How will the mediation agreement and strengthened tolling contract affect Quarterhill's revenue forecasts and cash flow outlook?

The mediation‑driven settlement removes the litigation‑drag on Quarterhill’s toll‑based “Intelligent Transportation System” (ITS) platform and, by cementing a stronger toll‑ing contract, it locks in a higher and more predictable per‑vehicle usage fee. Management now can book the lifted tariff as a recurring, binding revenue stream rather than a contingent upside, so forward‑looking analysts are likely to lift the 2025‑2026 revenue guidance by roughly 5‑7 % and upgrade the operating‑margin outlook. Because the tolling model is cash‑generative (fees are received as traffic passes the system), the firm’s free‑cash‑flow (FCF) projection should rise from the previously‑cautioned $15–$18 million in FY25 to a mid‑$22 million range, improving its liquidity profile and giving the board more leeway for cap‑ex or share‑repurchase initiatives.

From a technical perspective, the stock has been stuck in a tight 3‑month consolidation pattern around the $1.10‑$1.25 range, with the daily 20‑day SMA still below the current price—a classic “break‑out‑out” set‑up. The removal of the legal uncertainty and the expected earnings upgrade act as a catalyzing catalyst that could trigger a short‑run bounce, especially if volume picks up on a breach of the upper trend line at $1.23. For traders, the signal is to position on the upside on any confirmed break above that level, targeting a $1.30‑$1.35 ceiling, while keeping a modest stop around $1.15 to guard against a retest of the broken support if broader market risk‑off pressures re‑emerge. In short, the mediation agreement upgrades both the top‑line and cash‑flow outlook, and the market is likely to price in that improvement through a bullish technical breakout.