Q4 2025 NTG Clarity Networks Inc Earnings Call

April 28, 2026

Ali Farouk: Good morning, 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 31 December 2025. We'll 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 a recording of the presentation on our website following the call. Make sure to subscribe to our mailing list on our investor page on our website to get notified when those are available.

Speaker #1: Good morning and welcome to NTG Clarity's Q4 and full year 2025 earnings conference call. My name is Ali Farouq, 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 three months and nine months ending December 31st, 2025.

Speaker #1: 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.

Speaker #1: This presentation aims to highlight and summarize the key information already reported there. We will be posting both the slides and a recording of the presentation on our website following the call.

Speaker #1: So make sure to subscribe to our mailing lists on our investor page on our website to get notified when those are available. If you have any further questions, that doesn't get addressed, please reach out to Adam at NTG Clarity.com and we will get you an answer after the call.

Ali Farouk: If you have any further questions that doesn't get addressed, please reach out to Adam at ntgclarity.com, and we will get you an answer after the call. With that said, I'll be welcoming management for remarks shortly. 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.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: 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 dates they are made and expressly qualified in their entirety by this notice.

Ali Farouk: 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 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 of Strategy and Planning, to begin his remarks.

Speaker #1: 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.

Speaker #1: Please see the non-IFRS measures section towards the end of this presentation. Our press release and our MDNA for details and reconciliation of non-IFRS measures to IFRS measures.

Speaker #1: With that, I'd like to invite Adam Zagwal, Vice President Strategy and Planning, to begin his remarks.

Speaker #2: All right. Thank you, Ali. Appreciate it. So and thank you, everybody, for tuning in to our fourth quarter and full year 2025 earnings conference call.

Adam Zaghloul: All right. Thank you, Ali Farouk. Appreciate it. Thank you everybody for tuning in to our Q4 and full year 2025 earnings conference call. You know, 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. You know, Saudi Arabia and really the whole Gulf region as a whole is continuing to invest heavily in their sort of 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 five years, and the results are showing up in our financials. Really, over the past five years, we've posted a compounded annual growth rate of revenue of about 60%.

Speaker #2: You know, 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.

Speaker #2: You know, Saudi Arabia and really the whole Gulf region as a whole is continuing to invest heavily in their sort of diversification projects, becoming leaders in technology, finance, entertainment, and really especially on the technology front.

Speaker #2: 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 five years, we've posted a compounded annual growth rate of revenue of about 60%.

Speaker #2: 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.

Adam Zaghloul: 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 sort of geopolitical situation in the Middle East, and we're gonna talk about it in depth shortly. The short version is that we believe that our structural investment thesis is still very much intact. You know, if anything, the recent events have strengthened the need for Gulf states to diversify their economy away from oil and gas. Now we really see the desire to become the leaders in the technology, finance, and entertainment, continuing into the next decade. Of course, NTG being there to help enable and do the work that's required on that front as well.

Speaker #2: Now, definitely probably one of the biggest headlines recently is the sort of geopolitical situation in the Middle East, and we're going to talk about it in depth shortly.

Speaker #2: But the short version is that we believe that our structural investment thesis is still very much intact. You know, if anything, the recent events have strengthened the need for Gulf states to diversify their economy away from oil and gas.

Speaker #2: 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.

Speaker #2: So I'll talk about our full year performance. You know, we finished 2025 with our strongest quarter on record. You know, Q4 revenue was 23.9 million for the quarter, up 38.9% year over year.

Adam Zaghloul: I'll talk about our full year performance. You know, we finished 2025 with our strongest Q4 on record. You know, Q4 revenue was CAD 23.9 million for the Q4, up 38.9% year-over-year. That brought our full year 2025 revenue to CAD 83.4 million. That's about a CAD 5.4 million revenue beat on our revenue guidance of CAD 78 million, and it brought the full year year-over-year revenue growth to about 48.5%. Definitely a lot of work has gone into the continued growth this quarter and this year. 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Adam Zaghloul: I wanna 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 for collections. Even with us billing the largest amount of revenue we ever have in a single quarter, accounts receivable and contract assets actually declined compared to Q3. We finished 30 September with an accounts receivable balance of about CAD 29.7 million, and accounts receivable at the end of the year was CAD 28.4 million. And that contributed strongly to our Q4 operations operational cash inflow of about CAD 2.8 million.

Speaker #2: 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.

Speaker #2: We finished September 30th with an accounts receivable balance of about $29.7 million, and accounts receivable at the end of the year was $28.4 million.

Speaker #2: And that contributed strongly to our Q4 operations cash inflow of about 2.8 million dollars. For the full year, we didn't have any bad debt expense and our receivables aging quality actually improved with total receivables sitting at under 90 days of age, coming in at about 93% of the balance.

Adam Zaghloul: For the full year, we didn't have any bad debt expense, and our receivables aging quality actually improved with total receivables sitting at under 90 days of age, coming in at about 93% of the balance. I wanna set some realistic expectations going forward for sure. Even though we did reduce our days sales outstanding by about 3 days in Q3, you know, we have about a one-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 really great trust with a little bit of favorable payment scheduling. I would not guide investors to expect these sales outstanding to contract, you know, uniformly over the next few quarters.

Speaker #2: But I want to set some realistic expectations going forward for sure, even though we did reduce our day sales outstanding by about three days in Q3.

Speaker #2: You know, we have about a one-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 large degree of trust with, a little bit of favorable payment scheduling.

Speaker #2: So I would not guide investors to expect day sales outstanding to contract, you know, 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.

Adam Zaghloul: What I can tell you is that we're placing a strong focus on continuing to drive our cash 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 two revenue and customer retention metrics this year that I want to walk you through. The first is net dollar retention. For the full year 2025, net dollar retention was sitting at about 134.7%. That means that for every CAD of revenue earned from a 2024 client, before counting any new customers or anything like that, you know, we earned in 2025 about CAD 1.35.

Speaker #2: Turning to revenue quality, we're tracking two revenue and customer retention metrics. This year that I wanted to walk you through. The first is net dollar retention.

Speaker #2: 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, you know, we earned in 2025 about 100 or about $1.35, right?

Speaker #2: So $1 to $1.35 over the course of the year. So that means that there are deepening their engagements with us. You know, we're becoming a deeper and deeper part of their technology strategies and they're trusting NTG with a higher scope of work.

Adam Zaghloul: CAD 1 to CAD 1.35 over the course of the year. That means that they're deepening their engagements with us. You know, 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%. Over the course of the year 2025, we did turn a few customers, but the total revenue lost was on the order of about CAD 400,000, less than 1% of our total 2024 revenue base.

Speaker #2: 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.

Speaker #2: So overall, you know, our retention metrics reflect how strongly our customers trust our quality of service and rely on us to be the sort of technical experts that are going to guide them through the transformation.

