Good afternoon, ladies and gentlemen. Welcome to Altus Group's First Quarter 2017 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Ms. Camilla Bartosiewicz. Please go ahead.

Thank you, Michael, and good afternoon, everyone. Welcome to our First Quarter Results Conference Call and Webcast for the period ended March 31, 2017. For reference, our earnings results news release was issued after market close at 4:00 P.M. this afternoon and is also posted on our website, along with our MD&A and financial statements. Please visit altusgroup.com to obtain these documents and for more information. On today's call, we will begin with an overview of our performance during the first quarter, including a discussion of our financial results and noteworthy developments. We will finish by taking questions from analysts and institutional investors. And if we miss anyone, please contact me directly after the call. Joining us today is our Chief Executive Officer, Bob Courteau, and our Chief Financial Officer, Angelo Bartolini. Before we get started, please be advised that some of our statements may contain forward-looking information. Various factors and assumptions were applied or taken into consideration in arriving at the forward-looking information that do not take into account the effect of events announced today. There are also numerous risks and uncertainties that could cause actual results to differ materially from those set out or implied by such statements. These are all described in our filings on SEDAR. And please be mindful that our Q&A session will also be taking that into consideration. I will now turn the call over to our CFO, Angelo Bartolini, who will start with a review of our financial performance.

