Computer Modelling Group (CMG) Q3 2026 earnings summary

Executive summary

• 47-year history in reservoir simulation software, now expanded to a broader subsurface portfolio including seismic interpretation and geoscience solutions, with businesses at different maturity and margin stages.

• Expanded portfolio through three recent acquisitions in seismic interpretation, enhancing upstream energy workflows.

• Global customer base in ~60 countries, with a majority of revenue from the Eastern Hemisphere.

• Recurring revenue base remains resilient but has faced recent organic pressure due to customer spending and a significant contract loss.

• Margins are expected to expand as recent acquisitions mature and recurring software becomes a larger revenue share.

Financial highlights

• FY 2025 total revenue was $129.4M, with 67% from recurring software revenue.

• Q3 2026 total revenue decreased by 9% year-over-year to $32.7M; recurring revenue down 4% to $23.7M.

• Adjusted EBITDA fell 30% to $9.7M; margin dropped to 30% from 39% last year.

• Net income for Q3 was $6.0M, down 38% year-over-year; EPS was $0.07, a 42% decrease.

• Free cash flow for FY25 was $27.6M; Q3 free cash flow was $5.8M, down 34% year-over-year.

Outlook and guidance

• Near-term focus on stabilizing and expanding margins, with a return to positive organic recurring revenue growth expected in Q4/26.

• Positive annual organic recurring revenue growth anticipated for fiscal 2027, though quarterly results will be volatile due to seasonality.

• Adjusted EBITDA for the current fiscal year expected to be lower than prior year due to organic revenue and professional services decline.

• Targeting 80% of total revenue from software over the long term.