Altus Group Limited

Thank you, Ida. Good afternoon, everyone, and welcome to Altus Group's fourth quarter and year-end results conference call and webcast for the period ended December 31, 2018.

For reference, our earnings results news release was issued after market close at 4 PM and is also posted on our website along with our MD&A and financial statements. Please visit altusgroup.com to obtain these documents and for more information.

On today's call, we will begin with an overview of our performance, including a discussion of our financial results and noteworthy developments. We will finish by taking questions from analysts and institutional investors.

If you miss anyone, please contact me directly after the call. Joining us today is our Bob Courteau, Chief Executive Officer; Carl Farrell, President and Angelo Bartolini, Chief Financial Officer.

Before we get started, please be advised that some of our statements today may contain forward-looking information. Various factors and assumptions were applied or taken into consideration in arriving at the forward-looking information that do not take into account the effect of events announced today.

There are also numerous risks and uncertainties that could cause actual results to differ materially from those that are set out or implied by such statements. These are all described in the company's filings on SEDAR.

Our comments and answers to any questions must also be considered in the context of the disclosure in those materials. I will now turn the call over to our CFO, Angelo, who will start with the review of our financial performance.

Thank you, Camilla, and thank you all for joining us on the call and webcast this afternoon. I'll start off with a short summary followed by a deeper review by business segment.

Starting off with a quick recap of our consolidated performance for Q4 and for the year, revenues grew by 7% to 130.9 million for the fourth quarter, finishing the year at 510.4 million. Also up 7% with strong revenue contributions from Altus Analytics and Property Tax offset by declines in Geomatics.

Acquisitions contributed 4% on an annual basis. Adjusted EBITDA was down by 24% to 15.1 million in the quarter; down 12% for the year at 17.9 million reflect continued investments at Altus Analytics and the impact of lower Property Tax revenues, particularly in Ontario and the UK.

The loss in accordance with IFRS was 14.7 million in Q4 and 18.4 million for the year. In the fourth quarter, we took an impairment charge on the carrying value of our Geomatics business of 13.7 million reflecting a prolonged and challenging environment in the oil and gas sector in Western Canada.

Adjusted EPS was $0.20 in Q4 and $1.05 for the year. Turning to our business segments, the Altus Analytics business performed well in the fourth quarter and full year, especially after a relatively strong 2017 that saw significant DCF revenues well until late into the year.

Revenues were up 25% in Q4 and 9.4% for the year. Contributors to revenue growth both in Q4 and full year were higher software contract sales, including subscription and renewals, maintenance, appraisal management and software services, offset by lower due diligence assignments.

The acquisition of Taliance provided low single digit contribution, while FX was more of a tailwind in Q4 boosting revenues by 3%. Overall in 2018, we saw significant sales of AE come from add on sales to existing customers, followed by sales to net new customers and from residual conversions of our legacy ValCap customer base in the UK.

We also saw an increase in the mix of our software revenues from subscription contracts versus perpetual licenses coming from both on premise AE subscription contracts and from AOD sales. As you might recall, in Q2, we benefited from a new significant multiyear subscription contract followed by a large multiyear subscription renewal in the fourth quarter.

These contracts were deemed right of use under IFRS 15 and as a result a portion of those revenues were recognized upfront at time of delivery rather than inevitably over the term of the subscription contract. Altus Analytics recurring revenues as defined in our MD&A disclosure grew by 15% in the quarter and by 10% for the full year, standing at 130 million for the year.

And adjusted EBITDA in the fourth quarter grew 52% on a year-over-year basis, benefiting from strong revenues and in particular from the contract renewals. For the year however, EBITDA declined by 11% reflecting our continued investment in Cloud development and expansion into Europe.

Taliance also had a mild impact to earnings and we expect positive contributions in the year as sales ramp up. As we look out to the first quarter for AE, we are refining our expectation of revenue growth to the mid teens still within the range of our previous outlet for the two periods.

Turning to our Commercial Real Estate consulting segment, we had steady annual growth, but slightly underperformed to comparative period in Q4 only mostly to Property Tax. Although Property Tax delivered 11% increase in the year largely as a result of the CBS acquisition, revenue growth in the second half was subdued as two of our key markets, Ontario and the UK underwent government driven changes on tax appeal processes.