Thank you, Camilla, and thank you all for joining us on the call and webcast this afternoon. Our businesses performed well during the quarter and despite anticipated variability in some of our business segments, the continuous growth in our consolidated results demonstrates the strength of our business model. Altus Analytics continued to grow its revenue base, as well as growing its earnings by nearly 44%, while operating at a 32% margin. Following a series of strong quarters and full year in 2016, Property Tax was down in this first quarter, but not surprising as we have just entered 2 new assessment cycles in 2 of our largest jurisdictions. These new recycles provide for attractive growth potential in future periods. Valuation and Cost Advisory grew at 8%, led by strong performance from our global cost group. And Geomatics returned to profitability while capitalizing on the early signs of increasing activity levels in their market. Overall, as look ahead to the remainder of the year, we continue to be well positioned to capitalize on the growth opportunities in our businesses. I will now provide a summary of our consolidated financial results followed by a deeper review by business segment. First quarter consolidated revenues grew by 2.4% to CAD 109.2 million. Strong performance in our Altus Analytics, Geomatics, and Valuation and Cost Advisory businesses contributed to this growth, while the expected quarterly variability at Property Tax as well as some currency headwinds tempered our overall growth rate. Adjusted EBITDA improved by 7.2% to CAD 13.3 million, reflecting revenue growth as well as the benefits from restructuring and cost reduction activities undertaken in 2016 in Altus Analytics, Geomatics, and Property Tax. Consolidated adjusted EBITDA margins improved to 12.2% compared to 11.6% in Q1 2016. Profit, in accordance with IFRS, was CAD 0.5 million compared with a loss of CAD 2.2 million. Adjusted EPS was CAD 0.22, up 15.8% from CAD 0.19. Moving on to our performance by business segment, our Altus Analytics continued to deliver robust growth despite having a tough compare on a very strong Q1 last year, while simultaneously encountering currency headwinds. Revenues were up 6.8% to CAD 39.2 million, or otherwise up 10.9% if we were to exclude the impact of foreign exchange. Recurring revenues were up 5.5% to CAD 29.2 million or 9.6% adjusted for currency. Recurring revenue growth was driven by increased AE and ARGUS On Demand subscriptions, increased software maintenance and growth in appraisal management. Nonrecurring revenue growth was 11% to CAD 10 million or 15.1% adjusted for currency. Growth was driven primarily by higher service revenues. Adjusted EBITDA was up 43.8% to CAD 12.7 million reflecting the higher revenues, the benefits of the restructuring activities undertaken in 2016 and a onetime benefit of an approximate CAD 400,000 media tax credit received for the Canadian market data solutions. Adjusted EBITDA margins improved to 32.3% compared to 24.0% in the prior year. For comparative purposes, recall that strong U.S. and U.K. currencies at the start of 2016 provided us with some tailwinds in the first half of last year, a trend that has since reversed. Overall, changes in the exchange rates impacted revenues by a negative 4.1% and adjusted EBITDA by negative 0.7%. Commercial Real Estate Consulting revenues were down modestly by 1.2% to CAD 57.7 million. Property Tax revenues were CAD 33.2 million in the quarter, a decline of 7%, while Valuation and Cost Advisory revenues experienced 8.1% growth despite -- sorry -- rising to CAD 24.5 million. Following an exceptionally strong first quarter last year, Property Tax performance was impacted by several factors, including the typical cyclical variability associated with the commencements of 2 new assessment cycles, again, Ontario and the U.K. During the early stages of new cycles, resources are mainly focused on reviewing assessed property values and filing appeals. Settlements of the appeals with taxing authorities occur in subsequent periods. Additionally, the company had lower contingency revenues in the U.S. compared to the first quarter in 2016, while revenues from the U.K. operations were also adversely impacted by the decline in value of the pound sterling. Excluding the impact from currency, Property Tax revenues were down modestly by 3.2%. As a result of the lower revenues at Property Tax and the short-term impact of incremental expenses related to appeal fees, CRE Consulting adjusted EBITDA decreased by 31.8% to CAD 7.1 million. Changes in the exchange rate against the Canadian dollar affected CRE Consulting revenues by negative 2.3% and adjusted EBITDA by negative 0.5%. At Geomatics we saw improved performance as the market conditions appear to have improved in Q1, with early indicators of increasing activity levels. We expect similar seasonal patterns throughout the remainder of the year, as in past years, whereby Q2 tends to be the softest quarter due to the spring breakup, with Q3 followed by Q4 as the best-performing quarters. Geomatics Q1 revenues grew by 6.5% to CAD 12.6 million, and we returned to profitability with adjusted EBITDA improving to CAD 1.2 million. This reflects both improved revenues and the various cost cutting initiatives we implemented last year to position this business for profitable growth. Finally, in our Corporate division costs were CAD 7.7 million, up from CAD 6.2 million last year, as we invest in people and systems to support our growing business, as well as an increase in variable compensation. Also of note, during the quarter we initiated a corporate-wide restructuring program that will be completed in the second quarter. A charge of approximately CAD 1 million was recorded in Q1, mainly attributable to severance costs. Additional costs will be incurred upon completion in Q2. At the end of the quarter our balance sheet remained strong, with significant flexibility to support our growth strategy. Our bank debt stood at CAD 138.7 million, with a funded-debt-to-EBITDA leverage ratio of 1.76x. Our cash position at the end of the quarter was CAD 38.9 million, with CAD 61.3 million of available borrowing room under our credit facility. Subsequent to quarter end, all of the outstanding 6.75% convertible debentures were redeemed or converted, representing a total principal amount of approximately CAD 5.4 million. Specifically, 496,900 common shares were issued at the conversion price of CAD 10 per share. A principal amount of CAD 396,000 of the debentures was redeemed using available cash on hand. Finally, we continue to see improvement in our DSOs, which declined from 74 days at the end of 2016 to 71 days in Q1. With that, I will now like to turn the call over to Bob. Bob?

