Author: Atrium Research August 28, 2026
Luca Perna | Equity Research Associate | [email protected] | 647-969-1027
PLEASE REVIEW THE DISCLOSURES AT THE BOTTOM OF THE PAGE
What you need to know:
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NTG reported Q2 revenue of $20.1M (+6% YoY, $22.1M expected) and adjusted EBITDA of breakeven vs. our $2.4M estimate.
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The Company has withdrawn its 2026 financial guidance and now expects gross margin in the low-to-mid 30% range for the foreseeable future as the Middle East conflict has weighed on its clients.
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Customers are negotiating discounted rates, pausing extensions and in some cases scaling back engagements to preserve cash.
Yesterday, NTG Clarity Networks (NCI:TSXV, NYWKF:OTCPK) reported Q2 financial results that missed our forecasts due to impacts from the conflict in the Middle East. We believe these results are only temporary and that the Company will get back to historical profitability over the medium/long-term. We are maintaining our BUY rating and lowering our target price to $1.25/share (previously $2.00/share) on NTG Clarity.
Financial Highlights
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Q2 revenue was $20.1M (+6% YoY), below our estimate of $22.1M and CapitalIQ consensus of $21.5M. This was impacted by the conflict in the Middle East as client spend did not increase as expected.
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Contracted backlog landed at $80M vs. $73M in Q1 (+10% QoQ).
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Over the six months, revenue was 51% offshore services, 41% onsite services, and 8% product-related revenue. 58% of revenue came from the banking sector, 32% from system integrators, 7% from telecom, and 3% from other.
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Gross margin for the quarter was 34%, compared to our 35% estimate and 38% in Q2/25. Customers also negotiated discounted rates to preserve engagements. Resources were moved off the bench to new engagements, offset by some clients not renewing agreements.
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Adj. EBITDA for Q2 came in at breakeven vs. our estimate of $2.4M (11% margin) and consensus of $2.8M. As a reminder, new staff are booked as G&A before being moved to COGS when deployed (and vice versa).
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S&M was 8% of sales and G&A was 27% of sales, compared to historical averages of ~7% and ~17%, respectively. S&M decreased 2% QoQ, and G&A increased 10% QoQ. NTG maintained its staffing and infrastructure required to see future growth following the conflict stabilization.
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Net income (continuing ops) for Q2 was $1.8M vs. our estimate of $1.3M and $0.4M in Q2/25. This benefited from a $1.8M tax recovery.
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OCF for Q2 was $2.7M before WC changes, but ($4.6M) after WC changes as A/R increased by $5.4M QoQ attributed to the conditions in the region.
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NTG ended Q2 with $2.8M in cash and $5.8M in debt (down $0.2M QoQ).
| Q2/26A | Atrium Est. | YoY | |
| Revenue ($M) | $20.1 | $22.1 | +6% |
| Gross Margin (%) | 34% | 35% | -440 bps |
| Adj. EBITDA Margin (%) | 0% | 11% | -1475 bps |
| Net Income ($M) | $1.8 | $1.3 | +285% |
Figure 1: Q2 Financials Summary
Outlook
Similar to last quarter, the Middle East conflict has affected NTG’s ability to sign new contracts. Clients have been focusing on cost effectiveness and ROI, resulting in lower pricing, pausing expansion, and scaling back of some agreements. Many of the digitization efforts in Saudi rely on oil shipments for funding; real GDP declined 4.8% YoY in Q2 with non-oil up 0.6%. As such, NTG withdrew its 2026 guidance while monitoring the situation and may update guidance in the future.
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Atrium Research Ratings System
BUY: The stock is expected to generate returns of over 20% over the next 24 months.
HOLD: The stock is expected to generate returns of 0-20% over the next 24 months.
SELL: The stock is expected to generate negative returns over the next 24 months.
NOT RATED (N/R): Atrium does not provide research coverage on the respective company.
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