These changes caused a deferral of case settlements and consequently, revenue recognition. As we've said earlier, the economic value of our pipeline of appeals has always remained intact, while the changes were a headwind they now provide us with an opportunity for 2019 and position us to generate record Property Tax revenues as case settlements gradually ramp up through the year.

Although we expect sequential Q1 revenue improvement we only anticipate year-over-year improvement to actually begin in Q2, reflecting both a gradual buildup of higher case settlement and higher annuity revenues in the UK. From a seasonality standpoint, we actually expect Q2 to be slightly higher than other quarters as the annuity revenues only occur in Q2.

Moving on to other service businesses, valuation and cost advisory had a solid year growing revenues by 5% and adjusted EBITDA by 6%. This reflected strength across the board in both of our cost and valuation practices.

Despite the continuing market challenges, our Geomatics business was able to slightly improve margins through its right sizing efforts that occurred earlier in the year. Revenues were down 10%, but adjusted EBITDA improved by 3%.

Finally, in our corporate division corporate costs were 23 million in 2018, up from 22 million from the previous year. As a percentage of revenues they were 4.5%, generally consistent with 2017.

We expect corporate cost to trend higher proportionately as we continue to scale our business. Altus Group's financial strength remains a key pillar of our investment proposition benefiting from the strong cash generation of our business.

During the year, we sold our stake in Real Matters and used the net proceeds of approximately 54 million to pay down our bank debt. As at December 31, 2018 bank debt stood at 129.2 million representing a funded debt to EBITDA leverage ratio of 1.79 times that compares to 1.84 times at the end of 2017.

Our balance sheet has considerable financial flexibility to support our numerous growth initiatives and allows us to continue to deploy capital towards more acquisitions and organic investments. With that I would now like to turn the call over to Bob.

Hey, thanks Angelo. And thanks for the summary.

2018 was a very productive year as we further expanded our Altus Analytics business into Europe and Asia with some big blue chip customer wins. We live started Cloud.

We increased sales to larger clients and we enjoyed some enterprise deals with a higher mix of recurring revenues. And we did all this while maintaining really good traction in the mid market.

We also significantly increased our market share in the Property Tax business. Overall, I'm pleased with the robust performance across all of our businesses, as we had steady annual year-over-year revenue growth from virtually all of our commercial real estate consulting and Altus Analytics offerings.

Having delivered a five year 9% earnings CAGR up to 2017, we made a decision last year to increase our investment spending in 2018 to establish ourselves for continued growth and this weighed on our profitability. The investments were primarily geared towards our strategic initiatives to shift our solutions to the Cloud, great enterprise offerings, which include the integration of the newly acquired Taliance Solution and further our global expansion as we are investing in functionality for Europe.

We firmly believe that the investments we pursued are critical to sustain our market leadership and to drive further growth with Cloud capabilities and enterprise selling. Overall, I'm pleased with the financial and operational performance in 2018 and the progress against our strategic initiatives.

Our results underpin that our Altus Group is in growth mode and personally I remain very excited about the growth opportunity ahead for the company. At Altus Analytics, following years of growth fuel earlier fueled by ARGUS conversions sales, growth today is fueled by a broader range of revenue streams, it's a natural evolution, but also strategic on our part as we see a big opportunity with large global CRE firms both from driving global adoption of ARGUS Enterprise with our top 200 customers and by pursuing more large enterprise deals with global multi-product deal for the end-to-end client needs.

In addition, add on sales continue to be very strong and we're a significant contributor to total license sales in 2018, we expect that to continue in 2019. And as Angelo pointed out, in 2018, we saw an increase in the mix of our software revenues from subscription contracts both on premise ARGUS Enterprise subscription contracts and from growing adoption of our ARGUS On Demand offering, but also including more sales of Taliance and Voyanta.

One of the tradeoffs of being overweight on subscriptions is that it does take away from our quarterly top line growth as generally speaking, less revenue is recognized up front. But as we told you before, we really favor subscription contrast because this is a recurring revenue with higher long-term economic value and we will increasingly drive towards a higher recurring revenue mix.