Thanks, Angelo. We continue to deliver year-over-year growth in our consolidated key financial metrics, while also making excellent progress against our strategy. I'm really pleased with the performance, having sustained consolidated year-over-year top line growth now for 15 consecutive quarters. We had a very productive quarter, and I'm proud of what our team has accomplished. As we look ahead to the remainder of the year, we feel really good about the company's growth potential in 2017 and as we move forward. At Altus Analytics, we continue to make excellent progress against our strategy, driving higher sales from existing and new customers, market share gains in new geographies and enhanced value from product improvements. In April, we launched Version 11.6 of ARGUS Enterprise, which includes various user experience improvements that we expect will encourage migration of the outstanding legacy ARGUS users to ARGUS Enterprise. An example of that is we simplified for key transaction and valuation roles, advanced user productivity features, and added more powerful reporting features. We believe that these enhancements, many of which targeted the U.K. market, will help drive higher sales in Europe and support our ValCap migration strategy, where customers have been waiting for 11.6 to come out. We also expect this release will help further drive migration of our remaining DCF customers, who are mainly smaller size firms with fewer users, as many of our larger customers have converted. We expect that these announcements should help drive growth in international markets, where we continue to make inroads with larger transactions. But given the complexity of the sale, as we're still creating product awareness, growth in these markets will not happen overnight. But we remain very optimistic about the significant greenfield potential that they represent. More recently we've placed a greater emphasis on selling to the small- and medium-size business segments in all markets, and have seen significant interest. We added a new European leader early in the year and have also added some excellent sales talent with the EstateMaster acquisition expanding our coverage in the Middle East and Asia Pacific. In addition to our in-house sales team, we are increasing our activity with partners. Last week we held our Annual ARGUS User Conference. The event was very well attended by a wide range of customers across North America, including asset managers, investors and other owners of commercial real estate assets. This annual gathering gives us a platform to not only connect with our customers, but also with the thought leaders in our industry. Given our market position, the industry looks to us to influence best practices on valuation, analysis, return optimization and asset management. And as evidenced by the key themes from client discussions at the conference, demand for our Altus Analytics solutions remains strong. Finally, we had announced at the conference our intentions to move ARGUS in the cloud, and we have started to invest in that strategy accordingly. With roughly 2,500 customers on the ARGUS Enterprise platform by the end of Q1, of which approximately 35% represent net new customers, we continue to have strong momentum in software sales, the majority of which we expect will still be sold as a perpetual license with a maintenance component. In the near term we continue to have a lot of upside for add-on sales from current customers as they pick up more seats and add other modules. And through the next leg of growth we will continue to migrate our U.K.-based ValCap customers onto ARGUS Enterprise. And the idea is once we have locked down the largest customers in Toronto, in major cities in the U.S. and now in London, we will use that position to drive our strategy onto a global use of ARGUS Enterprise. Supporting our recurring revenue growth, we also expect to benefit from increasing sales of ARGUS On Demand, our key cloud delivery solution that's gaining popularity with smaller type firms. Since launching in 2016, we got up to over 400 customers at the end of Q1, a key testament to growing interest in our cloud solutions. And we expect to continue to benefit from sustained growth in appraisal management as our customers add more data on our platform and they increase the frequency of valuations. And we will continue to add new clients. Turning briefly to CRE Consulting, as you heard today, leaving aside our typical quarterly fluctuations at Property Tax, which we have highlighted in the past, on balance we really feel good about our growth prospects. Property tax continues to represent an attractive growth area for our business, both in the U.S. and the U.K. and we will continue to augment our growth with acquisitions. Near-term organic growth will be driven by market share gains, increased critical mass, enhanced productivity, as well as through innovation and technology. Our Valuation and Cost Advisory group posted good growth in Q1, benefiting from double-digit growth in cost. And looking ahead, given the leading market share enjoyed by both groups, we expect growth to be flat to moderate, but the data collection potential from these businesses is invaluable and supports our long-term growth ambitions. On the M&A front, during the quarter we completed a couple of tuck-in acquisitions. The first one was a small practice in Cost Consulting, which has allowed us to expand our market share for Cost Consulting in Western Canada, while providing us with additional talent in a very competitive market. The second one was EstateMaster, an Australian-based property development feasibility and management software provider. They have a leading market position in Australia and the Middle East. And the EstateMaster Development Feasibility software is the accepted market standard for the production of feasibility reports in the Australian property markets. Given our existing footprint in the development market with our Asia Pacific Cost Consulting group, plus our ongoing expansion efforts at Altus Analytics, this acquisition adds market share in a growth region, broadens our offerings with Software Solutions, adds approximately 1,000 new software customers and, more important, highlights the value we're placing in the developer market category. With more and more customers and asset holders getting into the development business, we see great opportunity in this sector. During the quarter we also made a small but strategic investment of CAD 3 million in an early-state data analytics company called Waypoint. This is a San Francisco-based commercial real estate technology company that provides real-time local market operating expenses information and benchmarking solutions for the North American CRE market. Its flagship product is a financial benchmarking and expense optimization platform that is SaaS-based, that empowers commercial real estate decision makers with local market expense intelligence. Waypoint's operating expense data is sourced directly from their clients and partners and covers over 1.75 billion square feet of property across over 275 markets. The platform is used to benchmark against the most similar peer building data sets for each property, and leveraged to drive building performance, property values and investor returns. With the first-mover advantage and significant market traction in the US, their play is to become a leading platform for CRE expense management. And this investment reflects our desire to partner with innovative early-stage CRE technology companies that represent strategic opportunities to add value to our customers. Some of these companies will have a strategic fit over time with our company and others, as an example our 13.6% investment in Real Matters, who plan to go public soon, may result in financial returns that are very attractive while allowing us to indirectly contribute to the technological innovation of the industry. And speaking of Real Matters, based on their most recent amended prospectus, their valuation is pegged over CAD 1 billion, implying our stake is valued at approximately CAD 135 million pretax. So we're pleased with the exceptional return of this investment, which provides us with more and significant financial flexibility. In addition to investment opportunities, we're also increasingly pursuing mutually beneficial partnerships with innovative CRE companies in adjacent categories such as the one we have with PTS and the one we're working on with CompStak, an early-stage company that collects and verifies commercial lease data and proprietary insights, crowdsourcing data for brokers and then enabling it for members to access comp transaction data when they need it. These partnerships will enable data distribution rights within ARGUS Enterprise and have referral and resale elements to it. These type of investments and partnership opportunities give us the ability to help guide these startups, leveraging our global network, our brand and our customers. Overall we see it as a really limited upfront capital risk with high potential reward. In closing, I would just like to reiterate that we remain in growth mode and we're very energized by the substantial market opportunity ahead of us. Lots of moving pieces in our strategy, but we have a solid track record of execution, a significant market advantage and, quite frankly, we feel like we've only scratched the surface. We thank you for your support. And now we'll welcome any questions. Operator?

