Intermap Technologies Corporation (IMP) Earnings Call Transcript

Good afternoon, and thank you for joining Intermap's call to discuss the completion of our acquisition of PCI Geomatics. I'm Sean Peasgood, Investor Relations. Joining me is Patrick Blott, Chairman and CEO of Intermap; Jennifer Bakken, CFO; Jack Schneider, COO; and June McAlarey, Head of Commercial and President of PCI. [Operator Instructions] Before we begin, certain information in this presentation constitutes forward-looking statements, including statements regarding the integration of PCI Geomatics, anticipated transaction benefits and synergies, government contracting opportunities, procurement and revenue recognition timing, commercial growth, capital deployment, 2027 guidance and future operating performance. Forward-looking statements are identified by words such as anticipate, believe, expect, plan, project, will and similar expressions. These statements are based on management's current expectations concerning customer retention and demand, contract awards and delivery schedules, integration costs, financing and foreign exchange. These statements involve risks and uncertainties, including integration of PCI, realization of anticipated benefits, availability of capital, revenue variability, timing and structure of government contracts, customer concentration, retention of key personnel, economic conditions, competitive dynamics, technology risk, cybersecurity and other factors described in Intermap's public filings. Actual results may differ materially. There can be no assurance that anticipated results will be achieved. Readers should not place undue reliance on forward-looking statements. The statements are made as of October 8, 2026. The company undertakes no obligation to update them, except as required by law. Adjusted EBITDA is a non-IFRS measure. Please refer to definitions and reconciliations in the published materials. Patrick will discuss the transaction, the combined company's technology and commercial opportunity and our execution priorities. He will then review liquidity and 2027 guidance before closing remarks and your questions. Patrick, over to you.

