Thank you everyone for joining us today, and Welcome to Avante's Third 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's 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 yesterday. Listeners are also encouraged to download a copy of our quarterly financial statements and management discussion and analysis from sedarplus.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, 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 definitions set out in our management discussion and analysis. With that, let me turn the call over 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 our Q3 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 would like to 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 an elevated level of security globally with white glove mentality to high-net-worth families and corporations alike. We achieve this through advanced detection technologies, including Halo, SmartBox, and a suite of proprietary systems, all centralized within our state-of-the-art Avante Control Center. Operating 24/7, the control center seamlessly integrates our technology with expert human-in-the-loop oversight to deliver unparalleled security outcomes.
Avante is headquartered in Toronto, Ontario, and we have approximately 199 employees in the company. Today, the security landscape for high-net-worth individuals has become more complex than ever. With rising geopolitical tensions, increasing incidents of 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 evolving risks and are one committed to providing elite security services that offer not only protection but also peace of mind. I'm pleased to report that in Q3 of our fiscal year, our team successfully responded to more than 1,900 security events, executed over 300,000 patrols, and completed more than 900 secure transports. On today's call, I want to highlight the following topics.
First is our Q3 financial results, which Raj will discuss in more detail shortly. Second is the innovation at Avante that is driving our growth. Lastly, our positive outlook for the remainder of the fiscal year. I would now like to turn it over to our CFO, Raj, who will discuss our financial results for Q3 2026.
Thank you, Manny. Welcome everyone. I'm pleased to report another quarter of growth in revenue, Adjusted EBITDA and net income, as well as positive operating cash flow. Our fiscal third quarter 2026 results are as follows. The third quarter was another exceptional quarter for Avante as we increased revenue by 8% compared to the same quarter last year. Avante achieved quarterly revenues of CAD 9.1 million during Q3 2026, compared to revenues of CAD 8.4 million in Q3 2025. This increase in revenue was driven by strong performances in both NSSG and Avante Black, with year-over-year growth of 20% and 31% respectively. Within NSSG, year-over-year revenues increased by 13% in its operations division and 186% in its investigations division.
Avante delivered strong reoccurring revenue growth this quarter, achieving CAD 4.2 million in RMR during Q3 2026 compared to CAD 3.7 million in Q3 2025, an increase of 12% driven by continued expansion in our monitoring customer base and new subscription services. Avante achieved gross profit of CAD 3.8 million in Q3 2026 compared to CAD 3.4 million during Q3 2025, representing an increase of 10%. During Q3 2026, Avante achieved positive Adjusted EBITDA from continuing operations of CAD 824,000, an increase of 7% compared to positive Adjusted EBITDA of CAD 770,000 in Q3 2025. I'm proud to report that Avante achieved positive net income for the third quarter in a row.
Avante recorded net income from continuing operations of CAD 92,000 in Q3 2026 compared to a net loss of CAD 155,000 in Q3 2025, representing an improvement of 160%. Our Adjusted EBITDA margins have strengthened materially, rising from 3% in Q1 of this fiscal year to 9% this quarter. We expect to sustain margin performance in the 5%-9% range in the quarters ahead. This expansion in Adjusted EBITDA margins, combined with our positive net income, underscores the strengthening profitability profile of our business. Here is a snapshot of our year-to-date performance for fiscal 2026 for the nine months ended December 31st, 2025.
Avante achieved revenues of CAD 26.7 million for the first nine months of the fiscal 2026 compared to revenue of CAD 24.4 million during the comparable period in fiscal 2025, an improvement of 9%. The company achieved positive Adjusted EBITDA from continuing operations of CAD 1.8 million in the nine months ended December 31, 2025, an increase of 20% compared to positive Adjusted EBITDA of CAD 1.5 million in the comparable period in fiscal 2025. I'm proud to report that Avante achieved positive net income for the third quarter in a row. Avante recorded net income from continuing operations of CAD 92,000 in Q3 2026 compared to a net loss of CAD 155,000 in Q3 2025, representing an improvement of 160%.
I'd like to take a moment to highlight Avante's current growth trajectory. On this slide, you'll see our trailing twelve-month revenue for the past two years from Q3 2024 to Q3 2026. Avante achieved trailing 12-month revenue of CAD 36.1 million in Q3 fiscal year 2026 compared to a trailing TTM revenue of CAD 31.7 million in Q3 fiscal year 2025, an increase of 14%. The company's growth has been driven by the onboarding of new customers through focused sales efforts, enhanced customer service, 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 reoccurring in nature.
