Hi, good morning everyone, and thank you for joining us today for our 2025 fourth quarter conference call. With me on the call today are Vitalhub CEO, Dan Matlow, and CFO, Brian Goffenberg. After our prepared remarks, we will open up the line to questions from analysts. Please press star one or use the raise hand function to indicate that you would like to ask a question. Before we begin, I will read our cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, please review the forward-looking statements disclosure in the earnings press release and in our SEDAR filings. As well, our commentary today will include adjusted financial measures which are non-IFRS measures.
These should be considered as a supplement to, and not a substitute for, IFRS measures. Reconciliations between the two can be found in our SEDAR filings. With that, I will hand the call over to Brian to go over financial highlights for the quarter. Over to you, Brian.
Good morning, everyone, and thank you for joining the call today. We are pleased to report results for the fourth quarter and full year of 2025. I'll provide a summary of the financial results and then pass it over to Dan for an update on the business. For the full year, we are proud to report over CAD 100 million of total revenue, a milestone for all of us at Vitalhub. At the end of 2025, we reported annual recurring revenues of CAD 96.1 million, representing net organic growth of 10% over the prior year. We achieved 24% adjusted EBITDA margins and increased sequentially, showing progress on integration.
For the fourth quarter of 2025, we reported total revenue of CAD 31.4 million, an increase of 52% year-over-year, and slightly lower than Q3 primarily due to the unusually high services revenue in Q3. Recurring revenue for the term license maintenance support segment was CAD 23.6 million, or 75% of total revenue. Virtual care term license revenue was CAD 2.4 million, down 4% sequentially. Perpetual license revenue was CAD 500 thousand, an increase from CAD 100 thousand in the prior year period. Service, hardware, and other revenue normalized sequentially at CAD 4.9 million compared to CAD 2.8 million in the prior year period. Our gross margin was 79% of revenue, compared to 81% in the prior year period.
Adjusted EBITDA for the quarter was CAD 7.4 million or 24% of revenue, compared to CAD 5 million or 25% of revenue in the prior year period, and 22% in Q3 as we continue to gain synergies from our latest acquisitions and operations. On the balance sheet, we closed the year with CAD 119.2 million of cash and no debt. With that, I'd like to hand the call over to Dan for an update on the business.
Good morning, everybody. It's good to have you this early, but we're excited to be here. Before I start, I just want to appreciate it and just talk about the delay that we had. There was nothing material that came out of that at all. It was just growth pains with the new auditor, new people, new teams, getting to know the business. In some ways, we were just ahead of our skis a little bit. If you noticed, we booked one week earlier than we did last year with the new auditor. Probably, not the smartest thing that we did, but we're really happy with the results that came out. EY did a great job. We're in great spirits with them, and we're off moving in the right direction.
Just thank everyone for their patience to do it. I'm not gonna talk that much about the year results. You know, those things all came through the quarter. We're excited about how the overall results. It's good to look at that. We did surpass CAD 100 million in revenue and all the metrics on a yearly basis were you know as expected, and we're very excited about our performance. We're very happy with our Q4 results, especially in respect to the integration of Novari and Induction. Those integrations are going really well. They're pretty good contributors. You can see the cost lines in perspective of those things and how they're starting to impact with that. Again, services revenues were lower, primarily because Q3 was higher.
We called that out in Q3 that that number probably isn't sustainable. It was a good surprise to have in Q3, and it definitely helped our numbers as we were working through getting the cost synergies from the acquisitions to do it. The same thing in our term licenses in Q3. Our term licenses for the most part represent ARR when you try to correlate it, but we do have timing issues, you know, for some of those ARRs on we get renewals where we do catch-ups for the rev rec perspective to do it. It's usually not that material that corresponds with it, but sometimes it's not 100% mapping on what they do.