Okay. Thank you, Sean. Yesterday, we completed Intermap's acquisition of PCI Geomatics. I want to welcome June and the entire PCI team to Intermap. This is a big deal for us, and it's a big deal for you, and it's very exciting all around. The transaction closed on October 7, 2026. We acquired all the outstanding PCI shares that we didn't already own under an arrangement agreement following PCI shareholder approval on September 25 and the final court order on October 2. We used USD 7.7 million of cash to complete the transaction. There was a lot of buyer interest. It's a fast-growing top line, it's cash generative, it's high-retention software products, delivered as a service. Customers love it, massively growing vertical market and commercial space. That's a vertical that attracts some of the most valuable companies in the entire stock market because of its size and growth. Our geospatial piece of that is around 2% of a $650 billion market, which is -- McKinsey estimates is growing to a $2 trillion market. But most importantly, execution is what matters, and PCI has an extremely accomplished and experienced employee group, has great leadership in June. And for Intermap, it was an unprecedented opportunity. Intermap has been an owner of PCI for decades. We're a trusted custodian of dual-use technologies. We were in a strong position because of the strategic rationale, and the fit of this transaction is undeniable. And we have very similar cultures. We've shared business relationships and IP, [ whether ] embedded technology, either data or software, whether directly or through customers or partners in many -- like foundational government programs, one such as NGA's Janus program or its even larger MGCP program. We're both core customers of mapping agencies all over the world. We both have decades of reliable past experience and past performance, including in Indonesia, where BIG, the mapping agency, and most of its contractors remain important customers, both for software and data from both companies. Why space? Space is the frontier. Image processing technologies like PCI's and Intermap are allowing the industry to generate images of the world with refresh rates and accuracies that are unprecedented. We need to push deeper into 3D context. That's going to open up use cases and markets for useful GEOINT. If you take 1 of our insurance companies, just to use 1 example, they may have a GEOINT stack of, say, 130 or more variables that allow them to risk manage a written premium. If a storm damages a particular roof, they may use a space image layer to help validate a claim. They'll pay more money for that. Or they may ingest dynamic imagery to monitor and correlate changes in sand dunes or barrier reefs to inform better risk pricing across an entire portfolio. That's a lot more value and more expensive. And being part of a platform like ours allows them to better amortize the cost across a book or even several books or even several customers. So space imagery works together with GEOINT from other sources collected from different platforms to generate a complete picture and inform better decisions. So we're making space imagery more useful. We're making it more affordable, and we're expanding our customer wallet at the same time with additional value proposition. And we're both achieving outcomes by focusing on the processing, integration, dissemination. We're both asset-light companies. That's a huge, strong financial position to be in, in a high-growth industry like commercial space. All automated, all at scale, without forcing our customers to build out massive GIS teams or make large capital expenditures or change established workflows, but allowing them to leverage an ecosystem and a platform. Why now? June and I have known each other for a long time. Many of our employees have known each other even longer. There was a time in the geospatial -- in this industry's evolution of space particularly when it made sense to treat space sensors as a distinct separated vertical market. Most, if not all at 1 time, were classified systems. There was a need for secrecy. The initial infrastructure is capital-intensive. Unclassified commercial systems need their own ecosystem. A lot of the analytic and algorithmic work needed to be distributed to enable base stations and other remote and autonomous workflows, and it formed a small part of a very large upfront spend. The focus has been on launch and payload more than on [ TCP ], [ TCP ] being using the geospatial intelligence, the exploitation. But today, our customers are focused on useful integrated GEOINT. And doing that at massive scale with autonomy and speed, data and use cases, they proliferated in the commercial market. Some use cases are classified, but most are not. And there's rapid commercial space market growth. There's no more need to keep these ecosystems separate. We have the infrastructure, the processes, the technologies to protect data. Information is coming from multiple sensors. And they're operating in all domains, not just space, land, air, sea. We now have the ability to produce exquisite GEOINT. But swimming in unused or slow data or not good data remains a big problem for our customers, so it makes sense to bring our capabilities back together. This is a customer-driven transaction so that we can speed things up, focus on the useful GEOINT and help customers get the most value out of it. And the rest will pay more for useful answers. The other part of that is pushing tools out through software to where customers use their GEOINT. That's a key requirement in Indonesia, for example, but they are by no means the only one. It's good business because it's recurring, and it's good for the customers because it's efficient and fast. It gives them more control and flexibility. They're going to pay more for that as well. PCI excels at delivering software-enabled tools to tens of thousands of users. They're focused on key vertical markets such as global infrastructure, better data, faster data into distributed workflows. That's where both of these customer sets are pulling us. It's where the margins are, and it's where the industry needs to go. And we're both already doing it. But together, we're going to be able to do it at a larger scale. We built a stronger company. Intermap's proprietary 3D geospatial data, collection and processing platforms, SAR domain expertise, our AI/ML analytics, and PCI adding image processing, cloud-native applications, relationships across the entire commercial space ecosystem. This acquisition doubles our recurring revenue. It adds more than 30,000 installed licenses across over 150 countries. PCI advances our technology road map as a combined company into distributed edge processing and micro services. For customers, these capabilities have the potential to reduce latencies while maintaining data oversight, provident security and sovereignty. We hear that over and over again. On the product side, PCI's work starts with imagery. Customers need to process that imagery accurately and automatically and turn it into information they can use. Intermap adds a proprietary 3D data foundation, AI and ML models developed over decades using global scale, real-world data. For customer processing satellite imagery, elevation data helps place that image accurately on the ground. For some applications, background truth can be priceless. Connecting that processing with our analytics provides a clear path to decision-ready intelligence. Distributed edge processing speeds the process up further, reducing latency within existing workflows. And all of these things are adding value which our customers are willing to pay for. We see opportunities to introduce Intermap's data, AI and ML models to PCI customers, expand access to PCI's processing capabilities through Intermap's relationships, particularly in the defense sector, and develop applications that combine both. PCI's installed base and relationships across the commercial space ecosystem significantly expand our global distribution. This is a highly attractive business model. Their churn is low because they bring highly proprietary algorithms to critical processes. Our churn is low because we bring one-of-a-kind data that helps solve previously intractable problems. Their focus is on the micro services and the algorithms, ours is on the data. Both embed unique value in software. And as a result, we both realize high ARRs, low churn, high margins, extended duration contracts. And it gets even more exciting when you think about the front end. Our customers, Intermap, compensate this company dearly for pursuit costs and program acquisition costs, especially with governments. They provide non-dilutive capital to extend our capabilities and technologies, and they pay us really high margins when we win large programs. Those programs get extended and made more valuable for everyone by embedding tools, software and services, but the acquisition cost for that follow-on sale is less than 0 when you're already the incumbent. So we're no longer leaving those opportunities on the table for us or for the customer. We make money on the capture side, we make money on the follow-on. We make money loading the gun, and we make even more money selling the software portfolio on the other side of it. So we're going to focus on growing recurring subscriptions, upselling, winning larger programs and expanding adoption of integrated solutions. For the year ending next year, we expect this commercial revenue stream to achieve $12 million to $15 million and adjusted EBITDA of around $5 million. That represents a growth of approximately 100% with contribution margins above 50%. This outlook assumes no contribution from government procurements. They have uncertain timing, including in Indonesia. And because of that uncertainty, we're not going to include those government programs in revenue guidance before contract award. We're going to focus on customers, disciplined integration and results. So those are the formal remarks. I want to thank everybody for joining us. And maybe, Sean, if you like, we can take some questions.

