Q1 2027 Computer Modelling Group Ltd Earnings Call

August 12, 2026

Operator: Good day, and thank you for standing by. Welcome to the Computer Modelling Group first quarter 2027 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Kim MacEachern, Director of Investor Relations. Please go ahead.

Operator: Good day, and thank you for standing by. Welcome to the Computer Modelling Group first quarter 2027 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone.

Speaker #1: Good day, and thank you for standing by. Welcome to the Computer Modeling Group first quarter 2027 earnings call. At this time, all participants are in a listen-only mode.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star, 11, on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star, 11, again. Please be advised that today's conference is being recorded.

Operator: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Kim MacEachern, Director of Investor Relations. Please go ahead.

Speaker #1: I'd now like to hand the conference over to Kim McEquin. Director of Investor Relations. Please go ahead.

Speaker #2: Thank you, operator. Good morning, and welcome to Computer Modeling Group's conference call to discuss financial results for the first quarter of fiscal 2027. My name is Kim McEquin, Director of Investor Relations, and with me today are Pramod Jain, Chief Executive Officer, and Bipin Kular, Chief Financial Officer.

Kim MacEachern: Thank you, operator. Good morning, and welcome to Computer Modelling Group's conference call to discuss financial results for the first quarter of fiscal 2027. My name is Kim MacEachern, Director of Investor Relations, and with me today are Pramod Jain, Chief Executive Officer, and Vipin Khullar, Chief Financial Officer. I will remind everyone that today's discussion contains forward-looking statements within the meaning of applicable securities laws. These statements reflect our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Please review the forward-looking information section of our MD&A and news release, both filed yesterday on SEDAR+ and available on our website. We will also reference non-IFRS measures, including adjusted EBITDA, organic recurring revenue, and free cash flow.

Kim MacEachern: Thank you, operator. Good morning, and Welcome to Computer Modelling Group's Conference Call to discuss financial results for the first quarter of fiscal 2027. My name is Kim MacEachern, Director of Investor Relations, and with me today are Pramod Jain, Chief Executive Officer, and Vipin Khullar, Chief Financial Officer.

Speaker #2: I'll remind everyone that today's discussion contains forward-looking statements within the meaning of applicable securities laws. These statements reflect our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially.

Kim MacEachern: I will remind everyone that today's discussion contains forward-looking statements within the meaning of applicable securities laws. These statements reflect our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker #2: Please review the forward-looking information section of our MD&A and news release, both filed yesterday on Cedar Plus and available on our website. We will also reference non-IFRS measures, including adjusted EBITDA, organic recurring revenue, and free cash flow, reconciliations to the most directly comparable IFRS measures are provided in our financial reports and news release, both of which are available on our website and on Cedar Plus.

Kim MacEachern: Please review the forward-looking information section of our MD&A and news release, both filed yesterday on SEDAR+ and available on our website. We will also reference non-IFRS measures, including adjusted EBITDA, organic recurring revenue, and free cash flow.

Kim MacEachern: Reconciliations to the most directly comparable IFRS measures are provided in our financial reports and news release, both of which are available on our website and on SEDAR+. We will begin this morning with roughly 15 minutes of prepared remarks from Pramod and Vipin, after which the operator will open the line for questions. A replay of this call will be available on our website later today. With that, I will turn it over to Pramod.

Kim MacEachern: Reconciliations to the most directly comparable IFRS measures are provided in our financial reports and news release, both of which are available on our website and on SEDAR+.

Kim MacEachern: We will begin this morning with roughly 15 minutes of prepared remarks from Pramod and Vipin, after which the operator will open the line for questions. A replay of this call will be available on our website later today. With that, I will turn it over to Pramod.

Speaker #2: We'll begin this morning with roughly 15 minutes of prepared remarks from Pramod and Bipin, after which the operator will open the line for questions.

Speaker #2: A replay of this call will be available on our website later today. With that, I'll turn it over to Pramod.

Speaker #3: Thank you, Kim. And good morning, everyone. So until now, my letter to shareholders has been the way main way of communicating with you. And as I said in my letter yesterday, it is not going away.

Pramod Jain: Thank you, Kim, and good morning, everyone. Until now, my letter to shareholders has been the main way of communicating with you, and as I said in my letter yesterday, it is not going away. The reason we decided to begin quarterly conference calls is because our business has grown. CMG today is a different company than it was even 3 years ago. We have moved from a single product reservoir simulation business to a group of businesses at different stages of maturity. That complexity deserves a forum where questions can be asked and answered in real time, and that is what this call is for. My key messages for today are, number 1, our strategy has not changed. We remain committed to growth both organically and through acquisitions. Number 2, our outlook is for stabilization to return to the business.

Speaker #3: The reason we decided to begin quarterly conference calls is because our business has grown. CMG today is a different company than it was even three years ago.

Speaker #3: We have moved from a single product reservoir simulation business to a group of businesses at different stages of maturity. That complexity deserves a forum where questions can be asked and answered in real time, and that's what this call is for.

Speaker #3: So my key messages for today are: number one, our strategy hasn't changed. We remain committed to growth both organically and through acquisitions. Number two, our outlook is for stabilization to return to the business.

Speaker #3: And number three, we are going to deploy our capital towards the highest risk adjusted return opportunities. And that includes the substantial issuer bid we announced yesterday.

Pramod Jain: And number three, we are going to deploy our capital towards the highest risk-adjusted return opportunities, and that includes the substantial issuer bid we announced yesterday. After that, I will turn it over to Vipin to discuss the financials for the quarter. Let's talk strategy first. Fundamentally, our strategy hasn't changed since I joined. What's our strategy? It is to preserve what CMG has built over almost five decades and put the free cash flow it generates to work buying businesses that build our next stage of growth. Our core business is physics-based reservoir simulation software that energy companies rely on to make decisions that are expensive to get wrong. For example, how a reservoir will behave, how a recovery process will perform, and how a CO2 storage project will hold up over decades.

Speaker #3: After that, I will turn it over to Bipin to discuss the financials for the quarter. So let's talk strategy first. Fundamentally, our strategy hasn't changed since I joined.

Speaker #3: And what's our strategy? It is to preserve what CMG has built over almost five decades and put the free cash flow it generates to work buying businesses that build our next stage of growth.

Speaker #3: Our core business is physics-based reservoir simulation software that energy companies rely on to make decisions that are expensive to get wrong. So for example, how a reservoir will behave.

Speaker #3: How a recovery process will perform, and how a CO2 storage project will hold up over decades. That software sits deep in our customers' workflows, and it is critical to their capital decisions.

Pramod Jain: That software sits deep in our customers' workflows, and it is critical to their capital decisions. That's a market position we have held for close to five decades, and it is the foundation everything else sits on. On top of that foundation, we've been building a second growth engine through acquisitions, bringing in complementary technologies across the upstream energy workflow. These acquisitions are building a portfolio of best-in-class technologies that expand the number of ways we support our customers, and they build resilience beyond reservoir simulation. In just over two and a half years, we have deployed over CAD 90 million in capital, completing four major acquisitions. To date, the return on our portfolio of these investments is on track. We are developing a reputation as a good home for specialized energy tech businesses.

Speaker #3: That's the market position we have held for close to five decades, and it is the foundation everything else sits on. So on top of that foundation, we've been building a second growth engine through acquisitions.

Speaker #3: Bringing in complementary technologies across the upstream energy workflow, these acquisitions are building a portfolio of best-in-class technologies that expand the number of ways we support our customers, and they build resilience beyond reservoir simulation.

Speaker #3: In just over two and a half years, we have deployed over 90 million dollars in capital completing four major acquisitions. To date, the return on our portfolio of these investments is on track.

Speaker #3: And we are developing a reputation as a good home for specialized energy tech businesses. That's because, when a well-run technical business is deciding who to sell to, price is one factor.

Pramod Jain: That's because when a well-run technical business is deciding who to sell to, price is one factor, but so is what happens to the team, the product, and the customers after closing. Our technical credibility and our commitment to growth means the founders and the engineers behind these businesses can expect their work to keep growing under CMG rather than being absorbed and stripped for cost synergies. Taken together, our strong foundation in simulation and our focus on growing capabilities through acquisitions gives us a clear path to becoming a more complete technology partner to our customers and to create value over the long term for our shareholders. Turning to the business, the KPIs that really matter to us when we evaluate the success of our strategy are growing recurring revenue and growing free cash flow.

Speaker #3: But so is what happens to the team, the product, and the customers after closing. Our technical credibility and our commitment to growth mean the founders and the engineers behind these businesses can expect their work to keep growing under CMG, rather than being absorbed and stripped for cost synergies.

Speaker #3: Taken together, our strong foundation in simulation and our focus on growing capabilities through acquisitions gives us a clear path to becoming a more complete technology partner to our customers and to create value over the long term for our shareholders.

Speaker #3: Turning to the business, the KPIs that really matter to us when we evaluate the success of our strategy are growing recurring revenue, and growing free cash flow.

Speaker #3: While we have been successful in growing acquired recurring revenue, organic recurring revenue has been a challenge in the past several quarters. And that has flowed through our cash flow.

Pramod Jain: While we have been successful in growing acquired recurring revenue, organic recurring revenue has been a challenge in the past several quarters, and that has flowed through our cash flow. This quarter, our organic recurring revenue was down 12%, and this is the final quarter of headwind from a lost contract from last year, and our priority is now moving on to organic recurring revenue to stabilize this year and ultimately back to growth. My outlook for the business is based on the insights I get during the considerable time I spend traveling and talking to the customers. I shared some of my observations in my letter yesterday, but to recap two things that stood out to me in customer conversations. First, operators are focused on maximizing recovery. Many are targeting recovery factors as high as 50%, which is very high for the industry.

