Highlights
The weighted average organic royalty growth1 of DIV's diversified royalty portfolio was 3.0% in Q4 2025 and 4.1% for the year ended December 31, 2025, compared to 5.2% for the three months ended December 31, 2024 ("Q4 2024") and 4.6% for the year ended December 31, 2024. The weighted average organic royalty growth1 on a constant currency basis was 3.0% in Q4 2025 and 3.8% for the year ended December 31, 2025, compared to 4.8% for Q4 2024 and 4.3% for the year ended December 31, 2024.
Revenue was $19.1 million in Q4 2025 and $70.8 million for the year ended December 31, 2025, up 11.9% and 8.9%, respectively, compared to the same periods in 2024.
Adjusted revenue1 was $20.4 million in Q4 2025 and $76.1 million for the year ended December 31, 2025, up 11.2% and 8.4%, respectively, compared to the same periods in 2024.
Distributable cash1 was $13.6 million in Q4 2025 and $50.5 million for the year ended December 31, 2025, up 7.9% and 12.7%, respectively, compared to the same periods in 2024.
Payout ratio1 was 87.1% in Q4 2025 based on dividends of $0.0696 per share for the quarter, compared to 82.3% based on dividends of $0.0625 per share for the comparable quarter and 88.1% for the year ended December 31, 2025 based on dividends of $0.2634 per share for the year, compared to 90.0% based on dividends of $0.2487 per share for the comparable year.
Fourth Quarter Commentary
Sean Morrison, Chief Executive Officer of DIV stated, "Overall, DIV is pleased with how its royalty partners performed with weighted average organic royalty growth of 3.0% in Q4 2025 and 4.1% for the year ended December 31, 2025. As with all portfolios, there are varying degrees of performance within the portfolio, which demonstrates the advantage of DIV's diversified approach. Mr. Lube + Tires, our largest royalty partner, continues to see strong growth, generating SSSG1 (defined below) of 7.2% for the three-month period ended December 31, 2025, and 9.5% for the year ended December 31, 2025. DIV's other variable royalty partners generated mixed results with Oxford generating slightly positive SSSG and Mr. Mikes generating slightly negative results in Q4. DIV's fixed royalty partners, Nurse Next Door, Stratus, BarBurrito and newly added royalty partner Cheba Hut, made their fixed royalty payments with average annual growth of 3.8%. DIV is providing 33% relief of Sutton's royalties to the end of 2026 to support Sutton's continued investment in business development initiatives to increase its agent base.
Royalty income from AIR MILES® saw a decline of 7.9% for Q4 2025; however, on January 26, 2026, DIV announced the amended terms to the two license agreements (the "Amendment") with Air Miles Loyalty Inc. Effective February 1, 2026, the terms of the Amendment will provide a 10-year, fixed annual royalty payment of $3.9 million, paid quarterly and growing at a rate of 2.42% per annum. In addition, the fixed royalty payments are guaranteed by the Bank of Montreal. Overall, this is a superior economic outcome for DIV".
1. Adjusted revenue and distributable cash are non-IFRS financial measures, payout ratio is a non-IFRS ratio and weighted average organic royalty growth and Same-store-sales growth or SSSG are supplementary financial measures, see "Non-IFRS Measures" below.
Fourth Quarter and Full Year Results
Three months ended December 31,
Year ended December 31,
(000's)
2025
2024
2025
2024
Mr. Lube + Tires
$
9,228
$
8,602
$
34,064
$
31,190
Stratusa
2,372
2,268
9,331
8,714
BarBurrito
2,184
2,101
8,681
8,403
Nurse Next Doorb
1,368
1,341
5,416
5,309
Oxford
1,242
1,206
4,744
4,530
Mr. Mikes
1,019
1,040
4,206
4,226
Suttonc
772
899
3,468
4,206
AIR MILES®
825
896
3,224
3,640
Cheba Hutd
1,396
-
2,985
-
Adjusted revenuee
$
20,406
$
18,352
$
76,120
$
70,218
a)
Stratus royalty income for the three months and year ended December 31, 2025, was US$1.7 million and US$6.7 million, respectively, translated at an average foreign exchange rate of $1.3946 and $1.3975 to US$1, respectively (three months and year ended December 31, 2024, royalty income of was US$1.6 million and US$6.4 million, respectively, translated at an average foreign exchange rate of $1.4000 and $1.3703 to US$1, respectively).
b)
Represents the DIV Royalty Entitlement plus management fees received from Nurse Next Door.
c)
Sutton royalty income is net of a 20% royalty relief applied beginning in the fourth quarter of 2024 and net of a 33.3% royalty relief applied beginning in the fourth quarter of 2025.
d)
Cheba Hut royalty income for the three months and year ended December 31, 2025 was US$1.0 million and US$2.2 million (three months and year ended December 31, 2024, US$nil), translated at an average foreign exchange rate of $1.3946 and $1.3847 to US$1, respectively.
e)
DIV Royalty Entitlement and adjusted revenue are non-IFRS financial measures and as such, do not have standardized meanings under IFRS. For additional information, refer to "Non-IFRS Measures" in this news release.