We continue to have strong visibility and predictability for future performance with 46% of our revenue in fiscal Q3 coming from contracted recurring revenue. Recurring revenue growth has been entirely from the core business. Our core business as a diversified security platform leveraging advanced technology solutions remains solid with recurring monthly revenue increasing by 12% in Q3. The Avante Security segment delivered recurring revenues or RMR of CAD 4.2 million during the third quarter of fiscal 2026, up from CAD 3.7 million during the company's third 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 maintain a 98% client retention and renewal, demonstrating the value proposition and trust in our solutions.
I'm pleased to report that we are also continue to have a strong balance sheet and are able to fund the company's organic growth initiatives. Our outlook for the remainder of the fiscal year remains positive. As at December 31, 2025, Avante was bank debt-free and had CAD 5 million in cash and short-term investments. The company has access to senior secured 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. Our working capital as of December 31, 2025 was CAD 6.6 million, an increase of 4% as compared to last year. We remain confident in our ability to fund growth through cash flow from operations. Overall, the company is in a very strong financial position going forward.
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 emphasizing 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 the next chapter for Avante. Last month, Avante secured an important deployment agreement with the Ontario Regional Police Force for our Gunshot Detection system. The system will be installed across three crime locations and represents a meaningful step forward in supporting law enforcement with real-time autonomous threat detection technology.
This deployment allows us to demonstrate the accuracy, scalability, and low infrastructure requirements of our Gunshot Detection platform in a critical public safety environment. We will review it as a significant opportunity to deepen our relationship with the agency and others over time. Our pipeline of technology-enabled security solutions continues to expand. I'd like to take a moment to walk through three key offerings: MAST, Avante Black, and NSSG. Starting with MAST, our mobile automated surveillance tower, our most recent deployment and autonomous security technology. MAST is an unmanned solar-powered wireless communication security tower equipped with Avante's proprietary Halo technology delivering real-time surveillance, silhouette and body part detection, advanced AI-driven analytics, facial and gun recognition, and fully autonomous threat detection. I am pleased to share that we have now equipped MAST with our Gunshot Detection technology, further strengthening its threat detection capabilities.
Every MAST deployment becomes part of a broader MAST security network, fully integrated into Avante Control Center. This network architecture allows all MAST units to operate collaboratively, creating secure, seamless perimeter networks with no blind spots, significantly enhancing responsiveness and situational awareness across large or complex environments. The customizable nature of our platform ensures we can meet each client's unique security requirements. For example, some sites in our pilot projects contain heavy visual obstruction, such as trailers and other large equipment that limit camera visibility and impede intrusion detection. In these scenarios, we have augmented the systems with strategically placed motion sensors, ensuring all coverage and reliable detection even when cameras have limited line of sight. With more than 20 pilot units now deployed, we are encouraged by the strong early detection across multiple verticals.
Beyond construction, we are seeing meaningful interest from telecommunications, retail, and the oil and gas sectors. These are markets that require reliable, autonomous perimeter security solutions that can be rapidly deployed and operate with minimal supporting infrastructure. As we look ahead to calendar 2026, our priority is to scale MAST from successful pilot deployment into a meaningful growth engine for business. Our global supply chain is now fully established, enabling us to deliver MAST units to any port of entry worldwide as deployment accelerates. The next phase of our plan focuses on expanding our sales and customer support capabilities to meet growing demand. We have recently added a dedicated sales executive for the MAST platform, who is already developing a strong pipeline of opportunities as market awareness continues to grow across multiple industries.
Additional towers are in production, enabling us to support this rising interest and reduce lead time as deployment activity accelerates. These efforts give us confidence that calendar 2026 will mark a significant ramp-up year for MAST. With its sustainable design, advanced analytics, network architecture, and flexible deployment model, MAST will position it to become a highly growth re-recurring revenue contributor to our performance as adoption continues to expand. Since its launch in January 2023, Avante Black has rapidly evolved into one of the most strategic business lines and now accounts for approximately 13% of the company's total revenues. Our Avante Black division delivers 31% year-over-year revenue growth over quarter, underscoring its strong momentum and the expanding demand for sophisticated, high-value security and intelligence solutions.