Great. Thanks, Patrick. Yes, we have a number of questions in the queue. [Operator Instructions] Right. First question, what are the near-term priorities for integrating PCI? And when do you expect integration to be substantially completed?

Yes. Bundling data and software and especially with its proprietary data, it just produces better answers. And it allows machine-to-machine type processes, greater automation. The algorithms just work better when you're including 3D context. And all of that creates really sticky recurring revenue. And it creates pricing power because we could toll data in addition to software subscriptions. So that gives customers incentive to extend contract lengths, which is great for us for visibility. And we've learned all of this through our insurance, through our commercial insurance business. So we understand our target. Like we understand what we're shooting for here, how to make the software work better, stick better, pay more, combining it with data and maximizing that GEOINT usefulness. At the same time, it amortizes it across larger books as a platform, and it becomes more financially compelling for the customer. They're going to pay more, but they're going to be happy paying more because of the way they're using the data now and the value that, that data brings them. Length [ is duration ], increases our pricing power. So we have, for example, already an ortho service product. It's AI/ML driven. It's super efficient. It's super effective. It uses high-grade global DEMs for accurate geolocation. We've won several new customers since rolling it out a month or so ago, and we're white labeling it through some geospatial platforms. But we're already bundling it with PCI customer imagery to deliver better ground [ true ] product for 1 of the satellite accounts. And we'll have rapid feature land cover object extraction at scale, all really fast and automated, some of the highest resolution product available on the whole planet right now. We've built this capability during our recent work in Southeast Asia. That's a 1,000 to 5,000 map scale. And it could cope with very complicated terrain. We're not talking about deserts here. They're very value-added derivative products at scale, automated. All kinds of commercial space companies can benefit from these downstream products. So we're bringing the resolutions that are captured by Intermap, runs exquisite sensors at like 30,000 feet. And we're bringing that product set to sensors that are miles into space. We're using our global 3D archive and machine learning and other capabilities to achieve that. And that combination is valuable, and it's compelling and people want that and they'll pay for it. I already gave some insurance examples of bundled product offerings. And we're anticipating -- we're participating already as a combined company on RFPs at the front end for integrated offerings. And we've had some key -- very key contracts renew subsequent to this transaction. So the customers, they're excited about this deal, and it's already generating a lot of momentum.

Okay. Great. Of the $12 million to $15 million of commercial revenue you're guiding to for 2027, how much represents PCI's existing revenue base versus Intermap's organic growth?

Yes. We've -- what I've said, we're not going to do some of the parts to break this stuff out. We've given the 2027 revenue. But what I've said that's important is that the top line is accretive. It's also synergistic, right? And we're already capturing some of those synergies with joint accounts. So in addition to that, we're capturing pricing power. We touch a lot of the DEMs on the planet when you combine these 2 companies. Most people are either buying them directly from us or they're using PCI tools to create them. And it evolves both companies' opportunities, and it elevates the business model. So there's going to be even more opportunity for high-margin revenue.