Speaker #3: This quarter, our organic recurring revenue was down 12%. And this is the final quarter of headwind from a lost contract from last year. And our priority is now moving on to organic recurring revenue to stabilize this year and ultimately back to growth.

Speaker #3: My outlook for the business is based on the insights I get during the considerable time I spend traveling and talking to the customers. I shared some of my observations in my letter yesterday, but to recap two things that stood out to me in customer conversations.

Speaker #3: First, operators are focused on maximizing recovery. Many are targeting recovery factors as high as 50%, which is very high for the industry. To get there, they're turning to a range of enhanced oil recovery or EOR technologies.

Pramod Jain: To get there, they are turning to a range of enhanced oil recovery or EOR technologies, and this is where CMG shines, and where we are focusing our sales efforts as EOR grows in importance globally. Second is a desire for the best specific technology to solve a specific problem. I have always believed that the biggest strength of our strategy is having a portfolio of the best tools and allowing customers to choose what works best. With four acquisitions complementing our core simulation offering, customers were eager to explore solutions across the group of companies.

Speaker #3: And this is where CMG shines. And where we are focusing our sales efforts as EOR grows in importance globally. Second is the desire for the best specific technology to solve a specific problem.

Speaker #3: I have always believed that the biggest strength of our strategy is having a portfolio of the best tools and allowing customers to choose what works best for them.

Speaker #3: With four acquisitions complementing our core simulation offering, customers were eager to explore solutions across the group of companies. Adding to that, relationships are simulation business built over decades, are now opening doors for our seismic solutions.

Pramod Jain: Adding to that, relationships our simulation business built over decades are now opening doors for our seismic solutions with customers who would not have seen them otherwise, and we are more frequently pursuing joint proposals with two or three of our companies coming together to put forth a broader package of technology than any of them could have done alone. This is a compelling example of the upside of our portfolio strategy. I am also seeing renewed interest from international operators in countries like Venezuela and Mexico, and African countries like Algeria, Angola, Nigeria, and Libya. These are shaping up to be important markets for CMG. They are the types of markets and assets where we do our best work, complex reservoirs, heavy oil, and mature fields that demand the science we have spent decades building.

Speaker #3: With customers who won't have seen them otherwise. And we are more frequently pursuing joint proposals with two or three of our companies coming together, put forth a broader package of technology than any of them could have done alone.

Speaker #3: This is a compelling example of the upside of our portfolio strategy. I'm also seeing renewed interest from international operators in countries like Venezuela and Mexico, and African countries like Algeria, Angola, Nigeria, and Libya now these are shaping up to be important markets for CMG.

Speaker #3: They are the types of markets and assets where we do our best work, complex reservoirs, heavy oil, and mature fields that demand the science we have spent decades building.

Speaker #3: As international companies return their attention to these regions, they are surfacing new opportunities across the CMG group of companies. It is early, and I will report on the progress as it becomes tangible.

Pramod Jain: As international companies return their attention to these regions, they are surfacing new opportunities across the CMG group of companies. It is early, and I will report on the progress as it becomes tangible, but I am optimistic at what we can do here. Before I turn to capital deployment, a brief word on AI. I think it is essential these days to talk about it. My view is unchanged. In the subsurface, AI does not replace physics. It needs physics. The data exists in silos. The cost of a wrong answer is enormous, and the companies that win with AI will be the ones who own the science underneath it. We are pursuing AI on two fronts. First, in our products. For example, InteractivAI, Bluware's AI-assisted seismic interpretation tool, is now in its sixth release and in use at some of the largest operators in the world.

Speaker #3: But I am optimistic at what we can do here. Before I turn to capital deployment, a brief word on AI. I think it's essential these days to talk about it.

Speaker #3: My view is unchanged. In the subsurface, AI does not replace physics. It needs physics. The data exists in silos, the cost of a wrong answer is enormous, and the companies that win with AI will be the ones who own the science underneath it.

Speaker #3: We are pursuing AI on two fronts. First, in our products, so for example, interactive AI, Blueways AI assisted seismic interpretation tool is now in its sixth release.

Speaker #3: And in use at some of the largest operators in the world. And across our simulation portfolio, we are building a common architecture for AI agents that work alongside the reservoir engineer.

Pramod Jain: Across our simulation portfolio, we are building a common architecture for AI agents that work alongside the reservoir engineer. Today, we have working prototypes that can launch a simulation run, monitor it, and flag it when something is wrong. These are still in the build phase, but they illustrate how we are using AI to secure the advantages where AI excels while not risking outcomes to apply AI where it is not appropriate. The second part is how we build it. Much of the code shipped this year was AI-assisted. With every line still passing the same human review and testing gates as before. This is making a lean R&D organization meaningfully more productive. Now let us talk capital deployment. To date, under our CMG 4.0 strategy, acquisitions have been our primary capital deployment priority, and that remains unchanged.

Speaker #3: Today, we have working prototypes that can launch a simulation run, monitor it, and flag it when something is wrong. These are still in the build phase.

Speaker #3: But they illustrate how we are using AI to secure the advantages where AI excels while not risking outcomes to apply AI where it isn't appropriate.

Speaker #3: The second part is how we build it. Much of the code shipped this year was AI-assisted, with every line still passing the same human review and testing gates as before.

Speaker #3: This is making a lean R&D organization meaningfully more productive. So now let's talk capital deployment. To date, under our CMG 4.0 strategy, acquisitions have been our primary capital deployment priority and that remains unchanged.

Speaker #3: The reality is that while the M&A pipeline is active, we are holding to our standards on price and the returns which has meant closing fewer transactions than we might otherwise expect.

Pramod Jain: The reality is that while the M&A pipeline is active, we are holding to our standards on price and the returns, which has meant closing fewer transactions than we might otherwise expect. This means that we have capital available through both our cash flows and our credit facility. Add to that, the market price of our shares is below what we believe the business is worth. This gives us an opportunity to capture value by repurchasing our shares. Our responsibility was to determine a size for the SIB that allows us to act without compromising our ability to pursue acquisitions. As you saw in the announcement yesterday, we will draw up to CAD 20 million on our credit facility to fund the SIB now. This is an opportunistic way to create value for our shareholders while we remain committed to pursuing the right acquisitions to diversify and strengthen our company.

Speaker #3: This means that we have capital available through both our cash flows and our credit facility. Add to that, the market price of our shares is below what we believe the business is worth.

Speaker #3: This gives us an opportunity to capture value by repurchasing our shares. Our responsibility was to determine a size for the SIB that allows us to act without compromising our ability to pursue acquisitions.

Speaker #3: And as you saw in the announcement yesterday, we will draw up to 20 million dollars on our credit facility to fund the SIB now.

Speaker #3: This is an opportunistic way to create value for our shareholders while we remain committed to pursuing the right acquisitions to diversify and strengthen our company.

Speaker #3: We remain committed to acquisitions because we believe the opportunities in our pipeline have the potential to meet or exceed the return threshold of buying back shares.

Pramod Jain: We remain committed to acquisitions because we believe the opportunities in our pipeline have the potential to meet or exceed the return threshold of buying back shares. The ones that cannot, we will pass on. I don't see acquisitions and buybacks as mutually exclusive. I believe this approach balances the upside of the M&A pipeline against the value returned by buying back shares. As I turn the call over to Vipin to walk through the numbers for the quarter, I will reiterate that, A, our strategy hasn't changed. We remain committed to growth both organically and through acquisition. B, our outlook is for stabilization to return to the business, which supports our view of the valuation of the business. C, we will continue to deploy capital towards the highest risk-adjusted return opportunities, and that includes the substantial share build we announced yesterday.

Speaker #3: So once that cannot, we will pass on. And I don't see acquisitions and buybacks as mutually exclusive. I believe this approach balances the upside of the M&A pipeline against the value returned by buying back shares.

Speaker #3: So as I turn the call over to Whippen to walk through the numbers for the quarter, I will reiterate that A, our strategy hasn't changed.

Speaker #3: We remain committed to growth, both organically and through acquisition. B, our outlook is for stabilization to return to the business, which supports our view of the valuation of the business.

Speaker #3: And C, we will continue to deploy capital toward the highest risk-adjusted return opportunities, and that includes the substantial issuer bid we announced yesterday.

Speaker #3: Whippen, I'll turn the call over to you.

Pramod Jain: Vipin, I'll turn the call over to you.

Speaker #2: Thanks, and good morning, everyone. With our financial results having been released yesterday afternoon, I won't go through them line by line, assuming you've all had a chance to review.

Vipin Khullar: Thanks, Pramod, and good morning, everyone. With our financial results having been released yesterday afternoon, I won't go through line by line, assuming you've all had a chance to review. I will highlight some of the key messages before turning the call over for your questions. Starting with total revenue. Total revenue was down year-over-year to CAD 27.8 million, as 10% growth from acquisitions was offset by a 16% organic decline. Looking at recurring revenue, which was down 3% this quarter, there are two main components. Organic recurring revenue decline, which we had disclosed, was as expected as this quarter is the final quarter lacking the contract loss from last year. Starting next quarter, we expect the year-over-year comparisons to begin to normalize.

Speaker #2: But we'll highlight some of the key messages before turning the call over for your questions. Starting with total revenue, total revenue is down year over year to 27.8 million, as 10% growth from acquisitions was offset by a 16% organic decline.

Speaker #2: Looking at recurring revenue, which was down 3% this quarter, there are two main components. Organic recurring revenue declined, which we had disclosed was as expected, as this quarter is the final quarter lacking the contract loss from last year.