This will also drive the right economics and solidify our position in the industry. Investment at Altus Analytics in addition to more software sales coming to the subscription forum impacted earnings and compressed our margins.

As I just said, we believe the investments we pursued were critical to further push our market leadership and drive future growth with Cloud capabilities and enterprise selling. And there's this great intersection of customer demand and these new offerings and capabilities that are going to drive value for those customers.

Having completed our conversion to ARGUS Enterprise and establish it as a new industry standard in major commercial real estate markets. This timing was right to make the move to the Cloud.

That is where the industry is headed, that's what our customers want and will allow us to extend our solution much easier and more broadly. And frankly, with the success we're having with ARGUS On Demand, we have a proof point already of the capability that customers are looking forward to run their business and so we've got a nice set of experience to make this transition.

Some of these investments will overlap and take more time to contribute meaningfully to revenues thus impacting our operating margins and costs. And I wanted to talk about that.

As you know, as we move to ARGUS and the Cloud, we're offering our clients a hybrid approach. And what that means is that we will still be able to drive value out of ARGUS Enterprise in the future, while we bring out Argus Cloud to tackle new problems for customers, which then expands our share of wallet and creates much higher value.

So what we've intended to do is to increase our development capacity, but make sure that ARGUS Enterprise is still a very viable product for years to come. And frankly, we're driving ARGUS Enterprise as the solution for continental Europe, including Germany and France, where we will be bringing out functionality in the middle of the year.

Our thinking around this is that as we start completing our requirements for the continental Europe market, what we'll do is start consolidating our future development onto a common framework where Cloud will be the place where we can absolutely put all of our capability. If we think it's prudent to do it this way because there's still much demand for ARGUS Enterprise and the way this will work out is as we go into the second half of the year we will be able to bring margin back onto our platform by consolidating onto a single development environment.

So that's our strategy. We're certainly believing that the efforts that we've already made around Cloud combined with the acquisition of Taliance and integration we're doing between this hybrid environment is really going to give us an opportunity to continue to drive large strategic customer value and we will benefit from the opportunity to deploy globally with those solutions.

Look, it's been a busy year, but we continue to outperform on last year's excellent revenues, have successfully refocus the business for the opportunities ahead, while there still remains a lot of work ahead of us to offer our clients, integrated Cloud solutions with data capabilities have already come a long way and I'm pleased with what the team has accomplished, particularly our development team who continues to hit milestone after milestone over the last few years. As we mentioned, with the shift to the Cloud, we're now in a place where we'd be going overweight in subscription revenues in our model.

And as you know, we've already started that move operating a hybrid model will continue to overweight the opportunity to take contracts and subscriptions. And when we get to the point where we offer a primary subscription solution, we would have already started that turn over the last year and a half as we really started bringing new solutions in and starting to take subscription based contracts.

We've always said we want to do this with the lowest amount of disruption to our business model, but we are absolutely committed to a stronger economic model that subscription delivers. Beyond our software strategy our appraisal management offering continues to be a strong contributor to growth.

And we made excellent progress in 2018 expanding that offering in new international markets. Growth was driven by same customer growth, new client additions and expansion into Europe and Asia Pacific.

In fact, in Europe, we were recently appointed by one of the largest global US based investment managers to provide full valuation management services and data collection under AIFMD. This win results from a successful collaboration between our appraisal management team and software team and also included ARGUS Enterprise modeling and support services to facilitate their adoption of AE, but also to improve their data collection and data consistency.

The recent measures taken by EU regulators further increase independence and substantiate requirements and evaluation process of real estate funds which will create opportunities for appraisal management and for ARGUS in continental Europe. And our model will combine those things in a platform for the largest investment managers in Europe.

And we are first to market and we have an enviable model. And now we have the capacity in Luxembourg, in Paris, with Taliance and in the UK where we have a very strong position.

So we're really, really well positioned there. In the APAC region, we had another record year of global fundraising, there's clearly a huge appetite to deploy this capital and open ended fund structures in that region and to implement independent third party evaluation oversight and now we have an APAC presence with our appraisal management group and remain well positioned to support our global clients there and the demand is already in place.