[Operator Instructions] The first question is from Daniel Chan from TD Securities.

Are you seeing any -- are you getting any visibility on how the second half is shaping up for your tax business? For example, are you submitting a lot more appeals this cycle than in the past?

So, look, the first half, as we've indicated, especially this year at the start of the cycles the focus is on really getting the appeals in. But really then what happens is they get settled over the rest of the cycle, which in Ontario is 4 years. The U.K. is 5 years. So we do expect that we're going to resume sort of normal activity levels starting in the back half of this year. So we'll get back to sort of normalized levels. But they really do as a result of these new cycles and these jurisdictions, they occur throughout the whole cycle.

Okay. Bob, at your conference you talked about growing demand environment in Europe and in your filing seems to be an important market for you this year. Can you talk about what's causing some of this demand and how you plan on going after that market?

Yes. I mean, the first part of the demand is another effort that we've initiated to upgrade ValCap to ARGUS Enterprise. And we have a built-in market opportunity that, albeit it smaller than the U.S., is well underway. And the response we've had from our customers in Europe on 11.6 was excellent. And so, what I was saying earlier is that the idea is that as we upgrade these customers in the U.K., we're putting a push on for those common customers in the U.K. and the U.S. to think of this as a European upgrade rather than a straight upgrade. So we're going to start migrating our selling strategy away from a straight upgrade to an enterprise buy for ARGUS Enterprise on first a European basis. But clearly the plan would be to put our selling capacity over time on the global opportunity that's front of us. When we do that, we end up in more complex deals and they take longer. But they're of a greater materiality. And so that's part of our strategy now. Second part of it is as we've gone into Europe, we've got an office in Luxembourg. We've made investments in our focus on some of the data products that we think we can bring into the market, including Voyanta. And so we're now more selling an integrated model in Europe, solving for asset management. And, finally, we're going to work with some of the partners over there that are strong in the sub markets in Europe to either sign reseller agreements or motivate them to get behind the initiative. And that would also include the service providers.

Okay, great. That's helpful. And just one final one, just to dive into the Analytics numbers a little bit. Looks like recurring revenue growth slowed this quarter whereas last quarter, we saw that offset by perpetual licenses. It doesn't seem like that happened this quarter. So can we get a little bit of color on what happened there?

