Digital Transformation Will Redefine Global Real Estate Analytics

Key Takeaways

• Momentum in advanced real estate analytics and adoption of new pricing models supports sustained revenue and margin growth amid industry digitization and expanding market opportunity.
  
• Operational efficiencies, strong client retention, and cross-sell opportunities enhance long-term profitability potential, while disciplined M&A strategy bolsters shareholder value.
  
• Increased reliance on core software segments and new products, amid sector uncertainty and operational risks, heightens revenue unpredictability and potential earnings volatility.

Catalysts

Provides asset and funds intelligence solutions for commercial real estate (CRE) in Canada, the United States, the United Kingdom, France, Europe, the Middle East, Africa, Australia, and the Asia Pacific.

• Accelerating client migration from ARGUS Enterprise to ARGUS Intelligence, coupled with successful adoption of new pricing models and double-digit growth in ARGUS recurring revenue, positions the company to benefit from continued demand for advanced real estate analytics-supporting sustained revenue and net margin expansion as secular industry digitization continues.
  
• Continued momentum in recurring bookings, driven by strong retention (>100% NRR), uptake of asset-based pricing, and a robust upgrade cycle over the next 2–3 years, enhances revenue visibility and earnings durability, especially as ongoing digital transformation and global institutional investment in CRE expand Altus' addressable market.
  
• Growing adoption of portfolio and benchmark management modules-though still in the early stages-indicates cross-sell opportunities that can create incremental high-margin revenue streams as more data is migrated onto Altus' platforms, resulting in higher future ARR and gross margins as clients embed within the ecosystem.
  
• Ongoing operational efficiency initiatives (portfolio optimization, offshore global service center, G&A focus) are translating into multi-year margin expansion, with the company targeting ~35% segment-level EBITDA margins by 2026, directly improving profitability and long-term earnings power.
  
• A strong balance sheet and disciplined approach to M&A position Altus to benefit from industry consolidation, adding to potential shareholder value creation through strategic acquisitions, scale, and further revenue and earnings growth.

Altus Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Altus Group's revenue will grow by 7.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.4% today to 37.4% in 3 years time.
• Analysts expect earnings to reach CA$246.8 million (and earnings per share of CA$4.95) by about August 2028, up from CA$22.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.1x on those 2028 earnings, down from 115.0x today. This future PE is greater than the current PE for the CA Real Estate industry at 10.0x.
• Analysts expect the number of shares outstanding to decline by 6.37% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.46%, as per the Simply Wall St company report.

Altus Group Future Earnings Per Share Growth

Risks

• Prolonged remote work trends and uncertainty in commercial real estate, particularly in Canada, are resulting in subdued transaction activity, which continues to negatively impact Altus Group's Appraisals & Development Advisory segment-this could put ongoing pressure on consolidated revenue and earnings.
  
• The company's recent reduction in revenue guidance, despite margin improvements, reflects persistent macroeconomic uncertainty, particularly cautious client spending and delayed deals in the VMS segment-potentially leading to slower top-line growth and unpredictability in recurring revenue.
  
• The company's divestiture of the Property Tax business removes a prior source of steady cash flow; dependence on fewer business lines increases exposure to sector-specific downturns and may heighten earnings volatility if core segments underperform.
  
• Nonrecurring revenue streams are declining due to the wind-down of non-core services, and while recurring software bookings are strong now, there is risk that uptake of new products (like Portfolio Manager and Benchmark Manager) may be slower than planned if client migration to the upgraded platforms lags, leading to slower than expected revenue and ARR growth.
  
• There is execution risk in sustaining margin expansion and delivering on cost efficiencies (e.g., G&A reduction, offshore global service center leverage, and integration of past acquisitions); failure to realize these operational improvements or to manage the transition to SaaS and new product offerings could compress net margins and disrupt earnings growth.

Valuation

• The analysts have a consensus price target of CA$63.0 for Altus Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$74.0, and the most bearish reporting a price target of just CA$54.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$659.8 million, earnings will come to CA$246.8 million, and it would be trading on a PE ratio of 11.1x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of CA$60.95, the analyst price target of CA$63.0 is 3.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.