We also not unlike Europe see our clients both US and European clients looking to adopt ARGUS in Asia as part of this integrated model and that's going to further our goal of serving large clients and moving them on to a ARGUS everywhere platform where they use ARGUS not only for global valuation, but it becomes a form of data standard that makes it easier for them to close and understand their assets on a global basis. And our Cloud investments are only going to improve that over time.

Appraisal management, the data we collect from it continues to be strategic to our enterprise selling, managed service offering whereby we can offer our clients a variety of end-to-end asset management solutions as a global provider of investment and asset management. So we feel really good about the next phase of growth for Altus Analytics and our ability to get back on the path to long-term steady double digit top line and profitable growth at expanded margins.

Turning to consulting given our market leadership in all of our key practice areas, we continue to benefit from strong client retention and prominent project wins. I would particularly like to acknowledge the contribution from our cost practice that had a very strong year and on top of that they've been innovating with data, thinking about how a EstateMaster is going to become a critical asset for them in providing their services, but also for the customers, the development customers of our cost business practice.

And as you know, our Property Tax business faced headwinds in 2018, owing to the process changes Angelo discussed. But now we're in this opportunity for 2019 that positions us to generate record Property Tax revenues this year.

And I tell you, the ramp up will be gradual and more skewed towards the second half of the year. Our Q4 settlement volumes were up 50% over Q3, but still off a low volume relative to pass trends.

Nevertheless, the trend is encouraging. And as we're now in the third year of a four year cycle, we will expect to see acceleration as the authorities start to prepare for the next reassessment.

The economic value of our pipeline of appeals remains completely intact. In the UK, interesting, very similarly is starting to ramp up and we're seeing increased activity with overall increased efficiency in the check stage, overall post integration with CBS, we're benefiting from increased market share, and a number of synergies, and as a result, we've been able to take her contingencies higher, our success rates are trending higher, the key driver on the economic model and overall productivity has improved greatly.

As Angelo guided, we maintain our guidance for record annual revenues. But remind you, as we said in the past, that we expect the bulk of the contribution to be between Q2 and Q4.

As we pointed out Q2 benefits from seasonality in the UK and in the second half, we expect to see both the Ontario and UK hitting new productivity levels as we drive out the year. Overall, Property Tax continues to represent an attractive growth area for our business.

We believe in the technology infrastructure that we're building. It's an amazing asset for data.

And we're improving our productivity as we go forward. We are poised for excellent years in 2019 and 2020.

So before I wrap up, I just want to thank each of our employees. Many of whom are fellow shareholders for their dedication and outstanding work in 2018.

Our people are great and we have the best people in this industry across the spectrum of service professionals, data experts and technology capability. I wanted to take a minute to personally recognize the contributions of our Property Tax Global President, Jim Derbyshire who recently retired at the end of 2018.

Many of you have met him. He's an amazing guy after more than 40 years in the industry, yes, 40 years in the industry, he might now warned me and said that he has created enormous value all the way back to Derbyshire Consultants which was one of the original businesses that merged to create Altus Group.

With the success of the Canadian practice, Jim, oversaw the expansion of our tax practice into the UK and US. He drove significant client value and his expertise and success has helped build an incredible business and that's why he has an amazing reputation.

And as my friend and on behalf of the company we thank Jim for his incredible contributions to Altus Group as a founder in formulating growth in going global. Thanks so much Jim.

As part of our succession planning, we had regional President's for our Property Tax business for quite some time now including Terry Bishop in Canada, Trey Beazley in the US and Alex Probyn in the UK. And I can tell you that Jim has taught them well, we have an amazing line up of leaders.

I've high confidence in our global tech senior leadership team who are going to lead us towards record revenues in the year. So with that, let me open it up for questions.

Hi, thanks for taking my questions. Can you guys talk about the big renewal deal in the quarter?

Did it expand from the previous agreement for more products and seats and did the mix of recurring revenue increase as well?

The value of the deal overall is greater, Dan. It gave us on a per individual proceed basis greater economic value and also allows us to sell into them more of our other products, so it provides greater flexibility and greater economic value over the term.

Are you getting more recurring revenue out of it?

