Altus Group Limited (AIF) Earnings Call Transcript & Summary

Thank you for standing by. This is the conference operator. Welcome to the Altus Group Second Quarter 2021 Financial Results Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Camilla Bartosiewicz. Please go ahead.

Thank you, Caitlin, and good afternoon, everyone. Welcome to Altus Group's Second Quarter Results Conference Call and webcast for the period ended June 30, 2021. The news release announcing our results was issued after market close this afternoon and is also posted on our website, along with our interim MD&A and financial statements. Joining us today is our CEO, Mike Gordon; and CFO, Angelo Bartolini. We'll start with some prepared remarks, and then we'll move right into the Q&A session. If we miss any questions, please contact me directly by e-mail. Angelo will begin by covering off our financial performance during the quarter, and then you'll hear from Mike on an operational update. Before we get started, please be advised that some of our remarks on this call may contain forward-looking information. Also, please be reminded that Altus Group uses certain non-GAAP non-IFRS measures as indicators of financial and operational performance. Forward-looking statements and an explanation of these measures are detailed in today's news release and in our related reports on SEDAR. So with that, I'll now turn it over to Angelo.

Thanks, Camilla, and thank you all for joining us this afternoon. We're really pleased with the solid execution in Q2 and with the strong financial performance in the first half of the year. We're making great progress against our strategic initiatives, which gives us solid foundation for continued growth over the long term. Turning to the quarter and business segments. Given the currency fluctuations in the first half of the year and our increasing mix of international revenues, we have started to show revenues and adjusted EBITDA on an as-reported IFRS basis, while also breaking out the constant currency growth for a better comparative view of our performance without the impact of fluctuations in foreign currency exchange rates against the Canadian dollar. We have done this by translating monthly results denominated in local currency with the U.S. dollar, the British pound, the euro, Australian dollar and other foreign currencies at the exchange rates of the comparable market. As we've seen, FX fluctuations have been a much more pronounced headwind in the first half of the year, particularly for the Altus Analytics business. So with that, I'll continue to frame my comments on as-reported numbers, and where appropriate, will speak to the constant currency performance drivers. On a consolidated basis, revenues and earnings grew in the double digits. Revenues increased 12% to $173.5 million, while adjusted EBITDA was up 21% to $42.2 million, improving our margins from 22% last year to 24% in Q2 2021. Our year-to-date margins are also showing strong improvement at 19% compared to 16% in the first half of the year. At Altus Analytics, we had healthy growth on a constant currency basis across all key business lines. Revenues were up 16% to $59.3 million or 26% on a constant currency basis. Organically, revenues were flat as reported, but up 10% on a constant currency basis again. And the acquisitions of Finance Active and StratoDem Analytics represented 16% of the constant currency growth. Our Over Time revenues, our key metric for reporting recurring revenues, were up 17% to $50.1 million year-over-year or 27% on constant currency. Organically, Over Time revenues were down 1% and up 8%, again, constant currency. We also had an improvement in adjusted EBITDA, which was up 9.5% to $8.9 million or 24%, again, in constant currency. Organically, earnings were up 6% and 21% constant currency. To add some color on the revenue performance. As we experienced in Q4 and in Q1, FX continued to be a headwind. Our key rate, the U.S.-Canadian rate was 1.39 in Q2 last year versus 1.23 this year, causing a significant impact on reported results. Our Over Time revenue base continues to build, and we're feeling really good about achieving double-digit growth for the full year in 2021, again, in constant currency. In Q2, Over Time revenue growth was driven by strong contribution from Finance Active, which is a growing SaaS business and an important component in our debt strategy; higher subscription revenues, reflecting the stacking effect of the subscription revenue model of both current and past deals; and overall higher subscription revenues from our software and data solutions. As you'll hear from Mike shortly, we're making solid progress transitioning clients to AE cloud subscriptions. And we had steady performance in Appraisal Management solutions with a healthy cadence of new client additions as well as our existing clients adding more assets on to the valuation management platform, which was rebranded as ARGUS ValueInsight. In addition to the healthy Over Time growth, total revenue growth also benefited from a COVID-related recovery in our software, consulting and education services. The strong growth at our One11 software consulting business, where we support companies on implementation of their technology road maps, is a really good indicator of healthy market conditions and companies investing in modernizing and upgrading their technology platforms. And overall, we have strong gross retention across all our software, data and analytic solutions, many of which are considered to be mission-critical by our clients. As an example, our Appraisal Management business