Adam Zaghloul: Overall, you know, our retention metrics reflect how strongly our customers trust our quality of service, rely on us to be the sort of technical experts that are gonna guide them through the transformation, and how eager they are to increase the scope of work with us as well. You know, I'll touch upon customer concentration for the full year 2025. For the year, about 71% of our revenue was linked to our top five customers. It's important to note that with a lot of these customers, we're not just working on one project or working with one point of contact. You know, 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.

Speaker #2: And how eager they are to increase the scope of work with us as well. You know, I'll touch upon customer concentration for the full year 2025.

Speaker #2: For the year, about 71% of our revenue was linked to our top five customers, but it's important to note that with a lot of these customers, we're not just working on one project or working with one point of contact.

Speaker #2: You know, 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.

Speaker #2: 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.

Adam Zaghloul: 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. You know, 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. You know, 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 has largely responsible for a lot of our new work this year. I would say, you know, 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.

Speaker #2: Our largest client is a system integrator that does a lot of work for the government in Saudi Arabia. You know, they're working on multiple concurrent Vision 2030 related tasks.

Speaker #2: And they're also one of the customers that's readily referring us to new clients. You know, a lot of our new customers come from word of mouth referrals from our existing customers.

Speaker #2: And this largest customer is no different than that trend and has largely responsible for a lot of our new work this year. And I would say, you know, 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.

Speaker #2: You know, each of the top five customers have been longstanding partners with us, and they have a consistent track record of timely payment of their invoices.

Adam Zaghloul: You know, each of the top five customers have been long-standing partners with us, and they have a consistent track record of timely payment of their invoices. 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. Of the CAD 27.2 million in incremental revenue that we generated in 2025, just under CAD 20 million, CAD 19.9 million or 73% of it came from existing customers expanding the scope of their work that's allocated to NTG. This budget expansion with relationships we already have as clients continue to ramp the projects that are related to this sort of Vision 2030 diversification as well. Another CAD 7.7 million came from new customers.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: So this budget expansion with relationships we already have as clients continue to ramp the projects that are related to this sort of Vision 2030 diversification as well.

Speaker #2: 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.

Adam Zaghloul: The majority of that work and relationships were sourced through word-of-mouth referrals from some of our existing satisfied customers as well. That plus the CAD 400,000 churn that I mentioned before brings us to the total of about CAD 83.4 million for the year in 2025. 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. I wanna address the G&A trajectory, you know, more directly. You know, G&A as a percentage of revenue has definitely run a little bit elevated throughout 2025 because we brought on some extra headcount in advance of some contract deployments that we saw in the future.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: So I want to address the G&A trajectory more directly. You know, G&A as a percentage of revenue has definitely run a little bit elevated throughout 2025 because we brought on some extra headcount in advance of some contract deployments that we saw in the future.

Speaker #2: You know, 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.

Adam Zaghloul: You know, the investment was deliberate, and we didn't wanna 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 know, we can think about nearshore centers in Saudi Arabia itself, but also offices in places like the UAE and Iraq. You know, while those operations are scaling up, they're not gonna be operating at the same kind of margins that our Saudi operations are. We're confident that over time, as these operations mature, they will get to that same level as we see in Saudi Arabia.

Speaker #2: We've also been investing a little bit in geographic expansion to some of the other Gulf states. You know, we can think about nearshore centers in Saudi Arabia itself, but also offices in places like the UAE and Iraq.

Speaker #2: And you know, while those operations are scaling up, they're not going to be operating at the same kind of margins that our Saudi operations are.

Speaker #2: But we're confident that over time, as these operations mature, they will get to that same level, at least in Saudi Arabia. So as we look ahead into the future, you know, we expect operating expenses to remain at roughly their current levels, at least in the near term.

Adam Zaghloul: As we look ahead into the future, you know, 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. You know, we see that the underlying cost base is largely in place, and incremental growth should flow through at a higher margin. You know, several of the new contracts that we referenced are already in place, at least at the frame agreement level. You know, getting those first purchase orders so that we can start work is happening a little more gradually than we had originally anticipated. Once these programs get into full execution, we expect the revenue to ramp against this sort of already established cost base and support a little bit of margin expansion that way as well. Moving on to profitability.

Speaker #2: And we're expecting to see some meaningful operating leverage as our revenue scales. You know, we see that the underlying cost base is largely in place.

Speaker #2: 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.

Speaker #2: But you know, getting those first purchase orders so that we can start work is happening a little more gradually than we had originally anticipated.

Speaker #2: But once these programs get into full execution, we expect the revenue to ramp against this sort of already established cost base and support a little bit of margin expansion that way as well.

Speaker #2: 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.

Adam Zaghloul: Q4 adjusted EBITDA came in at about CAD 3.8 million or 15.8% margin. Q4 net income came in at about CAD 900,000 or about a 3.9% margin. For the full year, adjusted EBITDA was about CAD 11.9 million or a 14.3% margin. Net income was about CAD 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. Now, 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 CAD 700,000, and for the year it was about CAD 900,000.

Speaker #2: 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.

Speaker #2: Now, the main drivers in the difference between adjusted EBITDA and net income are going to be foreign exchange and taxes. Now, on the foreign exchange side, this year we definitely had a little bit of a headwind from foreign exchange.

Speaker #2: For the quarter, it was about $700,000. And for the year, it was about $900,000. And we really see foreign exchange as sort of always being a source of volatility when it comes to our net income.

Adam Zaghloul: We really see foreign exchange as sort of always being a source of volatility when it comes to our net income. Some quarters it'll be a net positive, and some quarters it'll be a net negative. At the end of the day, foreign exchange doesn't play materially into our day-to-day operations because, you know, the vast majority of our revenue and the majority of our expenses are in US dollar-pegged currencies. What it does impact is the consolidation of all of our operations into our financial reporting. The other main factor that I mentioned is taxes, and taxes are definitely a very real expense, especially in 2025. You know, for the year 2025, we paid about CAD 3.3 million in taxes.

Speaker #2: Some quarters it'll be a net positive, and some quarters it'll be a net negative. But at the end of the day, foreign exchange doesn't play materially into our day-to-day operations because, you know, the vast majority of our revenue and the majority of our expenses are in US dollar–pegged currencies.

Speaker #2: 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.

Speaker #2: You know, 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 a Canadian tax rate to be.

Adam Zaghloul: At first glance, that's definitely much higher than what you'd expect a Canadian tax rate to be. That's because we are being double taxed in both the Canadian and the Saudi jurisdictions. We ended up paying an effective tax rate of close to 38% this year. In order to combat this, in late November 2025, we actually spun off our Saudi operations from a branch of the Canadian operation to being its own standalone Saudi LLC subsidiary. That's in preparation to sort of 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. We're gonna continue to provide some updates as the tax situation unfolds in 2026.

Speaker #2: 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.

Speaker #2: 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 standalone Saudi LLC subsidiary.

Speaker #2: And that's in preparation to sort of 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.

Speaker #2: 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.

Adam Zaghloul: 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. 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. Just to sum up the financial statements, this is a neat chart that shows that of our about CAD 83.4 million for the year in 2025, about 36% of that came through as gross profit. You know, that's within our typical range that we expect to see of that mid to high 30% range.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: You know, that's within our typical range that we expect to see of that mid to high 30% range. Pre-tax income came in at about 10.3%.