Speaker #2: Starting next quarter, we expect the year-over-year comparisons to begin to normalize. Offsetting that decline, we delivered 9% recurring revenue growth from acquisitions, which included contributions from Sizeware and Rose, two acquisitions we closed in fiscal 2026.

Vipin Khullar: Offsetting that decline, we delivered 9% recurring revenue growth from acquisitions, which included contributions from SeisWare and Rose, two acquisitions we closed in fiscal 2026. On the professional services side, we had a significant organic decline, which was also disclosed and expected. The two main components driving this quarter's decline in professional services are the absence of CoFlow related development funding, which concluded at the end of the 2025 calendar year, and the continued wind down of non-core professional services activity at Bluware. As a reminder, we underwent the Bluware acquisition on its software revenue growth potential, and we assumed the non-core professional services would wind down. Our remaining services work is the portion that directly supports our software.

Speaker #2: On the professional services side, we had a decline we had significant organic decline which was also disclosed and expected. The two main components driving this quarter's decline in professional services are the absence of co-flow related development funding, which concluded at the end of the 2025 calendar year, and the continued wind down of non-core professional services activity at Blueway.

Speaker #2: As a reminder, we underwrote the Blueway acquisition on its software revenue growth potential, and we assume the non-core professional services would wind down. Our remaining services work is the portion that directly supports our software.

Speaker #2: Partially offsetting that decline in professional services was 13% growth from acquisitions, which for context is largely the contribution from Rose, which had a strong Q1, our first full quarter of ownership of the Rose business.

Vipin Khullar: Partially offsetting that decline in professional services was 13% growth from acquisitions, which for context, is largely the contribution from Rose, which had a strong Q1, our first full quarter of ownership of the Rose business. Adjusted EBITDA and adjusted EBITDA margin for the quarter declined, reflecting the impact of lower organic recurring revenue and lower professional services revenue, offset by ongoing cost management discipline. While the lower organic recurring revenue weighed on adjusted EBITDA, I am pleased to say that both acquisitions completed in fiscal 2026, SeisWare and Rose, contributed positively to adjusted EBITDA in the quarter, despite the seasonal weighting of their software revenue recognition towards the back half of the year. On free cash flow, we experienced a decline to CAD 3.5 million in the quarter due to the revenue dynamics I just discussed and due to higher income taxes in the quarter, both of which impacted net income.

Speaker #2: Adjusted EBITDA and adjusted EBITDA margin for the quarter declined reflecting the impact of lower organic recurring revenue and lower professional services revenue offset by ongoing cost management discipline.

Speaker #2: While the lower organic recurring revenue weighed on adjusted EBITDA, I'm pleased to say that both acquisitions completed in fiscal 2026, Sizeware and Rose, contributed positively to adjusted EBITDA in the quarter, despite the seasonal weighting of their software revenue recognition towards the back half of the year.

Speaker #2: On free cash flow, we experienced a decline to $3.5 million in the quarter due to the revenue dynamics I just discussed and due to higher income taxes in the quarter, both of which impacted net income.

Speaker #2: Free cash flow conversion from EBITDA decreased to year over year primarily due to higher income taxes in the quarter. Current income tax expense for the quarter was 1.5 million this quarter compared to 900K a year ago.

Vipin Khullar: Free cash flow conversion from EBITDA decreased year over year primarily due to higher income taxes in the quarter. Current income tax expense for the quarter was CAD 1.5 million this quarter compared to CAD 900,000 a year ago. That change included a CAD 400,000 prior period adjustment taken in the current quarter. Our current tax expense and tax rate will fluctuate by quarter based on the jurisdictional mix of our income, how cross-border transactions get taxed, and foreign change movements. Looking forward to the second quarter recurring revenue, we expect organic recurring revenue to increase sequentially versus Q1, driven by a higher renewal cycle in Q2 relative to Q1. As a reminder, recurring revenue is expected to build as we move throughout the year as each quarter takes up more renewal revenue than the one before. So Q1 is typically our lightest quarter, and Q4 generally expected to be the heaviest.

Speaker #2: That change included a $400,000 prior period adjustment taken in the current quarter. Our current tax expense and tax rate will fluctuate by quarter based on the jurisdictional mix of our income.

Speaker #2: How cross-quarter transactions get taxed, and foreign exchange movements. Looking forward to the second quarter and recurring revenue, we expect organic recurring revenue to increase sequentially versus Q1.

Speaker #2: Driven by a higher renewal cycle in Q2 relative to Q1. As a reminder, recurring revenue is expected to build as we move throughout the year, as each quarter picks up more renewal revenue than the one before.

Speaker #2: So, Q1 is typically our lightest quarter, and Q4 is generally expected to be the heaviest. On professional services, we expect both a sequential and a year-over-year decline, and we expect that Q2 will be the lowest quarter of the fiscal year for professional services revenue.

Vipin Khullar: On professional services, we expect both a sequential and a year over year decline, and we expect that Q2 will be the lowest quarter of the fiscal year for professional services revenue. This comes as we finish the wind down of non-core Bluware services and from product timing and lower billable project activity during the summer months. On adjusted EBITDA, we expect both a sequential and a year over year decline driven by two things in Q2. First, the lower professional services revenue, and second, we expect higher sales and marketing expense in Q2, which is tied to agent commissions that regularly occur in Q2 on contract renewals that come up in the quarter. For the full year, we are reaffirming our expectation for stable organic recurring revenue and no reduction in adjusted EBITDA relative to fiscal 2026.

Speaker #2: This comes as we finish the wind down of non-core Blueway services and from project timing and lower billable project activity during the summer months.

Speaker #2: On adjusted EBITDA, we expect both a sequential and a year over year decline driven by two things in Q2. First, the lower professional services revenue.

Speaker #2: And second, we expect higher sales and marketing expense in Q2, which is tied to agent commissions that regularly occur in Q2 on contract renewals that come up in the quarter.

Speaker #2: For the full year, we are reaffirming our expectation for stable organic recurring revenue growth and no reduction in adjusted EBITDA relative to fiscal 2026.

Speaker #2: We also continue to expect free cash flow to improve year over year in fiscal 2027. We are adjusting our expectation on professional services decline for the year which is now anticipated to be in the range of 6 to 7 million dollars trending to the higher end of the range versus the 6 million dollars that we previously disclosed.

Vipin Khullar: We also continue to expect free cash flow to improve year over year in fiscal 2027. We are adjusting our expectation on professional services decline for the year, which is now anticipated to be in the range of CAD 6 million to CAD 7 million, trending to the higher end of the range versus the CAD 6 million that we previously disclosed. The revision of the professional services guidance is due to the Bluware non-core services winding down faster than originally forecasted. Finally, as Pramod mentioned, we announced an SIB. From a leverage perspective, we expect to draw up to CAD 20 million for the bid from our existing credit facility. The SIB size took into consideration many factors, including making sure that we can keep sufficient capital for our acquisition pipeline and taking into account our expected free cash flow for this year.

Speaker #2: The revision of the professional services guidance is due to the Blueway non-core services winding down faster than originally forecasted. Finally, as promote mentioned, we announced an SIB.

Speaker #2: From a leverage perspective, we expect to draw up to $20 million for the bid or from our existing credit facility. The SIB size took into consideration many factors including making sure that we can keep sufficient capital for our acquisition pipeline and taking into account our expected free cash flow for this year.

Speaker #2: We expect our free cash flow for the year to be more than sufficient to deleverage the portion of the credit facility we need to fund the SIB.

Vipin Khullar: We expect our free cash flow for the year to be more than sufficient to deleverage the portion of credit facility we need to fund the SIB. With that, I will turn it over to the operator for your questions.

Speaker #2: With that, I'll turn it over to the operator for your questions.

Speaker #1: As a reminder, we'd like to ask a question at this time. Please press *11 on your touch-tone phone and wait for your name to be announced.

Operator: As a reminder, if you would like to ask a question at this time, please press *11 on your touchtone phone and wait for your name to be announced. To withdraw your question, please press *11 again. Our first question comes from Erin Kyle with CIBC.

Speaker #1: To withdraw your question, please press star 11 again. Our first question comes from Erin Kyle with CIBC.

Erin Kyle: Hi. Good morning. Thanks for taking the questions. Happy to chat on a live conference call here. So maybe first question just on the outlook here. So you are calling for stable organic recurring revenue growth for the full year, compared to the decline this quarter. So understanding that Q1 was that final quarter of lapping the loss of the customer contract last year, can you maybe walk us through some of the drivers of the growth outlook for the remainder of the year on the organic side?

Speaker #3: Hi, good morning. Thanks for taking the questions. Happy to chat on a live conference call here. So maybe first question just on the outlook here.

Speaker #3: So you're calling for stable organic recurring revenue growth for the full year. Compared to the decline this quarter, so understanding that Q1 was that final quarter of lapping the loss of the customer contract last year, can you maybe walk us through some of the drivers of the growth outlook for the remainder of the year on the organic side?

Pramod Jain: Yeah. Thank you. Thank you, Erin, for the question. A couple of factors, and I was going to have Vipin also add more to it. The first one is looking at our renewal cycle, right? We have a very good understanding of our overall renewals for especially our simulation business, and that's the key for us to secure that, for the remaining of the year and beyond. The number two, looking at the market and the macro, which is changing positively in industry favor, in our favor, which will require more technologies overall. The third part is the investments that we have made in our products. I talked about ShaleSim last quarter, and more investments that are happening in the product will result in giving me confidence that we will hit the stable outlook. Vipin, anything you want to add?