has had 0 client churn over the past couple of years. AE software maintenance retention is at an industry-leading mid-90s range, and Finance Active also enjoys mid-90s gross retention. Our resiliency was proven throughout COVID. And with the added focus from our customer success program, we see more upside on both gross and net retention. Following an impressive 42% growth -- 42% bookings growth in Q1, the momentum continued into the second quarter. In Q2, we posted a 72% growth, 89% constant currency. Organic growth in bookings was 63%, 80% on constant currency. As Mike pointed out in our press release, our organic bookings in the first half of this year equaled more than 2/3 of total bookings in all of 2020. As a reminder, our bookings metrics includes all of our Altus Analytics revenue streams, both the recurring Over Time and the nonrecurring. For Over Time streams, we take the annual contract value for new sales. This includes software, Appraisal Management solutions and our data subscriptions. On renewal contracts, we count only the incremental portion that was not in our revenue base previously. So to be clear, we do not count renewals. And for the nonrecurring onetime revenues, such as consulting, training and due diligence work, we take the total contract value. With respect to bookings, it takes about a quarter or 2 for it to start to flow into revenue. For recurring offerings, the value of each new contract adds to our already significant level of Over Time revenues and supports our ability to achieve healthy growth in Over Time revenues in the coming quarters. With nonrecurring bookings, this will be reflected in point in time revenue and in coming quarters as we deliver on these engagements. On the earnings front, as a reminder, our Q2 margins were impacted by $1.4 million purchase price accounting adjustment to Finance Active's deferred revenues. The bulk of it was recorded in Q2, and this will ramp down in subsequent quarters. Overall, the purchase price accounting adjustment had a 2% impact on our Q2 margins, which would have otherwise been up year-over-year. In addition, we have also moderately increased our expenses on a year-over-year basis to accelerate our data strategy, including building out the StratoDem Analytics platform. Factoring in the impact of the accounting adjustment, we continue to expect that our full year margins will be similar to last year's, and we should see an acceleration next year. On the whole, we still feel good about delivering double-digit EBITDA growth this year. Turning to the CRE Consulting segment. Property Tax, it was a record quarter, marked by exceptionally strong annuity billings in the U.K. As a reminder, Q2 is a seasonally stronger quarter at tax, and our U.K. annuity revenue stream grows year-over-year throughout the cycle before it resets the first year of the new cycle. Our Q2 Property Tax revenues were up 13% to $86.7 million or up 16% on a constant currency basis. And adjusted EBITDA was up 27% to $39.7 million. We had solid double-digit revenue growth in the U.K., single-digit in the U.S., while modestly down in Canada. The U.K. annuity was a significant contributor, representing $25.7 million in revenues compared to $15 million in the second quarter of 2020 and, prior to that, approximately $10 million in Q2 of 2019. The increase reflects higher cumulative number of the 2017 cycle cases settled. While strong, the U.K. annuity billing was impacted by COVID-19 government subsidy program, which provides a temporary tax relief for companies in the retail, hospitality and leisure sectors. In the U.S., we benefited from increased seasonal case settlements in taxes as well as a catch-up on COVID-19-related delays from prior quarters. In Canada, revenues were lower, primarily impacted by timing of Ontario settlements, some of which were pulled forward into the first quarter, as you might recall from our comments in May, as well as by lower year-over-year comparative performance in Montréal and Manitoba, which were more favorably positioned in their cycles in the prior year, partly offset by a significant multiyear case settlement in Saskatchewan. Overall, it was a solid quarter as characterized by the following: appeal settlement; volumes moving along and in certain markets picking up; sustaining high success rates translating to higher savings for our clients; a growing pipeline of business as measured by volume of appeals and total value, thus increasing our market share; steady progress; integrating our national practices under a global operating model; and steady progress against our digitization efforts. These trends set us on very strong footing to sustain multiyear growth and to deliver another record year in 2021. And finally, our valuation and cost advisory businesses continued to deliver steady performance, a solid reflection of their market leadership. Revenues and earnings were flat at $27.6 million and $2.7 million, respectively. Overall, we benefited from higher underlying activity levels over the prior year. However, given the fixed fee and time material nature of these businesses, we did see some impact in the quarter from the cybersecurity incident that caused certain projects to be deferred. We estimate the impact to be approximately $1.6 million in the quarter. Turning to our financial position. Our balance sheet remains in great shape, and the cash flows are strong. We finished the quarter with a cash position of $74.1 million and $248.8 million in bank debt. Our reported funded debt-to-EBITDA leverage ratio was 2.03x. With that, I'll now turn it over to Mike.