Adam Zaghloul: Pre-tax income came in at about 10.3%, net income after taxes coming in at about 6.3% as well. I wanna do a little bit of an honest accounting of our performance in 2025 compared to some of the targets that we set out. You know, just the first target that we have there, expand and deepen our client relationships, I think we definitely delivered on that promise. You know, despite the, you know, 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.

Speaker #2: And then net income after taxes 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.

Speaker #2: And you know, just the first target that we have there, expand and deepen our client relationships, I think we definitely delivered on that promise.

Speaker #2: You know, despite the you know macro themes that are going on right now, we were able to post $135% net dollar retention and that 99% gross dollar retention.

Speaker #2: 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.

Speaker #2: You know, we 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 NTG Apps proprietary software platform continues to go strong.

Adam Zaghloul: You know, we put on about CAD 7.7 million in incremental revenue from new customers in the year in 2025 as well. 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%. All of those factors went into us being able to deliver on our full year revenue guidance. You know, we guided for CAD 78 million, and we were able to beat it by about CAD 5.4 million, bringing up full year revenue to CAD 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.

Speaker #2: We're NTG Apps 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.

Speaker #2: You know, we guided for 78 million and we were able to beat it by about 5.4 million. 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?

Speaker #2: 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.

Adam Zaghloul: Accounts receivable and contract assets declined by about CAD 1.3 million in what was our highest billing quarter of the year and really of all time. That contributed about CAD 2.8 million in operating cash flow. That being said, it's still important to look at the full year. Through the first three 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. Consistency is still something that we have to show on the cash collection and AR side of things.

Speaker #2: 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 three quarters, operating cash flow was negative as we had to scale our working capital with the scale of the business.

Speaker #2: 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.

Speaker #2: On the adjusted EBITDA line, you know, the original 16 to 20% guidance range turned out to not be achievable under the deployment timelines that we ended up seeing.

Adam Zaghloul: On the adjusted EBITDA line, you know, the original 16% to 20% guidance range turned out to not be achievable under the deployment timelines that we ended up seeing, and we had to reset the range to 12% to 16% in Q3. Full year 2025 came in at 14.3% that I mentioned within that revised range. It still fell short of that initial commitment, the 2026 outlook and guidance that we'll talk about shortly is set with those assumptions sort of 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 sort of operating at the intersection of the two major macro themes in 2026.

Speaker #2: 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.

Speaker #2: 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 sort of recalibrated as well.

Speaker #2: 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 sort of operating at the intersection of the two major macro themes in 2026.

Speaker #2: The first being artificial intelligence and how it impacts our business model. So investors often ask us, you know, are AI tools going to reduce the demand for what NTG does?

Adam Zaghloul: The first being artificial intelligence and how it impacts our business model. Investors often ask us, you know, are AI tools going to reduce the demand for what NTG does? 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. Our clients are large Saudi financial institutions and government-linked enterprises that are executing these multi-year transformation programs. You know, these engagements involve, you know, a scope of work that goes well beyond what off-the-shelf AI products can really deliver. We're talking things about cybersecurity, you know, data residency constraints, Arabic language requirements, regulatory alignment that we've spent years building up our expertise in. You know, our work is really embedded across multiple layers of a lot of large Saudi organizations.

Speaker #2: 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.

Speaker #2: So our clients are large Saudi financial institutions and government-linked enterprises that are executing these multi-year transformation programs. You know, these engagements involve you know a scope of work that goes well beyond what off-the-shelf AI products can really deliver.

Speaker #2: We're talking things about cybersecurity, you know, data residency constraints, Arabic language requirements, regulatory alignment that we've spent years building up our expertise in. And you know our work is really embedded across multiple layers of a lot of large Saudi organizations.

Speaker #2: And our contracts are typically won based on track record and long-standing relationships as opposed to the sort of point-in-time cost savings that a lot of AI tools are purporting to offer.

Adam Zaghloul: Our contracts are typically won based on track record and long-standing relationships, as opposed to the sort of point-in-time cost savings that a lot of AI tools are purporting to offer. 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. The near-term impact that we see from this is improved productivity. You know, teams are able to deliver more without needing more resources and capacity. Over time, we're expecting that to translate into margin expansion as the value that they deliver scales without necessarily needing any additional headcount. We're also seeing AI increase our demand for our services, you know, provide some incremental demand.

Speaker #2: 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.

Speaker #2: So the near-term impact that we see from this is improved productivity. You know, teams are able to deliver more without needing more resources and capacity.

Speaker #2: And over time, we're expecting that to translate into margin expansion as the value that they deliver scales without necessarily needing any additional headcount. But we're also seeing AI increase our demand for our services, you know, provide some incremental demand.

Speaker #2: You know, on the one hand, we're integrating AI into our NTG Apps software platform, and we're also developing a lot of other AI offerings like our test player automatic AI-based software testing and our agent builders and our customers are actually coming to us for early stage implementations of these sort of AI-based tools, which provides contract and engagements on top of what we had already contracted with some of our existing customers.

Adam Zaghloul: You know, 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 Test Player automatic AI-based software testing and our agent builders. Our customers are actually coming to us for early stage implementations of these sort of AI-based tools, which provides contracts and engagements on top of what we had already contracted with some of our existing customers. 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. 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 sort of second-order effects.

Speaker #2: 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.

Speaker #2: 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 sort of second-order effects.

Speaker #2: 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.

Adam Zaghloul: The key question is whether the changes in the operating environment are going to impact NTG at all. Just to 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 a oil price of about CAD 80 per barrel. At this time, Brent crude is trading at about CAD 108 per barrel. 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 pre-conflict to about 5.5 million barrels per day now.

Speaker #2: So just to talk about, you know, the Saudi budget, which funds a lot of the initiatives that are going into Vision 2030. You know, the Saudi budget for this year was based on an oil price of about $80 per barrel, and at this time, you know, Brent crude is trading at about $108 per barrel.

Speaker #2: But there is also a decline in volume brought to market that goes along with that price increase. You know, estimates are going from about 7.4 million barrels per day pre-conflict to about 5.5 million barrels per day now.

Speaker #2: But the good news is that, you know, at the current volumes, with the increase in price, Saudi government oil revenues are effectively flat versus pre-conflict.

Adam Zaghloul: The good news is that, you know, at the current volumes with the increase in price, Saudi government oil revenues are effectively flat versus pre-conflict. That gives us some confidence that the spending and the budgetary programs are still going to be on par with what was budgeted for this year. When it comes to more our experience and client behavior, we haven't seen any change in execution. You know, purchase order timelines and project activity remain similar to what they were before the conflict. We haven't received any clients initiating sort of deferrals or cancellations on their work. Of course, our Egypt offshore centers operate far outside the most directly exposed areas to the conflict.

Speaker #2: 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.