Yes. I think we're seeing some of our growth in the quarter affected a little bit by some of the success that we had Q1 last year. There's some currency things going on in the market in general. Like, part of what we're expecting or have been expecting and part of our growth, both recurring and nonrecurring, is to see more revenue now coming out of Europe. And currency worked against us in the quarter in that regard. And I don't know -- anything else you'd add to that, Angelo?

No, just like also just we finished the year very strong Q4, so very strong finish. And typically from a seasonality standpoint you do get a sequential quarter that is slightly lower and then it starts to ramp back up.

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

I guess further on to Dan's question here -- so I guess you're suggesting that we're going to see a steady progression as we kind of roll through the year here on the Analytics side. Is that how I'm hearing it?

Yes. I mean, well, that's our game plan.

Okay. And so you guys have a great base here with ARGUS. I just want to kind of get an understanding or help me size the opportunity in Analytics. So you've got, like, a ton of different products. You've got Voyanta. Now you've got EstateMaster, and arguably Waypoint. What percentage of your existing base has any of those products? Obviously some of them are extremely new. I'm just trying to get a sense of the opportunity in that base and how you guys are looking at that, whether it's from a dollar perspective or whatever it may be.

We have very few customers that have all our products. A lot of the success in 2013, 2014 was straight upgrade in the U.S. to get customers on. And now we're starting to see and as we got into 2016 more broad-based activity in Europe in cross-selling. We had a good year in ARGUS Developer last year. And we're now looking to broaden the products we sell, but also put some coverage behind it. So we're adding capacity, for example, with our selling teams, our in-house selling teams, to sell EstateMaster in the US. We think it's a really good product for the U.S. And we're going to build some capacity there. And similarly, we're adding -- we've added a leader in Europe and some more talent in Europe to sell these Enterprise deals. The guy we hired in Europe is clearly oriented toward solution selling. He's an enterprise guy and so that's going to help us. And through Altus Analytics, with the largest customers in the world, we're now focused on how all of these products can work in harmony to solve global asset and investment management. So that will pull in the Data Solutions and other things that we're doing.

So if you were to look at the Altus Analytics business today, like, so I don't know, the current run rate, let's call it 1.60 on the quarter. But are the opportunities that are in front of you with these new products, is that like potentially 2x the size of this market today, or 3x? Or can you maybe give us a sense of what that opportunity is? Or is it just too early here?

We've always said that it's 1.8 just on going to open markets if you take the number of customers in the world, of which a high percentage in the U.S. So we've got huge green space to touch customers globally. And these are the largest ones. And then, when you marry that with the fact that we basically have not done a huge amount of cross selling up until now, that creates an opportunity. And then, finally, getting these large customers to deploy ARGUS Enterprise on a global basis take it up then again. Right? So I--if we include the application set, three, four times the existing market opportunity that we've already started in the market.

Okay. And just one last quick one for me. In terms of the market broadly, there's rising rates here. And there's a lot of commentary in terms of the bond market for real estate. What have you seen, or have you seen any impact on your business given that sort of--that backdrop here? And that's it. Thanks.

Yes. No, we haven't seen any impact on our business. I think the interest rate changes, the implications of portfolio weighting, the understanding of markets that you want to serve, the risk and materiality of your portfolios are going to cause people to want to have these solutions. And I explained before that something as simple as currency can have a significant impact and interest in a particular market. When Brexit happened, all of a sudden it became a buyer's market again. When bought before that, there was such low yields or cap rates that--and they haven't changed that much. But all of a sudden it became a bit of a buyer's market because currency went down. So it's that global game. It's about portfolio weighting. It's about currency. It's about balancing by asset class. And any kind of offsets you might see in terms of rising interest in one market will cause these long term players to go to other markets. And the big driver on that is the fact that virtually all of the major players are--pension funds, insurance companies, banks, are continuing to increase their exposure to real estate.

Thank you. The next question is from Yuri Lynk at Canaccord Genuity.

Bob, on Altus Analytics we've seen over the last couple of years here the big wave of DCF conversions and early adopters come in. And obviously, you saw that in the impressive growth rates. Now that you're I would say the--the market you're in now you're in more of a trying to sell in the greenfield opportunities that you talked about cross selling. So what does the kind of long term growth rate of revenues for that business look like? I think in the past you had talked about somewhere between 15% and 25%. Just wondering how you feel about that now.