Thanks, Angelo, and good afternoon, everyone. I'm really pleased with the robust top line and earnings performance in the second quarter, which in itself was a record quarter. 2021 is proving out to be a reporting building year as we focus on accelerating cloud AE adoption, digitizing and streamlining our property tax practice, implementing a unified enterprise-wide go-to-market plan and expanding into the deck and data adjacencies. Operationally, it's been a very busy and productive first half of the year, and I'm really pleased with the solid execution of our strategy and the strong alignment from our team. With strong operational focus and solid progress against our strategic initiatives, we continued to deliver solid financial performance against our key metrics. Our record Q2 and strong first half of the year are the direct result of the hard work and strong execution by our more than 2,600 colleagues who helped drive immense value for our customers. I want to start by thanking them for their efforts and for going above and beyond, particularly in the final month of the quarter when we got disrupted by a cybersecurity incident, which I'm pleased to share is largely in our rearview mirror now. Let me spend a couple of minutes on that because it speaks to the resiliency of our business model, the amazing people we have been working with at Altus and how it accelerated our plans to further modernize and enhance many of our back-end operating systems onto cloud platform, which in itself is an important initiative as we continue to grow and scale globally for the opportunity ahead of us. Upon discovery of the ransomware attack on June 13, we took immediate action, activating our cybersecurity protocol, notified law enforcement and engaged with cybersecurity experts and professional advisers to assist us in resolving the issue as quickly as possible. Our customer business continuity protocol was implemented. And as a precautionary measure, our IT back-office systems were temporarily taken offline until we could rebuild them in greenfield environment. I will emphasize that our client-facing cloud-based data and software systems remained fully operational throughout this incident, which really helped mitigate client disruption. As our global economy and businesses continue to become more digitized in a post-pandemic world, cybersecurity threats are only going to rise and inflict materially higher damages for company. Cybersecurity has been a big cornerstone of our ESG and enterprise risk management strategies, which put us on a strong footing when this happened, enabling us to mitigate the impact. As we bring -- as we began to bring our systems back online, we have rebuilt stronger, and in doing so, we brought them up in a completely new environment and accelerated our road maps on improving our internal systems. We have done this under the guidance of leading cybersecurity experts and with additional measures to enhance the security of our systems. With cloud and data driving our next phase of growth, cybersecurity remains a high strategic focus for us so that we will continue to protect the privacy of client and employee data entrusted to us. While the investigation continues, I am pleased to share that based on the investigation to date, there is no evidence of any customer or employee data having been impacted as a result of the incident. Additionally, I can confirm that all of our software and antimalware programs are back up to date, complete and current and that the majority of the systems that were taken offline are back up now in the new greenfield environment. While the incident caused some internal disruption, particularly as it happened in the final month of the quarter, which tends to be one of our most busiest time, and forced us to incur some additional expenses, the impact to our Q2 revenues was not considered material and limited to only certain areas of our business. For example, projects on a fixed fee or time material basis had some revenue impact while our systems were down. To the extent that we missed out on some opportunities, I believe we can recoup them in future periods. All to say, we have proven out once again how resilient our operations are in the face of disruption. We're very appreciative of the support and patience of our customers and employees during this time and would especially like to thank our IT group who worked tirelessly around the clock to get us back up. Due to our corporate DNA of always prioritizing our customers, our people stood up to the challenges and found creative and innovative ways to get things done. I'll share an example to give you a feel for the ingenuity. In one example, despite not having access to our data and files and with an impending hearing deadline, one of our tax professionals found a way to manually rebuild the valuation materials and successfully achieved a $16 million tax reduction for our clients. Definitely ingenuity. Turning to our cloud migration journey. I'm pleased with the steady progress we're making. We're tracking right to our plan. Accelerating ARGUS Enterprise cloud adoption remains a top priority for us. And I believe that as our go-to-market changes take hold, we should see a good inflection point next year, especially as more of our larger customers have indicated interest and plan to move in the coming quarters. In Q2, we saw a good pickup from medium-sized businesses, finishing the quarter with 26% of our total ARGUS Enterprise user base contracted on the ARGUS Cloud platform, a good year-over-year increase from 8% in Q2 of last year. I still feel confident about our goal to reach between 35% to 40% penetration by year-end and migrate the higher majority of our user base by the end of 2023. We are now approaching 1,500 AE cloud customers. This includes both new AE customers as well as those who have migrated away from legacy on-premise version. This represents a solid base of AE customers and thousands of users on the cloud. We continue to have strong add-on purchases for our software products. But equally encouraging, we continue to add new clients, validating my view that we still have a lot of runway in our large addressable market. It's also a solid proof point of our improved go-to-market posture, reflecting our focus on developing our inside sales, customer success and new sales strategy. You may recall that in Q1, we added nearly 270 new software clients across our products. And in Q2, I'm happy to say we added approximately 265 new logos. This is substantially higher than what we were adding on a quarterly basis in 2020. Even on the software product side, we're led by innovation most impactful to our clients. As you know, we're focusing on differentiating the cloud version of ARGUS Enterprise to give customers a more compelling reason to move with features and functions that are only available to cloud customers. Our key software product initiatives this year include new API enhancements, starting with the Yardi connector, which we launched in May, with others coming on later in the year and