NTG Clarity Networks Inc. ($NCI)

Good morning, and welcome to NTG Clarity's Q1 2026 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 ending March 31, 2026. 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 get notified when those are available. If you have a question that doesn't get answered, 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 opinions 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 for the introduction, Ali, and thank you to everybody who's tuning in to this Q1 2026 earnings call. I want to start off by saying that Q1 marked our 20th consecutive quarter of last 12 months revenue growth, so we kept the growth going this quarter. And despite some continued conflict in the region, which I'll give a more detailed update on shortly, really our structural investment thesis hasn't changed. We have a growing and embedded client base that's executing long-term large-scope digital transformation initiatives across Saudi Arabia. And what Q1 results reflect really is a seasonal effect that we forecasted in Q4, meeting with already established fixed cost base. So to get right into the revenue, Q1 revenue was $21.3 million, up 8.1% from the $19.7 million that we posted in Q1 2025. And on the Q4 call, I signaled that Q1 would look similar to Q3 2025, which came in at $20.9 million. So there was a slight revenue beat on that from a revenue perspective there. So it's important to notice for Q1 that Ramadan and Eid al-Fitr both fell entirely within the Q1 this year. So that was late February to late March. And really, what this means is working hours are reduced by law in Saudi Arabia. Decision-making slows down, people take vacations, new project starts are delayed until after the holiday. So for a Saudi-facing company like us, this is one of the most significant, if not the most significant, calendar event of the year. So the revenue data definitely shows this pattern, but our gross margin data shows it as well. Even in past quarters where we saw revenue growth, so Q2 2024, Q1 2025, those both had gross margins of about 34% and Q1 2026 had a gross margin of about 33%. So all 3 Ramadan quarters had that sort of same dynamic. And throughout 2025, we built a delivery system that's capable of supporting materially more revenue than we saw in Q1 2026. So this quarter ran that base at lower utilization throughout this sort of seasonal trough, and that's really what compressed our margins year-over-year, not a change in the cost structure at all. So this base is largely in place and relatively fixed. So as revenue normalizes against it, we can expect some leverage to return as we progress through Q2 through Q4 this year. So I'll talk about the effects of Ramadan on our cost structure, Ramadan this quarter. So sequentially, Q4 2025 to Q1 2026, our combined cost base was essentially flat. So that's when you take into consideration basically all of our staffing costs, so cost of sales plus G&A, plus sales and marketing, altogether, they moved by less than 2%. And what really changed was our internal classification, so not the total of these sort of expenses. During Ramadan, a lot of our delivery staff who are normally billable to clients moved from cost of sales to G&A, especially if they're on an extended holiday period. And at the same time, overall lower utilization with clients and lower revenue compresses the gross margin as well. So adjusted EBITDA ends up taking the full effect of this reduced revenue, but the cost did not grow. They were really just recategorized within our internal categories. So I just want to reiterate that this cost base is built around having larger revenue than we saw in Q1. And Ramadan pulled utilization down for a few weeks and moved some of our billable staff onto the bench and the base itself did not change. So as those staff return to work with our clients and we start to see things pick back up in Q2 and beyond, we're expecting the incremental revenue to land against that already established cost base and convert at a higher profitability rate. Getting into the profitability in Q1. Q1 2026 adjusted EBITDA came in at about $757,000, that was about a 3.6% margin. Net income was $979,000 or a 4.6% margin. And what we're looking at is operating leverage, again, not any sort of change to our underlying cost structure. Q1 ran about low utilization, I mentioned, so margin compressed. Q2 through Q4 2026 are expected to run at relatively the same cost base, but at normalized revenues, and we're expecting margin recovery without necessarily adding any additional costs. So this slide is intended to help you visualize the impact of the sort of revenue -- seasonal revenue disruption. Q4 2025's EBITDA block is meaningful, while Q1's revenue drop results in a sort of smaller adjusted EBITDA. The cost amounts are essentially identical. But looking forward, the Q2 block here is illustrative of our expected results. So a similar cost base, revenue is expected to normalize and margin recovers that way. So the Q2 through Q4 recovery really involves 3 things moving in concert. It's revenue rebounds as billings pick back up after the holiday period, gross margin recovers as our utilization rate goes up, and G&A normalizes as staff return to cost of sales. So all 3 in the same direction against the same cost base should result in some leverage there. Talk a little bit about tax structure. One of our goals over the last year was to fix our overall tax structure. In fiscal year 2025, NTG paid an effective tax rate of about 37%, and that's nearly double the Saudi statutory corporate tax rate of about 20%. And