Yes. I look at I'd say this quarter as somewhat of an anomaly. We actually feel good about our ability to do double digit revenue growth on this business. And the thing that I look at is--the big change that's going on now is that we're now trying to really manage beyond the straight operating model. I think we did a pretty good job on that in 2016. I'm guessing that we'll be able to do that as well as 2017 while we get new products in the market. So I haven't directly given guidance around that. But I would say that we expect this to be a double digit growth business.

Okay. And I guess connected with that, the pickup that you're noticing in Europe for outsourced appraisal services, is--how much of that would just be a reflection of the very long sales cycle that you would have there given that you've got to educate the clients and kind of show them the product? And you've only been there for maybe I think it was 2014 you opened that office. So how much of it is that, and how much of it is some of the other factors that you talked about?

We're kind of--we're happy with how it's going in Europe. I think the interesting thing is that what you'll probably see us do over time is build data products independent of appraisal management. We're already starting to do that now. There's some interesting customer opportunities, and we see that as a way to go in Europe while we build up our appraisal management business. We like the way it's going like--don't get me wrong. We've added some fairly significant customers over there. But we want to actually by strategy break out our data products over time and make that a standalone available product, which will allow us to go into other markets as well, like Asia and the like. And so we--and the second part of the strategy is we don't only want to build a dependency on appraisal management as we build out this business. So you--at the ARGUS Conference, we hinted in some of the breakout sessions about that. But we're out in the market now selling straight data products, and frankly, even looking at--with some of the customers making sure that we don't give them all of the things that we're able to do just as part of an appraisal management contract. And so, that trend will evolve.

Thank you. The next question is from Stephen MacLeod at BMO Capital Markets.

Can you just talk a little bit about what you saw as the main drivers for the margin in Altus Analytics in Q1? Was it really just driven by the revenue mix, or was there something else in there that drove those margins to the north of 30% range?

Yes, Stephen. It was really a combination of the revenue growth and the restructuring activities that we undertook a year ago. So we've approved a cost structure and added to the top line. So that was a combination of the two.

And then, I guess the media tax credit.

Yes, and we pointed that out as well in our disclosures. There was a onetime media tax benefit in Canada of about CAD400,000.

Right, okay. And then, in the context of an expectation for double-digit top line growth over the long term even once you get out of the straight operating model, does the margin profile still look in that 20% to 30% range going forward?

Yes. I mean I've always said that in a good quarter we're going to see higher than that. And what we've proved I think over our model is that we rarely--I don't think in the last five quarters we've been anywhere near 20. Right?

Correct.

So -- and the wildcard on that, as I've said, is we're going to put some money into both the data investments and ARGUS in the cloud. But we'll still operate well in that range.

Okay. That's great. And then, that brings me to my next question. You mentioned the cloud and ARGUS On Demand was quite topical at the event this year. And obviously we've seen a big ramp in the user growth. What's the next wave of growth for ARGUS On Demand? I mean, do you foresee it being a complementary product to ARGUS Enterprise, even for your larger customers, or is it really just focused on the smaller -- small to mid-size customers?

The strategy that we presented at ARGUS Connect was a strategy where people will be able to operate in both environments and share files back and forth. In our advisory councils, I did a session with 22 CIOs down at ARGUS Connect. We're starting to see that people really are excited about the cloud and taking that product. Our guess is although we're going to make it available where you can operate in both environments, we think over the next few years this will become a cloud -- primarily a cloud delivered solution. And in terms of the impact on growth, obviously it's going to help recurring revenue at a cost of overall revenue growth, right, at some point by just changing our mix towards subscription solutions.

Right. Okay. And then, just finally, Angelo, if you would just elaborate a little bit on the corporate restructuring program that you have embarked upon?

Yes, sort of continuous improvement. And we initiated a program sort of late in Q1 whereby just--we worked with all of our business segments across the board in terms of reviewing cost structures and put programs in place to, again, sort of get more efficient with a view of increasing margins and being able to free up and--free up the ability to make more investments in the right areas of our business.

Thank you. The next question is from Paul Treiber at RBC Capital Markets.

