Quarterhill (QTRH) investor relations material

Executive summary

• Q3 revenue rose 9% YoY to $43.2M, the highest quarterly level since 2022; gross margin reached 29% and Adjusted EBITDA was $3.9M, positive for a fifth consecutive quarter.

• Operating improvements followed two years of restructuring, stronger contract economics and technology investment; priorities now include accelerating growth and scaling the business.

• After quarter-end, repayment of the convertible debentures strengthened the balance sheet as work continued toward the Conduent acquisition, subject to closing conditions and TSX approval.

Financial highlights

• Q3 revenue was $43.2M versus $39.7M; nine-month revenue rose 6% to $124.3M from $116.7M.

• Q3 gross profit was $12.3M versus $10.5M; Adjusted EBITDA was $3.9M versus $1.4M.

• Net loss widened to $16.5M, or $0.13 per share, from $4.7M, or $0.04 per share.

• Operating expenses rose to $23.6M, or 55% of revenue, from $13.7M, or 34%; operating loss was $11.3M versus $3.3M.

• Cash used in operations was $8.6M versus $6.4M generated a year earlier; acquisition-related costs, mainly for Conduent, drove the change.

Outlook and guidance

• Revenue backlog was $418.9M at September 30, including contracted work and defined-scope expected extensions; pipeline and unsigned change orders were excluded.

• Conduent tolling acquisition closing remained targeted for Q4 2026, subject to closing conditions including TSX approval; integration planning had progressed.

• Priorities include margin expansion, organic sales, pipeline conversion, acquisition integration and growth from UK sales of proprietary intersection radar technology.

• The AI-enabled modular platform is being rolled out to new customers, with the first customer launch planned for January; agencies can adopt it in phases without replacing existing systems.

• Improved operating performance and a stronger balance sheet support strategy execution and pursuit of opportunities in 2027.