Altus Group Ltd

TSX:AIF

Earnings Call Transcript 2020-Q3

[Operator]

Good afternoon, ladies and gentlemen. Welcome to the Altus Group's Third Quarter 2020 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.I would now like to turn the conference over to Ms. Camilla Bartosiewicz. Please go ahead.

[Camilla Bartosiewicz, Vice President of Investor Relations]

Thank you, Lori. Good afternoon, everyone, and welcome to Altus Group's Third Quarter Results Conference Call and Webcast for the period ended September 30, 2020. The news release announcing our results was issued after market close this afternoon and is also posted on our website along with our MD&A and financial statements. Joining us today are Mike Gordon, our new Chief Executive Officer, who will officially join at the end of September; and Angelo Bartolini, Chief Financial Officer. We'll start with some prepared remarks, and then we'll move right into the Q&A session. If we miss any questions, please contact me directly by e-mail.Before we get started, please be advised that some of our remarks on this call may contain forward-looking information. Also, please be reminded that Altus Group uses certain non-GAAP, non-IFRS measures as indicators of financial and operational performance. Forward-looking statements and an explanation of these measures are detailed in today's news release and in our related reports on SEDAR.And with that, I will now turn the call over to Angelo.

[Angelo Bartolini, Chief Financial Officer]

Thanks, Camilla, and thank you all for joining us this afternoon. We hope you're all safe and healthy. On today's call, I will begin by covering off the performance in the quarter, and then you'll hear from Mike, who will share some of his thoughts on the business, what attracted him to Altus and where he sees the opportunities ahead.So let's start with our third quarter results. We were pleased with our execution in Q3. Steady top line growth and strong earnings performance, improving our consolidated margins to 18%. On a consolidated basis, revenues were up 6% to $135 million, and adjusted EBITDA was up 28% to $24 million, driving a notable improvement to adjusted EPS at $0.40. We're really pleased with the exceptionally strong performance from our Property Tax group and the sustained double-digit growth in our overtime revenues in Altus Analytics as we continue our transition to a SaaS model.As the CRE industry continues to navigate through a challenging external environment, our industry-leading solutions and services are driving significant client value. Our Q3 results speak to this, further validating that Altus Group has a high degree of revenue stability during CRE market cyclicality and that many parts of our business are countercyclical. Clearly, we're able to sustain good productivity levels while the majority of our workforce continues to work remotely. We continue to adhere to guidance of local and global health authorities, the health and well-being of our people, clients and communities remains our top priority.Turning to the individual segments. At Altus Analytics, we continue to make progress against our multiyear transition to a primarily overtime revenue model through a shift to cloud-based subscriptions for ARGUS software. Given the first year of this shift and it combined with ongoing COVID-related pressures on some parts of the software business, Altus Analytics revenues were down 2.5% to $49.2 million, although earnings improved by 7% to 11.1%. But most notably, overtime revenues, our key metric, were up 12% to $41.4 million.To add some color on the revenue performance, as you're aware, at the start of 2020, we made the full shift to subscription model for all our ARGUS products -- software products. And as you know, although this transition creates a stronger long-term economic model, revenue growth is muted initially as upfront perpetual license revenue is replaced with ratable overtime revenue. For context, this time last year, we recorded roughly $3.5 million in upfront perpetual licenses revenues that did not reoccur this year.The COVID-related pressure was primarily on our point in time revenue streams such as software consulting and training services, which were down year-over-year. Similar to last quarter, we felt the impact of lower sales volumes in the SMB space and overall prolonged sales cycles, especially for the larger deals as companies recalibrate for the new normal.Given the current environment of rising COVID cases, we expect this to remain an impact on our performance into the fourth quarter. I would also add many of our existing customers continue to expand the use of ARGUS Enterprise as they realize substantial value from the software, especially during this time, and this includes expansion of cloud deals.Overall, our pipeline is stable. Especially with some attractive higher ACV deals that we're working on in closing in Q4. Most notably, our overtime revenue base continues to build with sustained double-digit growth. I should point out that on a sequential basis, however, overtime revenues were down 3%, impacted by an FX headwind of 3.9% compared to Q2.The strength in overtime revenues reflects a strong software subscription revenue base as a reflection of the economic model of both current and past deals; higher subscription license sales reflecting sustained customer expansion and a steady addition of cloud clients; a steady maintenance revenue base supported by a 94% retention rate for ARGUS Enterprise, which, by the way, we expect our retention rate to remain stable in the mid-90s range; and finally, the strong overtime revenue performance reflects continued strength in appraisal management and Canadian Data Solutions.At appraisal management, the external environment reinforces the strategic value we bring to our clients. We're benefiting from increased business development and brand awareness initiatives as well as technology enhancements that are allowing us to drive more client value with data analytics. Overall, we're seeing continued growth from our existing client base as our customers add more properties on our platform and launch new funds, which include open, closed and separate funds. And geographically, we're benefiting from growth of new funds and new clients in the U.S. and internationally.As we look ahead to next year, we're evolving our go-to-market strategy and ensuring better integration of our -- with our ARGUS solution sets. A big focus next year will be integrating our data exchange analytics platform with ARGUS Cloud. We want to leverage ARGUS APIs and other cloud capabilities to not only ingest data from AE in real-time, but also convert from file-based model sharing to hosting a model in a central place, inviting others to update.And in Canadian Data Solutions, we continue to see healthy demand for our national data. On the earnings front, we saw a notable improvement, including 23% margins, which after the bonus allocation that takes place in Q4, puts us on track to finish the year within our expected margin range.We would add that improvement in year-to-date margins, in fact, includes the benefit of the restructuring program that we initiated near