In Q4 2025, DIV generated $19.1 million of revenue compared to $17.0 million in Q4 2024. After considering the DIV Royalty Entitlement2 (defined below) related to DIV's royalty arrangements with Nurse Next Door, DIV's adjusted revenue2 was $20.4 million in Q4 2025, compared to $18.4 million in Q4 2024. Adjusted revenue increased primarily due to incremental revenue received through the acquisition of the Cheba Hut rights on June 17, 2025, positive SSSG2 at Mr. Lube + Tires and Oxford, the annual contractual royalty increases at Stratus, BarBurrito and Nurse Next Door, partially offset by negative SSSG from Mr. Mikes and lower royalty income from AIR MILES® and the 20% relief commencing in Q4 2024 followed by the 33% relief of the Sutton royalties commencing in Q4 2025, all as discussed in further detail below.
2. Adjusted revenue and DIV Royalty Entitlement are non-IFRS financial measures and SSSG are supplementary financial measures, see "Non-IFRS Measures" below.
Royalty Partner Business Updates
Mr. Lube + Tires: Mr. Lube Canada Limited Partnership ("Mr. Lube + Tires") generated SSSG3 of 7.2% for the Mr. Lube + Tires stores in the royalty pool for Q4 2025 and 9.5% for the year ended December 31, 2025, compared to SSSG of 12.0% and 10.5%, for the same respective prior periods in 2024. The increase was largely driven by incremental tire and maintenance sales.
3. Same-store-sales growth or SSSG is a supplementary financial measure, see "Non-IFRS Measures" below.
Stratus: Royalty income from SBS Franchising LLC ("Stratus") was $2.4 million (US$1.7 million translated at an average foreign exchange rate of $1.3946 to US$1.00) for Q4 2025 and $9.3 million (US$6.7 million translated at an average foreign exchange rate of $1.3975 to US$1.00) for the year ended December 31, 2025. The fixed royalty payable by Stratus increases each November at a rate of 5% until and including November 2026 and 4% each November thereafter during the term of the license, with the most recent increase effective November 15, 2025.
Nurse Next Door: The royalty entitlement to DIV (the "DIV Royalty Entitlement4") from Nurse Next Door Professional Homecare Services Inc. ("Nurse Next Door") was $1.4 million in Q4 2025 and $5.4 million for the year ended December 31, 2025. The DIV Royalty Entitlement from Nurse Next Door grows at a fixed rate of 2.0% per annum during the term of the license, with the most recent increase effective October 1, 2025.
4. DIV Royalty Entitlement is a non-IFRS measure, see "Non-IFRS Measures" below.
Mr. Mikes: SSSG5 for the Mr. Mikes Restaurants Corporation ("Mr. Mikes") restaurants in the Mr. Mikes royalty pool was -1.1% in Q4 2025 and 0.5% for the year ended December 31, 2025, compared to SSSG of -4.7% and -3.4%, for the same respective prior periods in 2024. The negative SSSG percentage for Q4 2025 is due to lower restaurant guest traffic during the quarter. The positive SSSG percentage in the year is due to higher sales per operating locations in the royalty pool due to increased guest traffic during the earlier part of the year.
Royalty income and management fees of $1.0 million were generated by Mr. Mikes in Q4 2025, compared to $1.0 million in Q4 2024. Royalty income and management fees of $4.2 million were generated for the year ended December 31, 2025, compared to $4.2 million generated for the year ended December 31, 2024.
5. Same-store-sales growth or SSSG is a supplementary financial measure, see "Non-IFRS Measures" below.
Oxford: The Oxford Learning Centres, Inc. ("Oxford") locations in the Oxford royalty pool generated SSSG6 (on a constant currency basis) of 3.7% in Q4 2025 and 5.0% for the year ended December 31, 2025, compared to SSSG of 4.0% and 0.2%, for the same respective prior periods in 2024. Oxford's positive SSSG is due to the solid performance of the Oxford system for Q4 2025 and the 2025 fiscal year.
6. Same-store-sales growth or SSSG is a supplementary financial measure, see "Non-IFRS Measures" below.
AIR MILES®: In Q4 2024, royalty income of $0.8 million was generated from the AIR MILES® Licenses compared to $0.9 million generated in Q4 2024, a decrease of 7.9% from the comparable quarter. For the year ended December 31, 2025, royalty income of $3.2 million was generated compared to $3.6 million generated in the comparable year, a decrease of 11.4%. The decrease is largely due to the continued softness in the AIR MILES® Rewards Program. Effective February 1, 2026, the terms of the Amendment will provide a 10-year, fixed annual royalty payment of $3.9 million, paid quarterly and growing at a rate of 2.42% per annum.