The recurring revenue at this point is slightly higher. But as I said, we expect it to grow as the result of the deal that we struck.

Okay. Just switching over to Property Tax, if I look at the Ontario timeline for your appeals, it looks like it really starts to move in 2019, like you guys are saying, but it looks like some of your appeals are scheduled to start progressing in Q1.

So I'm kind of curious why you're expecting Q1 to be down on a year-over-year basis when it looks like some of these appeals to start moving through the pipeline this quarter?

Yeah, well, we are seeing sequential growth, there's no doubt about that. What we had in the earlier part of last year that we had, we still had appeals from the previous cycle that we were solving for.

And so we were getting the benefit of that and it started dropping off as we progressed through the year. So that was one factor.

The second factor was that in Canada, we had a strong first quarter in Vancouver and Alberta and so that just makes it from a comparable standpoint a little bit more difficult, which is why we're saying it's really going to be Q2, we start seeing the strength year-over-year.

Okay, that's very helpful.

The only thing I would add to that is that we're confident on the year because we liked how Q1 is shaping up in terms of the in process measures around that, both Ontario, UK and frankly across our business in total. So we're not just betting on a UK, Ontario in 2019 like a lot of the business is really going well.

Okay and just one final one for me on a Property Tax. We know that business has a lot of operating leverage as evidenced by to be nearly breakeven this quarter.

So how should we think about the margins in that business as it ramps through the rest of the year?

Margins will definitely improve there's no question about it. The majority of the revenues that we have add to the top line fall right to the bottom line.

Yeah, so starting in Q2.

Okay, great. Thank you.

Hi good evening, guys.

Hi, Yuri.

Bob or Angelo, I don't know who wants to take it. But can you just clarify the boost that we saw in non-recurring revenues in the quarter; was that due to the IFRS classification that you talked about?

That's definitely part of it. There is a onetime element that you recognize when you have a subscription contract that is considered a right of use, so yes, that's one element of that.

Really, we don't define it anymore as recurring and non-recurring is under IFRS. But yes, there is that one time element.

Okay. And then it did sound a little bit like your softened you're tunnel just slightly on the revenue look for the Q1 of '19, maybe some color on that.

And then really more importantly, what do you expect for AA top line in '19 overall?

So on the tax part are you talking about AA overall for Q1?

Yeah, Altus Analytics, yeah.

Got it, so look, we provided guidance last time over two quarters, we said mid teens to low 20s, and on average we're actually going to overachieve on that when you look at it over the two quarters. Right now we're just seeing based on our current view it's going to be closer into the mid teens, so we just refreshed it.

Okay and how do we think about full year?

The full year, we're still expecting strength in the full year given what we're seeing in terms of the overall pipeline, our sales teams that we're growing into Europe, so our same sales to existing clients, we continue to see strength in all our markets.

New custom demand in all segments as we go for Q4.

Yeah in Q4 Yuri, we also closed one of our biggest deals in the quarter within Asia. We had a fairly significant deal and their pipeline is pretty damn good going forward.

So it's not just kind of a one deal quarter and then on top of it in Q4, building on the comments I made before, we closed probably our largest Voyanta deal ever and that's going to have some impact on recurring revenue down the road. And obviously, we are turning our sales force towards an orientation towards an environment where more and more we got to get them ready to be selling these large complex solutions.

And the risk on all of this is we did, as an example we did a very large deal with at Alliance in Q2 last year, right and that on the basis of selling the large deal, we're going to start seeing some lumpiness in the quarter, but also you end up with these year-over-year kind of challenges as we go forward. But we don't mind that, we really actually believe that our volume is good, the new products are - we had pretty good pipeline going into our new products.

We've already closed some really good recurring revenue deals that - true subscription Cloud based deals and we're going to close some really nice ARGUS Enterprise deals. I love the fact that we've got a balanced pipeline and a balanced set of revenue now.

Okay, thanks for the color Bob, I'll turn it over.

Great, thanks. Bob or Carl, could you talk a little bit about the Cloud transition and how close you think we are in terms of preparation and the team and not only development, but sales in terms of switching over to a Cloud subscription model?