early next; ARGUS data warehouse launched in May and our release of ARGUS Enterprise 14 targeted in Q4. We're seeing strong interest in the Yardi API connector and the ARGUS data warehouse. Feedback has been positive, and our pipeline for software opportunities is building. We continue to expect strong bookings in the second half of the year. And given our software pipeline, we anticipate recurring bookings will make up the majority of those bookings in the second half of the year. AE 14 will be an exciting release, including a key collaboration service on the cloud. To date, people have been sharing files back and forth, which is prone to errors and inconsistencies. On AE 14, they'll be able to invite users to all work on the same model, with the same data and at the same time. Our cloud vision will enable this as well as improve integration reporting. As we think ahead on product innovation, we have made solid progress on our data strategy. So I'll take you through a high-level overview, and we plan to go into a deeper dive at a future Investor Day this upcoming December. The rapid evolution in CRE requires data and software solutions to be layered with more analytics and consulting, presenting us with opportunities to introduce more predictive analytics and traditional workflows and decision-making. We believe there are 3 phases to this endeavor. Traditionally, the first phase has focused on what happened, which is a hindsight view with the scripted data. The second shift to why it happens, which gives us deeper diagnostic insight. And the most innovative third phase will focus on what will happen next, foresight with predictive and prescriptive analytics. As discussed on the last call, we currently have the tools and solutions that look backwards at what happened. With the addition of the recently acquired StratoDem platform, we will be equipped to bridge the gap to the why it happened, enable to rapidly transition to predicting what's next. That, in essence, is the direction of our data strategy. We're on a path to solve CRE challenges with real-time, data-driven insights, predictive analytics and alert capabilities. Our approach to data will be differentiated from the traditional data bureau. Our vision is to, first, combine Altus data and analytical capabilities with the market-leading position of our ARGUS software and Appraisal Management solutions to create the next generation of advanced analytics and predictive models in the real estate market. Second, to leverage the data technologies and data science to create useful insights that can drive faster decision-making for real estate professionals, uncover hidden opportunities and manage risks. Third, to reduce the amount of the data manipulation, clearing and repetitive data behavior by automating manual processes. Organizing data for use in ARGUS and by leveraging predictive analytics and scores to remove the need for redundant processes. And finally, to work collaboratively with clients, leveraging our trusted relationships to the system in their digital transformation process. Earlier this year, we advanced on this strategy and with a company-wide initiative to identify viable opportunities to create and grow data and analytics offerings. We did this with a view to improve the strategic position of our major lines of business. And following the months of research, we narrowed down to 8 use cases, which we thoroughly researched and validated with many of the interviews with leading customers and with a global management consulting firm to [ confess ] the strength of the ideas, the willingness to pay, the value created and the associated TAM. The concepts focused on the development of benchmarks, indices and scores based on our client activity in our software and advisory solutions, development of predictive models to create new insights and capabilities for investment management analytics and the data integration and workflow solutions to transform asset management, tax and debt workflows. We have started to move with select use cases by advancing them with some beta clients and expect that we should start to be productized early next year. More information will be shared in due course. As you've heard me say before, 2021 is a key execution year. We're investing in our growth engine across all of Altus and beginning to see operational improvements that in my experience are leading indicators for future revenue growth. We've built out our teams, revamped our infrastructure and go-to-market product strategies and have made excellent inroads into our most strategic market adjacencies and debt and data. Operationally, we've accomplished a lot in the first half of the year while sustaining strong financial performance and delivering on our cloud strategy. As we move into the second half, we are really encouraged by the sustained strong bookings growth as an indicator of future revenue growth at Altus Analytics. To put this in perspective, our organic bookings in the first half of this year equal more than 2/3 of all of our bookings in all of 2020. Together with a robust backlog of property tax appeals and a growing pipeline of opportunities as our revamped go-to-market programs begin to take effect, we feel confident about a strong second half of the year. At Property Tax, we're seeing great results from our operational initiatives under our global operating model. With our ongoing focus on business development, which is improving our lead generation and the pipeline coverage, we're well positioned for sustained growth. Our tax bookings in the first half of the year are up in the double-digits over last year, providing us with good visibility and predictability on future growth. And like at Altus Analytics, we're making solid progress at adding new customers. In the first half of the year, we've already added 3,200 new logos. In addition, we are on track establishing our foundational tech platforms with a single data structure that we expect will open opportunities for improved efficiencies, business development and innovation. As I approach my first year anniversary at Altus, I'm even more excited about our potential today than when I first took the job. The CRE industry is maturing, and we're seeing more consolidation, not unlike what was happening in the financial services sector over a decade ago, which I was part of. Given our exceptionally strong market position and how we strategically we are to our customers in the value chain of CRE, it really puts Altus in a great position to innovate and achieve our potential. We have a lot of work ahead, but we have a solid strategy, and our execution focus is as strong as ever. Despite a number of operational challenges in motion this year, overlaid with some uncontrollable headwinds in the first half of the year, be it currency or COVID or the cybersecurity incident, we continue to prove out the resiliency of our business, which reinforces how strategic and mission-critical we are to our clients. Okay. Now that, that's done, let's open it up -- the line for questions. Operator?