Yeah, we're pretty happy with operations. Our backlog for services is really strong as we move into the year. We're doing a great job on new deals. We're excited about the pipeline for Novari, both in Canada and in the U.K. There's a lot of work that's going on through provincial initiatives across all the different provinces that we're in the mix of. Unfortunately, not all those provinces or customers allow us to announce these deals at the time of signing them in all circumstances. We have a lot of activity to do. We're moving resources across organizations really effectively at this point. You know, we're excited about things that are going on through.
We did have contribution from all the different products for the quarter, and we're excited about what the pipeline is to get the company to the Rule of 40, you know, coming into the new year a lot quicker. We still expect to see cost synergies moving throughout our product sets, and we expect revenue to start contributing on the ARR side, which will start contributing to income as well as we continue to move forward. I also wanna talk a lot about AI or a little bit about AI. We've embraced it. We've set up AI development teams, AI projects. We've seen revenue come from one of our Novari projects. I think we announced that. We are close to seeing revenue going into market.
We're jointly developing other AI projects with our customers. All of our AI projects are being driven by our customers for initiatives, and we have a lot of those that are going on. We do expect those to start contributing into the revenue line as we start moving through the middle to the end of 2026 as they start coming in through our portfolio. We've also embraced it internally. We've added AI initiatives into our development processes, into our sales processes, into our support processes. We continue to look for ways that AI can improve our productivity, and we've started to make those investments as we continue to move there. We're excited about what AI can bring as an opportunity going forward. That's all I have to say today.
We'll look forward to getting some questions and fleshing out any details that we might get.
Great. Thanks, Dan. We'll now open up the line to any questions from analysts. As a reminder, please press star one or use the raise hand function if you would like to ask a question. Today's first question comes from Gavin Fairweather of ATB Capital Markets. Gavin, your line is open.
Oh, hey, good morning. Thanks for taking my questions, and congrats on the strong results. Maybe just to start on the macro, I mean, the incremental ARR was strong this quarter, but maybe down a little bit against a strong compare year over year. I know we talked about the NHS restructuring that was moving through the system in 2025. Maybe you can just discuss kind of the spending environment that you saw in the quarter and maybe touch on if you've seen any changes in Q1, which is historically the strongest quarter for bookings.
Yeah. You know, Q4 can be challenging just on the timing. You're coming into the Christmas year-end, and you're seeing procurement people, you know, not being around. Then they know they got Q1 to get those things over the finish line to use the budgets up. Sometimes it is a challenge getting things over in Q4. I think that's really, you know, what it is. We did see contribution. There were a lot of deals in the quarter, just not the size of the deals, just based on the way the mix worked for the quarter. Yeah, I think that's where it is, you know, relative to what we're doing.
We never thought this would go up in a straight line, Gavin. I've always said that. You know, we're excited to see what our Q1 results look like from a new ARR booking. We continue to move in the right direction.
Appreciate that. Maybe just on costs. I mean, they were down about 8% sequentially on the OpEx line, which was great to see. I guess I'm just curious for your assessment of kinda what proportion of your targeted cost synergies have kind of moved through the system and been actioned on Novari and Induction.
We're continuing to move costs out, and you know, to do that. It is somewhat gonna get, you know, offset by some investment in AI initiatives, but I think overall the costs are still going to continue to move down. We're trying to move a lot of those AI initiatives to the lab. We, you know, we do have training and other things that are going on sequentially in the core business. Yeah, well, we still got work to do on moving resources.
Both Novari and Induction had their own offshore development groups, and that's really you know, there are some initiatives that are going on and continue to go on in terms of people. Yeah, we've managed to recently integrate Induction into the greater U.K. world and that's working out pretty well. You know, I would say we still got work to do, but we're banging through it.
That's great. Just lastly for me, you know, with the progress on integration that you've seen, curious how the M&A environment is shaping up here in 2026, just in terms of the amount of deal flow that you're seeing, you know, the seller valuation expectations and competition for those deals.