the end of Q2, but I would also remind you of our intention to reinvest for emerging opportunities and to strengthen the capabilities in support of our long-term strategy. And of course, it reflects some of the cost savings realized this year from reduced travel and marketing events. With respect to our cloud-subscription strategy, we continue to make progress, and you'll hear from Mike shortly on his assessment. Some highlights. Based on our year-to-date performance, well over 80% of our Altus Analytics revenue base is now overtime. Our customers have fully accepted subscription contracts. This hurdle is now behind us. We finished the quarter with 10% of our total ARGUS Enterprise user base contracted on the ARGUS Cloud platform. This is still SMB-driven as planned, but we expect adoption to accelerate before the end of the year and into 2021 as larger deals come to fruition.The recent release of AE, included the federated single sign-on feature, will be key for some of our larger clients to move to the cloud. We remain focused on the migrations, and it's fair to say the pandemic has reinforced the strategic benefits for companies to be on the cloud. Overall, we're still on the path to migrate the significant majority of our ARGUS Enterprise users to the cloud by the end of 2023.Overall, we're seeing continued momentum as we're now approaching 950 ARGUS Cloud customers. This includes both new AE customers as well as those who have migrated from the legacy on-premise version. And with the introduction of ARGUS Developer on the cloud this year, we have over 1,000 customers on our cloud platform. Plus, in support of our strategy to serve the market with an end-to-end platform solution for asset and investment management, we remain focused on multiproduct enterprise deals, while continuing to integrate our solutions and shift our sales focus from point solutions to value-based selling.I would like to illustrate this by highlighting a couple of interesting Q3 deals. One of our long-standing ARGUS and appraisal management clients, Invesco, expanded their engagement with us through a managed service capacity for CRE data management through ARGUS Voyanta. As part of this service, our team will manage all of their data gestion, aggregation and analytics for the -- for their European operations.Another example, during the quarter, we also signed a deal with a midsized CRE investment firm, where we combined our appraisal management offering, with ARGUS Enterprise and ARGUS Taliance for their fund modeling and forecasting needs, a classic combination of how we can serve our clients' needs with expert advisory, data analytics and software.As we look ahead, we'll continue to feel the impact of the model transition as well as COVID into Q4. But we do feel good about the opportunities for 2021 as our pipeline of opportunities build, sales activities ramp up and as SMB volumes and software services begin to gradually rebound. Overall, the acceleration of digital transformation in the CRE industry is a positive catalyst for our long-term strategy. As you'll hear from Mike shortly, we remain favorably positioned for continued long-term growth, and there are opportunities ahead that he'll be focused on.Moving on to our CRE Consulting segment. Another solid quarter of excellent execution during a period of disruption. At our global Property Tax business, the strong momentum following Q2 continues. Q3 revenues were up 18% to $58.2 million, and earnings were up 37% to $20.2 million, driving 35% margins. We had strong double-digit growth in the U.K. and the U.S. where we benefited from both the acceleration and catch-up of case settlements, some of which were previously held up due to COVID-related slowdowns.In addition to catching up on some Q2 delays, we also saw some expected Q4 settlements come forward into the third quarter, both the U.K. and U.S. I particularly point this out given the existing consensus estimates that were made for Q3 and Q4. In Canada, Ontario had a temporary slowdown of settlement volumes due to COVID-related delays as well as weaker year-over-year comparative performance in Manitoba and Alberta, who are more favorably positioned in their respective cycles in the prior year.Overall, we're having a great year. We're seeing higher appeal settlement volumes, higher success rates and higher savings for our clients. Our pipeline continues to grow as measured by volume of appeals on hand and by total value. We continue to onboard new clients and more properties onto our platform, thus increasing our market share. Property assessment values continue to rise, and we see greater opportunities for savings, particularly in disruptive times like these.Lastly, with the investments we are making on our technology platforms, we expect to see the continued benefits of improving our CRM and business development capabilities, creating greater efficiencies in our workflows and capturing greater appeal savings through data and analytics. With the strong results year-to-date, we are very well positioned to post record revenues for the year, achieving another important milestone.The strength should continue well into 2021, given the strength of our pipeline and the extension of the tax cycle in the U.K., which gives rise to another year of annuity billings. This, of course, is contingent on our ability to continue to close appeal settlements as expected. But the uncertainty of COVID and its implications on tax regulations, economic and market conditions continue to persist, and we continue to monitor this situation closely. Long term, we continue to see great growth opportunity as we differentiate ourselves from our competitors and grow our market share. Our Valuation and Cost Advisory businesses continue to deliver steady performance in these unprecedented times. On balance, we're maintaining our revenues with strength in our core practices and navigating carefully around some of the pandemic-related challenges in the industry by focusing on unique opportunities and sectors, such as seizing the momentum of more frequent valuations and capitalizing on opportunities in infrastructure and distressed real estate deals.Turning to our financial position. Our balance sheet remains healthy. At the end of the quarter, bank debt stood at $153.5 million, down from last quarter, representing a funded debt-to-adjusted EBITDA leverage ratio of 1.49x, well below our maximum limit of 4x. Our cash and cash equivalents was $91.1 million. On a net cash basis, our leverage ratio is 0.7x debt to adjusted EBITDA.So before I turn it over to Mike, I trust you'll share in our enthusiasm that Mike has agreed to join Altus Group as our next CEO. Having spent quite a bit of time with Mike in these past couple of months, I can tell you he's already making significant contributions with his fresh perspectives and challenging the team in new ways. He's a visionary CEO and the right fit for our company, experience-wise and culturally. With his high emphasis on client success and people. He's well equipped to build on the strong foundation established by Bob and lead our company into the next stage of growth.With that, I'll now turn it over to Mike.