Sutton: In Q4 2025, royalty income of $0.8 million was generated by Sutton, which is net of a 33% royalty relief, compared to $0.9 million generated in Q4 2024, which was net of a 20% royalty relief. For the year ended December 31, 2025, royalty income from Sutton was $3.5 million, compared to $4.2 million generated in the comparable year. DIV entered into an agreement with Sutton for a 20% deferral of royalties paid by Sutton for the period beginning October 1, 2024 to December 31, 2025. Subsequently, in December 2025, DIV entered into an agreement to provide among other things, that (i) the 20% deferred royalties payable by Sutton for the months of October 2024 to September 2025 are forgiven, and (ii) 33% of the royalties payable by Sutton for the months of October 2025 to December 2026 are waived. Sutton continues to invest in growing their pipeline of franchise opportunities across Canada. The royalty relief agreement is intended to support Sutton's continued investment in business development initiatives to increase its agent base.
BarBurrito: Royalty income from BarBurrito Restaurants Inc. ("BarBurrito") was $2.2 million for Q4 2025 and $8.7 million for the year ended December 31, 2025. The royalty payable by BarBurrito initially grows at a fixed rate of 4% per annum each March up to and including March 2030 and, commencing on January 1, 2031, will fluctuate based on the gross sales of the BarBurrito locations in the royalty pool.
On March 1, 2026, the BarBurrito royalty pool was adjusted to add nine eligible BarBurrito restaurants to the BarBurrito royalty pool, which will result in an increase of $32,708 ($392,496 annualized) to the monthly royalty payment payable by BarBurrito to DIV commencing with the royalty payment in respect of the month of March 2026.
Cheba Hut: Royalty income from Cheba Hut Franchising, Inc. ("Cheba Hut") was $1.4 million for Q4 2025 (US$1.0 million translated at an average foreign exchange rate of 1.3946 to US$1.00) and $3.0 million for the year ended December 31, 2025 (US$2.2 million translated at an average foreign exchange rate of $1.3847). The fixed royalty payable by Cheba Hut increases each April at a rate equal to the greater of 3.5% and the U.S. Consumer Price Index ("U.S. CPI") plus 1.5%.
Distributable Cash and Dividends Declared
In Q4 2025 and for the year ended December 31, 2025, distributable cash7 increased to $13.6 million ($0.0799 per share) and $50.5 million ($0.2989 per share), respectively, compared to $12.6 million ($0.0759 per share) and $44.8 million ($0.2762 per share), in the respective periods in 2024.
The increase in distributable cash7 for the quarter was primarily due to higher adjusted revenue7, partially offset by higher general and administration expenses, higher professional fees, and higher interest expense, and higher salaries and benefits. The increase in distributable cash7 for the year was primarily due to higher adjusted revenue7, lower professional fees, and lower interest expense, partially offset by higher general and administration expenses and higher salaries and benefits.
The increase in distributable cash per share7 for the quarter and year end were primarily due to an increase in distributable cash, partially offset by a higher weighted average number of common shares outstanding.
In Q4 2025 and for the year ended December 31, 2025, the payout ratio7 was 87.1% on dividends of $0.0696 per share and 88.1% on dividends of $0.2634 per share, respectively, compared to the payout ratio of 82.3% on dividends of $0.0625 per share and 90.0% on dividends of $0.2487 per share for the same respective periods in 2024. The decrease in the payout ratio for the quarter and year end was primarily due to higher distributable cash per share7, partially offset by higher dividends declared per share.
7. Adjusted revenue and distributable cash are non-IFRS financial measures and distributable cash per share and payout ratio are non-IFRS ratios, see "Non-IFRS Measures" below.
Net Income
Net income for Q4 2025 and for the year ended December 31, 2025, was $11.0 million and $36.7 million, respectively, compared to net income of $4.0 million and $26.6 million for the same respective periods in 2024. The increase in net income in Q4 2025 was primarily due to higher adjusted revenue8, lower impairment loss on intangible assets, and lower share-based compensation expense, partially offset by higher general and administration expenses, higher interest expense, higher professional fees, higher salaries and benefits, and higher income tax expense. The increase in net income for the year was primarily due to higher adjusted revenue8, lower impairment loss on intangible assets, lower share-based compensation expense, lower professional fees, and lower interest expense, partially offset by higher salaries and benefits, higher general and administration expenses, and higher income tax expense.
8. Adjusted revenue is a non-IFRS financial measure, see "Non-IFRS ...