that was because Saudi revenue was taxed twice, once in the Kingdom and again in Canada, all on the same earnings. But in November 2025, our Saudi branch office was converted into an LLC. And that means that Saudi revenue, approximately 95% of our total revenue is now taxed only once in the Kingdom at that 20% corporate tax rate. So the Canadian tax layer is effectively eliminated for our day-to-day operations. And again, in fiscal year 2025, there was a 17-point excess above the Saudi corporate tax rate that represented approximately $1.5 million in excessive tax expense. And of course, that amount is going to grow as our earnings grow. So going forward, we expect that drag to be eliminated. Talking about collections and cash flow. Q1 operating cash flow was positive $43,000. It was positive for the second consecutive quarter despite our lower net income. And we collected over 99% of our Q4 trade receivables during Q1. So that left only about $79,000 in remaining AR that's aged over 90 days as of the end of Q1. Talking about contract assets, that's revenue that we've earned, but we haven't yet invoiced. It was sitting at $14.6 million at the end of Q1, that's down from $16.3 million at the end of the year. And those are typically billed and collected shortly after the quarter closes. And again, that large step-up at the year-end 2025 was just due to offering a little bit more accommodating payment terms to some of our larger, more trustworthy clients. So overall, bad debt expense remains 0 and has been for over 2 years now. And we really see that every dollar of our more than $29 million in AR is performing with customers that have a long track record of prompt payment with us for sure. I also want to give an update on the geopolitical context in the region. So when the conflict began in the beginning of -- or when the conflict began back in February this year, the market really feared a direct operational disturbance for our company, and that really hasn't been our experience, right? Our delivery teams are based out of Egypt, and they operate outside of the areas most affected by the conflict. And we even signed 2 new framework agreements with Saudi clients since the conflict began. However, we are starting to see people in the region starting to factor a potentially slower resolution into their decision-making, and that takes the form of delayed start-up of new projects and a preference for cost cutting. But I just want to stress that our existing contract backlog, which is currently sitting at about $73 million in POs and contracts on hand, hasn't been affected materially. So no contracted client has really changed their behavior. And the dynamic is really seen more in purchase order timing from new framework clients where the decision cycles have sort of started to take a little bit longer. But overall, sustained cost discipline in the region is not necessarily a headwind for our company. Our offshore delivery model really is what organizations under some budget pressure are looking for, right? They want to get the same results, the same delivery, but at a lower cost. And really, Saudi Arabia's 2026 budget is prioritizing spending efficiency and diversification. And we see that diversification in the Saudi economy in that this year, non-oil GDP in Saudi has reached 55% of Saudi's output, and that's up from 45% a decade ago, in 2016. So overall, the digital transformation mandate is driving our pipeline, but it's also embedded in the overall Saudi economy structure. So with that context in mind, I'll take a look at our 2026 outlook. So when we gave guidance back in Q4, it was developed really with this Q1 performance in mind. Keeping in mind, we put it out at the end of April. The revenue path to meet the guidance is straightforward. If we build $21.3 million in Q1, that represents a requirement to build $68.7 million more across Q2 through Q4, and that's an average of about $23 million per quarter. So that's 7.5% above our Q1 billings in quarters with fewer holiday disruptions against the cost base that we already have established and in place. So just for reference, Q4 2025, we booked a revenue of $23.9 million. So it's already above that level. On the adjusted EBITDA side, they follow from the same numbers. The cost base is already in place. So, any revenue above Q1 levels converts at a higher incremental rate. So that operating leverage is what carries us into the 13% to 16% adjusted EBITDA range over the balance of the year. And every additional dollar that we'll book in revenue really expands the margin from there. Overall, our total contracted backlog was $73 million purchase orders on hand as of the end of Q1. And that really provides us with multi-year visibility. But what really anchors that $90 million revenue base is the 12-month look ahead, the sort of what's going to be billed in the next year or so. The portion of the backlog that falls in that period is what anchors our $90 million revenue. And I'd say one caveat, the framework agreements that we signed in Q1 and late Q4, they carry no contractual floor minimum spending or anything like that. So they're not really reflected in the backlog right now, and they actually serve as potential upside above the contracted base of the guidance revenue. But overall, all that is to say that we're maintaining our full year 2026 guidance of a revenue floor of $90 million with adjusted EBITDA in the range of 13% to 16%. So that concludes the prepared remarks for Q1. I want to thank you for taking the time to listen to the remarks. And I'll now open it up to some questions.

