NTG Clarity Networks Inc. ($NCI)

Good morning, and welcome to NTG Clarity's Q4 and Full Year 2025 Earnings Conference Call. My name is Ali Farouk, analyst at NTG Clarity. On the agenda for today's call, we'll start with management's prepared remarks on our financial and operating results for the 3 months and 9 months ending December 31, 2025. We'll then have a Q&A period answering questions from covering analysts and investors. Note that the full published report with audited financial statements, notes, and management discussion is available on SEDAR and our website at www.ntgclarity.com. This presentation aims to highlight and summarize the key information already reported there. We will be posting both the slides and the recording of the presentation on our website following the call. So make sure to subscribe to our mailing list on our Investor page on our website to be notified when those are available. If you have any further questions that doesn't get addressed, please reach out to [email protected], and we will get you an answer after the call. With that said, I'll be welcoming management for remarks shortly, but first, I'll start with a quick disclaimer. Certain statements in this presentation other than statements of historical fact are forward-looking information that involves various risks and uncertainties. Such statements relating to, among other things, the prospects for the company to enhance operating results are necessarily subject to risks and uncertainties, some of which are significant in scope and nature. These uncertainties may cause actual results to differ from information contained herein. There can be no assurance that such statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. These and all subsequent written and oral forward-looking statements are based on the estimates and options of the management on the date they are made and expressly qualified in their entirety by this notice. The company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change. In this presentation, we also make reference to non-IFRS or non-GAAP financial measures that management believes are useful supplemental measures, but not alternatives, to net income and operating cash flow. Please see the non-IFRS measures section towards the end of this presentation, our press release, and our MD&A for details and reconciliation of non-IFRS measures to IFRS measures. With that, I'd like to invite Adam Zaghloul, Vice President, Strategy and Planning, to begin his remarks.