[Michael J. Gordon, CEO & Director]

Thanks, Angelo. I appreciate the vote of confidence, and good afternoon, everyone. It's been a pleasure to connect with many of our shareholders and analysts over the past several weeks, and I look forward to our ongoing dialogue.To start, I wanted to congratulate Bob on his well-deserved retirement after a very successful career and thank him, Angelo and the Board for the ongoing support through my transition. With Bob at the helm, the team has built a business that's revolutionized the CRE market, and we're far from done. I'm very excited to be part of that, and it's an honor to follow in Bob's footsteps to lead this great company.Like many of our shareholders, I was attracted to the opportunity at Altus Group for both its many strengths and its immense potential. As I studied the company, Altus Group had all the hallmarks of what you'd expect from a great business with a very purposeful transition of the analytics business to the cloud and a logical progression towards an information services model. But let me tell you, I have big aspirations, and I believe we can make this great company even better.There's high potential to unlock and grow value. With the 2 core business segments on a solid trajectory, and the cloud transition underway, we're now at a great inflection point in our strategy to become a leading CRE information services provider.For me personally, this is an exciting time to join. Altus was the right next chapter of my career. And frankly, my background in software, analytics, services and data is uniquely tailored for the strategy we're on. Through my experiences at FICO and Callcredit, I have a good handle on what it takes to realize our potential and the next steps we need to take. I'm definitely fired up. I'll give it my all. I'm about 45 days in now, but happy to share some of my preliminary assessments.I've spent the last several weeks studying the products and assessing our competitive position in addressable markets. Also, doing a deep dive on the operating structures, including evaluating talent, sales capabilities, product development and technology systems. I've also had the ability and opportunity to connect with a number of our shareholders and starting to connect with some of our largest clients.Having spent time with the Board, the management team and having the opportunity recently to dive into our budget cycle and strategy sessions, I'm impressed by the great shape the business is in, particularly against the backdrop of the pandemic and the majority of our workforce still working remotely. Without a doubt, we have a very coveted marketed position, and I'm especially impressed by the quality of the team. It's a powerful combination when you have both market expertise and technology preeminence.So what attracted me to Altus? I was drawn in by the potential, but here are the top 5 strengths that got me excited, and I've been able to validate over the past several weeks. First, we have 2 high-quality business segments, each with its own growth potential, mission-critical products and services that are in nondiscretionary demand with utility in the market. Our Altus Analytics solutions are highly strategic to our clients. In many cases, embedded in daily workflows where replacement costs are high. And our CRE Consulting services drive significant quantifiable value for our customers.Second, we have exceptionally strong competitive moats. And with a global footprint, we're years ahead of the competition. I admire the innovative culture that's in Altus' DNA. This is not a sleepy organization. The team is very focused on strengthening and protecting our competitive advantages.Third, we have a solid recurring revenue base, and we're poised for long-term profitable growth. In addition to our growing overtime revenues at Altus Analytics, a high majority of our CRE Consulting revenues are, in fact, quite repeatable. Our performance during this pandemic speaks to that.Fourth, we have deep-seated client loyalty with a world-class, global customer base comprised of the largest and most influential companies in commercial real estate. This is something not to be taken for granted. In many cases, we are integral to their operations. This is a direct reflection of the bench strength and the talent on our team that is required to achieve that. I'm a big believer in customer satisfaction as a foundational building block, and that's an area of focus for me right now, something that I will assess through a formal customer survey and the many meetings that I'm already taking with clients to influence our path forward.And finally, I see a long and global growth runway ahead supported by the sturdy demand trends, even though and perhaps longer-term accelerated by COVID as the CRE industry continues to prioritize digital transformation. Although many of our products and services have the market leadership distinction, my assessment is that we still have limited penetration on a very sizable global addressable market, both with our current solution set and from emerging opportunities and adjacencies with debt and data that will allow us to grow our footprint and add new revenue streams.Next, I wanted to address something that's been topical in my conversations with investors. My assessment of the strategy the company is on. And specifically, the path for Altus Analytics. I'll answer this very simply. I support the current strategy. I think we're on the right track, and I look forward to building on it.For our CRE Consulting businesses, we will continue enhancing each practice with a balanced view of pursuing revenue growth and maximizing margins. At Property Tax, our focus remains on market share gains, operational improvements to enhance the already-strong economic model and accelerating digital transformation to better leverage data and technology and digitize certain processes. I believe that Property Tax can