Yeah, we're definitely seeing deals. We're working on deals. We continue to work on deals. We expect to do deals in 2026. We're, you know, constantly on the go in those perspectives. Nothing has changed in those markets. Always with valuation, we value what we see in a company. I do think we're starting to see some companies. You know, there's definitely a lot more scrutiny on the companies by the PEs in perspective, and I don't think we're seeing. You know, there are some scenarios going on where maybe a couple years ago we would see PE that would get the price up on those deals, and we're not seeing PE in those deals anymore.
We are also starting to see a significant amount of tired investors in some deals that you know, it's just question on are they gonna take a down round on their sale or not, right? They came in at these higher valuations. Those scenarios are there and we still continue to value the deals by using our methodology. It doesn't really change how we think. You know, the opportunity to get deals at how we think at our prices is currently there in a bunch of scenarios and we're working through those.
Thanks so much. I'll pass the line.
Thanks, Kevin. The next question comes from Kevin Krishnaratne of Scotia Capital. Kevin, your line is open.
Hey there. Good morning, guys, Dan and team. Congrats on a great quarter. Dan, can you just expand on the AI product roadmap? You know, it's definitely early days, but you talked about. You saw the press release last week on Novari. What are some of the other, you know, kind of logical areas where we could see, you know, AI first? Then you talked about, you think you're gonna see the contributions midyear to end of year. Is that gonna show up in. Like, how do. Does that, is that revenue contribution in terms of, you know, price uplifts or module attach, or is it just sort of. You know, how do you see that sort of, like, flowing through? Like what
Yeah, I think you know, our mandate of our product managers was to come up with AI use cases for the solutions, and then we worked backwards to the ones that we thought would get the most demand by our customers and ratified that with our customer base and attempted to try to price that out of what this is going to cost us. That's where some of the challenges come into the works until you actually get this thing in production. I think we know with Novari where that sits, and Novari does have a module for protocolling built into its imaging solutions, which is demanded by our customers and you know, that's the first one out the door in there.
We also have two other initiatives that are going on in our definitely in a transcription solution in all of our EHR case management based solutions. We think that's low-hanging fruit. We got customers that are taking that, and there will be uploads that get associated with that towards the latter part of this year, and that's currently being worked at in with our partners customers and our hope is to have something in production, you know, midyear for that. We also are working on our SHREWD product set. Again, very much how we can use voice to understand the analytics and understand the data and ask the system what's going on, as opposed to interpreting the system of what's going on.
You know, that project's going really well with some partners as well and we're hoping to get some incremental revenue from that. We got other ones that are going on, but those are three very good examples of things that we're doing with AI and what we think we can do incrementally with it.
Awesome. Yeah, thanks for that. Maybe the second question, just in your press release, you talked about how you're considering M&A of all sizes and also adjacent geographies. Maybe if you can remind us here on how big you go in a deal. You know, how big would you go on putting on debt on the balance sheet? And then when you talk about adjacent geographies, would you consider the US or is that you're thinking more about regions in Europe or Asia Pacific?
I think it's more in Europe than Asia Pac. We still see that's primarily where we're looking for deals and we continue to see deals. You know, there are large initiatives that are floating around. You know, they're floating in these markets. It's just, you know, the challenge being, you know, what are the valuations for these organizations relative to how we look at businesses in what we do. Yeah, we would use debt if the business was right and we felt comfortable that that business could service that debt effectively to get through it. You know, we would really have to be extremely bullish on what that organization is going to do for our overall makeup of our business, right?
You know, we traditionally have been somewhat conservative, and we continue to work that way.
Great. Thanks for all the color. I'm gonna pass the line. Congrats again on a good quarter.
Yeah.
Thanks, Kevin. The next question comes from Richard Tse of National Bank Financial. Richard, your line is open.
Yes, thank you. Yeah, sort of a related question on AI with respect to your customers?
Yeah.
What are they saying about the advancements there? Is it sort of changing their buying decisions at all? You know, I think that in your space, it's probably something that is less, let's say disruptive, you know, given the healthcare industry. But you know, what are their comments in terms of, you know, how it impacts their buying decisions here?