All right. Thank you, Ali. Appreciate it. So thank you, everybody, for tuning into our fourth quarter and full year 2025 earnings conference call. Q4 was another amazing quarter of growth. It was our highest billing quarter on record, and it brought us up to a total of 19 consecutive quarters of last 12 months revenue growth. Saudi Arabia and really the whole Gulf region as a whole is continuing to invest heavily in their diversification projects, becoming leaders in technology, finance, entertainment, and really especially on the technology front, NTG has been able to enable them over the past few years, and the results are showing up in our financials. Really, over the past 5 years, we've posted a compound annual growth rate of revenue of about 60%. So really I think NTG is becoming a clear partner when it comes to the continued development of the technology sector in the Gulf region. Now definitely, probably one of the biggest headlines recently is the geopolitical situation in the Middle East, and we're going to talk about it in depth shortly. But the short version is that we believe that our structural investment thesis is still very much intact. If anything, the recent events have strengthened the need for Gulf states to diversify their economy away from oil and gas. And now we really see the desire to become the leaders in the technology and finance and entertainment continuing into the next decade. And of course, NTG being there to help enable and do the work that's required on that front as well. So I'll talk about our full year performance. We finished 2025 with our strongest quarter on record. Q4 revenue was $23.9 million for the quarter, up 38.9% year-over-year, and that brought our full year 2025 revenue to $83.4 million. That's about a $5.4 million revenue beat on our revenue guidance of $78 million, and it brought the full year year-over-year revenue growth to about 48.5%. So definitely, a lot of work has gone into the continued growth this quarter and this year. So I want to take the opportunity to thank the whole NTG team for their continued hard work and dedication, but also all of NTG's clients for their continued confidence and trust in what we're able to deliver. I want to talk about cash collection and accounts receivable early on in the call this time because I know it's something that a lot of investors are keeping their eye on. Q4 was a really strong quarter for collections. Even with us billing the largest amount of revenue we ever had in a single quarter, accounts receivable and contract assets actually declined compared to Q3. So we finished September 30 with an accounts receivable balance of about $29.7 million and accounts receivable at the end of the year was $28.4 million, and that contributed strongly to our Q4 operating cash inflow of about $2.8 million. For the full year, we didn't have any bad debt expense and our receivables age and quality actually improved with total receivables sitting at under 90 days of age coming in at about 93% of the balance. But I want to set some realistic expectations going forward for sure. Even though we did reduce our days sales outstanding by about 3 days in Q3, we have about a 1 quarter lag built in structurally to our billing cycle. And we're also giving some of our larger customers who we have worked with for years and also have a great degree of trust with a little bit of favorable payment scheduling. So I would not guide investors to expect days sales outstanding to contract uniformly over the next few quarters. But what I can tell you is that we're placing a strong focus on continuing to drive our accounts receivable balance down, improve our cash flow, and that includes initiatives like offering a little bit of early payment incentive on some of our new contracts going forward as well. Turning to revenue quality. We're tracking 2 revenue and customer retention metrics this year that I want to walk you through. The first is net dollar retention. So for the full year 2025, net dollar retention was sitting at about 134.7%. So that means that for every dollar of revenue earned from a 2024 client, before counting any new customers or anything like that, we earned in 2025 about $1.35, right? So $1.00 to $1.35 over the course of the year. So that means that they're deepening their engagements with us. We're becoming a deeper and deeper part of their technology strategies and they're trusting NTG with a higher scope of work. We're also tracking gross dollar retention, which for the year 2025 came in at about 99.3%. So over the course of the year 2025, we did churn a few customers, but the total revenue lost was on the order of about $400,000, so less than 1% of our total 2024 revenue base. So overall, our retention metrics reflect how strongly our customers trust our quality of service, rely on us to be the technical experts that are going to guide them through the transformation and how eager they are to increase the scope of work with us as well. I'll touch upon customer concentration for the full year 2025. For the year, about 71% of our revenue was linked to our top 5 customers. But it's important to note that with a lot of these customers, we're not just working on 1 project or working with 1 point of contact. We are really working at every layer of some of our customers' operations, working on multiple projects, a lot of them linked to the Vision 2030 strategy, and we have been doing so for years. So we are becoming a really deeply ingrained part of their technical ecosystems for sure. I'll just give you an example. Our largest client is a system integrator that does a lot of work for the government in Saudi Arabia. They're working on multiple concurrent Vision 2030 related tasks. And they're also -- one of the customers that's readily referring us to new clients. A lot of our new customers come from word-of-mouth referrals from our existing customers. And this largest customer is no different than that trend and is largely responsible for a lot of our new work this year. And I would say probably most importantly is these large customers that make up the majority of our revenue are some of the lowest credit risk profiles in the entire Kingdom. Each of the top 5 customers have been long-standing partners with us, and they have a consistent track record of timely payment of their invoices. So that reinforces both the stability and the strategic value of the revenue base that we've built. I'll look at the composition of our revenue growth. So of the $27.2 million in incremental revenue that we generated in 2025, just under $20 million, $19.9 million, or 73% of it, came from existing customers expanding the scope of their work that's allocated to NTG. So this budget expansion with relationships, we already have as clients continue to ramp the projects that are related to the Vision 2030 diversification as well. Another $7.7 million came from new customers. So the majority of that work and relationships were sourced through word-of-mouth referrals from some of our existing satisfied customers as well. So that, plus the $400,000 churn that I mentioned before, brings us to the total of about $83.4 million for the year in 2025. So I'll talk about some of our operating expenses now. Q4 operating expenses came in at about 22.9% of revenue, and that breaks down into about 16% from G&A and about 6.9% from sales and marketing. So I want to address the G&A trajectory more directly. G&A as a percentage of revenue has definitely run a little bit elevated throughout 2025 because we brought on some extra head count in advance of some contract deployments that we saw in the future. The investment was deliberate, and we didn't want to find ourselves in a position where we were understaffed to service some of the large contracts that we saw coming. We've also been investing a little bit in geographic expansion to some of the other Gulf states. You can think about nearshore centers in Saudi Arabia itself, but also offices in places like the UAE and Iraq. And while those operations are scaling up, they're not going to be operating at the same kind of margins that our Saudi