We're going to start things off with questions from our covering analysts, and then we're going to move on to Q&A written in from some of our investors ahead of the call. So maybe I'll start things off by inviting Aravinda Galappatthige from Canaccord on to the stage to start us off with some questions. Thanks, Aravinda, for being here.

No problem. Thanks, Adam and thanks for that great rundown as usual. I just wanted to clarify where you left off on the backlog and the guidance. To get to your guided full year number, you need probably just under $70 million for the rest of the year. How much of that is in the backlog at this point? Because I know that there's a portion of the backlog that's post 2026. I'm trying to get a sense of how much billings you have to do to sort of ensure that the '26 number is sort of locked in?

Yes. So that's really a great question on the backlog. It's $73 million on hand right now, but it does have that multi-year visibility portion. But basically, what we -- what goes into our guidance when we set it is the purchase orders that we already have on hand, and it's already contractually obliged to build within that time frame. But we also include those sort of low-risk, high confidence renewals into the backlog right now. So I think an important thing to remember when we're talking about our guidance is we basically set it as a floor based on agreements and contracts that we have confidence in. And it's not going to be a situation or at least we don't expect it to be a situation where we require the come through of a lot of additional contracts to be able to meet that guidance.

And then just on the accounts receivable, good to see sort of a 3-month plus being cleared and you guys making great progress there. How should we think about the path from here on? I mean, just with respect to trying to get a sense of what the underlying free cash flow would be, how much burn do you still expect from working capital through the remainder of the year? Or would it be an inflow to offset some of the recent quarters?

Yes. Definitely, our thinking right now is similar to back in Q4 when we highlighted that it's our intention to be more diligent about cash flow in this year. So I think our #1 priority is to continue seeing that sort of working capital drag on our cash flow stay relatively consistent and be able to provide some positive operating cash flow just from keeping the accounts receivable under control. I think that comes from a couple of places. #1, our operating cash flow before you take into account working capital drag was about $6.5 million for the whole year last year. And we've shown some good results in keeping that working capital drag minimal through better collections initiatives and just more moderate growth overall. So I think what we're expecting to see going through 2026 is better cash flow performance, positive cash flow performance as opposed to what we saw in 2025, which was more of an investment year.

And then lastly for me, just on NTGapps. Can you just give us an update there? What was sort of -- maybe just remind me what the revenues were in Q1 and how that's trending?

Yes, definitely. So still seeing some strong demand from the NTGapps line. Even with the growth that we've seen in the overall company, NTGapps has still been sitting at about 10% of overall company revenue this year so far. So the trend is continuing. The customers that we've been doing pilot projects with throughout last year are continuing to sort of have those projects carry forward into full-scale development and rollout. So again, those -- I don't have an update when it comes to what proportion is going to be, let's say, license or SaaS style revenue compared to more service work. The majority of our contracts on NTGapps are sort of bespoke software development projects still, but it's encouraging to see the customer demand is still there. Okay. So next up, I'm going to invite Nick Cortellucci to the stage from Atrium Research.

So yes, the first thing I wanted to ask about was just the cadence for revenue going forward. I know you're saying $23 million averaging through the next 3 quarters. But how do you see that playing out from a sequential perspective? Is it going to be roughly flat or rising through the year?

Yes. I would say what we'd expect to see coming into Q2 is a little bit of a recovery quarter after Q1 for sure. And just within mind that the final holiday of the year basically Eid al-Adha is just secured actually as well. So we'll see probably a more minor disturbance when it comes to the second holiday period this year. So I would say recovery in Q2 and really continuing to ramp up through Q3 and Q4 as opposed to a more flat profile. Yes.

And then I think you guys disclosed a new joint venture in the financials. Maybe can you tell us a bit more about that?

Yes, absolutely. So that was an exciting development coming out of this quarter, right? We basically made a little bit of an investment in Positive Side Consulting out of Saudi Arabia, and they are an organization that does similar stuff to NTG Clarity, right, IT services, digital transformation, consulting, and outsourcing work. And the idea there is by basically plugging our Egypt offshore center into this established consulting base, we can take their current book of revenue, which sits at about $2 million a year and hopefully expand it with some of their larger enterprise customers. And I think one exciting thing is that they have a little bit of exposure to the government and them themselves being a Saudi company, too. So we get exposure to a new set of clients that we hadn't before. So I think that's one of the levers that potentially leads to some upside going into 2026 for sure.

