Mr. Jim Hannon reports

ALTUS GROUP REPORTS FIRST QUARTER 2023 FINANCIAL RESULTS

Altus Group Ltd. has released its financial and operating results for the first quarter ended March 31, 2023. Unless otherwise indicated, all amounts are in Canadian dollars and percentages are on an as-reported basis in comparison with Q1 2022.

Q1 2023 Summary

• Consolidated revenues were $190.8 million, up 13.9% (10.9% on a Constant Currency* basis).
• Profit (loss) was $(2.4) million, compared to $(11.5) million.
• Earnings per share ("EPS") were $(0.05) basic and diluted, compared to $(0.26) basic and diluted.
• Consolidated Adjusted EBITDA* was $26.5 million, up 49.5% (43% on a Constant Currency basis).
• Adjusted EPS* was $0.33, compared to $0.27.
• Analytics revenues were $94.6 million, up 17.8% (12.3% on a Constant Currency basis), of which Recurring Revenue* was $85.3 million, up 25.4% (19.5% on a Constant Currency basis), and Adjusted EBITDA was $20.2 million, up 80% (65.8% on a Constant Currency basis) driving an Adjusted EBITDA margin* of 21.4%, up 740 basis points.
• Analytics New Bookings* totalled $21.4 million, down 23.7% (28.1% on a Constant Currency basis), of which Recurring New Bookings* were $14.1 million, down 26.4% (30.6% on a Constant Currency basis).
• At the end of Q1 2023, 67% of the Company's total ARGUS Enterprise ("AE") user base had been contracted on ARGUS Cloud (Cloud Adoption Rate*), compared to 44% at the end of Q1 2022.
• Property Tax revenues were $66.7 million, up 14.1% (13.2% on a Constant Currency basis) and Adjusted EBITDA was $15.1 million, up 13.3% (14.1% on a Constant Currency basis).
• Appraisals and Development Advisory revenues were $29.7 million, up 2.5% (2.3% on a Constant Currency basis) and Adjusted EBITDA was $3.0 million, up 2.2% (2.3% on a Constant Currency basis).
• As at March 31, 2022, Funded debt to EBITDA ratio as defined in the Company's credit facility agreement was 2.21 times, and Net debt to Adjusted EBITDA leverage ratio* was 2.13 times.

*Altus Group uses certain non-GAAP financial measures such as Constant Currency; non-GAAP ratios such as Adjusted EPS; total of segments measures such as Adjusted EBITDA; capital management measures such as Free Cash Flow; and supplementary financial and other measures such as Adjusted EBITDA margin, Net debt to Adjusted EBITDA leverage ratio, New Bookings, Recurring New Bookings, Non-Recurring New Bookings, Organic Revenue, Recurring Revenue, AE Software Maintenance Retention Rate, and Cloud Adoption Rate.

Jim Hannon, Chief Executive Officer of Altus, said:

"We had a positive start to the year, continuing our multi-quarter trend of topline growth and margin expansion. Altus Group delivered strong results in the first quarter, achieving 14% revenue growth, significant Adjusted EBITDA growth, and a 330-basis point Adjusted EBITDA margin expansion. We deliver Intelligence as a Service to help our clients manage performance and risk - this is especially relevant in today's dynamic CRE markets. The team is executing against our strategy and we remain well positioned for sustained top and bottom line growth."

Q1 2023 Review

On a consolidated basis, revenues were $190.8 million, up 13.9% (10.9% on a Constant Currency basis) and Adjusted EBITDA was $26.5 million, up 49.5% (43% on a Constant Currency basis). Adjusted EPS was $0.33, compared to $0.27 in the first quarter of 2022.

Profit (loss) was $(2.4) million and $(0.05) per share, basic and diluted, compared to $(11.5) million and $(0.26) per share basic and diluted, in the same period in 2022. The greatest driver of the year-over-year change was the completion of the 2022 global restructuring program. Profit was also impacted by higher interest rates on the Company's bank facilities, as well as increased expenditures in the quarter relating to the implementation of new technology infrastructure systems as the Company completes its business transformation.