operations are. But we're confident that over time, as these operations mature, they will get to that same level that we see in Saudi Arabia. So as we look ahead into the future, we expect operating expenses to remain at roughly their current levels, at least in the near term. And we're expecting to see some meaningful operating leverage as our revenue scales. We see that the underlying cost base is largely in place, and incremental growth should flow through at a higher margin. Now several of the new contracts that we referenced are already in place, at least at the frame agreement level, but getting those first purchase orders so that we can start work is happening a little more gradually than we had originally anticipated. But once these programs get into full execution, we expect the revenue to ramp against the already established cost base and support a little bit of margin expansion that way as well. Moving on to profitability. Q4 adjusted EBITDA came in at about $3.8 million or 15.8% margin. Q4 net income came in at about $900,000, or about a 3.9% margin. And for the full year, adjusted EBITDA was about $11.9 million, or a 14.3% margin, and net income was about $5.3 million at about a 6.4% margin. Now the main drivers in the difference between adjusted EBITDA and net income are going to be foreign exchange and taxes. On the foreign exchange side, this year, we definitely had a little bit of a headwind from foreign exchange. For the quarter, it was about $700,000 and for the year it was about $900,000. And we really see foreign exchange as always being a source of volatility when it comes to our net income. Some quarters, it will be a net positive and some quarters, it will be a net negative. But at the end of the day, foreign exchange doesn't play materially into our day-to-day operations because the vast majority of our revenue and the majority of our expenses are in U.S. dollar pegged currencies. But what it does impact is the consolidation of all of our operations into our financial reporting. Now the other main factor that I mentioned is taxes and taxes are definitely a very real expense, especially in 2025. For the year 2025, we paid about $3.3 million in taxes. And at first glance, that's definitely much higher than what you'd expect the Canadian tax rate to be, but that's because we are being double taxed in both the Canadian and the Saudi jurisdictions. So we ended up paying an effective tax rate of close to 38% this year. But in order to combat this, in late November of 2025, we actually spun off our Saudi operations from a branch of the Canadian operation to being its own stand-alone Saudi LLC subsidiary. And that's in preparation to restructure for taxes to make it so we reach our target of as much revenue as possible being recognized in and taxed in only one jurisdiction. So we're going to continue to provide some updates as the tax situation unfolds in 2026. But again, our goal is to have as much of our earnings as possible -- shelter as much of that 96% of our revenue as possible that comes from Saudi Arabia from being double taxed. But overall, as the tax situation improves as we plan it to in 2026, that will -- or at least we expect it to shrink the spread between adjusted EBITDA and net income. So just to sum up the financial statements. This is a neat chart that shows that of our about $83.4 million for the year in 2025, about 36% of that came through as gross profit. That's within our typical range that we expect to see of that mid-to-high 30% range. Pretax income came in at about 10.3% and then net income after tax is coming in at about 6.3% as well. So I want to do a little bit of an honest accounting of our performance in 2025 compared to some of the targets that we set out. And just the first target that we have there, expand and deepen our client relationships, I think we definitely delivered on that promise. Despite the macro themes that are going on right now, we were able to post 135% net dollar retention and that 99% gross dollar retention. Our customers are continuing to work with us and expand those engagements as well. We're also winning new customers through word-of-mouth referrals a lot of the time. We've put on about $7.7 million in incremental revenue from new customers in the year in 2025 as well. And our adoption and traction of our NTGapps proprietary software platform continues to go strong, where NTGapps year-over-year growth in terms of revenue contribution is up 179%. So all of those factors went into us being able to deliver on our full year revenue guidance. We guided for $78 million, and we were able to beat it by about $5.4 million, bringing full year revenue to $83.4 million. Now when it comes to cash collection and AR quality, I definitely think that there was an improvement that we saw in Q4, right? Q4 showed the improvement that we've been working towards. Accounts receivable and contract assets declined by about $1.3 million in what was our highest billing quarter of the year and really of all time. And that contributed about $2.8 million in operating cash flow. But that being said, it's still important to look at the full year. And through the first 3 quarters, operating cash flow was negative as we had to scale our working capital with the scale of the business. Q4 is a better indicator of how we see our business operating when collections and execution are performing as expected, but consistency is still something that we have to show on the cash collection and AR side of things. On the adjusted EBITDA line, the original 16% to 20% guidance range turned out to not be achievable under the deployment time lines that we ended up seeing. And we had to reset the range to 12% to 16% in Q3. And full year 2025 came in at 14.3% that I mentioned within that revised range. But it still fell short of that initial commitment. And the 2026 outlook and guidance that we'll talk about shortly is set with those assumptions recalibrated as well. Now before we get into the 2026 outlook and guidance for the year, I want to talk about the macro a little bit. Now NTG is probably pretty unique in that we are operating at the intersection of the 2 major macro themes in 2026, the first being artificial intelligence and how it impacts our business model. So investors often ask us, are AI tools going to reduce the demand for what NTG does. And I think it's a fair question. But in our market and in our experience, we're not really seeing that play out in any meaningful way. So our clients are large Saudi financial institutions and government-linked enterprises that are executing these multiyear transformation programs. These engagements involve a scope of work that goes well beyond what off-the-shelf AI products can really deliver. We're talking things about cybersecurity, data residency constraints, Arabic language requirements, regulatory alignment that we spent years building up our expertise in. And our work is really embedded across multiple layers of a lot of large Saudi organizations. And our contracts are typically won based on track record and long-standing relationships as opposed to the point-in-time cost savings that a lot of AI tools are purporting to offer. But that being said, AI is still providing us some benefit in terms of how we operate. We have a dedicated team internally who's working on both developing AI products, but also incorporating AI tools into our development and delivery workflows. So the near-term impact that we see from this is improved productivity. Teams are able to deliver more without needing more resources and capacity. And over time, we're expecting that to translate into margin expansion as the value that they deliver scales without necessarily needing any additional head count. But we're also seeing AI increase our demand for our services provide some incremental demand. On the one hand, we're integrating AI into our NTGapps software platform, and we're also developing a lot of other AI offerings like our TestFlair automatic AI-based software testing and our agent builders. And our customers are actually coming to us for early-stage implementations of these