Speaker #2: When it comes to more our experience and client behavior, we haven't seen any change in execution. You know, purchase order timelines, and project activity remain similar to what they were before the conflict.

Speaker #2: We haven't received any clients initiating any sort of deferrals or cancellations on their work. And, of course, our Egypt offshore centers operate far outside the most directly exposed areas to the conflict.

Speaker #2: 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?

Adam Zaghloul: 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? They want to diversify their economy, get away from being beholden to the oil and gas cycle, and really become leaders in technology, finance, and entertainment. If anything, the conflict in the region that's impacted its oil revenues has reinforced the objective and made it more important to invest. The strategic rationale for the continued investment hasn't weakened at all. I would say just to close out, you know, the trajectory of the conflict is of course gonna be uncertain, and we don't wanna be speculating on any specific outcomes.

Speaker #2: 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.

Speaker #2: And if anything, the conflict in the region that's impacted its oil revenues has reinforced the objectives and made it more important to invest. So the strategic rationale for the continued investment hasn't weakened at all.

Speaker #2: I would say just to close out, you know, the trajectory of the conflict is, of course, going to be uncertain. And we don't want to be speculating on any specific outcomes.

Speaker #2: But what we are going to do is continue to monitor, you know, both the geopolitical situation and also the sort of leading indicators from our customers, such as PO velocity, approval timelines, any sort of changes in the process that way.

Adam Zaghloul: What we are going to do is continue to monitor, you know, both the geopolitical situation and also the sort of leading indicators from our customers, such as PO velocity, approval timelines, any sort of changes in the process that way. We want to be open and transparent to investors about how that's impacting our timeline and how that might impact our guidance going forward. With the context of the geopolitics and the AI scene out of the way, you know, I want to discuss our expectations for 2026, which sort of reflect a conservative view based on the sort of current conditions there. We'll start with revenue guidance, which we're setting at being above CAD 90 million. This CAD 90 million floor is really anchored in our contract backlog and what we can see clearly coming down the pipeline.

Speaker #2: And we want to be open and transparent to investors about how that's impacting our timeline, and how that might impact our guidance going forward.

Speaker #2: But with the context of the geopolitics and the AI scene out of the way, you know, I want to discuss our expectations for 2026, which sort of reflect a conservative view based on the sort of current conditions there.

Speaker #2: 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.

Speaker #2: You know, we think it's an appropriate starting point for guidance because it relies on our normal renewal and expansion contracts cycle and not it doesn't what it doesn't rely on is any sort of large windfall contracts.

Adam Zaghloul: You know, we think it's an appropriate starting point for guidance because it relies on our normal renewal and expansion contract cycle and what it doesn't rely on is any sort of large windfall contracts. Our backlog is sitting at about CAD 88 million of purchase orders and contracts on hand as of 31 December, plus any POs and contracts that have been received since then. 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 multi-year contracts, most of which have just finished their first year billing. You know, it does not include assumptions for renewals of contracts that expire during the next 12 months.

Speaker #2: So our backlog is sitting at about $88 million of purchase orders and contracts on hand as of December 31st. Plus any POs and contracts that have been received since then.

Speaker #2: 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 multi-year contracts.

Speaker #2: Most of which have just finished their first year billing. You know, it does not include assumptions for renewals of contracts that expire during the next 12 months.

Speaker #2: 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.

Adam Zaghloul: The combination of what's contracted for the next 12 months and what converts off those contracts in the next 12 months is approximately CAD 60 million. That leaves about CAD 30 million in renewals and framework agreement expansions and POs from new agreements and that kind of thing to bring us to that CAD 90 million. I wanna bring a little bit of context to that sort of CAD 60 million one-year backlog number. First, we have signed multiple framework agreements in 2025 and in early 2026 that don't carry a contractual floor itself. We expect purchase orders against those agreements to come through, but without any sort of guaranteed commitment, they are not part of the backlog.

Speaker #2: But I want to bring a little bit of context to that sort of $60 million, one-year backlog number. First, we have signed multiple framework agreements in 2025 and in early 2026 that don't carry a contractual floor itself.

Speaker #2: So we expect purchase orders against those agreements to come through, but without any sort of guaranteed commitment, they are not part of the backlog.

Speaker #2: And actually, the bill-down of one year worth for those multi-year contracts, plus the lack of the contractual floor in the new agreements, is why the backlog has sort of reduced since early 2025.

Adam Zaghloul: Actually, the bill down of 1 year worth of those multi-year contracts, plus the lack of the contractual floor in the new agreements is why the backlog has sort of reduced since early 2025. Second, you know, 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. The multi-year backlog reflects that floor. Since actual POs have run materially above it does give us some potential upside when it comes to revenue as well. I'll move on to adjusted EBITDA guidance now. At the start of 2025, we guided to 16% to 20% adjusted EBITDA margin.

Speaker #2: And second, you know, our two large major framework agreements that we announced back in 2024 actually generated POs in 2025 that were about 20 to 50 percent above the contractual floor in the first year.

Speaker #2: So, the multi-year 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.

Speaker #2: So I'll move on to adjusted EBITDA guidance now. At the start of 2025, we guided to 16 to 20 percent adjusted EBITDA margin. But in Q3, we had to revise that range to 12 to 16 percent, basically recognizing that our headcount investments had scaled ahead of the contract conversion timeline.

Adam Zaghloul: In Q3 we had to revise that range to 12% to 16%, basically recognizing that our headcount investments had scaled ahead of the contract conversion timeline. We finished 2025 at 14.3% inside that revised range. 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, right? 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.

Speaker #2: We finished 2025 at 14.3 percent inside that revised range. But the trajectory across the year matters more than necessarily the average. Q3 was our softest quarter at 11.9 percent.

Speaker #2: And Q4 recovered to 15.8 percent. That recovery is operating leverage that we've been describing so far, right? Revenue catching up to the cost base that we built ahead of it.

Speaker #2: For 2026, we're guiding to 13 to 16 percent adjusted EBITDA margin. So we've raised that floor by 1 percent. This guidance is set knowing that Q1 is going to be a little bit of a slower revenue quarter driven by lower operating leverage.

Speaker #2: You know, we see a pathway to that ceiling of 16 percent and even beyond it, but it does require some PO conversion from our current framework agreements and pipeline to drive even greater operating leverage.

Adam Zaghloul: You know, 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. What we've effectively done with this guidance is take the lesson from 2025, and we wanted to be sure to issue guidance that's readily achievable without relying on the conversion of large contracts. Q1 dynamic I want to be sure to flag is the typical impact of Ramadan and Eid on our business. For investors that aren't as familiar with the Middle East, you know, Ramadan and Eid, they're not just like a 1-day holiday, right? You know, it's basically a law and observance during which, in Saudi Arabia's case, working hours are reduced by law. You know, decision-making slows down.

Speaker #2: So what we've effectively done with this guidance is take the lesson from 2025. You know, we wanted to be sure to issue guidance that's readily achievable without relying on the conversion of large contracts.

Speaker #2: So when 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, you know, Ramadan and Eid, they're not just like a one-day holiday.