sustain robust top line growth and strong margins. And although it's already a strong performer, I think there remain opportunities for improvement as we bring the 3 national divisions closer under our global model and, over time, shift the value proposition to Property Tax information services. This transformational potential is there.For the Valuation and Cost Advisory businesses, both of which are well-established market leaders, we'll maximize opportunities to stimulate top line growth, but we'll also be taking a hard look at the cost base to optimize margins, which I believe can be achieved with tech enablement.Our investment and innovation focus will continue to be centered on the Altus Analytics segment, where we will -- where we can best leverage our global operating model and the sizable addressable market ahead of us. The vision remains as it was to build a global CRE Enterprise platform solution that integrates software, analytics, advisory and data to help our customers enhance the performance and value of their CRE assets and investments. I think we have a great foundation in place with a mission-critical product set, but our evolution in sales execution, go-to-market alignment and product development continues. Completing our transition of ARGUS Enterprise to cloud-based subscription contracts is central to our vision and required to enable us to realize our potential in the fourth leg of the stool here, predictive data analytics, an area where we have potential to drive immense value for the industry and our customers.As you've heard from Angelo today, we're making steady progress with our cloud transition. Having gone through 2 SaaS transitions in my past roles, I have a good line of sight on where we are in the adoption curve and what needs to get prioritized to reach our aspirational goals. Although the pandemic is presenting us with some short-term challenges in certain areas of our business, we have multiple strategies that we believe will help us achieve the aspirational goals that were set out for 2023.To share some preliminary observations and areas of focus where I see opportunity, the CRE industry is maturing opening opportunities for ERP systems and larger platform deals. Momentum for cloud is also shifting. I feel good about the anticipated uptick in larger platform deals in 2021 and 2022. The opportunity is encouraging and the conversations that I'm having with many of our largest clients validate the conviction of the opportunity.However, to accelerate this pickup, it will require greater integration between our Altus Analytics offerings, a reframe of our go-to-market and product marketing strategy as well as a shift in our sales execution to sell on value. I believe there is also an opportunity to reframe our customer value proposition and how even we bundle and package our offerings across the company, many of which are currently maintained, sold and priced separately.Clearly, a high priority is getting our customers on the cloud. Like with all cloud migrations, it will be key to get over the hump on customer adoption. There's an opportunity to accelerate this with a network effect by targeting the influencers and early adopters not unlike what the team did when they migrated from the ARGUS user base to ARGUS Enterprise. This remains a key focus for 2021. As mentioned, customer satisfaction is an important pillar, and I think we can take direction from the feedback of the survey we'll be commissioning as a baseline of where to go.On the product development side, the future is cloud. Cloud gives us an opportunity to scale, improve our speed to market as well as for opportunities in some high-value workflows and adjacencies that would drive a lot of value for our industry and clients. While instinctively prioritize organic growth and believe that much of our success will be organic, we will consider acquisitions and partnerships in our buy or build evaluation.Approximately 2/3 of our software sales continue to come from existing customers, a trend that's been sustained for many years, speaking to the cross-sell and upsell opportunity that remains. Approximately 80% of our Altus Analytics revenues are still coming from North America, yet we know that Europe and Asia Pac combined represents a way bigger opportunity in the market. We'll double down on these opportunities with a focused sales approach and an agile product road map to maximize cross-sell and upsell opportunities and reduce our cost to serve our customers.And when I think of Altus as a whole, while the team has done a great job adding technology across the organization to tech enable many of our services, I think there's still a lot of complexity here. We'll be looking at how we optimize our current use of tech platforms and digitize some of our processes.All to say, while there's a lot of work to do, we're on the right path, and we're building on a very solid foundation. A lot of heavy lifting is now behind us. And by 2021, we're beginning past the growing pains of the transition, but there remain untapped opportunities to enhance and optimize our operations to consistently operate within that Rule of 40 framework, and that's where my near-term focus will be.Going forward, we're in execution mode and have control over the many opportunities I see ahead to get us to the promised land. All of this reinforces my excitement. I look forward to having more to share with you in February when we publish our annual results and take you through our strategic priorities for 2021 in greater detail.As I start to wrap up, I wanted to thank our customers for their continued commitment to Altus and congratulate our employees on strong execution during a personally challenging period. The next few months are going to be busy, but we will be focused on delivering the best year Altus has ever had and getting ready for an exciting 2021.Okay. Let's open up the line for questions now. Operator?

