Thank you, everyone, for joining us today, and Welcome to Avante second quarter Investor Webinar. My name is Rajan Sohal, and I will be the moderator for today's call. Joining me on the call today are Emmanuel Mounouchos, Founder and CEO of Avante, and Raj Kapoor, the Company CFO. This call is being recorded. There will be a question-and-answer session at the end of the call. I trust that everyone has received a copy of our financial results press release that was issued last week. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis from cedarplus.ca. Please note portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws.
These statements are made under the safe harbor provisions of those laws, forward-looking statements that are based on management's current views and assumptions, and that this discussion is qualified in its entirety by the cautionary note regarding forward-looking statements that is appended to our news release. Please review our press release and Avante's reports filed on SEDAR+ for various factors that could cause actual results to differ materially from the projections. We use terms such as gross profit, gross margin, adjusted EBITDA, and RMR on this conference call, which are non-IFRS and non-GAAP measures. For more information on how we define these terms, please refer to the definition set in our management discussion and analysis. With that, let me turn over the call to Mr. Emmanuel Mounouchos, Founder and CEO.
Thank you, Rajan, and welcome, everybody. We truly appreciate everyone joining us today. On today's call, our CFO, Raj Kapoor, will review the Q2 results, and I will provide a general update and business overview of where the company is today and our positive outlook. Before we get into the financial results, I will provide a high-level overview of Avante. Avante is a leading provider of security operatives and technology-enabled security solutions to residential and commercial clients. Avante's mission is to deliver on an elevated level of security globally with white-glove mentality to high-net-worth families and corporations alike through advanced solutions and methods of detecting conditions that require immediate response. The company has developed a diversified security platform that leverages advanced technology solutions to provide a superior level of services. Avante is headquartered in Toronto, Ontario, and we have approximately 175 employees in the company.
Today, the security landscape for high-net-worth individuals has become more complex than ever. With rising geopolitical tensions, increasing incident and targeted crime, and growing concerns over personal safety, the need for sophisticated security solutions has never been greater. High-profile individuals are no longer just seeking traditional protection; they require comprehensive, proactive measures that integrate advanced technology with expert oversight. At Avante, we understand these evolved risks and are committed to providing elite security services that offer not only protection but also peace of mind. On today's call, I want to highlight the following topics. First is our Q2 financial results, which Raj will discuss in more detail shortly. The second quarter continues to build on the momentum we established earlier this year, with revenues increasing 10% year- over- year, driven by strong performances in both NSSG and Avante Black, with growth of 47% and 48%, respectively.
These divisions represent some of our most sophisticated, specialized niche offerings, and their continued expansion underscores the strength of our differentiated approach and the value we bring to clients in complex environments. Our balance sheet remains strong as we remain bank debt-free, holding CAD 4.2 million in cash and CAD 12 million in available credit facilities, giving us the flexibility to execute on our growth priorities. At the same time, we are continuing to create efficiencies to reduce operating costs through a new ERP system and by streamlining the company's operations, resulting in positive net income for the second consecutive quarter. Second is the innovation at Avante that is driving our growth. Demand remains strong across our premium security portfolio, including our specialized NSSG and Avante Black services, as well as our Halo platform and the solution built on it. We are energized by the growth potential of our next-generation technology platforms.
Our newly rebranded MAST platform, which I will discuss further shortly, continues to gain momentum with strong engagement from institutions seeking advanced safety and security solutions. MAST has a healthy pipeline of opportunities, and we are focused on converting these into meaningful deployments in the coming quarter. Our positive outlook for the remainder of the fiscal year. I would like to turn it over to our CFO, Raj, who will discuss the first theme for today, our financial results for Q2 2026.
Thank you, Manny, and welcome, everyone. Our fiscal second quarter 2026 results are as follows. The second quarter was another exceptional quarter for Avante as we increased revenue by 10% compared to the same quarter last year. Avante achieved quarterly revenues of CAD 8.9 million during Q2 2026 compared to revenues of CAD 8.1 million generated during Q2 2025. This increase in revenues was driven by strong performances in both NSSG and Avante Black, with year-over-year growth of 47% and 48%, respectively. Avante delivered strong recurring growth this quarter, achieving CAD 4.2 million in RMR during Q2 2026 compared to CAD 3.3 million in Q2 2025, an increase of 27% driven by continued expansion in our monitoring customer base and new subscription services. Avante achieved gross profit of CAD 3.7 million in Q2 2026 compared to CAD 3.5 million during Q2 2024, representing an increase of 7%.