Speaker #2: Right? You know, it's basically a long observance during which in Saudi Arabia's case, working hours are reduced by law, you know, decision-making slows down, new projects are typically deferred until after Eid.

Adam Zaghloul: New projects are typically deferred until after Eid. The closest comparison, I think that comes to in North America is that sort of mid-December to early January period where things slow down for Christmas. Overall, you know, 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. 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. In Q2, we also have Eid al-Adha coming up around late May. By late Q2, with Ramadan and both Eids out of the way, you know, we expect to return to some sequential growth and a stronger back half of the year. That brings us to the end of the prepared remarks.

Speaker #2: The closest comparison I think it comes to in North America is that sort of mid-December to early January period where things slow down for Christmas.

Speaker #2: But overall, you know, 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.

Speaker #2: 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.

Speaker #2: But by late Q2, with Ramadan and both Eids out of the way, you know, we expect to return to some sequential growth and a stronger back half of the year.

Speaker #2: So that brings us to the end of the prepared remarks. I want to thank you for calling in and listening in to the earnings conference call.

Adam Zaghloul: I wanna thank you for calling in and listening in to the earnings conference call. I think we're gonna turn things over to a Q&A session now. We're gonna start things off with questions from our covering analysts, then we're gonna turn things over to some of the questions that were written in by investors ahead of the call. I'm going to see who is available for questions right now. Can we start with Aravinda Galappatthige from Canaccord, if you're ready to come on the screen. There we go. Sorry, Aravinda, you're on mute.

Speaker #2: 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.

Speaker #2: So, I'm going to see who is available for questions right now. And can we start with Aravinda Galapitige from Canaccord, if you're ready to come on the screen?

Speaker #2: Oh, there we go. Sorry, Aravinda, you're on mute. Oh, sorry. Hi, Adam. Thanks for taking the questions, and congrats on the quarter. My pleasure.

Aravinda Galappatthige: Oh, sorry. Hi, Adam. Thanks for taking the questions and congrats on the quarter.

Speaker #2: Thanks. 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.

Adam Zaghloul: My pleasure. Thanks.

Aravinda Galappatthige: I'll start with the outlook. Maybe a little bit more color on that CAD 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. Wanted to understand how much of it is sort of connected to conversations you're perhaps not having at this point and perhaps expected in H2, just to get a sense of the visibility that you have.

Speaker #2: 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. Wanted to understand how much of it is sort of connected to conversations you're perhaps not having at this point and perhaps expected in the second half, just to get a sense of the visibility that you have.

Speaker #2: Yeah, for sure. So yeah, that's definitely a good point on the, you know, 30 million that's not baked into the contract backlog right now.

Adam Zaghloul: Yeah, for sure. Yeah, that's definitely a good point on the, you know, CAD 30 million that's not baked into the contract backlog right now. You know, what's contained in that is basically contracts that are with customers that have been, you know, consistently renewing their ongoing engagements. It's not things that are contractually inked right now, but, like you mentioned, they are, you know, going to be renewals that we expect to be having a conversation around, say, in the next couple of months, basically anytime towards the end of the year. You know, what we take as a philosophical point when we look at that portion of the backlog is, you know, it's not intended to be like an ambitious sales pipeline.

Speaker #2: You know, 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 the conversation around, say, in the next couple of months, basically anytime towards the end of the year.

Speaker #2: But, you know, what we take as a philosophical point when we look at that portion of the backlog is, you know, we're not it's not intended to be like an ambitious sales pipeline.

Speaker #2: 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, you know, we're pretty confident about setting that $90 million as a floor—including that sort of $30 million of basically renewals that we expect to be in the bag in the next coming months.

Adam Zaghloul: It is really, you know, contracts with reliable existing customers that have proven to be, you know, renewing their engagements with us year in and year out. All that is to say, you know, we're pretty confident about setting that CAD 90 million as a floor, including that sort of CAD 30 million of basically renewals that we expect to be in the bag in the next coming months.

Speaker #2: Okay. Thanks, Adam. And then going back to the AR matter, just I think you've explained it really well, but just to understand, it seems that there seems to be a perhaps a material movement from monthly invoicing to quarterly.

Aravinda Galappatthige: Okay. Thanks, Adam. Going back to the AR matter, I think you explained it really well, but just to understand, it seems that there seems to be a perhaps a material movement from monthly invoicing to quarterly. Maybe just a background to that. I wanted to understand, was that sort of initiated and requested by customers? Is it sort of to reduce the administrative burden? What was sort of the backdrop to that?

Speaker #2: Was that maybe just a background to that? I wanted to understand, was that sort of initiated and requested by customers? And is it sort of to reduce the administrative burden?

Speaker #2: What was sort of the backdrop to that? Yeah, that's definitely a good question about the AR position. So yeah, definitely in Q4, we saw a significant jump in our contract assets versus just the typical trade receivables.

Adam Zaghloul: Yeah, that's definitely a good question about the AR position. Yeah, definitely in Q4 we saw a significant jump in our contract assets versus, you know, just the typical trade receivables. That largely is due to a couple of large customers, you know, coming to us. You know, of course, we don't want to, you know, proactively go out and, you know, reduce the billing frequency for us. Basically coming to us and, you know, 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 sort of do a little bit of consolidation.

Speaker #2: But that largely is due to a couple of large customers coming to us, you know, 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 sort of do a little bit of consolidation.

Speaker #2: 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.

Adam Zaghloul: The result has, you know, basically had a couple of our key customers, some of our largest customers, move from a more monthly billing cycle to a quarterly billing cycle. Of course, there's going to be a little bit of, let's say, you know, working capital build in order to support that. I want to stress that, you know, the move from sort of monthly invoicing to quarterly invoicing is basically a billing timing issue and not a creditworthiness issue. You know, when we look at the overall accounts receivable, still about 93% is aged less than 90 days. These customers that we're giving these favorable terms to are, you know, customers that we had relationships with going back years, and they have a history of timely payments as well.

Speaker #2: 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 sort of monthly invoicing to quarterly invoicing is basically a billing timing issue and not a creditworthiness issue.

Speaker #2: 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.

Speaker #2: And they have a history of timely payments as well. So we're not concerned at all that we're delayed payments. It really is a timing issue and a convenience issue for some of our customers.

Adam Zaghloul: We're not concerned at all that we're losing or delayed payments. It really is, you know, a timing issue and a you know convenience issue for some of our customers.

Speaker #2: Okay. And then onto the sort of the gross margin and sort of your epid guidance as well. I know that consulting the consulting component is sort of growing larger.

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

Speaker #2: With that in mind, maybe just help us understand what the gross profit margin is—is that the one we should be looking at and maybe considering as we look to forecast for 2026?

Speaker #2: And then based on your comments on GNA, is it fair to say that you kind of have the size now to kind of grow the revenue probably up to about 100 million dollars?

Speaker #2: Before sort of making any step-change investments, I guess, generally speaking, a sense of the capacity that you've built in at this point.

Speaker #2: Yeah, 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%.

