the conference back to Mr. Mike Gordon for any additional or closing remarks.
Michael Gordon: Well, I would just want to thank everybody for getting on the call. It's been a pleasure to talk to all of you, and thank you for the questions. As we talked as a team here, we're excited about the opportunities for this year, and we're getting to work. So looking forward to talking to you all coming forward in the next couple of months. Have a good night.
Operator: Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.