Speaker #2: Yeah, thank you. Thank you, Erin, for the question. So a couple of factors. And I would want to have Vipin also add more to it.

Speaker #2: So the first one is looking at our renewal cycle, right? We have a very good understanding of our overall renewals for especially our simulation business.

Speaker #2: And that's the key for us to secure that for the remainder of the year and beyond. Number two, looking at the market and the macro, which is changing positively.

Speaker #2: In industry's favor, and in our favor, this will require more technologies overall. The third part is the investments that we have made in our products.

Speaker #2: I talked about ShaleSim last quarter, and more investments that are happening in the product will result in giving me confidence that we will hit the stable outlook.

Speaker #2: Vipin, anything you want to add?

Speaker #4: Yeah, I'll also add just we talked about new markets as sort of being areas of strategic focus. So that'll kind of come into our revenue in the quarters ahead.

Vipin Khullar: Yeah. I'll also add, we talked about new markets as sort of being an area of strategic focus, so that'll kind of come into our revenue in the quarters ahead. As our acquisitions start to further integrate, starting to see more growth. Some of the revenue is sort of, it's weighted towards the back half of the year, given the revenue recognition towards Q3, Q4.

Speaker #4: And just as our acquisitions start to further integrate start to see more growth, some of the revenue is sort of it's weighted towards the back half of the year given the revenue recognition towards Q3, Q4.

Speaker #3: Okay, thank you. And maybe just to follow up that, as a related question, promote, you mentioned the macro there. So maybe just if you can comment a bit more broadly on customer spending trends in the current environment.

Erin Kyle: Okay. Thank you. Maybe just to follow up that, as a related question. Pramod, you mentioned the macro there. Maybe just if you can comment a bit more broadly on customer spending trends in the current environment. We've been in an elevated oil price environment for some time now. It sounds like maybe you're seeing some customer behavior change, or are customers still exercising any caution given the volatility? I'll pass the line.

Speaker #3: We've been in an elevated oil price environment for some time now, so it sounds like maybe you're seeing some customer behavior change. Or are customers still exercising any caution, given the volatility?

Speaker #3: And then I'll pass the line.

Speaker #2: Yeah, sure. No, I think broadly, I would say the investments that companies are now looking at, to say, "We need to invest now in energy security"—I'm seeing that more and more.

Pramod Jain: Yeah, sure. I think it's broadly, I would say the investments that companies are now looking at to say, "We need to invest now in energy security," I'm seeing that more and more. Two weeks ago, I was in Asia, spoke to a bunch of customers, especially large NOCs and IOCs. The trend is that, we can't wait. We need to invest in the energy upstream. We need to invest in technologies, because overall, countries have to be energy secure. On the other side, I also see companies in Canada, companies in US, they're still cost conscious as well, because nobody knows where the oil price will turn out to be. Broadly, I see a positive trend in terms of looking for the next oil that they can recover from the subsurface. For that, they need to go to EOR.

Speaker #2: I was last two weeks ago, I was in Asia, spoke to a bunch of customers, especially large NOCs and IOCs. The trend is that we can't wait.

Speaker #2: We need to invest in the energy upstream. We need to invest in technologies, because overall, countries have to be energy secure. But on the other side, I also see companies in Canada, companies in the US—they're still cost conscious as well.

Speaker #2: Because nobody kind of knows where the oil price will turn out to be. But broadly, I see a positive trend in terms of looking for the next oil that they can recover.

Speaker #2: From the subsurface. And for that, they need to go to EOR, they need to go to higher seismic interpretation, fidelity, so all of those signs are very positive for us.

Pramod Jain: They need to go to higher seismic interpretation fidelity. All of those signs are very positive for us. I have a huge conviction in terms of what the future would look like for us.

Speaker #2: So I have a huge conviction in terms of what the future will look like for us.

Speaker #3: Thank you. That's helpful.

Erin Kyle: Thank you. That is helpful.

Speaker #1: As a reminder, if you'd like to ask a question at this time, please press star 11 on your touchstone phone. Our next question comes from Doug Taylor with National Bank.

Operator: As a reminder, if you would like to ask a question at this time, please press star 11 on your touchtone phone. Our next question comes from Doug Taylor with National Bank.

Speaker #4: Yeah, thank you. Good morning. And thanks for hosting this call. I'm going to double back on one of Erin's questions there. Obviously, it's been a turbulent time for the energy industry.

Doug Taylor: Yeah. Thank you. Good morning, and thanks for hosting this call. I am going to double back on one of Erin's questions there. Obviously, it has been a turbulent time for the energy industry. Some of those new EOR opportunities you referenced with NOCs, the increased emphasis on energy security. Can you speak a bit more about the timetable to revenue or the velocity of some of those processes and RFPs? Also, do you have a presence with most of those customers already with some of your solutions, and this is more upsell of additional licenses, or would you characterize most of that as new logo opportunities?

Speaker #4: Some of those new EOR opportunities you referenced with NOCs, the increased emphasis on energy security. Can you speak a bit more about the timetable to revenue or the velocity of some of those processes and RFPs?

Speaker #4: And also, do you have a presence with most of those customers already with some of your solutions? And this is more upsell of additional licenses or would you characterize most of that as new logo opportunities?

Speaker #2: Yeah, thanks, Doug. Good to hear you. So I think two questions that you have asked and I'm going to take a chance to answer one by one.

Pramod Jain: Yeah. Thanks, Doug. Good to hear you. I think two questions that you have asked, and I am going to take a chance to answer one by one. One is these new EOR technologies. Look, in my trip I have done now, I have been in Asia, I have been in Latin America, and I am constantly traveling now to customers. What is happening there is the EOR technologies are not new, but they are expensive. But these industries are now, or these companies are now looking at to say, rather than exploring new oils, new oil fields, what they can do to extract more from implementing EOR. And with the oil price as it is today, it allows them to invest in that. That is happening, and we are seeing that happening everywhere, but mostly in the countries that we are now trying to get inside with a new logo opportunity.

Speaker #2: So one is this new EOR technologies. Look, in my trip, I have done now, I've been in Asia, I've been in Latin America, and I'm constantly traveling now to customers.

Speaker #2: What's happening there is the EOR technologies are not new. But they're expensive. But these industries are now or these companies are now looking at to say, rather than exploring new oils, new oil fields, what they can do to extract more from implementing EOR.

Pramod Jain: What is happening there is the EOR technologies are not new, but they are expensive. But these industries are now, or these companies are now looking at to say, rather than exploring new oils, new oil fields, what they can do to extract more from implementing EOR. And with the oil price as it is today, it allows them to invest in that. That is happening, and we are seeing that happening everywhere, but mostly in the countries that we are now trying to get inside with a new logo opportunity.

Speaker #2: And with the oil price as it is today, it allows them to invest in that. So that's happening and we are seeing that happening everywhere.

Speaker #2: But mostly in the countries that we are now trying to get inside, with the new logo opportunity, and some countries we are also looking at more upsell opportunities, increasing more licensing than we have seen in the past.

Pramod Jain: In some countries, we are also looking at more upsell opportunities, increasing more licensing that we have seen in the past. And that is why I was trying to answer the question to Erin, is that the positive trend that I am seeing now, it takes time to get these RFPs and proposals and the pipeline to commercial wins. But I see more closer to commercial wins than I have seen that before, because before it was all about cost and questions about cost, and now it is more about what can you do and which technology I can use to extract more oil from the ground.

Speaker #2: And that is why I was trying to answer the question to Erin, is that the positive trend that I'm seeing now, it takes time.

Speaker #2: To get these RFPs and proposals and the pipeline to commercial wins. But I see more closer to commercial wins than I have seen that before.

Speaker #2: Because before, it was all about cost, and questions about cost. And now, it's more about what you can do and which technology you can use to extract more oil from the ground.

Speaker #4: Thanks for that. The flip side of some of this is, obviously, in the Middle East, the entire quarter we're talking about here was sort of marred by the conflict there—closing the strait, things like that.

Doug Taylor: Thanks for that. The flip side of some of this is obviously, in the Middle East, the entire quarter we are talking about here was sort of marred with the conflict there, closing the strait, things like that. You have quite a few customers in the region. Has there been any disruption to your business there, or distraction from ongoing processes for purchasing more licenses, things like that?

Speaker #4: You've got quite a few customers in the region. Has there been any disruption to your business there or distraction from ongoing processes for purchasing more licenses, things like that?

Speaker #2: Yeah, thankfully Middle East has been actually quite good for us. We have renewed all of our contracts. Which has been great. There has been some disruption because some of the countries that we didn't have presence, we were very close to converting them.

Pramod Jain: Yeah. Thankfully, Middle East has been actually quite good for us. We have renewed all of our contracts, which has been great. There has been some disruption because some of the countries that we did not have presence, we were very close to converting them. But that took a bit of a hit because those countries got impacted by the war. But nevertheless, I think these countries are also realizing that they need to keep investing and talk about technologies. So actually, I am going to be on the road next week in Middle East itself, talking to these countries. So I think from a long-term or even midterm perspective, the investment cycle is changing, and they are thinking about doing business as usual as much as possible. But broadly speaking, no impact to our renewals.

Speaker #2: But that took a bit of a hit because those countries got impacted by the war. But nevertheless, I think these countries are also realizing that they need to keep investing and talk about technologies.

Speaker #2: So actually, I'm going to be on the road next week in the Middle East itself, talking to these countries. So I think from a long-term or even mid-term perspective, the investment cycle isn't changing.

Speaker #2: And they are thinking about doing business as usual as much as possible. But, broadly speaking, there's no impact to our renewals.