Yeah, I'll give you some comments. I mean, first of all, as Bob noted, we released exactly when we expected to release in Q4 the ARGUS Cloud platform with our first piece of functionality on top of the platform.

The ARGUS On Demand product set has given us the experience of - around 800 customers that we're supporting on that platform has given the experiences of the internal process on how to transition internally to Cloud and how to sell the SMB initially in those markets. We're taking those experiences and taking them right into the sales teams as we put more product onto the Cloud platform that the teams are going to be well prepared.

We've been working in advance of this for a while now doing different certifications and trainings. We've been out to our clients as well doing roadshows, so we have recently done some roadshows making sure they understand the transition, understand how we're pulling them into the Cloud, as opposed to pushing them into the Cloud.

It's been a very positive process to this point.

Yeah, I think the roadshows have been fairly effective what we've been - what Carl's been doing, I don't want to take credit for it. But I did sit in on one and so what we're doing is we're going to our RBA clients showing them where we're taking our data strategy, how that ties in ARGUS in the Cloud and bring in our salespeople, ARGUS salespeople in, so they get the message and the interaction from our customers is amazing.

No, I mean, the enthusiasm, the ability now to join the data together, people are seeing existing users the ability to go in the Cloud, take that data into the Cloud, taking some of the new functionality which releasing to do more things with that data in the Cloud. They're giving us some great ideas for future product development and it's also promoting the sale of other aligned and associated products like Taliance and Voyanta, so we're getting the benefit all around.

Okay. And then if we think about the investment levels between '17 and '18, we saw margin compression for bunch of reasons, maybe talk about the investment and where we are in '19?

You highlight in the annual report, you've highlighted it on the call, are we at run rate in terms of the extra cost needed to get the business to the Cloud or should we expect a further lift in cost over the coming quarters? Thanks.

I think I kind of covered that in my comment, but we are above run rate because we made a decision to extend ARGUS Enterprise on premise as the platform where that will give us an opportunity to drive that global valuation standard. In normal circumstances, we would have taken the traditional ARGUS Enterprise team and just drew a line and put all our capacity on to the ARGUS Enterprise Cloud platform.

And we elected to run two development teams, a lot of its staffed like contractors or offshore capability course put onto two teams as they go into the second half of the year will start harmonizing those teams, take our cost base down and then all future development will be on the ARGUS Cloud platform.

Okay, thanks guys.

Hi, good evening guys. Thanks for taking my question.

Bob, Angela, first question is on Property Tax. I just want to get some more clarity on the cost side of Property Tax.

When I look at revenue, on a sequential basis revenue seemed to be flat between Q3 and Q4 and margins came down quite a bit, I know that you guys reallocate some bonuses, but I don't imagine there was much paid out in tax. Can you just help me understand some of the concentrated control?

Yeah, certainly the bonuses is one factor that we do in Q4, which kind of muddies the waters a little bit. But the other factor that you need to recall is that with CVS that kind of - that business came in and on a run rate basis, the early years it was a negative impact to our EBITDA and so it's turning the quarter now as we're increasing the volumes, but that was certainly a factor in the quarter as well.

Okay. I think on CBS at the time when you guys acquired it, you were contemplating an average over five years of about 40 million revenue or 11 million EBITDA.

Is that still the quantum of what you expect from incremental boost on that?

Yeah, I can't split out the CVS piece anymore. We've integrated it fully and we're on one platform now.

So our targets is the combination of our legacy business and the CVS business and in fact, our targets are higher. So we plan significant organic growth on top of what we acquired.

Okay. Okay, that's helpful.

Just wanted to go back to the Alliance deal that you guys got earlier, anything we can understand about the rollout of that? Are you guys fully up to speed with Alliance?

And or is this kind of a ramp up that's still expanding in terms of the initial deal with them?

No, the team is fully engaged on site in Munich, we're well into the first quartile of the implementation. So there's a full implementation team working with the Alliance team.

We're actually on time at this point, so it's progressing extremely well. We made sure that we staff the team with the right knowledge and experience.

It's our first large multi-product implementation, utilizing the integrations between the three products, so we've made sure we put all the right people on this deal, but it's going well, and we're learning a lot from it. And we're taking that and putting it back into the sales teams to deliver the next ones and development.