[Operator Instructions] Our first question is from Daniel Chan with TD Securities.

Nice to see the strong bookings growth. Can you kind of give us any color on what's driving some of that?

Daniel, I think there's a couple of things that we have. I mean we've been working on the go-to-market teams. First, I would put in, we have a full new pipeline forecasting process. I think the second thing that I would say is the cadence and reporting that we've put in has really directed the team. You see the new growth on the new customers. So I would say the focus inside sales team, which has been revamped, as well as I think just good old-fashioned account planning has worked out. The team is now working with a consistent sales methodology and more is going to be coming later in the year as our customer success team ramps up and we put more marketing around what we're doing. So we feel really good about where the bookings were in the first half of the year, and we continue to expect to see that in the second half.

Sounds good. Good to see the initiatives are starting to work out. Also thanks for detailing the data strategy. MSCI made a major real estate data acquisition recently. And I was just wondering if there's any kind of read-through to your strategy and potential impact on the competitive landscape?

That's a fair question. And MSCI, we actually partner with those guys and we do some work with them. So we're excited to see that they will be working more in the data bureau space. Our view is that we're more working around the data that we have as well as the data analytics and providing the information and the insight on top of the data that we see. We collect a lot of data on our ARGUS platforms. We collect a lot of data through our Appraisal Management work. And we collect a lot of data through our tax business. And we think that the addition that we've seen with the analytics platform we have as well as leveraging the data business that we have in Canada, we think that we can actually bring more insight. So the view that we have is that we were a great partner with RCA for years before. We expect that partnership to continue. And then we will put in our space, in the valuation space and the risk management space, will provide the insights and analytics on top of the data -- some of the data that they provide to us as well as some data that we provide to them. So as far as I'm concerned, this is fairly good and synergistic for us.

Your next question is from Stephen MacLeod with BMO Capital Markets.

I just wanted to circle around a little bit -- yes, can you hear me?

Sorry. Yes, I can hear you. I was just saying hi.

There we go.

There was a little bit of -- there's a little bit of a delay to mic.

Okay. I just wanted to circle around on the new AE clients. You've had good client growth this year -- sorry, this quarter, good client growth last quarter. Can you talk about maybe a bit around where -- what segments of the market you're seeing client growth, whether it's by size of client or geography or any way to stratify it?