AI-based tools, which provides contracts and engagements on top of what we had already contracted with some of our existing customers. So overall, we definitely see AI as a potential tailwind to improve our business. Now the other major macro theme is the ongoing conflict in the Middle East for sure and its potential impact on our business. So we operate primarily in Saudi Arabia and Egypt, both of which have been not directly involved in the conflict. But of course, the region is experiencing some second order effects. So the key question is whether the changes in the operating environment are going to impact NTG at all. The first and probably largest question is how the conflict impacts the Saudi fiscal position. So I'll just talk about the Saudi budget, which funds a lot of the initiatives that are going into Vision 2030. The Saudi budget for this year was based on an oil price of about $80 per barrel. And at this time, Brent crude is trading at about $108 per barrel. But there is also a decline in volume brought to market that goes along with that price increase. Estimates are going from about 7.4 million barrels per day preconflict to about 5.5 million barrels per day now. But the good news is that at the current volumes with the increase in price, Saudi government oil revenues are effectively flat versus preconflict. So that gives us some confidence that the spending and the budgetary programs are still going to be on par with what was planned for the year. When it comes to more our experience and client behavior, we haven't seen any change in execution. Purchase order time lines and project activity remain similar to what they were before the conflict. We haven't received any clients initiating deferrals or cancellations on their work. And of course, our Egypt offshore centers operate far outside the most directly exposed areas to the conflict. And I think overall, probably one of the most important points is that Vision 2030 really is a structural shift in how Saudi Arabia structures its economy, right? So they want to diversify their economy, get away from being beholden to the oil and gas cycle and really become leaders in technology and finance and entertainment. And if anything, the conflict in the region that's impacted its oil revenues has reinforced the objective and made it more important to invest. So the strategic rationale for the continued investment hasn't weakened at all. I would say, just to close out, the trajectory of the conflict is, of course, going to be uncertain, and we don't want to be speculating on any specific outcomes. But what we are going to do is continue to monitor both the geopolitical situation and also the leading indicators from our customers such as PO velocity, approval time lines, any changes in the process that way. And we want to be open and transparent to investors about how that's impacting our time line and how that might impact our guidance going forward. But with the context of the geopolitics and the AI [ scene ] out of the way, I want to discuss our expectations for 2026, which reflects a conservative view based on the current conditions there. But we'll start with revenue guidance, which we're setting at being above $90 million. So this $90 million floor is really anchored in our contract backlog and what we can see clearly coming down the pipeline. We think it's an appropriate starting point for guidance because it relies on our normal renewal and expansion contract cycle and not -- what it doesn't rely on is any sort of large windfall contracts. So our backlog is sitting at about $88 million of purchase orders and contracts on hand as of December 31, plus any POs and contracts that have been received since then. But it's important to note that this annual backlog number is basically the value of POs that we've received plus the remaining commitments on our multiyear contracts, most of which have just finished their first year billing. It does not include assumptions for renewals of contracts that expire during the next 12 months. So the combination of what's contracted for the next 12 months and what converts off those contracts in the next 12 months is approximately $60 million. And that leaves about $30 million in renewals and frame and agreement expansions and POs from new agreements and that kind of thing to bring us to that $90 million. But I want to bring a little bit of context to that $60 million 1-year backlog number. First, we have signed multiple framework agreements in 2025 and in early 2026 that don't carry a contractual floor itself. So we expect purchase orders against those agreements to come through. But without any guaranteed commitment, they are not part of the backlog. And actually, the build down of 1-year worth of those multiyear contracts, plus the lack of the contractual floor in the new agreements, is why the backlog has reduced since early 2025. And second, our 2 large major framework agreements that we announced back in 2024 actually generated POs in 2025 that were about 20% to 50% above the contractual floor in the first year. So the multiyear backlog reflects that floor. And since actual POs have run materially above it, it does give us some potential upside when it comes to revenue as well. So I'll move on to adjusted EBITDA guidance now. At the start of 2025, we guided to 16% to 20% adjusted EBITDA margin. But in Q3, we had to revise that range to 12% to 16%, basically recognizing that our head count investments had scaled ahead of the contract conversion time line. We finished 2025 at 14.3% inside that revised range. But the trajectory across the year matters more than necessarily the average. Q3 was our softest quarter at 11.9% and Q4 recovered to 15.8%. That recovery is operating leverage that we've been describing so far, revenue catching up to the cost base that we built ahead of it. For 2026, we're guiding to 13% to 16% adjusted EBITDA margin. So we've raised that floor by 1%. This guidance is set knowing that Q1 is going to be a little bit of a slower revenue quarter driven by lower operating leverage. We see a pathway to that ceiling of 16% and even beyond it, but it does require some PO conversion from our current framework agreements and pipeline to drive even greater operating leverage. So what we've effectively done with this guidance is take the lesson from 2025. We wanted to be sure to issue guidance that's readily achievable without relying on the conversion of large contracts. So one Q1 dynamic I want to be sure to flag is the typical impact of Ramadan and Eid on our business. So for investors that aren't as familiar with the Middle East, Ramadan and Eid, they're not just like a 1-day holiday. It's basically a long observance during which, in Saudi Arabia's case, working hours are reduced by law, decision-making slows down, new projects are typically deferred until after Eid. The closest comparison I think that comes to in North America is that mid-December to early January period where things slow down for Christmas. But overall, Ramadan and Eid typically result in delayed sales cycles, billing cycles, collections, which typically picks back up in the following quarter after the holiday season. So Ramadan 2026 ran from mid-February through mid-March. And with that in mind, we're expecting Q1 to look more similar to this past Q3. So in Q2, we also have Eid al-Adha coming up around late May. But by late Q2, with Ramadan and both Eids out of the way, we expect to return to some sequential growth and a stronger back half of the year. So that brings us to the end of the prepared remarks. I want to thank you for calling in and listening into the earnings conference call. And I think we're going to turn things over to a Q&A session now. So we're going to start things off with questions from our covering analysts, and then we're going to turn things over to some of the questions that were written in by investors ahead of the call. So I'm going to see who is available for questions right now. And can we start with Aravinda Galappatthige from Canaccord, if you're ready to come on the screen. There we go. Aravinda, you're on mute.