Analytics revenues increased to $94.6 million, up 17.8% (12.3% on a Constant Currency basis) or $14.3 million. The year-over-year growth consisted solely of Organic Revenue. Adjusted EBITDA was $20.2 million, up 80.0% (65.8% on a Constant Currency basis) driving an Adjusted EBITDA margin of 21.4%, up 740 basis points.

• Recurring Revenues were $85.3 million, up 25.4% (19.5% on a Constant Currency basis). Sequentially, Recurring Revenue decreased 0.6% from $85.8 million in the fourth quarter of 2022, which primarily reflects some seasonality from Valuation Management Solutions.
• Revenue growth continues to be driven by strong Recurring Revenue performance, which is where the Company's go-to-market efforts and investments are focused. This included robust growth across key revenue streams in software, Valuation Management Solutions and data solutions. A high percentage of the Recurring Revenue growth continues to be driven by customer expansion and supported by steady new customer additions and the ongoing transition to cloud subscriptions.
• Following record New Bookings performance in the fourth quarter of 2022, New Bookings in the first quarter were $21.4 million, down 23.7% (28.1% on a Constant Currency basis). Recurring New Bookings were down 26.4% (30.6% on a Constant Currency basis), and Non-Recurring New Bookings were down 17.8% (22.7% on a Constant Currency basis). As issues in the banking sector made headlines in early March 2023, some clients slowed their decision making. This impacted New Bookings growth in the first quarter. On balance, New Bookings benefited from continued growth, with strong AE performance. The software pipeline continues to grow in line with historical pace.
• Adjusted EBITDA growth and margin expansion benefitted from higher revenues, improving operating efficiencies, ongoing cost optimization efforts, and foreign exchange fluctuations.

Property Tax revenues were $66.7 million, up 14.1% (13.2% on a Constant Currency basis) and Adjusted EBITDA was $15.1 million, up 13.3% (14.1% on a Constant Currency basis). On a Constant Currency basis, the Company had double digit growth in Canada and the U.K., and steady performance in the U.S. Adjusted EBITDA benefitted from the revenue growth.

Appraisals and Development Advisory revenues were $29.7 million, up 2.5% (2.3% on a Constant Currency basis) and Adjusted EBITDA was $3.0 million, up 2.2% (2.3% on a Constant Currency basis). Revenue growth was driven by strong performance in Development Advisory in the APAC region.

Corporate Costs were $11.7 million, compared to $9.7 million in the same period in 2022. Corporate costs increased primarily from higher operating expenditures attributable to information technology and compensation, as well as higher costs related to organizational and strategic initiatives.

Free Cash Flow was $(34.4) million, and Net cash used in operating activities was $(31.0) million. Free Cash Flow in the quarter reflects the impact of the Company's annual bonus payouts, payments related to the 2022 global restructuring program, and increased working capital balances due to anticipated delayed billings from the enterprise resource planning system implementation.

As at March 31, 2023, bank debt was $350.1 million and cash and cash equivalents was $42.9 million (representing a Funded debt to EBITDA ratio as defined in the Company's credit facility agreement of 2.21 times, or a Net debt to Adjusted EBITDA leverage ratio of 2.13 times).

Q1 2023 Results Conference Call & Webcast

Date:  Thursday, May 4, 2023

Time:   5:00 p.m. (ET)

Webcast:  altusgroup.com (under Investor Relations)

Live Call:  1-888-660-6785 (toll-free) (Conference ID: 8366990)

Replay:   A replay of the call will be available via the webcast at altusgroup.com

About Altus Group

Altus Group is a leading provider of asset and fund intelligence for commercial real estate. We deliver intelligence as a service to our global client base through a connected platform of industry-leading technology, advanced analytics, and advisory services. Trusted by the largest CRE leaders, our capabilities help commercial real estate investors, developers, proprietors, lenders, and advisors manage risks and improve performance returns throughout the asset and fund lifecycle. Altus Group is a global company headquartered in Toronto with approximately 2,800 employees across North America, EMEA and Asia Pacific.

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