I think they're interested in it, but they're a long way off suggesting how that's gonna drive their business changes relative to what it is. There's some low-hanging fruit, I'd mentioned a couple of them, that we will and should be putting into our product sets. It's not making or breaking our deals, and it's not making or breaking our churn profile of what we have. It's important that we get to it, and we are, but our customer base is not that, you know, crazily as involved as other sectors for sure. Yeah, we do view it as an opportunity where we can add new modules.
Our biggest asset is our customers, and we let our customers drive our initiatives and, of course, if you bring up what we're gonna do and discuss it with them, they're excited about new functionality and new things within our install base. We bring it to our install base first and ideas and that's sort of what we do.
Okay. Great. With respect to Novari, I think I noticed in the filings that you marked up the earn-out a bit, which I think sort of is positive in terms of what maybe sort of represented the business. What's sort of driving that markup, you know, that you can maybe comment on?
I'm sorry, Richard, I don't understand the question. Markup?
The earn-out.
There's a lot of activity going on there.
Right. Okay.
Across Canada and now across the UK. Our UK team has driven on that. They did sell that one implementation that's going on. It's getting a lot of notice within the UK that we're seeing at the moment. The way the auditors and so forth do that contingent, it's always based on what they see and what's going on. Yeah, you know, there are initiatives going on that give a little more probability to paying that out, but that would be a good thing.
Yeah. That was sort of what I was intimating here. I guess related to Novari and perhaps the other acquisitions, are there any metrics that you can just share around the success with respect to, you know, cross-selling, you know, some of the products into the existing base? It's not specific to Novari, but, you know, probably more your sort of entire product.
Yeah. We're starting to see the MedCurrent product and Novari are really starting to hit it off. I think we got our first cross-selling deal in that world that's coming to fruition and we're doing a lot of presentations, especially in the UK marketplace. MedCurrent's done a really good job in there and Novari's imaging solution just dovetails right in to that solution. MedCurrent's got a pretty big base in the UK that they've established over the years. That one seems to be progressing. We're progressing to move the Zesty portal into our EHR product, so that will become the portal per se on a go-forward basis. We're starting to also you know work integration between our Intouch platform and our Zesty customers.
The Zesty product can be used as the patient engagement application, you know, as we go forward and do all the check-ins and so forth with that. We are starting to see some cross-selling, you know, from those components, definitely in the markets.
Okay. Great. Thanks.
Thanks, Richard. The next question comes from David Kwan of TD Securities. David, your line is open.
Thanks, Christian. Apologize, I was late jumping on the call if these questions have been addressed. Just wondering, as it relates to the margins, how we should be kind of looking at it through the balance of or through 2026, assuming that you don't make any kind of incremental material acquisitions. Like, do you think we could get back to the pre-acquisition levels, kind of pre-MedCurrent, pre-Strata in the kind of 27%-28% range exiting the year?
Yeah, if you think about it, right, like, you know, we're continuously working at the cost side of things and trying to get integration and so forth that are there. I think equally as important that is if we can add incremental new ARR without increasing costs, you're gonna start getting it on both sides, right? I think it could be a little bit of both that starts coming to the equation. We do expect to add ARR, which should start coming to the bottom line as we close it. You know, combined with that with a little bit of some more synergistic work that we're doing, to do it.
That's what we're aiming to do, and that's what we're trying to do, you know, as part of the year, right? We've always said where we wanted to get to, and nothing's changed from that perspective. We're budgeted to get there, and we're trying to get there.
No, that's great. Thanks, Dan. On the AI side, appreciate the color that you've provided. I think you kinda hinted and talked about some of your customers kind of working with you on some of these AI projects and initiatives. Like, to what extent are they funding or helping fund some of these initiatives?
Yeah, we do have initiatives on the transcription product where customers have actually given us money to build it for them. You know, that's showing evidence of it to that degree. We do got stuff there. On the case of the Novari side, it's a separate SKU. We had customers buy it before it was built, with them and helped in the design and in the process to do that. Yeah, that's sort of how we like to work. We always have been in terms of trying to partner with those initial customers and try to get some skin in the game from them, and that's how we build software.