Thanks. Thanks, Carl.

So from a revenue perspective, is that then now a steady revenue stream or is there a ramp up associated with Alliance?

Obviously, there's a revenue stream associated with the deployment of the software. So it's a regular stream now until the deployment is finished.

Okay, great. And then my last question, Bob, I think you went into detail on the investments that you're spending on analytics and moving to the Cloud.

In terms of capital allocation with respect to M&A, dividend, share buybacks, whatnot any changes on those areas that you're thinking of in the last couple months?

No, I think we like where we are. I talked about anything in that regard, the only thing that has evolved for me in the last few months is by looking around at my neighbors either a private venture backed real estate tech companies, companies like REIX that was just bought, Moody's entering the market, new PEE firms trying to consolidate like I think I picked a really great market to come into and it's alive with opportunity and our current position is unbelievable given our customer base and it may not perfectly show up in valuation, but it eventually will.

Okay and things like rolling up the Property Tax market in the US, is that still something that's a priority for you guys or?

Yeah, we look at it. It's like in Property Tax US, UK we absolutely are open for business, we're having conversations and we think we're the preferred consolidator where the company people want to go work for.

Okay. Okay, excellent.

Thank you for taking my questions. I'll pass the line.

Hi, there. Just following on the last question, sort of a good segue, just curious in terms of the competitive landscape in your analytics division and also the Property Tax division.

If you're seeing anything new in terms of competition for organic growth or acquisitions or anything worth mentioning of interest has come out of a lot of what's going on in the industry lately that you just referenced.

Yeah, I think that some of the large players - if you look at - you've heard me talk about this before Maggie and first of all hi, how are you doing?

Good, thank you.

The amount of investment continues to grow in Property Tax and I think it underscores how we feel about the potential of this market. So of course we're watching that, we've made direct investments, in companies we invested in are doing really well, Honest Buildings, Waypoint, now REIX, and they're enjoying the property valuation upticks and we're partnering with them and creating value for customers and lots of good stuff going on there.

And we see that as a future area where we can create consolidation. My goal is to be the front office ERP for the asset management marketplace.

Couple of large players MRI and Yardi doing the back office, I want to be the front office player, which means that we will add capability that asset managers and portfolio managers need and want to operate their business and all of this Prop Tax investment is creating opportunities for me to partner with some of those companies to make money together and where it makes sense for both of us to create consolidation. And so we're tracking that aggressively with their Venture Capital Partners and direct investments and we're now looking at doing data partnerships, now that we're going into Cloud where we can help them monetize our customer base a lot quicker, so we think we're in really good position.

And then a further validation is when you see the big players like Moody's and CoStar, which I've always enjoyed watching how they operate, buying software company thinking about going into the institutional business. This is all for me validation of the opportunity.

Sure it creates competition. But we got an industry position, standard in the market, we've got great modes we got coming up, we have 4000 customers on the ARGUS Enterprise platform.

Our growth rates in ARGUS On Demand has been phenomenal. We added hundreds of new customers last year in the mid market.

Yeah, we feel pretty damn good. Whether you're a big company coming in or you're a small company going out.

Very few of those small companies have got out of their whole market. We're a global company.

And then in the tax business, you saw that RX invested in Ryan, which validated the importance of a large player in tax. Ryan is primarily a state and local tax provider.

They do Property Tax. We're primarily a Property Tax provider that does some state and local, so we're going to see him in the market.

They're good competitor. And again the fact that I would say a mainstream smart investor is spending quite a bit of money on Property Tax validates this as a growth opportunity as well.

And we like competition. Start a team running, we like to win, so it keeps us going, so there's some trends for you.

Okay, thanks very much. Just one final thing on the cash platform that you introduced in Canada and sounds like you're going to be working on rolling out in other markets soon, is that going to primarily benefit the tax segment or will there be some synergies with your analytics division as well?

We're going to really offer tax business. But I think what was brilliant for Carl is he took anything where you had common functionality, things like customer portals, data aggregation, and then we turn them into unified projects.

You want to talk about that?

Yeah, I mean, we standardized as much all the technology across all of the experts of these services divisions. I mean, we're going to drive significant efficiencies into that tax businesses starting with Canada, then probably into the US and the UK.