During Q2 2026, Avante achieved positive adjusted EBITDA from continuing operations of CAD 584,000, an increase of 73% compared to positive adjusted EBITDA of CAD 338,000 in Q2 2025. I'm proud to report that Avante achieved positive net income for the second quarter in a row. Avante recorded net income from continuing operations of CAD 83,000 in Q2 2026 compared to a net loss of CAD 909,000 in Q1 2025, representing an improvement of 109%. I'd like to take a moment to highlight Avante's current growth trajectory. On this slide, you'll see a graphical view of our six-year annual revenue. Over a period of flat growth from fiscal 2020 through 2022, we have returned to a strong growth path over the past three years. Revenues increased by 35% in fiscal 2025 compared to fiscal 2024.
This growth has been driven by the onboarding of new customers through focused sales efforts, enhanced customer support, the launch of new services, and strategic acquisitions such as NSSG. We have not incurred any reorganization expenses since Q3 of fiscal 2025. Looking ahead, we do not anticipate any further reorganization expenses. We have a very predictable business model as a significant portion of our revenue is recurring in nature. We continue to have strong visibility and predictability for future performance, with over 47% of our revenue in fiscal Q2 coming from contracted recurring revenue. Recurring revenue growth has been entirely from the core business. Our core business, as a diversified security platform, leveraged advanced technology solutions, remains solid, with recurring monthly revenues increasing by 27% in Q2.
The Avante security segment delivered recurring monthly revenues of RMR of CAD 4.7 million during the second quarter of fiscal 2026, up from CAD 3.3 million during the company's second quarter in the prior year. The increase in recurring revenue was driven by net growth in monitoring customers and the introduction of new recurring revenue services to the existing client base. Our client contracts are typically one year in length, and we continue to maintain a 98% client retention and renewal, demonstrating the value proposition and trust in our solutions. We continue to have a clean and healthy balance sheet. I'm pleased to report that we continue to have a strong balance sheet and are able to fund the company's organic growth initiatives. We continue to have a positive outlook for the remainder of the fiscal year.
As of September 30th, 2025, Avante is back to bank debt-free and had CAD 4.2 million in cash and short-term investments. The company has access to a senior secure revolver of CAD 2 million and to a CAD 10 million unsecured term loan facility for a total of CAD 12 million, all of which remains completely undrawn as of today. We feel confident to continue funding growth with cash flow from our operations. Overall, the company is in a very strong position going forward. We continue to have a positive outlook for the remainder of the fiscal year. I will now turn the call back over to Manny.
Thank you, Raj. I will now discuss our second theme for today, how our innovation is driving growth at Avante. Our company was founded on the principle of combining cutting-edge technology with best-in-class security operatives. Innovation remains at the heart of our strategy. We are committed to scaling our proprietary technology for mass use and emphasize subscription-based models to enhance recurring revenue. Our legacy of leadership and commitment to innovation continues to drive us as we build upon the strong foundation and shape of the next chapter for Avante. Our pipeline of technology-enabled security solutions continues to expand, and I'd like to take a moment to walk through three key offerings: our newly rebranded MAST, Avante Black, Avante Verified, and NSSG. Turning now to MAST, our mobile automated surveillance tower represents the next evolution of our autonomous security technology.
As many of you will recall, this solution was previously rebranded as WALL-E. We rebranded it this quarter to MAST to better reflect our product's core purpose and capabilities as a mobile, automated, and highly intelligent surveillance tower. MAST is an unmanned, solar-powered, wireless communication security tower equipped with Avante's proprietary Halo technology, enabling real-time surveillance, silhouette and body part detection, advanced AI-driven analytics, facial and gun recognition, and fully autonomous threat detection. Designed for environments with limited infrastructure or temporary security requirements, MAST provides continuous monitoring with minimal human intervention. It also incorporates a backup generator, ensuring uninterrupted operation even in low sunlight conditions. Every deployment of MAST becomes part of the MAST security network, which is fully integrated into the Avante security network control center.