And last one I wanted to ask about was just on the balance sheet on the debt side of things. If cash flow can come in like you guys think it's going to be over the remainder of the year, are you guys in a position to start paying down a bit more of that debt?

That's a good question, too. Yes, when it comes to capital allocation from that perspective, I would say, the #1 priority is always going to be continuing to fund the growth, the working capital required to keep scaling because we still see the growth opportunities coming through in the Gulf. #2 on that list is continued debt paydown. Now when cash flow has been a little bit tighter as it has been in recent quarters, we scaled back on the debt repayment. In Q1, we probably repaid like $10,000 of the debt, I think something like that, basically just covering expenses. But our typical paydown cadence is at roughly about $150,000 a quarter average debt over any given year. And I think once cash flow returns, we're going to return to that sort of idea. But our priorities are probably continue to invest in the growth and continue that slow and steady repay down of the debt. I don't think necessarily cash flow is going to lead to a windfall repayment, at least that's not expected right now. Okay. So I'd like to now invite Ali Farouk back to the stage to start us off with some questions that were written in from investors ahead of the call. So whenever you're ready, Ali, with the first question.

All right. Our first question is written in from Olivia, a private investor. You pointed to gross margin recovering towards the mid-30% range. What drives that recovery? And how should we think about it versus the recent Ramadan quarters?

So yes, definitely, we're guiding towards recovery in the gross margins towards the mid-30% range. But I want to stress that that's not a new high watermark or a new target by any means, right? That really is where we expect our gross margins to be on a regular utilization quarter. Q1 saw us have lower utilization just because of the Ramadan impact on our business. We had the gross margin come in at about 33%. And that's pretty consistent with Ramadan quarters in the past. I mentioned Q2 2024, Q1 2025, both having about 34%. So that 33% to 34% is indicative of those sort of Ramadan quarters that we've seen. Now I'd also point out that there are a couple of other drivers behind gross margin, right? Historically, things like the revenue mix from products versus services impacts our gross margin, also any sort of pricing incentives that we've given to our customers as well. It's just that this quarter, the utilization rate was the determining factor when it came to the lower gross margins that we've seen. But overall, as we ramp back up throughout the rest of the year, I think we can expect ourselves to reach a more consistent utilization level and see gross margins recover to that mid-30% range.

Our next question is written in from Bob, another private investor. It would be great to hear about free cash flow estimates for the year. This is extremely important in my mind for investors to start coming up with a free cash flow run rate for valuation purposes.

Yes, right on, thanks for the question, Bob. So when it comes to free cash flow, we don't guide specifically on free cash flow, but I can talk around a little bit of the building blocks for it. So operating cash flow for this quarter, again, was positive by about $43,000, another -- despite the lower net income that we had this quarter, we posted our second consecutive quarter of positive operating cash flow, which is reassuring to see. And I think the levers behind that are historically, the largest drag on our cash flow has been those sort of working capital items, typically AR. That's the biggest drag. But we've seen some promising results from sort of Q4 having a positive operating cash flow than Q1, both from our growth moderating, but also getting our accounts receivable discipline a little bit in better shape. We've seen those contract assets, so revenue recognized but not yet invoiced decreased from $16 million at the end of the year to $14 million now. We've seen our trade receivables have some really good discipline as well, right? Over 99% of our receivables that we built in Q4 have been collected by Q1 as well. So really, what we're expecting to see is stronger operating cash flow going into the year 2026. And hopefully, if you just take a look at 2025, I mentioned with Aravinda that the cash flow before those working capital items was about $6.5 million. It gives you the sort of ballpark of what we're working at when we can keep those working capital items under control. So looking forward to a better cash flow year in 2026 for sure.

Our next question is written in from Michael, an institutional investor. The MD&A notes that contract ramp took longer than expected in 2025. What gives you confidence in the back half ramp this year?

That's a good question, Michael, thanks. So yes, I'll talk about the ramp into the guidance and the sort of contract backlog right now, sitting at about $73 million of contracts and POs on hand, and that's always going to change. It's going to come down as we bill contracts, bill against contracts, and it's going to go up as we sign new contracts. You'll probably notice that there is a little bit of a trend of reduction over the last few quarters, but that really is because we've been billing against our multiyear contracts, but the new multiyear contracts don't have that contractual floor in it. So we really have to wait until the POs start coming through until we can start adding our backlog back up again. But of that $73 million backlog, that sort of amount that's going to be built in the next 9 or 12 months, that sort of 1-year look ahead is remaining consistent or even growing over the last few quarters as well. And that's what's giving us the confidence to say that even without sort of like large new windfall contracts, we're in a position to ramp ourselves back up to meet that guidance. Like I mentioned before, it's just about a run rate of about $23 million per quarter, which we've already beaten in the past to meet the guidance. So overall, I think we're in a confident position to meet that guidance and then any new purchase orders that come in from new work or these new framework agreements serve as sort of upside both on the revenue side and the adjusted EBITDA side.