One of the byproducts from all the data that we're collecting and how we can assemble that data, aggregate that data in a central place against a single asset identifier. So the side benefits from around the business is huge as we go forward, but just to drive the efficiencies for the volumes we've seen will give us immense benefit as well.

Thanks, very much. Have a good evening.

Thanks, Maggie.

Yes. Thanks so much.

Can you hear me?

Yeah, how are you doing Paul.

Great, good just related to Altus Analytics when you look at 2019, how do you see that growth skewed between a new customers and in regions like Europe or Asia versus expanding within the existing customer base?

I see large enterprise transactions in the US. I see continued growth in the US in the mid market.

I see cross over into banks in the debt markets. I see us selling lots of Taliance in the US to large pension funds and other asset managers and I see those us customers deploying ARGUS everywhere pushing into market.

So a broad spectrum of opportunity plus as the new functionality of Cloud it gives us another bet and it also propagates this ARGUS everywhere strategy. In Europe, we've already proven to sell large multi-function, multi-product capability and we're starting to see our RFP's more in Europe than even in North America.

Some driven by AIFMD, others written by a lack of a need by institutional oversight to have good visibility on things like valuation, performance data. So we're seeing project opportunities there and obviously the net new opportunity.

We've invested on the ground in market and we're building functionality, so we'll see a lot of net new in Europe. And then Asia we got a really strong team, I mean every year they, to pick a football example I would kick their coverage and it's like they keep on bringing one large customer after another and we're seeing more and more the large North American, European companies going into that market and they want the same tools.

They want ARGUS and so we got a really good portfolio of things to sell. The wild card for me and probably compile on this is it is hard to sell on premise and subscription, have been there before, it's difficult.

So we're envisioning models that allow us to bring expertise to the function rather than worrying about whether it's a Cloud or an on premise model. So we've changed our selling model a little bit around the type of need of the customer, whether it's a pension fund, an asset manager, an insurance company, a bank and we're investing more and more in understanding the value proposition.

Yeah, we've put a lot more preparation into the sales teams become a lot more specialized on their approach to the different markets as Bob mentioned. There's many, many different value propositions.

We brought additional strength into our management team. We made announcement of Mac Carter [ph] joined us.

Mac will bring significant large scale expertise into the teams globally, both in the software and on the expert services side. We're also seeing the opportunity to expand what we're doing on the SMB front; we brought another very strong person [indiscernible] to drive our global inside sales for the SMB and mid market.

We saw right volume in 2018. We're look into go significantly above those volumes in 2019, so opportunities everywhere.

That's helpful and just you touched on it like the sales investments and now you're seeing the investments in Altus Analytics, generally it sounds like you're referring to product development costs declining in the second half of the year. But just in terms of sales and investments.

How do you see that progressing through the year?

I mean, we made a lot of investments in the end of 2018 and begin to 2019 to make sure we ready to start the year. We have to put some investments across the board as we're scaling out.

As Bob mentioned, we're still running to development teams. We elected to put some more function into the existing platform to get us into those markets.

There's still a lot of demand there and then we're going to push Cloud right on top of that after we follow that through. So investment has to go across - in number of areas across AE not just one area.

But Paul, this isn't like the investment we made in the year - we call it investments, but what we're naturally doing is evolving our sales coverage right. And the idea is this is the normal growth that we've always had as we grow out our product set, go into new geographies and so I wouldn't - it is definitely small I on a relative basis from an investment perspective.

This is natural evolution of coverage.

Okay and one last one for me, just for Angelo. Just in regards to IFRS 16, how should we be thinking about that going into 2019?

From a disclosure standpoint you mean or?

Disclosure and impact on EBITDA, P&L or cash flow statement.

Yeah, we haven't - we have disclosed in our notes, so you'll see the sort of the balance sheet impact. From a IFRS standpoint it is going to have a significant benefit back to EBITDA.

We haven't landed 100% in terms of doing with that metric if it's a different metric, but we're going to normal - on some basis we're going to normalize it back, so we have an apples-to-apples comparison.

Fine, thank you, that's helpful.

Okay, thanks Paul.