Adam Zaghloul: Yeah, that's definitely, both of those are good points to be looking at. On the gross margin point, you know, taking a look at this year's performance, we came in gross margin at about 36%. You know, down slightly from last year's margin of about 37% just due to, you know, changes in our revenue mix. I don't think at this point we are going to be guiding to any sort of, you know, material change in the gross margin. I think that sort of mid to maybe mid-high 30% range for gross margin is where we're going to expect to be for the near term.

Speaker #2: 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 sort of material change in the gross margin.

Speaker #2: I think that sort of mid to maybe mid-high 30% range for gross margin is where we're going to expect to be for the near term.

Speaker #2: And on the question about capacity and ramping up, I would say our intention is to have this sort of, especially GNA cost-based, 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.

Adam Zaghloul: On the question about, you know, capacity and ramping up, I would say, our intention is to have this sort of, 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. I think that it's very probable that, you know, for the next few quarters we keep 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. Yeah, for sure.

Speaker #2: So I think that it's very probable that for the next few quarters, we keep the SGNA 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.

Speaker #2: Yeah, for sure. And lastly, real quick, on NTG apps— I know that it's choppy quarter to quarter. What are your expectations? How much of the outlook includes components from NTG apps, and perhaps the mix in terms of the implementation and the ongoing components within that as well?

Aravinda Galappatthige: Lastly, real quick on NTG Apps. I know that it's choppy quarter to quarter. What are your expectations? How much of the outlook includes components from NTG Apps and perhaps the mix in terms of the implementation and the ongoing components within that as well?

Speaker #2: Yeah, for sure. Thank you. Yeah, no problem. So NTG apps is definitely exciting to see the 180% year-over-year growth on the NTG apps line as well.

Adam Zaghloul: Yeah, for sure.

Aravinda Galappatthige: Thank you.

Adam Zaghloul: Yeah, no problem. NTGapps, it's definitely exciting to see the 180% year-over-year growth on the NTGapps line as well, or 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 were working on proof of concepts in 2024 and early in 2025 have moved on to full-scale implementations this year, and that's largely why, you know, we saw the growth that we did. Still largely, you know, 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, you know, one-off project based that way.

Speaker #2: Or this year. It brought the revenue share from NTG apps up to about 11% of revenue this year, which is great to see. Some customers who are working on proof of concepts 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.

Speaker #2: Still largely implementation-based bespoke project-based not as much of that SaaS revenue base is going into NTG apps 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.

Speaker #2: So, in terms of guidance, we're not going to guide specifically for an NTG Apps contribution, just because so much of our business and demand—and new engagements—are on the services side, and NTG Apps ends up being a little bit of an upsell in the background.

Adam Zaghloul: In terms of guidance, you know, 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. I would say, you know, a good goal to have is to maintain the revenue contribution from NTGapps as we have it right now in that sort of 10%, 11% range.

Speaker #2: But I would say a good goal to have is to maintain the revenue contribution from NTG apps as we have it right now in that sort of 10-11% range.

Speaker #2: Thank you, Adam. I'll pass it on. Right on. Thank you, Arvind. I appreciate it. So, I'm going to invite our next analyst onto the stage.

Aravinda Galappatthige: Thank you, Adam. I will pass the line.

Adam Zaghloul: Right on. Thank you, Arvind. I appreciate it. I'm going to invite our next analyst onto the stage. I believe we have Nicholas Cortellucci from Atrium Research on the line. If, Nick, you're ready to come up.

Speaker #2: I believe we have Nick Cordalucci from Atrium Research on the line. If Nick, you're ready to come up. Hey, Adam. There we go. Hi, Nick.

Nicholas Cortellucci: Hey, Adam.

Adam Zaghloul: There we go. Hi, Nick.

Speaker #2: How’s it going? Great. Great. Excited to post the quarter. How are you doing? Doing well. Thanks for answering my questions. A couple of questions here.

Nicholas Cortellucci: How's it going?

Adam Zaghloul: Great. Great. Excited to post the quarter. How are you doing?

Nicholas Cortellucci: Doing well. Thanks for answering my questions. A couple of questions here. Firstly, there's been some news on the Vision 2030 and kind of 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?

Speaker #2: So firstly, there's been some news on the Vision 2030 and kind of shifting away from these mega projects and into maybe a more diversified approach.

Speaker #2: 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.

Speaker #2: I mean, 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.

Adam Zaghloul: That's a really good question for sure. I mean, you know, overall, I would say it's a positive for NTG just because, you know, it really hones in the focus on the Saudi spending into technology, digital transformation, that side of the economic development. You know, I think, you know, 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, you know, becoming a regional hub for, you know, technology, but also finance and entertainment and that kind of thing.

Speaker #2: I think maybe over the last few years with 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.

Speaker #2: 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 sort of infrastructural projects are the ones that are getting scaled back.

Adam Zaghloul: Especially in times that are a little bit uncertain like these with the conflict in the region, you know, it's almost reassuring to see that, you know, when budget considerations come into play, those sort of 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, you know, technology-based, which are the ones that NTG helps with.

Speaker #2: 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.

Speaker #2: Right. Well, that makes sense. 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, two years ago?

Nicholas Cortellucci: Right. Well, that makes sense. 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 two years ago?

Speaker #2: Yeah, that's a good question for sure. Nick, I mean, 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 dollar-based revenue compared to like a 56 million dollar-based revenue that we saw last year.

Adam Zaghloul: Yeah, that's a, that's a good question for sure, Nick. I mean, overall, what I'd say is, you know, the law of large numbers definitely kicks in, and it's always gonna be hard to, you know, grow at 50% year starting at, you know, a CAD 83 million base revenue compared to like a CAD 50, 56 million base revenue that we saw last year. In some respects, you know, scaling gets harder, and we can't promise those same, you know, 100% or 50% scaling years every year.

Speaker #2: 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 sort of make it easier to have the conversations open up about larger contracts.

Adam Zaghloul: On the other hand, you know, once we really have a proven track record of being able to operate and scale in our, in our target market, which we have been proving with some of our large customer engagements, it does sort of make it easier to have the conversations open up about larger contracts. That's what we're seeing happening, right? Some of our large customers are referring us to work with, you know, other sister companies in the, in the same portfolio or other companies in their professional network. The negotiations are starting at a higher level of contract. I mean, 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.

Speaker #2: 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.

Speaker #2: And the negotiations are starting at a higher level of contract. So I mean, 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.

Speaker #2: Understood. Okay. 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 kind of the new norm?

Nicholas Cortellucci: Understood. Okay. Just the last one for me was just on the sales and marketing and G&A, just from an absolute dollar figure, is this kind of the new norm? I think it was CAD 1.7 million in sales and marketing, CAD 3.8 million in G&A. Kind of a baseline for the future?

Speaker #2: I think it was 1.7 million sales and marketing, 3.8 million in G&A. So kind of a baseline for the future. Yeah, that's a good question for sure.