That's great. Just last question. Just on the cash flow this quarter, can you provide some color as to why there was such a significant drag? I think cash taxes was one thing in particular, but anything you could provide, that'd be great.
Timing is always an issue when it comes to cash. Q4, we have a lot of our business turns over at the end of Q1. You know, like Attend Anywhere. The whole Induction stream, Attend Anywhere, all comes up for renewal at the end of Q1. That's a big cash driver in the business, right, in terms of funding that. There's other products that are definitely there more skewed to Q1. Our AR number is higher than we want it to be in terms of the collections. I think operationally, both Induction and Novari had challenges in terms of how they were set up to collect money and do billings. Operationally with that, we've improved that tremendously.
Yeah, it's giving a bit of a drag on getting the money through the doors, through that perspective. I think that's all it is, really.
Do you expect that we could see a reversal either this quarter or next quarter?
Yeah, I think Q2 is probably our big cash collection item. There's some pretty big deals that come in Q2 and Q1 that have traditionally driven our cash balances.
Right. Thanks.
Thanks, David. The next question comes from Paul Treiber of RBC Capital Markets. Paul, your line is open.
Hi, good morning. Thanks for taking the question. Just a question on Sri Lanka. You know, your operations there, I think they've moved to a four-day work week in the last few days. Do you see any operational impact or how you plan to mitigate any operational impact from that change?
They didn't move to a four-day workday. They moved to a four-day in-office workday. They're all working five days a week at home. We always did have a hybrid workplace there. Certain teams come in certain days of the week, and certain teams come in other days of the week into that office setting, depending on what they do. There's no disruption at all in operations there.
Okay, thanks. Thanks for that insight. Just in terms of AI and then also just in regards to M&A, to what degree or how have you changed your due diligence to take into account either, you know, potential AI opportunities or potential AI risks at some of the targets that you're looking at?
You definitely throw it into the mix of the criteria where we look at, you know, number one, can AI replace us down the road? How simple is the tech? How complex are the workflows? Most of the time we come to the conclusion that the workflows are pretty complex, that they wouldn't if they weren't complex, they wouldn't actually be applications. But we're definitely, you know, dotting the I's and crossing the T's on it. And also we're, you know, we have seen a few companies that have built some AI components, or they call them AI components, but when you actually look underneath the covers, it's pretty simplistic. It's not really much to do with AI.
We're definitely going to start asking those companies, have they started any AI initiatives? Do they see what AI use cases do they see? Have they spoken to their customers and about AI and tried to understand what the direction for those products would be with AI? I wouldn't say it's the sole criteria in how we buy things, but, you know, we definitely cover it off as part of our buying process, for sure.
Okay, great. Well, thanks for taking the questions.
Thanks, Paul. The next question comes from Michael Freeman of Raymond James. Michael, your line is open.
Good morning. Congratulations on a great big year. I'm gonna also jump on the AI theme. You know, you've discussed AI as an opportunity in your own business. I wonder if you could expand a bit about how you see, you know, the potential for it to be a competitive threat. Maybe touch on the stickiness of your contracts. You know, change management in healthcare and potentially it. I wonder if you could point out if there are any pieces of software in your portfolio that you might identify as particularly vulnerable to, you know, to an AI competitor.
Yeah, I don't think there's anything in our portfolio that fundamentally is a risk to an AI competitor. There is stuff that's a risk for other factors, but I don't think it's at the root of AI. I think the complexity of our applications in terms of workflow and structures is a pretty big moat. I also think the size of the TAM that we work in and the slow moving-ness of our customers is a pretty big moat. You know, for someone to recreate our software in AI, they'd have to rebuild it. Sure. That's something that's all part of it. You know, rebuilding, you still gotta sell it, you still gotta replace it, you still gotta go through a change management process with the customer.