[Operator]

[Operator Instructions] And the first question is from Yuri Lynk from Canaccord Genuity.

[Yuri Lynk]

I don't know who wants to take this one, maybe, Angelo, but great Altus Analytics results given the macro situation out there. But overtime revenues have been flat now for about 3 quarters. The growth trajectory that you guys laid out at the Investor Day last year that gets you to your $400 million of revenue in 2023, you guys are starting to drift a little bit below that -- the trend to get there. So have you thought about walking back that revenue target at all? And if not, how do we inflect from here, which is essentially going to be flat revenue to a path to $400 million by 2023?

[Angelo Bartolini, Chief Financial Officer]

Yuri, this is Angelo. At this time, we're not -- we're definitely not changing our 2023 targets. COVID has -- had an impact, as we've said in our prepared remarks. We're slightly behind where we thought we would be at this time, just given the impacts over the last couple of quarters. But we continue to have good visibility in terms of our pipeline, the discussions we're having with our clients are extremely positive, and we just see multiple ways of getting to the targets we set out in 2023.So yes, it's -- we have been sidelining up a little bit. We have some parts of our business that are actually outperforming our expectations, such as the appraisal management, but there is -- there definitely is the areas that we pointed out on the point in time revenues. And then, quite frankly, on the SMB side of things that has scaled back a little bit so far. And some of these larger deals are taking a little bit longer to close. But as we've said, we've got a few right now that we're looking at in this quarter and into the new year.So at this point in time, we're feeling good about things. I think we -- as Mike outlined, we're going to come back in February and provide more clarity around our 2021 objectives and provide a little bit more clarity, I'll say, around 2023.But Mike, do you -- would you like to jump in?

[Michael J. Gordon, CEO & Director]

Yes. Yes, sure. I think -- I mean as I've gotten a chance to look at the business and look at the pipelines, one thing I'm happy with is that they're steady. In talking to a lot of other leaders in commercial real estate, I know that these are definitely some challenging times. So I feel very good of what the team is doing right now. I realize the challenge ahead. And I think that, as I discussed, one of the focuses that we will be looking at in 2021 is how do we adjust our go to market, adjust how we package our products, adjust how we interact with our customers to bring that back and get to the point where we achieve the goals that were set out in the Investor Day for 2023.

[Yuri Lynk]

Is the key really to start seeing some of the larger clients, which I understand have a longer sales cycle to see some of those make the conversion to get the revenue base growing?

[Michael J. Gordon, CEO & Director]

Yes. I think that the base strategy about getting people and getting customers in the SMB business on early was a smart strategy because it lays the foundation. Our focus is going to be starting to shift, and we've had a number of discussions with some of our largest customers in the ARGUS world, and we will be very much focusing on them later this year, hopefully, early next year and every quarter thereafter.I think that, a, the sales cycles are a little longer; b, the questions and the bars are a little higher when it comes to like how they're leveraging the products; and c, we need to make sure that they understand and they feel comfortable with the functionality and the road maps we're putting together, which I think is all starting to come together for a fruitful move in 2021.

[Operator]

The next question is from Richard Tse from National Bank Financial.

[Richard Tse, MD & Technology Analyst]

As far as your comment on greater integration, I was wondering if you can maybe comment on whether that sort of requires incremental development efforts on the part of the company to sort of bring those together.

[Michael J. Gordon, CEO & Director]

Greater integration within the Altus Analytics business or with Altus Analytics and the Tax business?

[Richard Tse, MD & Technology Analyst]

Within the Altus Analytics business, sorry.

[Michael J. Gordon, CEO & Director]

No problem. I just -- from my end, a lot of it is when I look at our businesses and how they operate today, they do cooperate very well. But some of it is we're trying to work with our sales methodology and our focus on how we handle some of our largest customers and how we go to sell. And most of the investment that we would make is really in our go-to-market. Our products are following the road map. Our customers have told me that we have very good products. And so I believe we have the right products in place.So now it's really being able to bundle, price effectively and really hit the value propositions that our customers are looking for. And that, to me, is a combination of a number of things. That's a great tech platform in what we have in our solutions. It's some of the great value-added services that we have. And then we're starting to do more work with them around how they can use data for decisioning.And to me, those 3 things are where we're going to be focusing our time with our customers as they move to the cloud. But as to large-scale investments onto the platform, we have a good investment moving now, and we continue to foresee that, that will be where we focus.