This network architecture allows MAST units to work together to create secure local perimeter networks with no blind spots, enhancing responsiveness and situational awareness across large or complex sites. We are pleased to report that all MAST units from the initial rollout are now fully deployed, reflecting strong early demand and successful onboarding across customer sites. Over 20 pilot units are currently deployed, which include different forms and factors of MAST, such as [BOXY], which is a smaller version designed for sites where the full MAST footprint is too large and where grid power is available. This expands our addressable market to give customers more flexibility across a variety of deployment scenarios. Over the past year, we have been working diligently to bring MAST product to market. I'm really proud of our team and all the work we have done to get MAST ready for market.
This includes complete R&D and integration with our Halo system, design and implementation of the MAST security network, securing our supply chain and multi-sourcing of parts, assembly and pilot testing of MAST, and deploying all units from the initial pilot rollout. With the foundational work now completed, we are now positioned to begin ramping up commercial activity. As we look ahead in calendar 2026, our focus is on scaling MAST from successful pilot programs into a meaningful growth engine for business. The next phase of our plan is focused on expanding our sales and customer support capabilities to meet growing demands. We are also building a robust pipeline of opportunities as awareness of MAST increases across multiple industries. Additional towers are currently in production, allowing us to support this growing interest and reduce lead times as deployment accelerates. We're already seeing strong early traction in several verticals.
In addition to construction, we are seeing interest across many vertical markets, including telecommunication, retail, and oil and gas. These are attractive markets where customers require reliable, autonomous perimeter security that can be deployed quickly and operate in a meaningful infrastructure. Taken together, these efforts give us confidence that the calendar 2026 will be a meaningful ramp-up year for MAST. With all its sustainable design, advanced analytics, network architecture, and highly flexible deployment model, MAST is well-positioned to become a high-growth recurring contributor to our performance as adoption continues to build. Launched in 2023, Avante Black now represents over 10% of our total revenue and continues to scale rapidly. The division delivered 48% year-over-year revenue growth in the quarter, reflecting strong and rising demand for our high-value, need-security, and intelligence services. This growth is being driven by several key factors.
First, there's a strong demand for specialized executive-level security services, particularly as global risk environments continue to intensify. Our worldwide footprint also enables us to service clients anywhere in the world, which has been a meaningful competitive advantage as the division expands. Clients also continue to demonstrate a willingness to pay premium pricing for the level of quality, responsiveness, and discretion that Avante Black offers. Finally, there is very limited competition in the ultra-high-end segment of the market, allowing Avante Black to establish a clear position as a leading provider of elite mission-critical risk mitigation services. Avante Black represents the pinnacle of exclusive risk mitigation, offering an unprecedented level of client experience that ratifies how security, intelligence, and crisis management are delivered.
The elite offering has been built by assembling a world-class team, including experts and former members of elite forces who combine deep covert operation experience with tailored, precision-engineered security solutions. Our investigative capabilities are market-leading, providing clients with comprehensive, high-fidelity intelligence that is unmatched in the industry. This is supported by 24/7 personal security protection and a physical response team capable of deploying within minutes when a threat emerges. Beyond traditional security measures, we also provide safe houses for clients and families requiring heightened protection. Our team monitors reputational and digital risk indicators, including social media-based threats, enabling us to intervene before issues escalate. Avante Black's capabilities include in-depth background investigations to uncover potential threats and provide clients with a clear understanding of risk. Technical surveillance countermeasures, ensuring client communications and operations remain secure. Custom campaigns designed to protect clients and their corporations from targeted risk.
Ethical hacking to test and strengthen the network security. Turning now to NSSG, our North Star Support Group, our global risk management and crisis response subsidiary. NSSG continues to be an important driver of our international strategy and has further solidified its position as a trusted partner to organizations operating in some of the world's most complex environments. NSSG's global presence is one of its greatest strengths. The team maintains offices and representation across Europe, the Middle East, North America, and Africa, enabling us to support multinational clients wherever their operations take them. NSSG currently has active projects spanning multiple continents, supported by a vetted global provider network that allows for rapid deployment and execution in over 100 countries. The business serves a diversified roster of multinational clients, including Fortune 500 companies, many of whom operate in high-risk and rapidly evolving jurisdictions.