Speaker #2: I would say on the SG&A line, broad strokes, what we're seeing in the near future, what we're expecting to see in the near future is sort of maintenance around that sort of baseline level.

Adam Zaghloul: Yeah, 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, sort of maintenance around that sort of baseline level. I think we've made the investments that we need to make to be able to continue to scale this year. You know, 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. I would say, you know, our guidance is basically assuming, you know, this is the new normal and the baseline, at least for the near future right now.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Got it. Okay. Thanks for answering my questions. I'll jump back in. My pleasure. Thank you, Nick. I appreciate it. Hey, I think that is all of the analyst questions on the call.

Nicholas Cortellucci: Got it. Okay. Thanks for answering my questions. I'll jump back in the queue.

Adam Zaghloul: My pleasure. Thank you, Nick. I appreciate it. Okay, I think that is all of the analysts' questions on the call. Feel free to put your hands up if you have any more questions. 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 ahead of the call.

Speaker #2: 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 ahead of the call.

Speaker #2: All right. So our first question is written in from Chris from Activate Capital. The last three years have seen extraordinary top-line growth, and it looks like cash flow is starting to catch up to the investment in that growth.

Ali Farouk: All right. Our first question is written in from Chris from Activate Capital. The last three years have 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 right-sized now and can keep delivering growth and the positive cash flow?

Speaker #2: Do you feel the business is right-sized now and can keep delivering growth and the positive cash flow? Yeah, that's a great question. Thanks for writing it in, Chris.

Speaker #2: So overall, I think like we were mentioning with a couple of the earlier questions, the level of investment that we put in is at a good spot for the near future.

Adam Zaghloul: Yeah, that's a great question. Thanks for writing it in, Chris. Overall, I think, you know, like we were mentioning with a couple of the earlier questions, you know, the level of investment that we've 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've put on this year. You know, there is the possibility for upside if new contracts come through. On the cash flow side of things as well, you know, I think Q4 was a great example of trending in the right direction, right? We had an operating cash flow of about CAD +2.8 million for the quarter.

Speaker #2: 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.

Speaker #2: And there is the 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, right?

Speaker #2: We had a positive operating cash flow of about 2.8 million dollars for the quarter. We saw an improvement in the adjusted EBIT margins compared to Q3 as well, bringing us back up to where we're going to be.

Adam Zaghloul: 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. I would say Q3 is an excellent example of where we want to be in terms of, you know, margin improvement, also cash flow. 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, you know, we're going to have a little bit of introduction due to holidays, right? Eid and Ramadan falling in Q1. Another Eid coming a little bit later in Q2 as well. Overall, as we progress towards the back half of the year, I think we're going to look towards some improved consistent, you know, quarter over quarter growth that way.

Speaker #2: 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 interruption due to holidays, right?

Speaker #2: 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.

Speaker #2: All right. Our next question is written from Marcus. I know you touched on it during the presentation—maybe just to clarify again, Marcus has been talking about AI taking all coding jobs.

Ali Farouk: 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?

Speaker #2: Are you seeing that with your clients? Yeah, that's a great question, Marcus. Thanks for writing it in. Yeah, just to double down on the AI point, right?

Adam Zaghloul: Yeah. That's a great question, Marcus. Thanks for writing it in. Yeah, just to, you know, double down on the AI point, right? Like, we really haven't seen any sort of decline in the demand for our services due to AI, right? Like even just looking at the net dollar retention, gross dollar retention numbers for 2025, you know, 135% net dollar retention, 99% gross dollar retention. You know, our customers are continuing to renew their engagements and even expand them. It's because they're trusting NTG to really guide them through the complex projects that they're working on.

Speaker #2: We really haven't seen any sort of decline in the demand for our services due to AI. Right? Even just looking at the net dollar retention, gross dollar retention numbers for 2025, 135% net dollar retention, 99% gross dollar retention.

Speaker #2: 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.

Speaker #2: 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.

Adam Zaghloul: You know, we're working with these large Saudi enterprises that require cybersecurity, you know, 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, you know, risk in switching to some of the off-the-shelf AI tools. 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 headcount, which will hopefully lead to some margin expansion down the line as well. Overall, we haven't seen any sort of 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.

Speaker #2: 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 headcount, which will hopefully lead to some margin expansion down the line as well.

Speaker #2: So overall, we haven't seen any sort of 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.

Speaker #2: Okay. Our next question is written in from Priya, another private investor. The $90 million revenue guidance is a large step down in growth rate from 2025.

Ali Farouk: Okay. Our next question is written in from Priya, another private investor. The CAD 90 million revenue guidance is a large step down in growth rate from 2025. What is driving that?

Speaker #2: What is driving that? All right. Thanks for the question. So yeah, 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.

Adam Zaghloul: Great. Thanks for the question. Yeah, definitely if you compare the growth, you know, basically 50% growth from the CAD 56 million in 2024 to the CAD 83 million in 2025, going up to CAD 90 million is much less of a growth point. I just wanna, you know, hammer home the point that the CAD 90 million target that we set for 2026 is in fact, you know, the floor that we see based on what we can clearly view in our, you know, backlog and expected renewals and contracts. You know, it's entirely based on our, you know, backlog and renewal and expansion cycle that way. 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.

Speaker #2: 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.

Speaker #2: 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?

Speaker #2: 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.

Speaker #2: That's a potential source of upside. But also the fact that some of our multi-year contracts that we signed in even 2024, their first full year of billings ended up being somewhere between 20 and 50 percent higher than the contractual floor.

Adam Zaghloul: They don't have a contractual floor, so they're not in the backlog. That's a potential source of upside. Also the fact that, you know, some of our multi-year contracts that we, you know, signed in even 2024, their first full year of billings ended up being somewhere between 20% and 50% higher than the contractual floor. That with additional sales pipeline, you know, makes it start to look like, you know, above CAD 90 million is definitely possible as well. You know, just taking into consideration the state of the markets right now, we wanted to be conservative and come out with guidance that's supported basically by our backlog and, you know, strong conviction renewals.

Speaker #2: 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.

Speaker #2: But just taking into consideration the state of the markets right now, we wanted to be conservative and come up with guidance that's supported basically by our backlog and strong conviction renewals.

Speaker #2: 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.

Ali Farouk: 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 CAD 28.4 million against quarterly revenue of CAD 24 million. When does this normalize?

Speaker #2: When does this normalize? All right. Thanks for the question, Mike. Yeah. So I think this goes back to what we were talking about with Aravinda, right?

Adam Zaghloul: Great. Thanks for the question, Mike. Yeah. I think this goes back to, you know, what we were talking about with Aravinda, right? You know, definitely contract assets quarter over quarter has grown, but, you know, when you take a look at the accounts receivable as a whole, you know, we've actually seen improvement quarter over quarter, right? You know, and resulting in that positive operating cash flow. Again, like we were talking about, the increase in contract assets really is just, you know, us negotiating with our customers, giving them a little bit more of flexible invoicing cycles, moving from that monthly invoicing to the quarterly invoicing. It's an entirely, you know, invoice timing issue as opposed to, you know, a really credit worthiness issue.