You gotta get them to believe that, it's there. You gotta cross a significant amount of investment in security solutions and compliance-based solutions to work in that world. I think it is a pretty big moat to get into. You know, it's not. We're not waking up in fear that there's someone. We still haven't, for sure, seen it, where all of a sudden you see someone put up a website that says a competitor to our product and it's go-to-market and we've used it building AI. Like, nothing even close to that scenario in our market at this stage of the game.
Okay. No, I appreciate that. I'll typically ask questions about the changes going on at the NHS. Could you just touch on a little more how the reorganization of the NHS has been showing up in buying patterns among your customers for your software?
Yeah. I think the biggest effect of the NHS is. I've mentioned this in the last couple of conference calls. It is affecting our SHREWD product line. There's these groups in the UK called ICB which are owned by government, and it's regional oversight of them. They're reorganizing those ICBs right now, and they're merging them, and they're making employee cuts in those particular areas. Really what it's done is slow down our operations. It slowed things down relative to what it is. You know, we'll see how that goes. It could be a really great opportunity for us to try to get the rest of those sites that we don't have once the dust settles here.
It's gonna take a few more quarters for the dust to settle and work with that. They're definitely until they understand how all these places are gonna work and do stuff, there's buying decisions. That's really the only products that we sold to that group. The rest were sold to the other regions that are actually, you know, controlled by the actual hospitals and the other groups amongst them, to do that. They're regionalized in, like, a double layer mode in the NHS, and the top layer is a challenge, but the second layer where they actually operate as a region as opposed to oversight. SHREWD is an oversight product. It's a viewing product.
As they try to integrate operations, such as things like Novari and Strata and things where they're starting to talk to each other, that stuff is still going and we're seeing a really nice trend there of them looking for products like ours right now in terms of referral management.
Gotcha. Thank you. Very quickly, you know, with the stock price having come down over the last couple of months, I wonder if you have looked at your capital allocation strategy and considered an NCIB or a buyback at these prices.
Yeah. We have considered it, although we do think our cash can be used for acquisitions and we'll get a better return based on that when we do the math, that corresponds with that. You know, we think at the end of the day we're looking to produce a good company and produce good results and good financials. We're trying to get, you know, as well as we can. It's always been our mandate. That's our mandate from the board. I think our major investors understand what we do and would like us to continue to do that. Yeah, we, at this stage, we're not going that route.
Okay. Perfect. I'll pass it on. Congrats again.
Thanks, Michael. The next question comes from Daniel Rosenberg of Paradigm Capital. Daniel, your line is open.
Good morning, everybody. My first question comes around just the product roadmap. You mentioned putting together this AI team inside your business.
Right.
I was curious if that changes how you think of product development, whether it should be build versus buy. Just how do you think about that, given the changes in productivity in the internal teams?
Yeah. We are putting AI into our building processes of product. We are starting to use it. We, you know, we need to introduce this and have introduced it in a controlled fashion. We got a lot of compliance and security requirements on how we build things and how we use AI and it's important that we have strategies and regular processes as we build that. We are using AI in our work, and we are investing in those initiatives. There's some really good low-hanging fruit to do.
We've introduced the products such as Gong into our sales and marketing group, which are AI-based initiatives in terms of transcribing sales calls and understanding the whole sales world, and it's really been a really good initiative for us. You know, we've definitely upgraded our Freshdesk support systems to do that. We're exploring the NetSuite AI modules that are available in the marketplace. Yeah, we are starting to look at the productivity tools that they can enhance relative to what we have. We got the same debate that's going on. Do we use Copilot? Do we use Claude? Do we do stuff? We got pockets that are using one or the other.
We're in the same mode, I think, where a lot of companies are at this stage in the game.
Thanks for that. You spoke to low-hanging fruit, which a lot of it sounds like kind of scribe transcription type technologies. I was wondering, you know, as you think of the longer term use cases, you know, does this go to agentic type solutions? You know, where does your mind go when you think longer term about the possibilities?