Speaker #4: Okay. Thank you. Safe travels then, Pramod.

Doug Taylor: Okay. Thank you. Safe travels then, Pramod.

Speaker #2: Thank you.

Pramod Jain: Thank you.

Speaker #1: As a reminder, that is star 11 if you'd like to ask a question at this time. That will conclude today's question-and-answer session.

Operator: As a reminder, that is star 11 if you would like to ask a question at this time. That will conclude today's question and answer session. I would like to turn the call back to Pramod Jain for closing remarks.

Speaker #1: I'd like to turn the call back to Pramod Jain for closing remarks.

Speaker #2: Well, thank you all for joining our first call today. We will do this every quarter, and I hope it's a useful forum for you.

Pramod Jain: Well, thank you all for joining our first call today. We will do this every quarter, and I hope it is a useful forum for you. We are coming out of some challenging quarters, yet my commitment to our strategy is the same, and I have deep conviction that the market is working in our favor. Energy security is top of mind, and our customers are showing renewed commitment to maximizing their assets. That means they need new and more complex recovery methods, and that requires more simulation and high-fidelity seismic interpretation. Our portfolio of companies are showing every day the value of serving our customer in multiple ways, and our joint proposals are just the beginning.

Speaker #2: We are coming out of some challenging quarters, yet my commitment to our strategy is the same. I have deep conviction that the market is working in our favor.

Speaker #2: Energy security is top of mind. And our customers are showing renewed commitment to maximizing their assets. That means they need new and more complex recovery methods.

Speaker #2: And that requires more simulation, and high fidelity seismic interpretation. Our portfolio of companies are showing every day the value of serving our customer in multiple ways.

Speaker #2: And our joint proposals are just the beginning. My conviction, and what we are building, comes from being in direct conversation with customers and turning those insights into actionable plans for new products, new geographies, and new ways to strengthen our sales processes.

Pramod Jain: My conviction in what we are building comes from being in direct conversation with customers and turning those insights into actionable plans for new products, new geographies, and new ways to strengthen our sales processes. Finally, to almost our 300 employees, the science, the customer relationships, and the work of bringing four companies into CMG is done by you, through a period of time where the numbers haven't reflected the quality of that work. So thank you for all that you do, and we look forward to speaking with you next quarter. Thank you.

Speaker #2: Finally, to almost our 300 employees, the science, the customer relationships, and the work of bringing four companies into CMG is done by you. Through a period of time, where the numbers haven't reflected the quality of that work.

Speaker #2: So thank you. For all that you do. And we look forward to speaking with you next quarter. Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Good day, and thank you for standing by. Welcome to the Computer Modelling Group Q1 2027 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Kim MacEachern, Director of Investor Relations. Please go ahead.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker #1: Good day, and thank you for standing by. Welcome to the Computer Modelling Group first quarter 2027 earnings call. At this time, all participants are in a listen-only mode.

Speaker #1: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star, 11, on your telephone.

Speaker #1: You will then hear an automated message. To withdraw your question, please press star-1-1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Kim McEquin.

Speaker #1: Director of Investor Relations, please go ahead.

Speaker #3: Thank you, operator. Good morning, and welcome to computer modeling group's conference call to discuss financial results for the first quarter of fiscal 2027. My name is Kim McEquin, Director of Investor Relations, and with me today are Pramod Jain, Chief Executive Officer, and Bipin Kular, Chief Financial Officer.

Kim MacEachern: Thank you, operator. Good morning, and welcome to Computer Modelling Group's conference call to discuss financial results for the Q1 of fiscal 2027. My name is Kim MacEachern, Director of Investor Relations, and with me today are Pramod Jain, Chief Executive Officer, and Vipin Khullar, Chief Financial Officer. I'll remind everyone that today's discussion contains forward-looking statements within the meaning of applicable securities laws. These statements reflect our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. Please review the forward-looking information section of our MD&A and news release, both filed yesterday on SEDAR+ and available on our website. We will also reference non-IFRS measures, including adjusted EBITDA, organic recurring revenue and free cash flow.

Speaker #3: I'll remind everyone that today's discussion contains forward-looking statements within the meaning of applicable securities laws. These statements reflect our current expectations and are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker #3: Please review the forward-looking information section of our MD&A and news release, both filed yesterday on Cedar Plus and available on our website. We will also reference non-IFRS measures, including adjusted EBITDA, organic recurring revenue, and free cash flow, reconciliations to the most directly comparable IFRS measures are provided in our financial reports and news release, both of which are available on our website and on Cedar Plus.

Kim MacEachern: Reconciliations to the most directly comparable IFRS measures are provided in our financial reports and news release, both of which are available on our website and on SEDAR+. We'll begin this morning with roughly 15 minutes of prepared remarks from Pramod and Vipin, after which the operator will open the line for questions. A replay of this call will be available on our website later today. With that, I'll turn it over to Pramod.

Speaker #3: We'll begin this morning with roughly 15 minutes of prepared remarks from Pramod and Bipin, after which the operator will open the line for questions.

Speaker #3: A replay of this call will be available on our website later today. With that, I’ll turn it over to Pramod.

Speaker #4: Thank you, Kim. And good morning, everyone. So until now, my letter to shareholders has been the way main way of communicating with you. And as I said in my letter yesterday, it is not going away.

Pramod Jain: Thank you, Kim, and good morning, everyone. Until now, my letter to shareholders has been the main way of communicating with you, and as I said in my letter yesterday, it is not going away. The reason we decided to begin quarterly conference calls is because our business has grown. CMG today is a different company than it was even three years ago. We have moved from a single product reservoir simulation business to a group of businesses at different stages of maturity. That complexity deserves a forum where questions can be asked and answered in real time, and that's what this call is for. My key messages for today are, number one, our strategy hasn't changed. We remain committed to growth both organically and through acquisitions. Number two, our outlook is for stabilization to return to the business.

Speaker #4: The reason we decided to begin quarterly conference calls is because our business has grown. CMG today is a different company than it was even three years ago.

Speaker #4: We have moved from a single-product reservoir simulation business to a group of businesses at different stages of maturity. That complexity deserves a forum where questions can be asked and answered in real time, and that's what this call is for.

Speaker #4: So, my key messages for today are: Number one, our strategy hasn't changed. We remain committed to growth, both organically and through acquisitions. Number two, our outlook is for stabilization to return to the business.

Speaker #4: And number three, we are going to deploy our capital towards the highest risk-adjusted return opportunities. That includes the substantial issuer bid we announced yesterday.

Pramod Jain: Number three, we are going to deploy our capital towards the highest risk-adjusted return opportunities, and that includes the substantial issuer bid we announced yesterday. After that, I will turn it over to Vipin to discuss the financials for the quarter. Let's talk strategy first. Fundamentally, our strategy hasn't changed since I joined. What's our strategy? It is to preserve what CMG has built over almost five decades and put the free cash flow it generates toward buying businesses that build our next stage of growth. Our core business is physics-based reservoir simulation software that energy companies rely on to make decisions that are expensive to get wrong. For example, how a reservoir will behave, how a recovery process will perform, and how a CO2 storage project will hold up over decades.

Speaker #4: After that, I will turn it over to Bipin to discuss the financials for the quarter. So let's talk strategy first. Fundamentally, our strategy hasn't changed since I joined.

Speaker #4: And what's our strategy? It is to preserve what CMG has built over almost five decades and put the free cash flow it generates to work buying businesses that will build our next stage of growth.

Speaker #4: Our core business is physics-based reservoir simulation software that energy companies rely on to make decisions that are expensive to get wrong. So, for example, how a reservoir will behave.

Speaker #4: How a recovery process will perform. And how a CO2 storage project will hold up over decades. That software sits deep in our customers' workflows, and it is critical to their capital decisions.

Pramod Jain: That software sits deep in our customers' workflows, and it is critical to their capital decisions. That's a market position we have held for close to five decades, and it is the foundation everything else sits on. On top of that foundation, we've been building a second growth engine through acquisitions, bringing in complementary technologies across the upstream energy workflow. These acquisitions are building a portfolio of best-in-class technologies that expand the number of ways we support our customers, and they build resilience beyond reservoir simulation. In just over 2.5 years, we have deployed over CAD 90 million in capital, completing four major acquisitions. To date, the return on our portfolio of these investments is on track. We are developing a reputation as a good home for specialized energy tech businesses.

Speaker #4: That's the market position we have held for close to five decades, and it is the foundation everything else sits on. So on top of that foundation, we've been building a second growth engine through acquisitions.

Speaker #4: Bringing in complementary technologies, across the upstream energy workflow. These acquisitions are building a portfolio of best-in-class technologies that expand the number of ways we support our customers, and they build resilience beyond reservoir simulation.

Speaker #4: In just over two and a half years, we have deployed over $90 million in capital, completing four major acquisitions. To date, the return on our portfolio of these investments is on track.

Speaker #4: And we are developing a reputation as a good home for specialized energy tech businesses. That's because, when a well-run technical business is deciding who to sell to, price is one factor.

Speaker #4: But so is what happens to the team, the product, and the customers after closing. Our technical credibility and our commitment to growth mean the founders and the engineers behind these businesses can expect their work to keep growing under CMG, rather than being absorbed and stripped for cost synergies.

Speaker #4: Taken together, our strong foundation in simulation and our focus on growing capabilities through acquisitions give us a clear path to becoming a more complete technology partner to our customers, and to creating value over the long term for our shareholders.

Speaker #4: Turning to the business, the KPIs that really matter to us when we evaluate the success of our strategy are growing recurring revenue, and growing free cash flow.