I just wanted to focus on capital allocation for a moment and how you're thinking about that. In regards to real matters, you're not a selling shareholder at the IPO. What's your thoughts on potential timing of monetizing your stake, if anything? And then, what do you see as your near term priorities for capital allocation?

Yes, go for it.

All right. So look, we've talked about organic investments. We've talked about opportunities for acquisitions. The key areas right now in terms of the opportunities--the larger opportunities around acquisitions continues to be within our tax practice where we sort of see the U.S. and UK markets ripe for consolidation. Within the AA business, as Bob talked about, we are making investments although they still are much more of a modest level. So it's not like they require a lot of capital. And given that sort of backdrop where we are looking at taking a little bit off the table with respect to our investment in real matters. But at the same time, we're not in a great rush. So we're going to proceed prudently and take a little bit, as I said. But in the short term, near term, we'll hold onto the investment.

And in regards to the investment opportunities within Altus Analytics, the weight point investment is interesting. How are you thinking about in terms of allocating capital to these smaller type of investments just given there's a lot of activity in the CRE tech space, as opposed to outright acquisitions of companies?

It -- the way we're thinking about it is we have a multiyear plan for how we would like to operate our platform. And if you--and then we have a bunch of things that we've got to do organically, right? ARGUS in the cloud is one of them. And so, the idea is that if we have a view of where we want to be in three years, an example of that is as an extension of our attribution product where we show trends on revenue and expense, the idea of partnering with a weight point where you can zero down onto expenses in a fairly detailed way is a natural connection. We wouldn't build it right away. It wouldn't make the list of things that are critical in our roadmap in the next 18 months. But we can see how we -- it will be critical in the long term. So what we do is we make an investment, we open the doors to our customers, we sign a partnership with this company, we monetize it together. And at some point down the road, either by our strategic position with the company or through a more meaningful relationship, we bring it onto a platform at a time that makes sense for us. So it allows us to accelerate our ability to have more touchpoints against white space that we want to participate in. And so, that's how we're thinking about it. We're not going to put a huge amount of capital out on this. We're going to be fairly selective. And it will be three stages. Stage one is straight partnership where we monetize it together. Stage two is partnership and a small equity investment. And then, obviously, there will be some of these young companies that we'll feel that we're going to have to buy because they're so strategic.

And in regards to -- I mean, I think this is--may be obvious. But the -- I mean, maybe just get your view as well. Does an equity investment help accelerate a partnership with some of these smaller companies and strengthen a potential partnership? And then also, could you elaborate on the process for finding -- you've implemented -- defined some of these potential partnerships or equity investments or acquisitions.

Yes. Well obviously it strengthens the partnership. We're able to do strategic partners because of our position in the market with companies that we're not invested in. VTS is a good example, which I mentioned before, who I think is a fairly important player in the marketplace. And they're excited to work with us. In terms of the process for identifying for--I would say once I came to a conclusion 2.5 years ago that we had to be an innovator, an organic growth company, we came to realize that the risk of defending our brand was not from the larger, mature companies in the market. It was going to come from some of these upstarts. And, so we've always been really close to them and really watched the ones that we think are most interesting. And what we've done is we've--we have a person that is responsible for partnerships and investments and we also are looking at helping fund some of the incubators that are out there, and may even make some small investments in some of the venture capital companies. And we're not talking about a lot of money here, but they're all excited to work with us because we give them access to 5,000 or 6,000 customers. And so, we have a formal program, in place to track these companies, to evaluate partnerships, to work with the venture capital community, and to pick the winners.

Thank you. The next question is from Deepak Kaushal at GMP Securities.

I've got a couple of quick ones. First off, Bob, on the managed services side strategy for your tax business, can you give us an update on the progress you've made on that front and what your vision is for that strategy going forward?