Yeah, in our world, it's you know, we got unique workflows. We gotta report to governments. We got to do things. I do think they'll like transcribing. I don't think they're looking at it through the same lens as a hospital's gonna be looking at them or the complexities of what we do. You know, we primarily sell to social services, mental health. It's pretty unique models, and we need to build our products in a different way. Yeah, I think, yeah, they're definitely gonna wanna use them, and we think, you know, as we start getting towards 2026, 2027, that we'll start seeing results. At some point, I can't see regular. You know, I don't think anyone's gonna do note-taking, right?
They're gonna come do it through the system. We're embracing it, and we're putting it into our product sets.
Fair enough. I guess lastly for me, I was curious around the pricing of these things. You know, can you comment on kind of there's some debate around usage-based pricing versus seat-based pricing? How do you strike that balance, when you think about rolling out these solutions?
I think we're getting charged usage, so we sort of have to pass that on to the customers and be transparent about it. That's really where the challenge, I think, comes for AI is, who's gonna make the money here, right? Are the vendors gonna cost more than what our customers are willing to pay for that, or can you get it done cost-effectively? I think the one conclusion that we've come to is we need to build our own modeling for our systems and not use third parties for it. We need to train our own models for that stuff and as opposed to getting a third-party tool to become a layer in there in order to make money at this.
That's sort of what we're investing in.
Very interesting. Thanks for taking my questions. I'll pass the line.
Thanks, Daniel. The next question comes from Justin Keywood of Stifel. Justin, your line is open.
Good morning. Thanks for taking my call. Just on the earlier comments of recapturing Rule of 40 status, are you able to walk us through how that may be achieved? The EBITDA margins in the Q were 24% and the exit ARR growth was a little lower, so just wondering the factors in recapturing the Rule of 40 status. Thank you.
Well, let's hypothetically say, you know, for every CAD 1 million of ARR that we add no cost. You start adding, you know, 1% on both sides of those equations. And then if you start getting those costs down a little bit more, you increase that speed. Yeah, I think it's done both ways. We gotta sell some more software and just get that ARR coming. That's high gross margin-based business. Yeah, of course, we are adding some costs in other areas along the side of it, but yeah, sort of how we work as a business.
Is there a target exit EBITDA margin for 2026 or target ARR organic growth range?
We've always said, as an organization, that we're probably a 27%, 13%, 28%, 12% type of business, right? In terms of getting to the Rule of 40, that's where we were before these two acquisitions. We've made it very clear that that's what we were aiming for after these acquisitions, and we were pretty clear on the timeframes that we thought that could be in. We're still in the middle of those timeframes, and we're continually trying to progress that forward.
Thank you. One final question. Just the progression, you know, to those metrics. Realize there could be some variability, but any particular softness just in Q1 or the first half of the year?
Softness in.
Either in the ARR growth or maybe perhaps the margin expansion would be back-end weighted, if that's the correct way of looking at it.
No, I think our margin increase is really coming from the integration of those organizations which we continue to work on. ARR growth will continue to be incremental. You know, we're aiming to have that in the 10-12% range on a continuous basis, and that's what we're trying to do.
Great. Look forward to see it. Thank you very much.
Thanks, Justin. There are no further questions at this time. I'll hand the call back to you, Dan, for any closing remarks.
Yeah. I think in general, our Q4 is sort of when we did the Novari and Induction acquisition. I think our Q4 was pretty much on the mark, right? In some ways, the overachievement of Q3 affected the Q4 but we're happy with how we're progressing. We're integrating those organizations. The pipelines are strong. We're getting our AI initiatives into market and we're happy with what we do. We got a lot of cash to do some work. We're picking through some acquisitions, and we're just continuously trying to run the business model here. Another quarter behind us. We're excited to have this done and get into Q1, which is gonna close in a couple weeks. It's always the fun part about this.
Yeah, we look forward to seeing you guys in, I guess, another 60 days or whatever and showing you what the Q1's all about.
Thanks, Dan. This now concludes today's conference call. Thanks everyone for joining.
Thanks, everyone. Bye-bye.