Our next question is written in from Ron, a private investor. There was a Semafor article this week that reported Saudi Arabia freezing payments to consultants as it weighs the impact of the war. Is it going to impact NTG?

That's a good question, Ron. Thanks for writing that one in. So yes, I read the article this week, and it's noteworthy to point out that #1, most importantly, is a Saudi spokesperson has come out and clarified that even if payments are delayed, all of the payments are still made within the contractual terms of the agreement. So that is really reassuring to see. But I think what might even be more important is the industries that were mentioned in that article are things like management consultants, business consultants, those types of workers. And at the end of the day, we don't really see ourselves as those sort of management business strategy consultants necessarily. We're really doing the operational boots on the ground work to support the Vision 2030 digital transformations. We are that sort of low-cost alternative to those big consulting houses that I think Saudi enterprises are looking for right now. So overall, it's reassuring to see that the Saudis are still, of course, making good on their contracts. But if anything, this serves to show that Saudi enterprises are prioritizing working with companies like NTG. So far, we haven't seen any impact from that sort of directive over the last week and we don't really expect to at the end of the day.

Our next question is written in from Bob, a private investor. Would also be appreciative of some commentary relative to AI hurting the consulting business longer term. This has been a huge headwind for Accenture, and I imagine hurting you somewhat as well.

Thanks, Bob, for the question. So I would say, AI is definitely going to be a risk, and we have to keep our eye on it. I don't think anybody can say confidently one way or the other if it's going to be a headwind or a tailwind for the IT consulting business. But overall, what I can say is that we haven't seen it hurting our business as NTG any time recently. I think the dynamic in the Middle East is different than in North America. The customers that we're working with in Saudi Arabia are these large Saudi enterprises that are focused on cybersecurity and compliance and really having tight regulatory control over the new software that gets added to their stack. They also work in the Arabic language, which has a little bit of different implications when it comes to training models for sure that way. So overall, there are just different concerns and a more conservative approach that's being taken by enterprises in Saudi Arabia and where NTG really prides ourselves on being able to position ourselves as offering support and guidance and consulting on how to best implement these sort of new strategies. So we're even seeing some results in our own internal AI programs and platforms being pitched to some of our Saudi customers in the form of proof of concepts and early-stage pilot projects. So our Agent Builder product is currently being, what would you say, rolled out with an Egyptian real estate client and that they're seeing some good results with it, too. Test where is in the pilot stage with a couple of clients and also rolled out to our entire internal QA and testing team. So really, we see AI as a continued opportunity. We haven't seen any sort of drawback on our revenues or cash flows due to it, and we really see it as sort of another technology that NTG can help enable our customers with.

Our next question is written in from Hassan, a private investor. Given the regional conflict and the longer decision cycles you mentioned, how are you thinking about any risk to guidance? And what are you seeing in the business so far?

Thanks for the question, Hassan. So when it comes to risk to guidance, I just want to clarify, we can start with the revenue side. The way we look at our revenue guidance again is, it's built off of, #1, the POs and contracts that we have on hand. So customers are already contractually committed to a certain amount of revenue. But also #2, any sort of renewals that we have a very high degree of confidence in, the low risk in turning over, over the next year or so. So basically, the 1-year portion of our guidance is based on those POs and contracts that we have on hand and those low-risk renewals. So it really gives us confidence to be able to come out and say, we're going to produce $90 million in revenue as a floor in 2026 because in a lot of cases, the contracts are already there. On the adjusted EBITDA side, we definitely are taking the learning from 2025 and applying it to the guidance for adjusted EBITDA coming into 2026. So our guidance is basically set up. So as a baseline, just based on our backlog right now, we can relatively comfortably hit about the midpoint of the guidance. If we start to see some more contracts come through either with new customers or from the framework agreements that we've already signed because we already have our large established cost base in place, we can see that incremental revenue, we can expect it to come down to the net income or adjusted EBITDA line at a higher rate just because we already have the expenses in place to be able to service it. So it gives us a high degree of confidence to be able to say our revenue guidance and our adjusted EBITDA just because of the contracts that are in place and not relying on sort of new contracts to come through in order to reach the adjusted EBITDA guidance this year.