I'm going to adjust this one a little bit, but this question, what kind of organic revenue growth are you seeing from PCI? And then what percentage of that revenue would be contractually recurring?

All of it. And -- all of it. And like I said, we -- I think we've addressed that in the guidance already in terms of where we're going to be a year from now.

Okay. To what extent was this acquisition informed by commentary from defense customers?

Yes. It's coming from commercial. It's coming from -- and I gave that insurance example. Like you're able to now -- one of the things that people struggle with is how do I do like one-off imagery purchases? And those -- some people can do that, but not nearly at the volumes where either the satellite companies or those commercial enterprises can really benefit. But once they bundle with a GEOINT product on a platform that is scaled, it becomes a completely different story in terms of being able to drive that source data. And there's value to the source data, right? Like it could have high refresh rates, it can have other things. And it can -- it brings value to the stock. These data stocks are not a single product, like a single source of imagery intelligence. They're a GEOINT stack, right, 130 layers. But the satellite can bring a valuable piece to that, and -- this is -- what we're doing is going to enable a much larger, I believe, larger adoption of that. It's also getting pulled by -- on the government side. And it's getting pulled on defense as well because of this need to have distributed, secure, distributed, highly accurate, reliable GEOINT. And so it's no longer good enough to be sitting at headquarters, have a bunch of PhDs and an army of people working through GEOINT product and source and then getting it out to the field a week later or a month later, that's not good enough anymore, needs to be down range. And so that's driving it. We're enabling that, right? We're enabling it. We're enabling exquisite data on an [ ATAC ] that's really, really needed. And so -- and then on the partner side, if we just take recent work in Southeast Asia, they want data sovereignty. Like they want distributed data as well, right? Like they want to be part -- they want to own their own supply chain. And then we now have the tools to enable that, to create authoritative data, but allow them to maintain the provenance and the data authority and the security around that. So that's a really big evolution, and it's important.

So tying on to exactly what you just said, this is kind of a follow-up. But does this acquisition help with winning government programs like Indonesia? And if so, how? I think you've kind of talked a little bit about that, but do you think that this is helpful in winning those government contracts now?

It's -- I mean, I pinch myself because the requirements, like I said, they're pulling us. They're pulling everybody in this direction, right? And we have this perfect fit with PCI where they're already fulfilling a gap. We're fulfilling a gap for them, they're fulfilling a gap for us. We're also, at the same time, combining top shelf, talented people and industry verticals and installed customer base. And we're getting our gap filled. So instead of going out and hiring and building into that for a single account or a smaller number of accounts, we've now got our gap filled, plus, plus, plus. So it's a very exciting big deal.

Okay. Back to the guidance here. Does the guidance of $12 million to $15 million include built-in synergies? Or would that represent additional upside?

Yes. What we haven't built in is the government. So the government is going to be additional upside. What we've built in is the sort of bottoms-up accounts where we have visibility and longevity and can make, I think, pretty good guidance projections.

Okay. The margin profile of the commercial business is defined as $5 million. Can you confirm that excludes costs associated with the acquisition [ services ] business?

Yes, it's the contribution margin, right? So it's that side of the business. It's not the other side of the business.

Okay. Okay. Moving on, there's a couple of questions outside of the acquisition. Can you talk about what you're seeing in terms of defense opportunities?

It's very, very active. I mean, not surprisingly because the world is affected. And I think what's changed in the last certainly 12 months is the defense. People saw the budgets, right? And people saw that this was becoming a much more important market for dual-use companies like ours and other defense contractors. But what's really changed is now, defense is affecting everybody. So it's affected -- we see -- well, when oil, for example, comes out of the Strait of Hormuz, where do you think it goes? Almost all of it goes to the Strait of Malacca, which is Indonesia. And it services Southeast Asia and China. And so all of a sudden, what's happening in defense is part of everybody's business. And that's driving -- it's contributing to delays in places like Indonesia on funded programs, like those programs are going to happen, and they have the money and -- but there's impact when defense starts to impact all the other parts of your economy as well. And then it's also driving our pure defense side of our house, where our customers on that side are really, really busy, like busier than I've ever seen them in the last decade. So there's a lot of activity happening there.