Pramod Jain: Turning to the business, the KPIs that really matter to us when we evaluate the success of our strategy are growing recurring revenue and growing free cash flow. While we have been successful in growing acquired recurring revenue, organic recurring revenue has been a challenge in the past several quarters, and that has flowed through our cash flow. This quarter, our organic recurring revenue was down 12%, and this is the final quarter of headwind from a lost contract from last year, and our priority is now moving on to organic recurring revenue to stabilize this year, and ultimately back to growth. My outlook for the business is based on the insights I get during the considerable time I spend traveling and talking to the customers. I shared some of my observations in my letter yesterday, but to recap two things that stood out to me in customer conversations.

Speaker #4: While we have been successful in growing acquired recurring revenue, organic recurring revenue has been a challenge in the past several quarters. And that has flowed through our cash flow.

Speaker #4: This quarter, our organic recurring revenue was down 12%. And this is the final quarter of headwind from a lost contract from last year. And our priority is now moving on to organic recurring revenue to stabilize this year and ultimately back to growth.

Speaker #4: My outlook for the business is based on the insights I gain during the considerable time I spend traveling and talking to customers. I shared some of my observations in my letter yesterday, but to recap, two things stood out to me in customer conversations.

Speaker #4: First, operators are focused on maximizing recovery. Many are targeting recovery factors as high as 50%, which is very high for the industry. To get there, they're turning to a range of enhanced oil recovery, or EOR, technologies.

Pramod Jain: First, operators are focused on maximizing recovery. Many are targeting recovery factors as high as 50%, which is very high for the industry. To get there, they are turning to a range of enhanced oil recovery, or EOR technologies, and this is where CMG shines and where we are focusing our sales efforts as EOR grows in importance globally. Second is the desire for the best specific technology to solve a specific problem. I have always believed that the biggest strength of our strategy is having a portfolio of the best tools and allowing customers to choose what works best. With four acquisitions complementing our core simulation offering, customers were eager to explore solutions across the group of companies. Adding to that, relationships our simulation business built over decades are now opening doors for our seismic solutions with customers who would not have seen them otherwise.

Speaker #4: And this is where CMG shines, and where we are focusing our sales efforts as EOR grows in importance globally. Second is the desire for the best specific technology to solve a specific problem.

Speaker #4: I have always believed that the biggest strength of our strategy is having a portfolio of the best tools and allowing customers to choose what works best.

Speaker #4: With four acquisitions complementing our core simulation offering, customers were eager to explore solutions across the group of companies. Adding to that, relationships in the simulation business built over decades are now opening doors for our seismic solutions.

Speaker #4: With customers who wouldn't have seen them otherwise. And we are more frequently pursuing joint proposals, with two or three of our companies coming together to put forth a broader package of technology than any of them could have done alone.

Pramod Jain: We are more frequently pursuing joint proposals with two or three of our companies coming together to put forth a broader package of technology than any of them could have done alone. This is a compelling example of the upside of our portfolio strategy. I am also seeing renewed interest from international operators in countries like Venezuela and Mexico, and African countries like Algeria, Angola, Nigeria, and Libya. These are shaping up to be important markets for CMG. They are the types of markets and assets where we do our best work, complex reservoirs, heavy oil, and mature fields that demand the science we have spent decades building. As international companies return their attention to these regions, they are surfacing new opportunities across the CMG group of companies.

Speaker #4: This is a compelling example of the upside of our portfolio strategy. I'm also seeing renewed interest from international operators in countries like Venezuela and Mexico, and African countries like Algeria, Angola, Nigeria, and Libya. Now, these are shaping up to be important markets for CMG.

Speaker #4: They are the types of markets and assets where we do our best work, complex reservoirs, heavy oil, and mature fields that demand the science we have spent decades building.

Speaker #4: As international companies return their attention to these regions, they are surfacing new opportunities across the CMG group of companies. It is early, and I will report on the progress as it becomes tangible.

Pramod Jain: It is early, and I will report on the progress as it becomes tangible, but I am optimistic at what we can do here. Before I turn to capital deployment, a brief word on AI. I think it is essential these days to talk about it. My view is unchanged. In the subsurface, AI does not replace physics. It needs physics. The data exists in silos, the cost of a wrong answer is enormous, and the companies that win with AI will be the ones who own the science underneath it. We are pursuing AI on two fronts. First in our products. For example, InteractivAI, Bluware's AI-assisted seismic interpretation tool, is now in its sixth release and in use at some of the largest operators in the world. Across our simulation portfolio, we are building a common architecture for AI agents that work alongside the reservoir engineer.

Speaker #4: But I am optimistic about what we can do here. Before I turn to capital deployment, a brief word on AI. I think it's essential these days to talk about it.

Speaker #4: My view is unchanged. In the subsurface, AI does not replace physics—it needs physics. The data exists in silos, the cost of a wrong answer is enormous, and the companies that win with AI will be the ones who own the science underneath it.

Speaker #4: We are pursuing AI on two fronts. First, in our products—for example, Interactive AI. Blueways AI-assisted seismic interpretation tool is now in its sixth release.

Speaker #4: And in use at some of the largest operators in the world. And across our simulation portfolio, we are building a common architecture for AI agents that work alongside the reservoir engineer.

Speaker #4: Today, we have working prototypes that can launch a simulation run, monitor it, and flag it when something is wrong. These are still in the build phase.

Pramod Jain: Today, we have working prototypes that can launch a simulation run, monitor it, and flag it when something is wrong. These are still in the build phase, but they illustrate how we are using AI to secure the advantages where AI excels, while not risking outcomes to apply AI where it isn't appropriate. The second part is how we build it. Much of the code shipped this year was AI-assisted, with every line still passing the same human review and testing gates as before. This is making a lean R&D organization meaningfully more productive. Now let's talk capital deployment. To date, under our CMG 4.0 strategy, acquisitions have been our primary capital deployment priority, and that remains unchanged.

Speaker #4: But they illustrate how we are using AI to secure the advantages where AI excels, while not risking outcomes by applying AI where it isn't appropriate.

Speaker #4: The second part is how we build it. Much of the code shipped this year was AI-assisted, with every line still passing the same human review and testing gates as before.

Speaker #4: This is making a lean R&D organization meaningfully more productive. So now, let's talk capital deployment. To date, under our CMG 4.0 strategy, acquisitions have been our primary capital deployment priority, and that remains unchanged.

Speaker #4: The reality is that while the M&A pipeline is active, we are holding to our standards on price and returns, which has meant closing fewer transactions than we might otherwise expect.

Speaker #4: This means that we have capital available through both our cash flows and our credit facility. Add to that, the market price of our shares is below what we believe the business is worth.

Speaker #4: This gives us an opportunity to capture value by repurchasing our shares. Our responsibility was to determine a size for the SIB that allows us to act without compromising our ability to pursue acquisitions.

Speaker #4: And as you saw in the announcement yesterday, we will draw up to $20 million on our credit facility to fund the SIB now.

Speaker #4: This is an opportunistic way to create value for our shareholders, while we remain committed to pursuing the right acquisitions to diversify and strengthen our company.

Speaker #4: We remain committed to acquisitions because we believe the opportunities in our pipeline have the potential to meet or exceed the return threshold of buying back shares.

Speaker #4: So once that cannot, we will pass on. And I don't see acquisitions and buybacks as mutually exclusive. I believe this approach balances the upside of the M&A pipeline against the value returned by buying back shares.

Speaker #4: So as I turn the call over to Wippen to walk through the numbers for the quarter, I will reiterate. That A, our strategy hasn't changed.

Speaker #4: We remain committed to growth, both organically and through acquisition. Second, our outlook is for stabilization to return to the business, which supports our view of the valuation of the business.

Speaker #4: And C, we will continue to deploy capital towards the highest risk-adjusted return opportunities, and that includes the substantial issuer bid we announced yesterday. Wippen, I'll turn the call over to you.

Pramod Jain: Vipin, I'll turn the call over to you.

Speaker #2: Thanks, Ramon, and good morning, everyone. With our financial results having been released yesterday afternoon, I won't go through them line by line, assuming you've all had a chance to review.

Vipin Khullar: Thanks, Pramod, and good morning, everyone. With our financial results having been released yesterday afternoon, I will not go through line by line, assuming you have all had a chance to review. But we will highlight some of the key messages before turning the call over for your questions. Starting with total revenue. Total revenue was down year over year to CAD 27.8 million as 10% growth from acquisitions was offset by a 16% organic decline. Looking at recurring revenue, which was down 3% this quarter, there are two main components. Organic recurring revenue decline, which we had disclosed, was as expected as this quarter is the final quarter lacking the contract loss from last year. Starting next quarter, we expect the year-over-year comparisons to begin to normalize. Offsetting that decline, we delivered 9% recurring revenue growth from acquisitions, which included contributions from SeisWare and Rose, two acquisitions we closed in fiscal 2026.

Speaker #2: But we'll highlight some of the key messages before turning the call over for your questions. Starting with total revenue: total revenue is down year over year to $27.8 million, as 10% growth from acquisitions was offset by a 16% organic decline.

Speaker #2: On the professional services side, we had a decline we had significant organic decline which was also disclosed and expected. The two main components driving this quarter's decline in professional services are the absence of co-flow-related development funding, which concluded at the end of the 2025 calendar year, and the continued wind down of non-core professional services activity at Blueware.