Our next question is written from Bob, a private investor. Can you give forward-looking commentary on growth and backlog beyond 2026? How are you feeling about 3- to 5-year type of growth in the business?

Thanks for the question, Bob. So I definitely can't give exact numbers going out 3 to 5 years, but I can sort of talk around what we see as the trends in the region. Starting with the backlog, you mentioned the backlog currently sitting at about $73 million in POs and contracts on hand. Again, that has been trending down in recent quarters, but it's because all of the multiyear contracts are lumped into the backlog as well. And as we've been building that down, it's been decreasing the backlog. And the new multi-year contracts that we've been signing don't have a contractual floor on them. So they haven't been adding on to the backlog as well. So you have to wait for POs to come through on those get the backlog back up again. But overall, the 1-year portion of the backlog has been remaining relatively consistent or even growing over the last few quarters. So that's reassuring to see. Looking out 3 to 5 years in the region, I think it's important to recognize that the sort of digital transformation initiatives that go into Vision 2030, they aren't limited to just one budget cycle, right? Like these are economy-wide, region-wide strategic initiatives that aim to basically redefine the economies over there. So we've seen the results. I mentioned Saudi non-oil GDP has gone up to 55% from 45% a decade ago. So we're really seeing this sort of long-term push to have services like IT services, digital transformation become a big part of the Saudi economy. So as the economy grows, I think we can expect our business to grow with it. I think the only question for NTG is really how much of the market can we take. Admittedly, recently, our revenue has been concentrated with a few large customers, but we're starting to see the sort of early stages of some more diversification in those new framework agreements that we've been signing over the last 6 months or so with new enterprise in the Saudi economy as well. So really, we're setting ourselves up to take full advantage of the growth in the market and the real drive towards digital transformation that's taking place over the next even 5 to 10 years in Saudi Arabia for sure.

Our next question is written in from Tom, a private investor. Q1 came in a 3.6% EBITDA margin against full year guidance of 13% to 16%. Can you walk us through the path back to that range over the rest of the year?

I appreciate the question. So yes, just to reiterate how we expect to get back to that sort of 13% to 16% EBITDA range. Really, I mentioned in the presentation and in a couple of the questions that the cost base that we have right now is already established. So really, as revenue starts to scale up over the back half of the year as we expect it to, it's going to fall down to the adjusted net income line at a higher rate just because the expenses are already there. Q1 saw lower billings again because of the seasonal trough related with Ramadan and Eid. But even just to get back to the level we were in Q4, we would see a significant uptick in the adjusted EBITDA line. So I would say, just to reiterate the guidance that we set in mind, we had taken into consideration the Q1 performance. And we really have to see the ramp-up into the sort of teens throughout Q2, Q3, Q4 in order to meet the midpoint of the guidance, but we think that's very doable just based on the contracts that we have visibility for in our pipeline.

Our next question is written in from Priya, an institutional investor. The 90% -- the $90 million floor implies a slower growth rate than 2025. Could you help us understand how you set that number and whether it reflects any change in demand?

So yes, just to reiterate on the backlog, right, the $90 million floor, again, just takes into consideration basically POs and contracts that we have on hand plus visibility that we have on very confident renewals. So the backlog that we have right now, $73 million in POs and contracts, that 12-month period forward-looking period, the amount that's billable then plus the confidence in the contracts that we have to renew, so give us the confidence to set the floor at $90 million. But again, what's not included in that backlog or that guidance is any work that comes out of these big framework agreements that we've signed over the last 6 months or so. There's one in Q4 and a couple in Q1. Because they don't have limits or floors to the amount of spending like some of our other multi-year contracts did, those are not included in the backlog. So we don't really see any slowing in the demand for our work. What the guidance really just shows is how much of the work is contractually committed versus how much we have to wait for POs to start work on some of these new engagements that we've been signing. So overall, demand still looks very strong.

And that's all the questions I have from my end.

Okay. Great. Thank you, Ali, for reading the questions. And thank you to all the investors who tuned in for this earnings conference call or wrote in a question. If I didn't get a chance to answer your question or if you still have questions after the presentation, feel free to reach out to me at [email protected], and I'll be sure to get a response back to you. But I think that's all that we have prepared for the session today. I want to thank you again for tuning in. We're looking forward to the operations back up into Q2, Q3, Q4 this year. And I'll be back in a couple of months to talk about our Q2 results, hopefully. But until then, take care, and thank you.