Congrats on the quarter. So I'll start with the outlook. Maybe a little bit more color on that $30 million that you built into the guidance number from outside of the current backlog. It's fair to say that the vast majority of it you're expecting from existing clients connected to existing projects, extensions, renewals kind of thing. I wanted to understand how much of it is connected to conversations you're perhaps not having at this point and perhaps expect it in the second half, just to get a sense of the visibility that you have.

Yes, for sure. So that's definitely a good point on the $30 million that's not baked into the contract backlog right now. What's contained in that is basically contracts that are with customers that have been consistently renewing their ongoing engagements. So it's not things that are contractually inked right now. But like you mentioned, they are going to be renewals that we expect to be having a conversation around, say, in the next couple of months, basically any time towards the end of the year. But what we take as a philosophical point when we look at that portion of the backlog is we're not -- it's not intended to be like an ambitious sales pipeline. It is really contracts with reliable existing customers that have proven to be renewing their engagements with us year in and year out. So all that is to say we're pretty confident about setting that $90 million as a floor, including that $30 million of basically renewals that we expect to be in the bag in the next coming months.

Okay. And then going back to the AR matter. Just -- I think you explained it really well, but just to understand, it seems that there seems to be perhaps a material movement from monthly invoicing to quarterly. Was that -- maybe just a background to that. I wanted to understand, was that initiated and requested by customers? And is it to reduce the administrative burden? What was the backdrop to that?

Yes, that's definitely a good question about the AR position. So yes, definitely, in Q4, we saw a significant jump in our contract assets versus just the typical trade receivables. That largely is due to a couple of large customers coming to us. Of course, we don't want to proactively go out and reduce the billing frequency for us, but basically coming to us and wanting to make it simpler for themselves, reduce the administrative burden of having all of these invoices go out monthly for sometimes individual resources and that kind of thing and do a little bit of consolidation. So the result has basically had a couple of our key customers, some of our largest customers move from more monthly billing cycle to a quarterly billing cycle. And of course, there's going to be a little bit of, let's say, working capital build in order to support that. But I want to stress that the move from monthly invoicing to quarterly invoicing is basically a billing timing issue and not a creditworthiness issue. When we look at the overall accounts receivable, still about 93% is aged less than 90 days. And these customers that we're giving these favorable terms to are customers that we had relationships with going back years, and they have a history of timely payments as well. So we're not concerned at all [ creditworthiness ] or delayed payments. It really is a timing issue and a convenience issue for some of our customers.

Okay. And then on to the gross margin and your EBITDA guidance as well. I know that the consulting component is growing larger. With that in mind, maybe just help us understand what the gross profit margin is -- the one we should be looking at and maybe considering as we look to forecast for 2026? And then based on your comments on G&A, is it fair to say that you have the size now to grow the revenue probably up to about $100 million before making any step change investments? I guess, generally speaking, a sense of the capacity that you've built in at this point?