Vipin Khullar: On the professional services side, we had a significant organic decline, which was also disclosed and expected. The two main components driving this quarter's decline in professional services are the absence of CoFlow related development funding, which concluded at the end of the 2025 calendar year, and the continued wind down of non-core professional services activity at Bluware. As a reminder, we underwent the Bluware acquisition on its software revenue growth potential, and we assumed the non-core professional services would wind down. Our remaining services work is the portion that directly supports our software. Partially offsetting that decline in professional services was 13% growth from acquisitions, which for context, is largely the contribution from Rose, which had a strong Q1, our first full quarter of ownership of the Rose business.

Speaker #2: As a reminder, we underwrote the Blueware acquisition based on its software revenue growth potential, and we assumed the non-core professional services would wind down. Our remaining services work is the portion that directly supports our software.

Speaker #2: Partially offsetting that decline in professional services was 13% growth from acquisitions, which, for context, is largely the contribution from Rose, which had a strong Q1—our first full quarter of ownership of the Rose business.

Speaker #2: Adjusted EBITDA and adjusted EBITDA margin for the quarter declined, reflecting the impact of lower organic recurring revenue and lower professional services revenue, offset by ongoing cost management discipline.

Vipin Khullar: Adjusted EBITDA and adjusted EBITDA margin for the quarter declined, reflecting the impact of lower organic recurring revenue and lower professional services revenue, offset by ongoing cost management discipline. While the lower organic recurring revenue weighed on adjusted EBITDA, I am pleased to say that both acquisitions completed in fiscal 2026, SeisWare and Rose, contributed positively to adjusted EBITDA in the quarter, despite the seasonal weighting of their software revenue recognition towards the back half of the year. On free cash flow, we experienced a decline to CAD 3.5 million in the quarter due to the revenue dynamics I just discussed and due to higher income taxes in the quarter, both of which impacted net income. Free cash flow conversion from EBITDA decreased year over year, primarily due to higher income taxes in the quarter.

Speaker #2: On free cash flow, we experienced a decline to $3.5 million in the quarter due to the revenue dynamics I just discussed, and due to higher income taxes in the quarter, both of which impacted net income.

Speaker #2: Free cash flow conversion from EBITDA decreased year over year, primarily due to higher income taxes in the quarter. Current income tax expense for the quarter was $1.5 million this quarter, compared to $900,000 a year ago.

Vipin Khullar: Current income tax expense for the quarter was CAD 1.5 million this quarter compared to CAD 900,000 a year ago. That change included a CAD 400,000 prior period adjustment taken in the current quarter. Our current tax expense and tax rate will fluctuate by quarter based on the jurisdictional mix of our income, how cross-border transactions get taxed, and foreign change movements. Looking forward to the second quarter recurring revenue, we expect organic recurring revenue to increase sequentially versus Q1, driven by a higher renewal cycle in Q2 relative to Q1. As a reminder, recurring revenue is expected to build as we move throughout the year, as each quarter takes up more renewal revenue than the one before. So Q1 is typically our lightest quarter, and Q4 generally expected to be the heaviest.

Speaker #2: How cross-border transactions get taxed and foreign exchange movements. Looking forward to the second quarter, recurring revenue—we expect organic recurring revenue to increase sequentially versus Q1.

Speaker #2: This is driven by a higher renewal cycle in Q2 relative to Q1. As a reminder, recurring revenue is expected to build as we move throughout the year, as each quarter picks up more renewal revenue than the one before.

Speaker #2: So Q1 is typically our lightest quarter, and Q4 is generally expected to be the heaviest. On professional services, we expect both a sequential and a year-over-year decline, and we expect that Q2 will be the lowest quarter of the fiscal year for professional services revenue.

Vipin Khullar: On professional services, we expect both a sequential and a year-over-year decline, and we expect that Q2 will be the lowest quarter of the fiscal year for professional services revenue. This comes as we finish the wind down of non-core Bluware services and from project timing and lower billable project activity during the summer months. On adjusted EBITDA, we expect both a sequential and a year-over-year decline driven by two things in Q2. First, the lower professional services revenue, and second, we expect higher sales and marketing expense in Q2, which is tied to agent commissions that regularly occur in Q2 on contract renewals that come up in the quarter. For the full year, we are reaffirming our expectation for stable organic recurring revenue growth, revenue, and no reduction in adjusted EBITDA relative to fiscal 2026.

Speaker #2: This comes as we finish the wind-down of non-core Blueware services, and from project timing and lower billable project activity during the summer months.

Speaker #2: On adjusted EBITDA, we expect both a sequential and a year-over-year decline driven by two factors in Q2. First, the lower professional services revenue.

Speaker #2: And second, we expect higher sales and marketing expense in Q2, which is tied to agent commissions that regularly occur in Q2 on contract renewals that come up in the quarter.

Speaker #2: For the full year, we are reaffirming our expectation for stable organic recurring revenue growth and no reduction in adjusted EBITDA relative to fiscal 2026.

Speaker #2: We also continue to expect free cash flow to improve year over year in fiscal 2027. We are adjusting our expectation on professional services decline for the year, which is now anticipated to be in the range of $6 to $7 million, trending to the higher end of the range versus the $6 million that we previously disclosed.

Speaker #2: The revision of the professional services guidance is due to the Blueware non-core services winding down faster than originally forecasted. Finally, as promote mentioned, we announced an SIB.

Speaker #2: From a leverage perspective, we expect to draw up to $20 million for the bid from our existing credit facility. The SIB size took into consideration many factors, including making sure that we can keep sufficient capital for our acquisition pipeline and taking into account our expected free cash flow for this year.

Speaker #2: We expect our free cash flow for the year to be more than sufficient to deleverage the portion of the credit facility we need to fund the SIB.

Vipin Khullar: We expect our free cash flow for the year to be more than sufficient to de-leverage the portion of credit facility we need to fund the SIB. With that, I'll turn it over to the operator for your questions.

Speaker #2: With that, I'll turn it over to the operator for your questions.

Speaker #1: As a reminder, we'd like to ask a question at this time. Please press star 11 on your touchstone phone. And wait for your name to be announced.

Operator: As a reminder, if you'd like to ask a question at this time, please press star one one on your touchtone phone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Erin Kyle with CIBC.

Speaker #1: To withdraw your question, please press *11 again. Our first question comes from Erin Kyle with CIBC.

Erin Kyle: Hi. Good morning. Thanks for taking the questions. Happy to chat on a live conference call here. Maybe first question just on the outlook here. You are calling for stable, organic, recurring revenue growth for the full year, compared to the decline this quarter. Understanding that Q1 was that final quarter of lapping the loss of the customer contract last year, can you maybe walk us through some of the drivers of the growth outlook for the remainder of the year on the organic side?

Speaker #3: Hi, good morning. Thanks for taking the questions. Happy to chat on a live conference call here. So, maybe first question, just on the outlook here.

Speaker #3: So you're calling for stable, organic, recurring revenue growth for the full year, compared to the decline this quarter. So, understanding that Q1 was that final quarter of lapping the loss of the customer contract last year, can you maybe walk us through some of the drivers of the growth outlook for the remainder of the year on the organic side?

Speaker #4: Yeah, thank you. Thank you, Erin, for the question. So, a couple of factors, and I want to have Wippen also add more to it.

Pramod Jain: Yeah. Thank you. Thank you, Erin, for the question. A couple of factors, and I would have Vipin also add more to it. The first one is looking at our renewal cycle, right? We have a very good understanding of our overall renewals for especially our simulation business, and that's the key for us to secure that, for the remaining of the year and beyond. The number two, looking at the market and the macro, which is changing positive to positively in industry favor, in our favor, which will require more technologies overall. The third part is the investments that we have made in our products. I talked about ShaleSim last quarter, and more investments that are happening in the product will result in giving me confidence that we will hit the stable outlook. Vipin, anything you want to add?

Speaker #4: So the first one is looking at our renewal cycle, right? We have a very good understanding of our overall renewals, especially for our simulation business.

Speaker #4: And that's the key for us to secure that for the remainder of the year and beyond. Number two, looking at the market and the macro, which is changing positively.

Speaker #4: In industry favor, in our favor, which will require more technologies overall. The third part is the investments that we have made in our products.

Speaker #4: I talked about shale sim last quarter, and more investments that are happening in the product will result in giving me confidence that we will hit the stable outlook.

Speaker #4: Wippen, anything you want to add?

Vipin Khullar: Yeah. I'll also add just, we talked about new markets as sort of being an area of strategic focus, so that'll kind of come into our revenue in the quarters ahead. Just as our acquisitions start to further integrate, starting to see more growth. Some of the revenue is sort of, it's weighted towards the back half of the year, given the revenue recognition towards Q3, Q4.

Speaker #2: Yeah, I'd also add, we talked about new markets as sort of being an area of strategic focus. So that'll kind of come into our revenue in the quarters ahead.

Speaker #2: And just as our acquisitions start to further integrate and we start to see more growth, some of the revenue is weighted towards the back half of the year, given the revenue recognition towards Q3 and Q4.

Speaker #3: Okay, thank you. And maybe just to follow up on that, as a related question—you mentioned the macro there. So, if you can, maybe comment a bit more broadly on customer spending trends in the current environment.

Erin Kyle: Okay. Thank you. Maybe just to follow up that, as a related question. Pramod, you mentioned the macro there, so maybe just if you can comment a bit more broadly on customer spending trends in the current environment. We've been in an elevated oil price environment for some time now, so it sounds like maybe you're seeing some customer behavior change, or are customers still exercising any caution given the volatility? Then I'll pass the line.

Speaker #3: We've been in an elevated oil price environment for some time now. So, it sounds like maybe you're seeing some customer behavior change, or are customers still exercising any caution given the volatility?

Speaker #3: And then I'll pass the line.

