Information Services (ISC) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 12% year-over-year to CAD 60.9 million, driven by strong performance in Saskatchewan Registries, new Bank Act Security Registry revenue, and robust Technology Solutions growth.

• Adjusted EBITDA increased 18% to CAD 22.7 million, with margin rising to 37.3% from 35.2% in Q3 2023.

• Net income was CAD 4.2 million (CAD 0.23 per share), flat year-over-year, as higher operating results were offset by increased share-based compensation and IT investments.

• Adjusted net income rose to CAD 11 million (CAD 0.61 per share) from CAD 8.4 million (CAD 0.47 per share) in Q3 2023.

• 2024 guidance reaffirmed, expecting record annual revenue and adjusted EBITDA since going public.

Financial highlights

• Registry Operations revenue rose to CAD 31.9 million (from CAD 27.4 million), with Land Registry at CAD 20.7 million (from CAD 17.8 million).

• Services segment revenue was stable at CAD 25.6 million; Technology Solutions revenue increased to CAD 3.5 million (from CAD 1.6 million).

• Consolidated expenses increased to CAD 49.7 million (from CAD 43.3 million) year-over-year.

• Adjusted free cash flow was CAD 15.9 million, a 10% increase year-over-year.

• Net cash flow from operating activities was CAD 14.2 million, slightly down from CAD 14.6 million in Q3 2023.

Outlook and guidance

• Annual guidance for 2024 reaffirmed: revenue expected between CAD 240 million and CAD 250 million, adjusted EBITDA between CAD 83 million and CAD 91 million.

• Strong Saskatchewan real estate activity and a full year of fee adjustments are expected to support continued growth in Registry Operations.

• Enhanced due diligence trends and regulatory oversight are anticipated to benefit the Regulatory Solutions Division.

• Recovery Solutions Division expected to see increased assignments due to consumer financial pressures.

• Expense drivers include wages, cost of goods sold, and additional costs from the Extension Agreement.