Yes, that's definitely -- both of those are good points to be looking at. So on the gross margin point, taking a look at this year's performance, we came in gross margin at about 36%, down slightly from last year's margin at about 37% just due to changes in our revenue mix. But I don't think at this point, we are going to be guiding to any no material change in the gross margin. I think that mid to maybe mid-to-high 30% range for gross margin is where we're going to expect to be for the near term. And on the question about capacity and ramping up, I would say our intention is to have this especially G&A cost base represent a position where we need to be in order to scale to say where we want to be later on towards the end of the year. So I think that it's very probable that for the next few quarters, we keep the SG&A expenses at roughly the same absolute value as we look to get some operating leverage and scale towards our targets towards the end of the year for sure.

And lastly, real quick on NTGapps. I know that it's choppy quarter-to-quarter. What are your expectations? How much of the outlook includes components from NTGapps and perhaps the mix in terms of implementation and the ongoing components within that as well?

Yes, no problem. So NTGapps, it's definitely exciting to see the 180% year-over-year growth on the NTGapps line as well this year. It brought the revenue share from NTGapps up to about 11% of revenue this year, which is great to see. Some customers who are working on proof of concept in 2024 and early in 2025 have moved on to full-scale implementations this year, and that's largely why we saw the growth that we did. Still largely implementation-based, bespoke project-based, not as much of that SaaS revenue base is going into NTGapps right now. And that's part of the reason why it ends up being choppy quarter-over-quarter is it's very project-based and very one-off project-based that way. So in terms of guidance, we're not going to guide specifically for an NTGapps contribution just because so much of our business and demand and new engagements are on the services side and NTGapps ends up being a little bit of an upsell in the background. But I would say a good goal to have is to maintain the revenue contribution from NTGapps as we have it right now in that 10%, 11% range. So I'm going to invite our next analyst on to the stage. I believe we have. Nick Cortellucci from Atrium Research on the line. If Nick, you're ready to come up.

A couple of questions here. So firstly, there's been some news on the Vision 2030 and shifting away from these mega projects and into maybe a more diversified approach. What are your guys' thoughts on that? And is it a positive or a negative for you guys?

That's a really good question for sure. Overall, I would say it's a positive for NTG just because it really hones in the focus on the Saudi spending into technology, digital transformation, that side of the economic development. I think maybe over the last few years, what the experience has been in Saudi Arabia is that, that's the area where there's the most return on investment, becoming a regional hub for technology, but also finance and entertainment and that kind of thing. And especially in times that are a little bit uncertain like these with the conflict in the region, it's almost reassuring to see that when budget considerations come into play, those infrastructural projects are the ones that are getting scaled back and the core projects that are really going to technologize and evolve the economy are the ones that continue to get funding and are the ones that are technology based, which are the ones that NTG helps with.

And then maybe more of a philosophical question, but do you think it's getting easier or harder to scale now that you guys have reached such a critical mass compared to maybe like 2 years ago?

Yes, that's a good question for sure, Nick. overall, what I'd say is the law of large numbers definitely kicks in, and it's always going to be hard to grow a 50% year starting at an $83 million based revenue compared to like a $56 million base revenue that we saw last year. So in some respects, scaling gets harder, and we can't promise those same 100% or 50% scaling years every year. But on the other hand, once we really have a proven track record of being able to operate and scale in our target market, which we have been proving with some of our large customer engagements, it does make it easier to have the conversations open up about larger contracts. And that's what we're seeing happening, right? Some of our large customers are referring us to work with other sister companies in the same portfolio or other companies in their professional network. And the negotiations are starting at a higher level of contracts. So I would say it has its pros and cons, right? The law of large numbers is kicking in, but it definitely opens the door to talking large contracts, which is what we're seeing come through.

Understood. And then just the last one for me was just on the sales and marketing and G&A, just from an absolute dollar figure, is this the new norm? I think it was $1.7 million in sales and marketing, $3.8 million in G&A. So a baseline for the future?

Yes, that's a good question for sure. I would say on the SG&A line, broad strokes, what we're seeing in the near future, or what we're expecting to see in the near future is maintenance around that baseline level. I think we've made the investments that we need to make to be able to continue to scale this year. And there is the possibility for upside if we get some new POs coming off of the framework agreements we signed recently, it could even result in a little bit of a contraction. But I would say our guidance is basically assuming this is the new normal on the baseline, at least for the near future right now. I think that is all of the analyst questions on the call. But feel free to put your hands up if you have any more questions. But in the meantime, I'm going to invite Ali back to the stage to start us off with some of the questions that were written in by investors [ during ] the call.