Yes, sure. That's a fair question. Most of the client growth that we're seeing, especially on the software side of things in the Q1 and Q2 is we're reaching really into what I would call our Tier 3, Tier 4 customers, so small and medium enterprise. In Q1, a lot of those were customers buying 2 or 3 licenses. And this quarter, it was customers buying 3 to 5 licenses. So they're not huge customers, but they're adding things in, and that's really building out our ecosystem nicely. Where this work happened, this was primarily in North America. So what we think we've done is we've been able to -- in a part of the world that we are very strong in, we've actually started reaching into parts of the business that we were never really being taken into account in. And we're really providing a very good value proposition around ARGUS Enterprise on the cloud. As we ramp up and we start to integrate Finance Active more directly, we expect to see the same kind of concept happen in Europe. And so that's -- we think that we can probably maintain this pace going into Q3 and Q4 as well and then hopefully accelerate in new geographies as we create more of an international team.

Okay. That's great. And then I know it's sort of early days that you acquired StratoDem, and you talked a little bit about your data -- your progress on your data strategy. Are you able to give just maybe some color around how StratoDem has performed or how it's integrated with your existing business thus far?

Yes, sure. I think -- I mean I think it's early days. I mean what we liked with them is we felt that they had a very good engine. We felt that there were about 3 or 4 use cases that we can get into very quickly, especially around automated valuations, investment valuations and really into alerting profiles. I think we're running right now a number of beta tests with some of our largest customers. And we're expecting a pretty strong second half with them. They have -- the team has jumped right into the Altus Analytics team. And we're seeing activities around our Appraisal Management business. But we're also starting to see them getting engaged, especially around the ARGUS Cloud Warehouse on the ARGUS side, too. So what we're looking at is a couple of things. Number one, there is customer -- the customer work that we're doing that we can provide insights to how to improve their investment portfolios and their investment portfolio management. But at the same point, we're building out, for lack of better terms, scores on how to assist people to do valuation management in between appraisals. And I think from that perspective, we think those are 2 very good plays for the StratoDem team. Once we get those use cases past the beta tests and into production and we start to see new clients coming on, we plan to also then work with the team on the tax side of the equation as well. But that's probably a number of months out.

The next question is from Paul Steep with Scotia Capital.

Mike, can you just recap where we are on go-to-market transition? You mentioned revamping the team in Q1. I'm assuming you're largely done, but how should we think about the ramp-up of the effectiveness of the changes you put in place? And then I've got one quick follow-up.

Okay. Yes, that's -- yes, we are -- the journey is -- the journey with getting the team in place and the leadership in place and how we look at metrics and pipelines and things like that is mostly in place. And we saw, especially like on the new sales, the inside sales team really outperforming. So I think those things are pretty efficient, and we're going to see those become more effective in the second half of the year. What I look at in the second half of the year, as we're starting to talk through things, you're going to see -- we're going to really get our customer success teams ramped up and focusing on renewals and our renewal management. And we think that will be very beneficial from us from a gross retention and net retention perspective. And these are metrics we're starting to use internally, and we'll talk more about as we go forward. We have also focused more on our demand generation and marketing. As I mentioned before, we have a new Chief Marketing Officer, Ernie Clark. And he is focusing on building out our go-to-market around that demand generation from campaigns to channel to reach people to and tying that into the systems that we have. That will be a good focus for the second half of the year. And then as I mentioned a little bit earlier, there will be more metrics. I think I once said to you, I was an undergraduate engineer and I like metrics. So I think that the first part of the year, I think we've gotten a lot more efficient in just running through our cadence. And I think we're going to see an effective -- us be more effective in the second half. I think that as we look at this, you'll start to see that in the first half, we did really well, that we had good balance between our bookings of recurring and nonrecurring. But in the second half, with that type of focus, you'll start to see that our recurring bookings will become more of the majority of the bookings versus the nonrecurring. And I think that's the -- how we would measure the effectiveness.

Great. And then just on the data strategy, thanks for the outline there. Should we -- or should investors think that to get the final piece of foresight should be thinking about either tuck-under deal in terms of M&A strategy or that Altus would pursue something maybe more transformative that would bring not only those capabilities, but maybe even a broader data stack with it?

That's a very good and leading question. Listen, I think for us, we're confident in how we're approaching our road maps right now. I think we feel pretty good with the progress we're making. And the addition of StratoDem got us very far away very quickly. I think that as we continue down the path of finalizing the strategy, if there's interesting assets out there and they make really good sense for us, we will certainly take a look at them. I think -- but we are planning to be enhancing the StratoDem work this year and really launching these things early next year. So I think we'll stay on that task right now. But I would never -- you never say never. If you find -- if there's a good fit and it can accelerate where you want to be, I think that's the way our team is looking at it.