Speaker #4: Yeah, sure. No, I think broadly, I would say the investments that companies are now looking at—saying, "We need to invest now in energy security"—I'm seeing that more and more.

Pramod Jain: Yeah, sure. I think it's, broadly, I would say the investments that companies are now looking at to say, "We need to invest now in energy security," I am seeing that more and more. Two weeks ago, I was in Asia, spoke to a bunch of customers, especially large NOCs and IOCs. The trend is that, we cannot wait. We need to invest in the energy upstream. We need to invest in technologies, because overall, countries have to be energy secure. On the other side, I also see companies in Canada, companies in US, they are still cost-conscious as well, because nobody kind of knows where the oil price will turn out to be. Broadly, I see a positive trend in terms of looking for the next oil that they can recover from the subsurface, and for that, they need to go to EOR.

Speaker #4: I was, last two weeks ago, in Asia and spoke to a bunch of customers, especially large NOCs and IOCs. The trend is that we can't wait.

Speaker #4: We need to invest in the energy upstream. We need to invest in technologies because, overall, countries have to be energy secure. But, on the other side, I also see companies in Canada, companies in the US—they're still cost-conscious as well because nobody really knows where the oil price will turn out to be.

Speaker #4: But broadly, I see a positive trend in terms of looking for the next oil that they can recover from the subsurface. And for that, they need to go to EOR, they need to go to higher seismic interpretation fidelity, so all of those signs are very positive for us.

Pramod Jain: They need to go to higher seismic interpretation fidelity. All of those signs are very positive for us. I have a huge conviction in terms of what the future would look like for us.

Speaker #4: I have a strong conviction about what the future will look like for us.

Erin Kyle: Thank you. That's helpful.

Speaker #3: Thank you. That's helpful.

Speaker #1: As a reminder, if you'd like to ask a question at this time, please press *11 on your touch-tone phone. Our next question comes from Doug Taylor with National Bank.

Operator: As a reminder, if you would like to ask a question at this time, please press star 1 1 on your touchtone phone. Our next question comes from Doug Taylor with National Bank.

Speaker #2: Yeah, thank you. Good morning, and thanks for hosting this call.

Doug Taylor: Yeah, thank you. Good morning, and thanks for hosting this call. I am going to double back on one of Erin Kyle's questions there. Obviously, it has been a turbulent time for the energy industry. Some of those new EOR opportunities you referenced with NOCs, the increased emphasis on energy security. Can you speak a bit more about the timetable to revenue or the velocity of some of those processes and RFPs? Do you have a presence with most of those customers already with some of your solutions, and this is more upsell of additional licenses, or would you characterize most of that as new logo opportunities?

Speaker #4: I'm going to double back on one of Erin's questions there. Obviously, it's been a turbulent time for the energy industry. Some of those new EOR opportunities you referenced with NOCs, and the increased emphasis on energy security—can you speak a bit more about the timetable to revenue, or the velocity of some of those processes and RFPs?

Speaker #4: And also, do you have a presence with most of those customers already with some of your solutions, and this is more upsell of additional licenses, or would you characterize most of that as new logo opportunities?

Speaker #4: Yeah, thanks, Doug. Good to hear you. So I think there are two questions that you have asked, and I'm going to take a chance to answer them one by one.

Pramod Jain: Yeah. Thanks, Doug. Good to hear you. I think two questions that you have asked, and I am going to take a chance to answer one by one. One is, these new EOR technologies. Look, in my trip I have done now, I have been in Asia, I have been in Latin America, and I am constantly traveling now to customers. What is happening there is the EOR technologies are not new, but they are expensive. But these industries are now, or these companies are now looking at to say, rather than exploring new oils, new oil fields, what they can do to extract more from implementing EOR. With the oil price as it is today, it allows them to invest in that. So that is happening, and we are seeing that happening everywhere, but mostly in the countries that we are now trying to get inside with a new logo opportunity.

Speaker #4: So, one is these new EOR technologies. Look, on my trip I have now—I’ve been in Asia, I’ve been in Latin America, and I’m constantly traveling now to customers.

Speaker #4: What's happening there is the EOR technologies are not new. But they're expensive. But these industries are now or these companies are now looking at to say, rather than exploring new oils, new oil fields, what they can do to extract more from implementing EOR.

Speaker #4: And with the oil price as it is today, it allows them to invest in that. So that's happening; we are seeing that happening everywhere.

Speaker #4: But mostly in the countries that we are now trying to get into, with the new logo opportunity, and in some countries we are also looking at more upsell opportunities, increasing more licensing than we have seen in the past.

Pramod Jain: In some countries, we are also looking at more upsell opportunities increasing more licensing than we have seen in the past. That is why I was trying to answer the question to Aaron, is that the positive trend that I am seeing now, it takes time to get these RFPs and proposals in the pipeline to commercial wins. But I see more closer to commercial wins than I have seen that before, because before it was all about cost and questions about cost, and now it is more about what can you do and which technology I can use to extract more oil from the ground.

Speaker #4: And that is why I was trying to answer the question to Erin, is that the positive trend that I'm seeing now, it takes time.

Speaker #4: To get these RFPs and proposals, and the pipeline, to commercial wins. But I see us closer to commercial wins than I have seen before.

Speaker #4: Before, it was all about cost and questions about cost. Now, it's more about what you can do and which technology you can use to extract more oil from the ground.

Speaker #2: Thanks for that. The flip side of some of this is, obviously, in the Middle East, the entire quarter we’re talking about here was sort of marred with the conflict there—closing the strait, things like that.

Doug Taylor: Thanks for that. The flip side of some of this is, obviously, in the Middle East, the entire quarter we are talking about here was sort of marred with the conflict there, closing the strait, things like that. You have got quite a few customers in the region. Has there been any disruption to your business there, or distraction from ongoing processes for purchasing more licenses, things like that?

Speaker #2: You've got quite a few customers in the region. Has there been any disruption to your business there, or distraction from ongoing processes for purchasing more licenses, things like that?

Speaker #4: Yeah, thankfully, the Middle East has actually been quite good for us. We have renewed all of our contracts, which has been great. There has been some disruption, because in some of the countries where we didn't have a presence, we were very close to converting them.

Pramod Jain: Yeah. Thankfully, Middle East has been actually quite good for us. We have renewed all of our contracts, which has been great. There has been some disruption because some of the countries that we didn't have presence, we were very close to converting them, but that took a bit of a hit because those countries got impacted by the war. Nevertheless, I think these countries are also realizing that they need to keep investing and talk about technologies. So actually, I'm going to be on the road next week in Middle East itself, talking to these countries. I think from a long-term or even mid-term perspective, the investment cycle isn't changing, and they are thinking about doing business as usual as much as possible. Broadly speaking, no impact to our renewals.

Speaker #4: But that took a bit of a hit because those countries were impacted by the war. But nevertheless, I think these countries are also realizing that they need to keep investing and talking about technologies.

Speaker #4: So actually, I'm going to be on the road next week in Middle East itself. Talking to these countries. So I think from a long-term or even mid-term perspective, the investment cycle isn't changing.

Speaker #4: And they are thinking about doing business as usual as much as possible. But, broadly speaking, there's no impact to our renewals.

Speaker #2: Okay, thank you. Safe travels then, Pramod.

Doug Taylor: Okay. Thank you. Safe travels then, Pramod.

Speaker #4: Thank you.

Pramod Jain: Thank you.

Speaker #1: As a reminder, that is star 11 if you'd like to ask a question at this time. That will conclude today's question-and-answer session.

Operator: As a reminder, that is star 11 if you'd like to ask a question at this time. That will conclude today's question and answer session. I'd like to turn the call back to Pramod Jain for closing remarks.

Speaker #1: I'd like to turn the call back to Pramod Jain for closing remarks.

Speaker #4: Well, thank you all for joining our first call today. We will do this every quarter, and I hope it's a useful forum for you.

Pramod Jain: Well, thank you all for joining our first call today, and we will do this every quarter, and I hope it is a useful forum for you. We are coming out of some challenging quarters, yet my commitment to our strategy is the same, and I have deep conviction that the market is working in our favor. Energy security is top of mind, and our customers are showing renewed commitment to maximizing their assets. That means they need new and more complex recovery methods, and that requires more simulation and high-fidelity seismic interpretation. Our portfolio of companies are showing every day the value of serving our customer in multiple ways, and our joint proposals are just the beginning.

Speaker #4: We are coming out of some challenging quarters. Yet, my commitment to our strategy is the same, and I have deep conviction that the market is working in our favor.

Speaker #4: Energy security is top of mind, and our customers are showing renewed commitment to maximizing their assets. That means they need new and more complex recovery methods.

Speaker #4: And that requires more simulation and high fidelity seismic interpretation. Our portfolio of companies are showing every day the value of serving our customer in multiple ways.

Speaker #4: And our joint proposals are just the beginning. My conviction and what we are building come from being in direct conversation with customers and turning those insights into actionable plans for new products, new geographies, and new ways to strengthen our sales processes.

Pramod Jain: My conviction in what we are building comes from being in direct conversation with customers and turning those insights into actionable plans for new products, new geographies, and new ways to strengthen our sales processes. Finally, to almost our 300 employees, the science, the customer relationships, and the work of bringing four companies into CMG is done by you through a period of time where the numbers haven't reflected the quality of that work. So thank you for all that you do, and we look forward to speaking with you next quarter. Thank you.

Speaker #4: Finally, to almost our 300 employees, the science, the customer relationships, and the work of bringing four companies into CMG is done by you. Through a period of time where the numbers haven't reflected the quality of that work.

Speaker #4: So, thank you for all that you do, and we look forward to speaking with you next quarter. Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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