All right. So our first question is written in from [ Chris ] from [ Activ8 ] Capital. The last 3 years has seen extraordinary top line growth, and it looks like cash flow is starting to catch up to the investment in that growth. Do you feel the business is rightsized now and can keep delivering growth and the positive cash flow?

Yes, that's a great question. Thanks for writing it in, Chris. So overall, I think like we mentioned in a couple of the earlier questions, the level of investment that we put in is at a good spot for the near future. I would say we've made the investments we need, especially in the SG&A line to continue the growth towards bordering on the revenue floor guidance that we put on this year. And there is a possibility for upside if new contracts come through. On the cash flow side of things as well, I think Q4 was a great example of trending in the right direction. We had a positive operating cash flow of about $2.8 million for the quarter. We saw an improvement in the adjusted EBITDA margins compared to Q3 as well, bringing us back up to where we're going to be. So I would say Q3 is an excellent example of where we want to be in terms of margin improvement, also cash flow. But just with the caveat that I don't think it's going to be a smooth improvement quarter-over-quarter just because of situations like this upcoming Q1 where we're going to have a little bit of interruptions due to holidays Eid and Ramadan falling in Q1, another Eid coming a little bit later in Q2 as well. But overall, as we progress towards the back half of the year, I think we're going to look towards some improved consistent quarter-over-quarter growth that way.

All right. Our next question is written from [ Marcus ]. I know you touched on it during the presentation. Maybe just to clarify again. Markets have been talking about AI taking all coding jobs. Are you seeing that with your clients?

Great question, Marcus. Thanks for writing it in. Yes, just to double down on the AI point, right? Like we really haven't seen any decline in the demand for our services due to AI. Even just looking at the net dollar retention, gross dollar retention numbers for 2025, 135% net dollar retention, 99% gross dollar retention. Our customers are continuing to renew their engagements and even expand them. And it's because they're trusting NTG to really guide them through the complex projects that they're working on. We're working with these large Saudi enterprises that require cybersecurity, data housing constraints, and Arabic language requirements and really just regulations that we've spent years immersing ourselves in and that they're not quite ready to risk in switching to some of the off-the-shelf AI tools. But at the same time, of course, we're getting the productivity gains that we're getting through AI by incorporating tools like Claude Code and Cursor into our developer workflows to hopefully bring more value to our customers using the same head count, which will hopefully lead to some margin expansion down the line as well. So overall, we haven't seen any negative impact from AI in terms of demand for our services. If anything, it's improving our productivity and becoming a little bit of a tailwind for us.

Okay. Our next question is written in from [ Priya ], another private investor. The $90 million revenue guidance is a large stepdown in growth rate from 2025. What is driving that?

Great. Thanks for the question. So yes, definitely, if you compare the growth, basically 50% growth from the $56 million in 2024 to the $83 million in 2025, going up to $90 million is much less of a growth point. But I just want to hammer home the point that the $90 million target that we set for 2026 is, in fact, the floor that we see based on what we can clearly view in our backlog and expected renewals and contracts. It's entirely based on our backlog and renewal and expansion cycle that way. There definitely is the potential for upside through a couple of areas, right? Number one being those framework agreements that we signed towards the end of 2025 and early 2026. They don't have a contractual floor, so they're not in the backlog. That's a potential source of upside. But also the fact that some of our multiyear contracts that we signed in even 2024, their first full year of billings ended up being somewhere between 20% and 50% higher than the contractual floor. So that's also a potential source of upside. So that with additional sales pipeline makes it start to look like above $90 million is definitely possible as well. But just taking into consideration the state of the markets right now, we want to be conservative and come up with guidance that's supported basically by our backlog and strong conviction renewals.

All right. Our next question is written in from [ Mike ], a private investor. Contract assets have grown significantly and AR plus contract assets is still at $28.4 million against quarterly revenue of $24 million. When does this normalize?

Thanks for the question, [ Mike ]. Yes. So I think goes back to what we were talking about with Aravinda, right? Definitely, contract assets quarter-over-quarter has grown. But when you take a look at the accounts receivable as a whole, we've actually seen improvement quarter-over-quarter and resulting in that positive operating cash flow. And again, like we were talking about the increase in contract assets really is just us negotiating with our customers, giving them a little bit more of flexible invoicing cycles moving from that monthly invoicing to the quarterly invoicing. So it's an entirely invoice timing issue as opposed to really creditworthiness issue. Our customers continue to be Saudi enterprises that we have years-long relationships with who have -- we've had a very little problem with payment once the invoices are actually issued in the past as well. So yes, I think that covers the AR.

Okay. Our next question is written in from [ Krishnan ], a private investor. When can we expect news on share buybacks?