Yes. At the bottom end of it is we've started rolling out our tax platform in Canada where we'll drive productivity, we'll collect data in a common way. We'll present that data to our customers and that is the -- as I've explained it before, the productivity enabled part of the strategy and the normalization of the data part of that strategy. We've also started to do that in the U.S. where we're starting to get common standards in across our business. We -- as you know, previously, we had signed a large customer that is using our tax services where we are a managed service provider for them, of which we also do the valuation management or appraisal management for them. And that is a template for where we're taking it. We have a dedicated person that manages that account. We're replicating that model and we're going to customers to start advocating the idea of us taking over tax management in the U.S. And the idea is to build infrastructure on that with technology where you'd have a common CRM. You'd be able to give regular online reporting. And we would cohabit these managers with our valuation management team as we go forward. And we think it's a great opportunity.

Okay, great. And how does that change the--how do you think that might change the margin profile of the property tax business?

It's pretty good now. I think we think that this will be market share rather than margin is how we're thinking about it. And we will invest in infrastructure and capacity to build out this business as we go forward. I don't think we're going to erode margins while we do this. But it's not--we would see that the margin -- any margin acceleration will come a couple years, three years, down the road.

Okay, great. And then, just one minor question for Angelo. It looked like there was a little blip in cash from ops in the quarter. It's been many years since we've seen that. Perhaps can you comment on what's going on there and how do we think of cash flow going forward?

Cash flow remains really strong. I mean, it really is a question of timing around working capital, and if you sort of look at accounts payable. So it's really just kind of a timing blip if anything. Cash flow remains strong. Continue to monetize receivables in a really strong fashion. Q1 tends to be a little bit weaker as well just from a cash flow. There's bonus payments made, so there's some--there is insurance payments that we make. So there's prepaids, that kind of thing. So it really is just a timing issue.

Thank you. The next question is by Maggie MacDougall.

So just a couple of questions on the margin. So revisiting a prior question around the Analytics Division, so the margin was very strong in the quarter, and you've been saying for a few quarters now that the wild card will be in terms of what types of investments you plan to make in that division going forward. So I'm wondering if you have any near-term plans in terms of investment that may change the margin profile somewhat compared to what we saw in Q1 and sort of the run rate of 2016.

Well, we're going to add capacity on the development side around cloud, but we're not changing our guidance around margin profile. We still--we could add 2 or 3 points of cost into Altus Analytics and still find it results in some quarter in the high 20s. So we're not too anxious about that, and we're getting organized to build a whole new capacity--coming back to the question earlier, what's the market potential for this, we think that there is a series of apps and users that we can collect in the cloud that extend our position broadly. And we're well on the way to winning--we need to--we believe we need to be in the cloud to win the global use of ARGUS Enterprise. So we're not getting carried away here. This isn't a bet your company thing. But we are--we will ramp up our spending on development here and through the next few quarters.

Okay. So it sounds like a little bit like some of the savings from the restructuring that you've been able to sort of win in that division could possibly be used for reinvestment, which would essentially keep the margin around where it's been anyway.

Yes, we did the restructuring a year ago. So it's pretty well flown through, and so you'll--you might have, for a whole bunch of reasons, you might have seen really good performance in the last year around margin. We probably will on a year-over-year growth not see the kind of performance we had, but we still believe we can operate in a pretty good margin range.

Okay. And then one question on the CRE Consulting margin. So I read that there was some increased operating cost due to the PLCs that are going to be recovered in the future. I'm wondering how material that is in terms of the overall cost in the quarter and timing for recouping those fees.

I'd say from a materiality standpoint, it really was--the margin was impacted more by sort of the decline in revenues more than the appeal fees. They---we did have an impact, somewhat of an impact, related to the Ontario jurisdiction, and we're going to see some recoveries in the next couple of quarters. But I would say that the material aspect of that change had to do more with the fact that we just had a lower revenue quarter as a result of going through the process of fling those appeals.

Thank you. There are no further questions at this time, sir. You may proceed with your presentation.

Yes, thanks all. I appreciated the turnout at ARGUS Connect. It was great. I can honestly say like, I've been on the phone with a bunch of customers this week. The energy level is high coming out of ARGUS Connect. The confidence we have in terms of the next wave of growth is positive. And as we start thinking about going to cloud, we put ourselves--if we execute well, in control of this global market opportunity. So I appreciate the calls. Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference call. Should you have further questions, please contact Camilla Bartosiewicz at Altus Group, at 416-641-9773. That number again, 416-641-9773. Thank you for your participation and please disconnect your lines at this time.