This performance reflects several powerful tailwinds, including escalating global risk environment, which have increased the demand for specialized executive-level protection and intelligence support. Our global operating reach, which allows us to seamlessly serve clients anywhere in the world. Client preference for premium high-touch service that includes exceptional quality, discretion, and responsiveness. The ultra-high-end segment remains largely underserved, enabling Avante Black to build a distinct leadership position in mission-critical mitigation. At its core, Avante Black represents the pinnacle of elite risk management, redefining how protection, intelligence, and crisis response are delivered. The division has been purposely built by assembling a world-class team, including seasonal expert and former members of elite military units, who bring unparalleled covert operations experience and precise engineering methodologies to every engagement. Our investigative and intelligent capabilities continue to set industry standards. Clients benefit from high-fidelity intelligence, comprehensive due diligent investigations, and rapid on-the-ground response.
This is reinforced by 24/7 personal protection and a specialized response unit capable of mobilizing within minutes when a threat arises. Avante Black's expanding suite of capabilities include in-depth background investigations to identify and preempt emerging threats, technical surveillance countermeasures to safeguard sensitive communications and operations, custom-engineered protective strategies designed around each client's unique risk profile, ethical hacking assessment to identify vulnerabilities and fortify digital security. Together, these offerings position Avante Black as a trusted partner for clients recurring the highest level of protection, intelligence, and discretion, driving sustainable growth and reinforcing its role as a premium high-margin segment of our business. NSSG. I'll turn now to North Star Support Group, or NSSG, our global risk management and crisis response subsidiary.
NSSG remains at the cornerstone of our international strategy, having established itself as a go-to partner for some of the world's largest organizations operating in challenging and high-stakes environments. The business serves a broad and diverse client base of multinationals, including Fortune 500 companies, many of which have significant footprint in high-risk and fast-moving jurisdictions. These clients look to NSSG across world spectrum of needs from threat monitoring and intelligence to executive protection, crisis, and evacuation management. The direct on-the-ground execution. As a reminder, we acquired a 55% stake of NSSG in September 2023, a transaction that has meaningful extended Avante's international reach and deepened our service capabilities. Since that acquisition, NSSG has been tightly integrated with Avante's technology platform, combining its deep frontline expertise with our innovative infrastructure, intelligence tools, and advanced security technology.
The result is a differentiated technical-enabled risk management model that sets us apart from traditional providers in this space. A key competitive advantage for NSSG is its global footprint. With offices and representation across Europe, Middle East, North America, and Africa, the team is positioned to support clients wherever their operations require. NSSG currently has active engagements across multiple continents, underpinned by a rigorously vetted provider network that enables rapid deployment and execution in more than 100 countries. Financially, NSSG had another excellent quarter, delivering 20% revenue growth year-over-year with a gross margin of 58%. That momentum reflects the progress of multiple fronts: stronger commercial execution, improved global sales practices, and the increasing tangible benefits of operating within the Avante group.
Access to Avante's technology, intelligence capabilities, and operational infrastructure has allowed NSSG to compete for and win larger and more complex mandates that it couldn't previously pursue. This combination of operational depth and technological e-enablement has sharpened NSSG competitive edge in what has become an ever more demanding global risk landscape. Looking ahead, the conditions for continued growth remains favorable. Rising geopolitical instability, growing demands for integrated security and crisis management solutions, and the strength of our combined platforms all support a positive outlook for NSSG. The business continues to be central to Avante's broader transformation into a fully integrated international security and risk management provider. Positive outlook. 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 increased sales, expanding Adjusted EBITDA margins, positive net income, a clean balance sheet, and potential for future acquisitions. Demand remains strong across the premium security platform, including our specialized NSSG and Avante Black services, as well as our Halo platforms and the solutions built on it. We are encouraged by the early market reception of MAST with deployments made. Our newly announced engagement with the Ontario Police Services with our Gunshot Detection technology provides strong validation of our solutions. We view this as an important first step in demonstrating the broader capabilities of our platform and expanding our relationships with this and other law enforcement agencies. As we enter calendar 2026, we do so with strong momentum and clear focus, expanding our core operations while accelerating the growth of our technology-enabled product ecosystem.
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 of revenue, recurring monthly revenue, and Adjusted EBITDA. Adjusted EBITDA margins in the 5%-9% range for fiscal 2026. Leverage NSSG's footprints to increase international revenues. Achieve growth in adjusted net income per share. Reinvest cash flow into future business growth. I believe we have laid an excellent foundation for the companies to have 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 revenue.