Adam Zaghloul: Great. Thanks for the question, Mike. Yeah. I think this goes back to, you know, what we were talking about with Aravinda, right? You know, definitely contract assets quarter-over-quarter has grown, but, you know, when you take a look at the accounts receivable as a whole, you know, we've actually seen improvement quarter-over-quarter, right? You know, and resulting in that positive operating cash flow. Again, like we were talking about, the increase in contract assets really is just, you know, us negotiating with our customers, giving them a little bit more of flexible invoicing cycles, moving from that monthly invoicing to the quarterly invoicing. It's an entirely, you know, invoice timing issue as opposed to, you know, a really credit worthiness issue.

Speaker #2: 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, right?

Speaker #2: And resulting in that positive operating cap. 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.

Speaker #2: So, it's entirely an invoice timing issue as opposed to really a creditworthiness issue. Our customers continue to be Saudi enterprises that we have years-long relationships with, and we've had very little problem with payment once the invoices are actually issued, in the past as well.

Adam Zaghloul: You know, our customers continue to be Saudi enterprises that we have years-long relationships with. We've had very little problem with payment once the invoices are actually issued in the past as well. Yeah, I think that covers the AR.

Speaker #2: So yeah, 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?

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

Speaker #2: 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 priorities basically being funding working capital for growth, a little bit of debt repayment as we work down our long-term debt.

Adam Zaghloul: That's a good question, Krishnan. Thank you. I think it opens up the question about capital allocation in general. You know, in past quarters, we've talked about capital allocation, the priorities basically being funding working capital for growth, you know, a little of debt repayment as we work down our long-term debt. Historically, we've actually talked about maybe some M&A as being the next step of capital allocation. We still think that the thesis works, you know, finding IT 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. You know, 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.

Speaker #2: 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 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.

Speaker #2: 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.

Speaker #2: 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 sort of third priority is looking at share buybacks.

Adam Zaghloul: You know, over the last few months, valuations of technology companies across the board have gone down. NTG is no different. Now what we're starting to think is that the better use of capital for that sort of third priority is, you know, looking at share buybacks. Definitely we're, you know, keeping our finger to the pulse when it comes to when the best time to execute on that is. We're gonna, you know, come out with news as anything develops on that front. I think, you know, 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, you know, the working capital growth right now.

Speaker #2: So, definitely, we're keeping our finger on 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.

Speaker #2: 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.

Speaker #2: So definitely stay tuned, and we'll keep the news flowing on when it comes time to update that sort of capital allocation strategy. Okay. Our next question is written in from Jane.

Adam Zaghloul: Definitely stay tuned and we'll keep the news flowing on, you know, when it comes time to update that sort of capital allocation strategy.

Speaker #2: James, you've 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.

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

Adam Zaghloul: Thanks for the question, James. When it comes to Q1, I mentioned, you know, we're seeing Ramadan and Eid al-Fitr come in about, you know, mid-February to mid-March. Impacting our Q1 in the form of, you know, slower sales cycles, slower, you know, invoicing, slower collections. You know, 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 sort of, you know, point of comparison. I'll just, you know, 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.

Speaker #2: 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 sort of point of comparison.

Speaker #2: 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.

Speaker #2: 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?

Ali Farouk: 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? How does it go from here?

Speaker #2: Yeah, 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.

Adam Zaghloul: Yeah, that's a great question, Brandon, for sure. Definitely the tax expense was large in 2025, about CAD 3.3 million for the year. And it really is a factor of, you know, we had from previous operations some tax loss carryforwards in Canada, but those were completely used up by the end of 2024. 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.

Speaker #2: So in 2025, we were fully taxable in the Canadian jurisdiction as well as the Saudi jurisdiction. Which led to a 37 or a 38 percent effective tax rate for the year.

Speaker #2: 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.

Adam Zaghloul: One of the things that we've done in 2025 is in late November, you know, we 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, you know, 96% of our revenue comes from Saudi Arabia. We want as much of that to be sheltered from that sort of double taxation. Over the course of this year, we're gonna continue to provide updates on how this sort of restructuring is happening. Again, what we wanna see happening at the end of the day is as much of our earnings as possible taxable in only one jurisdiction.

Speaker #2: We want as much of that to be sheltered from that sort of double taxation. So, over the course of this year, we're going to continue to provide updates on how the sort of 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.

Speaker #2: Okay. And the last question is written in from Greg. I know we touched upon this. Maybe just brush over it one more time. Obviously, the war on Iran is big news and it doesn't seem like there is a resolution soon.

Ali Farouk: Okay. The last question is written in from Greg. I know we touched upon this, maybe just to 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?

Speaker #2: How is this impacting you guys? Yeah, definitely. Thanks, Greg. So yeah, 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.

Adam Zaghloul: Yeah, definitely. Thanks, Greg. Yeah, just to, you know, highlight what we're seeing on the ground. You know, our operations in Saudi Arabia and Egypt are far away from, you know, the active conflict. Our, just our experience from our customers as well is we haven't seen any sort of material impact to any of our operations when it comes to, you know, PO and contract timing, project delivery. You know, even customers saying, you know, Let's wait to see what happens with the conflict before we continue or start up any new projects. Things are more or less business as usual in the region. It's also reassuring to crunch the numbers on, you know, the Saudi oil revenue base. You know, I mentioned Brent crude has gone up from CAD 80 to about CAD 108 a barrel.

Speaker #2: Our experience from our customers as well is, we haven't seen any sort of material impact to any of our operations when it comes to project delivery, even customers saying, let's wait to see what happens with the conflict before we continue or start up any new projects.

Speaker #2: 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.

Speaker #2: 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 in the market from 7.5 million barrels per day to 5.5 million barrels per day.

Adam Zaghloul: That price increase came with a decrease in Saudi's basically mobilization to market from 7.5 million barrels per day to 5.5 million barrels per day. That ends up washing out to be roughly the same revenue stream during the conflict as before. It gives us confidence that the funding to some of these large Saudi financial institutions and government organizations is going to continue coming. Overall, you know, 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, right? If anything, you know, recent news has strengthened that thesis.

Speaker #2: 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.

Speaker #2: 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, right?

Speaker #2: 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 sort of material deviation in our operations as a result of the conflict.

Adam Zaghloul: Overall, we're going to continue to again, keep our finger to the pulse and come to investors if we see any sort of material deviation in our operations as a result of the conflict. As of right now, we're very happy to say there's, you know, effectively no material impact. All right. That was the last question, I believe. Thank you, Ali, for reading the questions, and thank you to everybody who wrote in a question as well. I'll just say one more thank you for tuning in to 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.

Speaker #2: But as of right now, we're very happy to say there is effectively no material impact. All right. And that was the last question, I believe.

Speaker #2: 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.

Speaker #2: 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.

Adam Zaghloul: I'll look forward to speaking to you again in the next month or so for Q1. Until then, take care. Thank you.

Q4 2025 NTG Clarity Networks Inc Earnings Call

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