That's a good question, Krishnan. Thank you. So I think it opens up the question about capital allocation in general. In past quarters, we've talked about capital allocation, the priority basically being funding working capital for growth, a little bit of debt repayment as we work down our long-term debt. But then historically, we've actually talked about maybe some M&A as being the next step of capital allocation. And we still think that the thesis works, finding IT and technology companies in Saudi and the rest of the Gulf, maybe smaller scale that have access to customers that we don't currently have access to. So large enterprise customers who have the ability to scale their engagements, basically NTG's bread and butter. We still think that thesis would work, but what's changed is basically the hurdle rate. Over the last few months, valuations of technology companies across the board have gone down. NTG is no different. And now what we're starting to think is that the better use of capital for that third priority is looking at share buybacks. So definitely, we're keeping our finger to the pulse when it comes to when the best time to execute on that is. We're going to come out with news as anything develops on that front. But I think at the very least, what we're going to need to see is cash flow continue to come through with consistency that's above the level needed to fund the working capital growth right now. So definitely stay tuned, and we'll keep the news flowing on when it comes time to update that capital allocation strategy.

Okay. Our next question is written in from [ James ]. You said Q1 2026 will be softer. How soft are we talking?

Thanks for the question, James. So when it comes to Q1, I mentioned we're seeing Ramadan and Eid al-Fitr come in about mid-February to mid-March. So impacting our Q1 in the form of slower sales cycles, slower invoicing, slower collections. And if I were to give directional guidance, I would expect Q1 to look much closer to Q3 2025 as opposed to Q4 2025, just to give you a point of comparison. But I'll just echo that all of our guidance that we're giving for the full year, both revenue and adjusted EBITDA, are taking into account the impact from the slower season around the holiday times for sure.

Okay. Our next question is from [ Brandon ]. You paid significantly higher taxes this year, and that impacted net income. Can you walk us through that? And how does it go from here?

Yes, that's a great question, [ Brandon ], for sure. So definitely, the tax expense was large in 2025, about $3.3 million for the year. And it really is a factor of we had from previous operations some tax loss carryforwards in Canada, but those were completely used up by the end of 2024. So in 2025, we were fully taxable in the Canadian jurisdiction as well as the Saudi jurisdiction, which led to a 37% or 38% effective tax rate for the year. Now we're actively working to reduce the tax burden. One of the things that we've done in 2025 is in late November, we've spun off our Saudi operation as an LLC subsidiary in Saudi as opposed to just a branch of the Canadian operation with the goal being 96% of our revenue comes from Saudi Arabia. We want as much of that to be sheltered from that double taxation. So over the course of this year, we're going to continue to provide updates on how the restructuring is happening. But again, what we want to see happening at the end of the day is as much of our earnings as possible taxable in only one jurisdiction.

Okay. And the last question is written in from [ Greg ]. I know we touched upon this, maybe just brush over one more time. Obviously, the war in Iran is big news and doesn't seem like there is a resolution soon. How is this impacting you guys?

Yes, definitely. Thanks, Greg. So yes, just to highlight what we're seeing on the ground. It really is our operations in Saudi Arabia and Egypt are far away from the active conflict. Just our experience from our customers as well as we haven't seen any material impact to any of our operations when it comes to PO and contract timing, project delivery, even customers saying, let's wait to see what happens with the conflict before we continue or start up any new projects. So things are more or less business as usual in the region. It's also reassuring to crunch the numbers on the Saudi oil revenue base. I mentioned Brent crude has gone up from $80 to about $108 a barrel, but that price increase came with a decrease in Saudi's basically mobilization of market from 7.5 million barrels per day to 5.5 million barrels per day. But that ends up washing out to be roughly the same revenue stream during the conflict as before. So it gives us confidence that the funding to some of these large Saudi financial institutions and government organizations is going to continue coming. And overall, the conflict in the region and its resulting potential impact on oil revenues is basically just another reason for Saudi Arabia and the Gulf in general to continue its diversification away from oil and gas freight. If anything, recent news has strengthened that thesis. So overall, we're going to continue to, again, keep our finger to the pulse and come to investors if we see any material deviation in our operations as a result of the conflict. But right now, we're very happy to say there's effectively no material impact. All right. And that was the last question, I believe. So thank you, Ali, for reading the questions, and thank you to everybody who wrote in a question as well. And I'll just say one more thank you for tuning into our Q4 and full year 2025 earnings conference call. It was another fantastic year of growth, and we're looking forward to keeping the growth going for at least another year, ideally into 2030 and beyond. But I'll look forward to speaking to you again in the next month or so for Q1. But until then, take care. Thank you.