These organizations rely on NSSG for a wide range of services, from threat monitoring and intelligence gathering to executive protection, crisis management, evacuation support, and on-the-ground operational execution. We acquired a 55% stake in NSSG in September 2023, a strategic investment that has significantly expanded Avante's international reach and broadened our services offerings. Since joining the Avante Group, NSSG has integrated closely with our technology platforms, combining frontline operational expertise with innovation, intelligence, and advanced security technology. This creates a compelling, tech-enabled risk management model that differentiates us in the market. NSSG also delivered another strong quarter, achieving 48% year-over-year revenue growth, reflecting continued momentum across both new and existing clients. This growth was driven not only by enhanced commercial execution and improved global sales practices, but also by the meaningful advantages created since joining Avante's Group.
With access to Avante's advanced technology platforms, intelligence capabilities, and operational infrastructure, NSSG is now able to pursue and win larger and more complex engagements than before. This combination of frontline expertise and technological enablements has strengthened NSSG's competitive positioning and supported its ability to secure contracts in an increasingly demanding global risk environment. Looking ahead, NSSG is well-positioned for continued growth supported by rising geopolitical risk, increasing demand for comprehensive security and crisis management capabilities, and the strength of our combined global platform. NSSG continues to play a critical role in Avante's evolution into a fully integrated international security and risk management provider. I will now conclude with our final theme for today, our positive outlook for the remainder of fiscal 2026. Our outlook continues to look promising with increasing sales, positive net income, and a clean balance sheet and potential for future acquisitions.
The company's long-term financial objectives serve as a guide in developing our strategy and should not be considered as guidance. The company's long-term financial objectives are: reach new record levels for revenue, recurring monthly revenue, and adjusted EBITDA, target over 15% organic growth for the fiscal 2026, leverage NSSG's footprint to increase international revenues, achieve growth in adjusted net income per share, reinvest cash flow into the future business growth. I believe we have laid an excellent foundation for the company to have a positive outlook for the remainder of fiscal 2026. We expect continued improvement in revenue, cash flow, and EBITDA driven by organic growth, introduction of new products and services, and increasing NSSG revenues. We expect international revenues to continue to increase this calendar year as NSSG allows us to attract new clients globally and service them in a boutique manner that Avante offers.
We are very excited about the potential growth opportunities with our latest services and expect overall revenues to benefit over the next year from these new services. Meanwhile, we continue to achieve and seek new opportunities to expand and enhance our services through acquisitions. Finally, I want to thank the entire team at Avante, including the employees whose hard work continues to elevate the company to higher levels. We want to thank our customers around the globe who trust and rely on us to use innovative technologies to manage risk and provide elevated security solutions and services. Also, I'd like to thank you all for joining us on this call today. We look forward to providing more updates next quarter. I will now hand it back to Rajan for questions. With that, we will now open the call to questions.
To submit your questions, please use the Q&A button on the bottom of your screen. Please note that priority will be given to questions from analysts. First question comes from Gabriel Leung, Equity Analyst from Beacon Securities. Gabriel, please unmute your mic and go ahead.
Good morning and thanks for taking my questions. Manny, I just want to talk about MAST for a little bit. Can you just talk a bit more about some of the verticals that these pilots are involved in right now? Number one and number two is, what are some of the KPIs that these customers are looking for before they decide to move forward with a more meaningful deployment of some of the towers?
Some of the clients are in the communication sector, retail. They are testing the ability for MAST to cover a larger area than just with the cameras themselves.
They're testing how trespassers hidden behind buildings where you can't—it doesn't make sense to add another MAST unit. It's just too expensive. How we protect things like that, like with trailers. As they test us, because they do test us, we successfully detect the people coming in from trailers or from behind buildings, use MAST as the conduit to our control center, and then we talk to them in two-way voice. We also have a lot of oil and gas interest around the world, not just only Canada, and that's becoming very interesting in the way we expand. We are getting some U.S. business and pilots, which is very exciting because we feel that the market in the U.S. is where it's at presently. Canada has a big opportunity, but nothing like what's happening in the U.S.