We expect international revenue to continue to increase this calendar year as NSSG allows us to attract new clients globally and service them in boutique manner that Avante offers. We're very excited about the potential growth opportunities with our latest service and expect overall revenue to benefit over the next year from these new services. Meanwhile, we continue to actively 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 continue 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. I'd like to thank you for all 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. We have a question here from Gabriel Leung, equity research analyst at Beacon Securities. Mr. Leung, please go ahead.
Hi, good morning, and thanks for taking my questions and congrats on the progress. Manny, I just wanna focus on Avante Black and NSSG for a second here. Do you anticipate you'll be able to maintain the current pace of growth with the current footprint, or do you anticipate having to add sort of capacity, whether it's infrastructure or personnel related, to those divisions to maintain the current pace of growth? You know, what does that mean for margins as we look into fiscal 2027?
Well, I believe that we can maintain the growth. The projects and the way the threat risk around the world is happening, more and more people are calling. Just with this war that just started. Again, we've had a request for evacuations from more countries, you know, in the Middle East, you know, Dubai and Israel, of course. These countries are getting attacked, people are getting scared. The network of contractors that we use are there. It isn't like we have to hire employees to provide these services. Our management team, both in NSSG and Avante Black, can handle these requests. It isn't a capital expense that we need to do to provide the service. I see the growth scaling higher.
There's a lot of things that are being worked on in the background. It's gonna be an exciting year.
Well, thanks for that. Just on MAST, you know, with the pipeline you're working with right now, you know, how do you expect revenue growth to play out? Do you anticipate perhaps signing up a larger sort of anchor customer, or do you think it'll be a series of smaller pilots that'll turn into, you know, smaller deployments?
It looks like it's gonna be larger anchor customers, with a few smaller ones coming on board. The interest has been from larger corporations, and customers.
sort of what sort of milestones or data points do you need to see before some of these larger guys are willing to commit to, one of these larger deployments?
They ask us for, you know, a pilot, and we provide the MAST unit and then set it up in the way that they would want it to operate. It seems to be very successful. From the pilot, they say, "Keep it, you know, in the location that it's at, and now we wanna expand to more locations." It's basically a pilot for a couple of weeks, then it always works out to be something longer.
Gotcha. Just one last thing on the M&A pipeline. Any commentary or any color you can offer there in terms of, you know, what you're seeing out there and sort of what sort of valuations some of the targets are expecting?
Yeah, it's an interesting question. The M&A side of, you know, we entertain expanding through mergers and acquisitions. It's interesting that a lot of the traditional security companies, owners are kind of aging out. They're hitting 65, they're tired. There isn't many companies that are willing to buy that type of service, that kind of company. You know, it's an interesting space that we're in right now. We're one of the bigger security companies that has cash to do an acquisition of people that are retiring. We are entertaining some possibilities.
Gotcha. No, thanks. I appreciate the feedback, and congrats again on the progress.
Thank you.
Thank you, Mr. Leung. We now have a question coming in from Mr. Gianluca Tucci, equity research analyst at Haywood Securities. Mr. Tucci asks, "Services like those of Avante Black tend to target high net worth clients. Given economic headwinds and client risk perceptions globally, what is your view of demand stability in this segment through calendar 2026?
I think with the status of what's going on in the world, it's just gonna increase. Again, we had requests for evacuations. We have requests now to travel with corporate C-level persons around the world and have a plan, have an advance set out before we get there, and then have a plan to evacuate if anything happens. This has been going on for at least six months as tensions rise. We see it as an ongoing normal practice for corporations as C-level people travel. We're also dealing with some of the staff, you know, like technical people, marketing people, purchasing agents that travel around the world. Corporations are asking us to escort them as well to their meetings.
Interesting enough, they're reaching out for us to provide black car service. When you're traveling to a little more safer cities, New York, London, where there isn't that much kind of war happening, we're starting to get some of the black car service that we didn't have before. It's interesting that our clients wanna have this one call, one stop service for everything on the Avante Black side.
Thank you. Last question here from Mr. Tucci. What are your main priorities for capital deployment going into fiscal or calendar 2026, sorry? Is it sales and marketing? Is it R&D, M&A, anything else?
A little bit of everything. The M&A seems to be interesting. There's a lot of opportunities coming our way. We just have to find the right deal. The R&D is steady. we don't spend a lot of money on R&D, but enough to be innovative. Our capital is, you know, we're careful of where we spend the money.
Thank you. 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 our call today. Thank you to the analysts for their questions. We look forward to our next update for Q3. Thank you, everybody.