[Richard Tse, MD & Technology Analyst]

Okay. And I guess your comment on reframing marketing sort of ties into that integration as well. Am I right?

[Michael J. Gordon, CEO & Director]

It does. I look at marketing and go to market and sales as one and the same. I think that there are 2 things that fit off each other. And again, I think it gets back to making sure your customers have a high degree of satisfaction with what you're offering, how they're looking at things. And I look at Altus as being incredibly important to the ecosystem of these -- of our customers. And so it's really ensuring that our space is adding value to those guys.

[Richard Tse, MD & Technology Analyst]

Okay. Okay. And then just -- I don't know this is a fair question because you've only been in the job for 45 days. But if you look at the past few years, there have been acquisitions as part of this growth strategy. Like how are you thinking about that? Are you primarily focused on sort of making these operating changes that you talked about just now?

[Michael J. Gordon, CEO & Director]

It's not an unfair question. It's a good question. I think, listen, we -- I'm a big believer, as I said, about organic growth. I believe as a business, if we can continue down the path of the organic growth that we've had, Angelo talked about us having a record year this year. That's a great thing, and we focus that on for 2021.As to acquisitions, I have -- in my past lives, I have always looked either at build or buy when it comes to trying to move into an adjacency or trying to augment or accelerate something that we need to do. My guess is that there will be some acquisitions coming down the road that will help us get into some adjacencies because our customers are demanding that of us, and I believe that they start to make sense. When I think of our entire business being about valuation for our customers. So no doubt that there'll probably be an acquisition or 2.

[Richard Tse, MD & Technology Analyst]

Okay. And just one last one for me. Aside from COVID, if you sort of look at the larger customers today, what do you think, based on your discussions with them is the gating factor here for them to make that transition?

[Michael J. Gordon, CEO & Director]

I think they want us to solve more of their problems. I think when the conversations have had are twofold. Number one, one of the reasons why we're going to adjust our go to market is we have too many people talking to them, and we need to align that a little bit more closely to like having one person conduct how we do business with those larger accounts. So that's the first thing on just go to market.The second thing is, we've been talking to them about where we fit on investment management and how we look at that. I think that's a great strategy. We are having more workshops. Now my team has told me that we've had in the past about how that works. And we need to align that investment with the management vision with what our customers need. So I think what you see is, as they want to move to the cloud, they're thinking holistically how they're going to use our services, how they're going to leverage our technology and how we can -- we will steward their data so that they can make better decisions. I think those 3 things are usually part of the conversations we've been having with them.I think they get excited when we start to talk about how we can apply our thought processes, whether on services or analytics around this. And I think that's where a lot of the conversation is happening so they can see that additional value we can bring. So that -- it's a little bit longer sales cycle, but I think it's one that's going to be fairly worth it for them.

[Operator]

The next question is from Stephen MacLeod from BMO Capital Markets.

[Stephen MacLeod, Analyst]

I just wanted to follow-up a little bit, Mike, thanks so much for all the color you gave on your outlook for the business and your initial thoughts. I think it's really helpful. I just wanted to follow-up. You talked a little bit about, in February, you'll be talking more about the 2020/2021 objectives. And you alluded to it in the last question with respect to going to market and adjusting products. I'm just curious, is there anything specific that you've found that isn't working. Or is it more that -- not to suggest things aren't working, but I just -- just trying to get a sense of where the motivation is coming from in terms of adjusting, whether it's the go to market or the product mix. Or is it just about accelerating that from where you are, from where the company was before you came into it?

[Michael J. Gordon, CEO & Director]

No, Stephen, that's a fair question. The best thing about coming in during budgeting, you get to spend a lot of time with the company to look through every lever of the business and getting underneath the covers everything. So what I'd tell you, it's twofold. It's -- one is ensuring our alignment. Sometimes when you're moving quickly, sometimes that alignment gets off. And I think that the team has been working very hard and very fast. And I want to make sure that our go-to-market resources are aligned as they talk about all the great services we have, especially on the Altus Analytics side, and they can really bring the power of what we have for the software services and what we bring to market even around data in Canada.The second thing is it is about that acceleration. It is about that sense of urgency and that sense of purpose. I think that we have a great opportunity to help shape this industry going forward. And I came from the financial services sector, where I was in software and solutions. And this feels a lot like what happened in 2008 and 2009 and what was happening there in the next 2 to 3 years. I think there's going to be fairly good adoption for a lot of the solutions that we're talking about right now, whether it's the valuation solutions that we do, whether it's how we ingest data, how we curate data or how we show the information back to the users who are using it so that they can make decisions.My view is on the acceleration. I want to make sure that we are front and center with our customers on that. And I think from the perspective that we -- that I have seen when I've looked at the business, I think we have a lot of solutions that I don't really think we are giving enough focus to with our customers. And I think that's where the -- some of the adjustments will be. So if I had to answer again, just to summarize, alignment and acceleration.