Gotcha. Thanks for that.
If I sort of look at just the pilots you're involved in today, if these groups were to move forward, do you have a sense of how many units you would be required to sort of fully deploy out?
It is hard to guess, but it is a considerable amount. If we can get 10 units per partner, we would be hitting our targets.
Gotcha. Just switching over to, I guess, both NSSG and Avante Black, where are you in terms of sort of manpower for those groups, and what sort of revenue capacity do you think you have to grow those two lines of businesses with your current employee base?
NSSG is operating smoothly, and Alessandro Martello is doing a great job hiring as needed and expanding.
What he's doing beautifully is he's introducing Halo, he's introducing MAST to various projects around the world that he's securing. This is really, it's bringing him to a different level where it's not just manpower, it's not just security operatives, it's actually a technology-enabled solution for him as well. Avante Black is growing considerably quick. We are looking to hire maybe a business development person, but I don't know yet. We're just trying to figure out and balance the amount of business that we're getting with the cost of hiring somebody like that.
Gotcha. Thanks for that. Maybe on that note, Raj, this quarter you did, I think it was about 6.6% EBITDA margins, an improvement from Q4 and Q1.
Where do you see that trend heading as we go into the back half of the fiscal year, given some of these investments you'd like to make to the business?
We're still targeting towards just under 15% adjusted EBITDA for this fiscal year. Up until now, we've been hitting our targets based on our internal budgets.
Gotcha. And one last thing, just sort of below the line on the cash flow side of things, what are your expectations in terms of CapEx now that MAST is starting to accelerate? Do you have a sense of what your CapEx requirements might be over the near term?
As of now, we're looking at approximately about $500,000 in the short term, which would probably be between six and nine months.
Gotcha. I appreciate that. Thanks again for the feedback and congrats on the progress.
Thank you.
Thank you for your questions, Gabriel. We also have a few questions here from Gianluca Tucci, Equity Analyst at Haywood Securities. First question, Avante offers a wide range of security and service offerings, from residential security and monitoring to elite executive protection, investigations, remote solutions, and secure transport. Given that breadth, which service verticals do you view as strategic priorities over the next 12 to 18 months?
We launched Oakville just November 1st, which is taking off. It is very exciting. We are putting a lot of efforts into building that division or that area of the city. It is really getting hit with crime. People are nervous. That is probably where our focus is in the organic growth. Internationally, we still are dealing with large corporations. We have become the security providers for big international companies.
I can't mention the names, but it's exciting that Avante is the sole security provider for large companies.
Thank you. Another question here from Mr. Tucci. Services like those of Avante Black, which have elite protection, secure transport, and investigations, tend to target high-net-worth clients. Given economic headwinds and client risk perceptions globally, what is your view on demand stability in this segment through 2026?
Depending on the global environment, when things are quiet, Avante Black becomes a little bit softer as things increase to a political level. Our clients want us to investigate. They want us to cyber monitor their names, cyber monitor the corporation. When they travel, they definitely want our team around them, whether it's with ballistic vehicles, lead-and-chase vehicles, but they definitely want protection as they travel. It's hard to determine how big it's going to get, but it's very exciting.
These are services that you just can't advertise. It's word of mouth. One client tells another, which tells another, and we've built an entire infrastructure of services that gear around the referrals. As different clients suggest different needs, it doesn't necessarily mean that we have a menu of services that they tick off of. They say, "This is my problem." We just come up with a solution, and that impresses them so much that they become a lifer for Avante services.
Thank you, Manny. Last question here for Mr. Tucci. What are your main priorities for capital deployment entering 2026? For example, maybe sales and marketing, R&D, M&A?
I think most of it is the production of MAST.
Now that we understand what we need to be a superior product, superior service, we need to get more of MAST units to be able to deploy them. Raj, do you have any other?
That is primarily where the CapEx is going to be over the next 6 months-12 months.
Yeah. Thank you for that. There are no further questions. I will now pass the call back to Manny for closing remarks.
In closing, I want to thank everyone once again for joining us on our call today. Thank you to the analysts for their questions. We look forward to our next update for Q3. Thank you and have a nice day.