[Stephen MacLeod, Analyst]

Okay. That's helpful. When you talk about the larger users, and there's some wording in the MD&A that you talked about larger users sort of initiating -- have begun to initiate their move to ARGUS Cloud in Q3. Do you have any more color on -- that you can give around the process that they're going through that maybe evolved in Q3? And what insights you have into timing around moving up from the SMBs to the more larger-sized enterprises?

[Michael J. Gordon, CEO & Director]

I think what -- as people have kind of now started -- I mean, I realize COVID is coming through its next wave. But I think as people have learned to live with the state we're in right now, this new normal, they started to think about what they need to be doing in their own investments over 2021 and 2022. And so we started seeing -- it might be early to talk about green shoots, but the inquiries that we've been getting about the cloud and what we're doing with it and where the road map is going has certainly started to solidify further.And from my perspective, that's where they're starting to ask the questions on how this fits towards their entire valuation strategies. And so this has been a lot of period of time in talking to them about as they're using our advisory services, how can they leverage our solutions even more fully -- our software solutions more fully. In the past, we might lead the software, but now we're sort of leading a little bit with advisory, and the software is coming.I think as I -- as we talk to our customers, they are definitely engaged in trying to find new ways to do their business and improve their business models. And that's where a lot of our discussions are going. So back to your questions on when we will start to get to a -- we'll start seeing progress with this. To be honest, I'm very hopeful that we'll see some progress before the end of the year with some of our large customers. I would -- but I definitely see next year being a year that we will be very focused on that.And I would say that Q1, Q2, we'll start to see more customers coming on, assuming we are in the same world we are right now. And so that's my goal.

[Stephen MacLeod, Analyst]

Great. Okay. That's also helpful. And then maybe just one last final one, more tactical, but is there a way you can quantify, and maybe Angelo has this number, how much pull forward you had from Q4 into Q3 on the Tax business?

[Angelo Bartolini, Chief Financial Officer]

Well, I don't -- I'm not going to provide an exact number, but it was pretty significant. I'd say that like if you're looking at consensus estimates, there's a significant part of that, that we pulled in from Q4. I mean we were expecting in that space to have more of an impact with the ability to close on -- with some of our appeal files with the jurisdictions. And we were able actually to bring them in earlier.We had a great quarter, as I said earlier, in the U.K. So that we saw settlements up very high there as well as in the U.S. and Texas, in particular, where they had been dragging out in -- from Q2. And our expectation was that it would take a substantial part of the remainder of this year. And we saw a good part of it coming in, in Q3. So hopefully, that gives you some sort of idea, Steve.

[Stephen MacLeod, Analyst]

Yes. That's helpful. Great.

[Michael J. Gordon, CEO & Director]

I'm sorry, I think if I would add to it, I think that when I've been talking to Angelo and the team, I think we're comfortable with the FY 2020 tax consensus out there.

[Operator]

The next question is from Paul Treiber from RBC Capital Markets.

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

Mike, you spoke about Europe and Asia as a large opportunity. What do you think the company has been missing for the last couple of years that's been straining adoption outside of North America? And what's the plan to address that?

[Michael J. Gordon, CEO & Director]

I think from a standpoint of -- again, I don't want to keep beating the drum on go to market. But I think we have our different businesses that have gone out into new areas or newer jurisdictions in the world, and they've done it somewhat independently.And where I want to spend some time with them is, we have a lot of great resources in this company. We have a lot of great resources from software, and we have a lot of great resources from the people who do the business for our customers. But we're -- again, it gets back to that alignment, we're not using our heft to solve solutions in some of these markets.So one of the things as we continue to shift things around, we'll be focusing a little bit more on the regional model. And as a result of using that, we'll make sure that we have the resources more aligned to leverage the solutions together. It's something that I saw back in my days in FICO, and it's -- a lot of times, as you're moving into new jurisdictions, you really need to think about your partners, your staff that you have there, all the different things and how you coordinate the sales together.I think what I heard from our global customers, they absolutely want us in those jurisdictions. They would like to have us play a role in helping them normalize the data around their assets, normalize the valuation around their assets across the world. So I think we're getting strong demand. Now we have to be able to serve that demand in the right way. And so that's where I think -- that's, I think, the major shift that we have to make.

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

And now that you've been -- you can see under the hood of the company. One of the things that Altus is it does have 2 fairly distinct businesses, Altus Analytics and then the CRE services business, or CRE Consulting. The -- do you see synergies from a data and software strategy between those 2 businesses? And how do you look to execute on that if you do see them?

[Michael J. Gordon, CEO & Director]

So my short answer is, yes. I think that when I look at where we -- where both businesses operate is in a very close ecosystem with each other. We saw valuation services, and we performed valuation functions for our customers. And a lot of the data that our Tax guys are doing, they are pulling ARGUS files with our customers to help support the work that they do.And so there is an alignment of software as well as data that I think will align these businesses further in the future. And that gets back to the digitization I've talked about with Tax. I think there's some work there that we can really build a very strong solution when it comes to valuation by leveraging our Tax team along -- and aligning it a little bit more with Altus Analytics.I realize the practitioners in both businesses will continue to do what they need to do. But I think that in the world in which our customers are really looking to us to provide solutions, I think there's a good opportunity in the software and data across both units.

[Paul Michael Treiber, Director of Canadian Technology & Analyst]

And lastly for me, in Altus Analytics, from a products point of view, you talked about the need for greater integration between the products. Do you see any key gaps in the product portfolio that perhaps you could address over time?

[Michael J. Gordon, CEO & Director]

I think -- I mean I would say I've gotten a good review of the road map right now, and I've been spending time with the teams on the road maps. I think from a perspective of getting those pieces aligned, I think we have a pretty good set of solutions. One, we have a great valuation engine in ARGUS Enterprise, Voyanta and Taliance fit in very nicely nearby.I think there are some things that we probably need to do in the debt space. Our customers are asking us to -- we do a lot in the equity space, but they would like us to be able to align debt and equity together. So there's probably some work that we'll be doing on that. But I think that the remainder of like 2021 on the road map will be really bringing out a lot of good core functionality that you'll see us put on the cloud because that's what our customers are demanding right now.

[Operator]

The next question is from Deepak Kaushal from Stifel GMP.

[Deepak Kaushal, Director and Technology & Communications Analyst]

I've got a bit of a hodgepodge. I'll try and keep them short. Mike, you mentioned you took a survey of the competitive market in your earlier remarks. I'm wondering if you can note -- it's hard to probably talk about, but any vulnerabilities you’ve seen or any potential competitive gaps in the market that might be new to us that have a lot in store for a while?

[Michael J. Gordon, CEO & Director]

Well, I think what we're doing is -- we definitely look competitively. What we're going to be doing is a customer survey. And so that's going to be something that we're getting in more just on our client -- on our customer satisfaction. So if I misspoke, I would apologize on that.I think as for the competitive market out there, listen, I think right now, there are -- there's a lot of useful -- there's a lot of people running to the data market. Everybody I met in this business, whether they are competitors or their customers are talking about themselves as data companies.And I had the ability to be on a panel with several of my peers a couple of weeks ago. And I think that the major thing that we have is we're all trying to -- we have to be more aligned as you use data. That's one of the things that the financial services industry got right is they got the alignment down, and there's different people in different parts of the ecosystem where people are trading data back and forth. So I think what you'll see from us is you're going to see us do more on opening up our APIs, making it easier for us to use our business -- our solutions on the cloud. So people can move data back and forth. That is something that our customers have asked for. So that will close the gap.I think that you'll also see the way that we leverage the data that we have, we're going to steward that for our customers. It's their data, and our job is to steward it and make sure that they get as much -- they get as much out of it as they can.The one thing where I would say that is going to be something that we will definitely invest in as we go forward is there's definitely a need -- and this comes back from the space that came from, there's definitely a need for more analytics in this space. Some forward-looking thoughts. Things are moving faster now, given with what COVID has happened and I see the velocity changing. So while you capture the data, it's how you really have to manage the velocity of what's coming at you and how you need to use that for decisioning. And I think that's something that I think we're uniquely set up for, and that's something that we'll be focusing on to help close that gap for our customers as well.

[Deepak Kaushal, Director and Technology & Communications Analyst]

Okay. And just to follow-on that, when I think of the ERP players in the space, are they competitors? Are they partners? Or are they ecosystem players? How do you look at it?

[Michael J. Gordon, CEO & Director]

They're both. I think I've gotten a chance to meet a number of them. And God, they do a lot of great things out there, and I can see what they're trying to do. And -- but at the same point, we're starting to partner with them to make sure that we both -- we open up the APIs between our systems to make it, again, easier for our customers to do work and do business. I think that's the right thing for our customers. So I'm sure that might open up some co-opetition or like, I will say, it will open up some competition, but I'm also assuming at the same time, it will improve some partnerships that we have.So I kind of -- that's kind of how I look at them. I will -- I've already had some nice messages from them, welcome me to the game. I'm looking forward to working with them. And I'm sure that there's going to be times we're going to compete.

[Operator]

[Operator Instructions] There are no further questions registered at this time. I'll turn the meeting back over to Mr. Gordon.

[Michael J. Gordon, CEO & Director]

Thank you for that. It's been great to have you guys on tonight, and it's been great to talk about the business as we see right now. I would like to thank you all for coming. I look forward to working with all of you in the near future and continuing our conversations. And I wish you all a good evening. Thank you very much.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Should you have further questions, please contact Camilla Bartosiewicz at Altus Group. We thank you for your participation and ask that you please disconnect your lines.