Q1 2025 Alithya Group Inc Earnings Call

Speaker Change: Good morning. Welcome to Alithya's first quarter fiscal 2025 results conference call. I would now like to turn the meeting over to Alithya's management team. Please go ahead.

Operator: Fiscal 2025 Results Conference Call. I would now like to turn the meeting over to Alithya's management team. Please go ahead.

Unknown Executive: Fiscal 2025 Results Conference Call.

Unknown Executive: I would not like to turn the meeting over to Allidias management team. Please go ahead.

Unknown Executive: Good morning, and thank you once again for joining us for Alita's first quarter fiscal 2025 results conference call. The press release and NGNA with complete financial statements and related notes were issued this morning and are now posted on our website. The webcast presentation can also be found on our websites in the Investors section.

Unknown Executive: Good morning, and thank you once again for joining us for Alithya's first quarter fiscal 2025 results conference call. The press release and MD&A with complete financial statements and related notes were issued this morning and are now posted on our website. The webcast presentation can also be found on our website in the Investors section. Please be advised that this call will contain statements that are forward-looking and which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.

Alita: Good morning and thank you once again for joining us for Alithya's First Quarter Fiscal 2025 Results Conference Call. The press release and MD&A, with complete financial statements and related notes, were issued this morning and are now posted on our website.

Speaker Change: The webcast presentation can also be found on our website in the Investors section. Please be advised that this call will contain statements that are forward-looking and which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.

Unknown Executive: Please be advised that this call will contain statements that are forward-looking in which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These statements include, without limitation, our estimates, plans, expectations, and other statements regarding the future growth, results of operations, performance, and business prospects of Alita that do not exclusively relate to historical facts. These statements can also refer to future events, including those regarding our expectation of our clients, demands for our services, our ability to take advantage of business opportunities, to leverage our service offering, IT, AI, and expertise to meet clients' needs, to stand out and excel in a competitive market, and to meet our goals set in our three-year strategic plan, as well as our ability to deploy our smart showing capabilities.

Unknown Executive: These statements include, without limitation, our estimate, plan, expectation, and other statements regarding the future growth, results of operations, performance, and business prospects of Alithya that do not exclusively relate to historical facts. These statements can also refer to future events, including those regarding our expectation of our clients' demands for our services, our ability to take advantage of business opportunities, leverage our service offering, IP, AI, and expertise to meet clients' needs, stand out and excel in a competitive market, and meet our goals set in our three-year strategic plan, as well as our ability to deploy our smart-sharing capabilities.

Speaker Change: These statements include, without limitation, our estimate, plan, expectation, and other statements regarding the future growth, results of operation, performance, and business prospects of Aletheia that do not exclusively relate to historical facts.

Speaker Change: These statements can also refer to future events, including those regarding our expectation of our clients' demands for our services, our ability to take advantage of business opportunities, to leverage our service offering, IP, AI, and expertise to meet clients' needs.

Speaker Change: to stand out and excel in a competitive market and to meet our goals set in our three-year strategic plan, as well as our ability to deploy our smart shoring capability.

Unknown Executive: For more information, please refer to the cautionary note in our presentation and to the non-IFRS and other financial measures section of our MD&A for more details.

Unknown Executive: For more information, please refer to the cautionary note in our presentation and to the forward-looking statements and risk and uncertainty sections of our MD&A, both available on our website. All figures discussed on today's call are in Canadian dollars unless otherwise stated, and we may refer to certain indicators that are non-IFRS measures. Please refer to the cautionary notes in our presentation and to the non-IFRS and other financial measures section of our MD&A for more detail.

Speaker Change: For more information, please refer to the cautionary note in our presentation and to the Forward-Looking Statements and Risk and Uncertainty sections of our MD&A, both available on our website.

Speaker Change: All figures discussed on today's call are in Canadian dollars, unless otherwise stated, and we may refer to certain indicators that are non-IFRS measures.

Speaker Change: Please refer to the cautionary note in our presentation and to the non-IFRS and other financial measures section of our MD&A for more details.

Unknown Executive: Presenting this morning are Paul Raymond, Alita's President and Chief Executive Officer, Bernard Dockville, Chief Operating Officer, and Debbie Di Gregorio, Interim Chief Financial Officer.

Unknown Executive: Presenting this morning are Paul Raymond, Alithya's President and Chief Executive Officer; Bernard Dockrill, Chief Operating Officer, and Debbie DeGregorio, Interim Chief Financial Officer. I will now turn the call over to Paul.

Speaker Change: Presenting this morning are Paul Raymond, Alithya's President and Chief Executive Officer, Bernard Dockrill, Chief Operating Officer, and Debbie DiGregorio, Interim Chief Financial Officer.

Paul Raymond: I will now turn the call over to Paul Raymond. Paul. Bonjour, good morning everyone, and thank you for joining us today. I'd like to begin by highlighting three notable achievements by our team for the first quarter.

Speaker Change: I will now turn the call over to Paul Raymond. Paul?

Paul Raymond: Bonjour. Good morning, everyone, and thank you for joining us today. I'd like to begin by highlighting three notable achievements by our team for the first quarter. I will then turn things over to our Chief Operating Officer, Bernard Dockrill, to break down some of the specifics around our operational performance, followed by Debbie, our Interim Chief Financial Officer, to cover some financial highlights. So first, in Q1, our team delivered yet another quarter of adjusted EBITDA above $10 million.

Paul Raymond: Bonjour, good morning everyone, and thank you for joining us today.

Paul Raymond: In fact, our adjusted EBITDA increased 11.1%, or by $1 million, over the same quarter last year on lower year-over-year revenue. Second, 83% of our Q1 revenues were generated by repeat clients who turned to us for value-added services above and beyond the scope of their initial project. Our gross margins as a percentage of revenues increased at 31.9% compared to 28.9% for the same quarter last year. Third, in maintaining our efficiency focus, our SG&A spending remains sequentially steady in Q1 despite company-wide salary increases and decreased by 2.6% compared to the same quarter last year.

Paul Raymond: I'd like to begin by highlighting three notable achievements by our team for the first quarter.

Paul Raymond: I will then turn things over to our Chief Operating Officer, Bernard Dockville, to break down some of the specifics around our operational performance.

Paul Raymond: And one more thing, it should also be noted that our team delivered very strong net cash flow from operating activities of $16.7 million. This represents a 120% improvement over the same period last year, further reducing our long-term debt. I will now pass this on to Bernard to discuss our operations in more detail.

Speaker Change: I will then turn things over to our Chief Operating Officer, Bernard Dockrill, to break down some of the specifics around our operational performance, followed by Debbie, our Interim Chief Financial Officer, to cover some financial highlights.

Paul Raymond: Followed by Debbie, our interim Chief Financial Officer to cover some financial highlights. So first in Q1, our team delivered yet another quarter of adjusted he did above $10 million. In fact, our adjusted he did, they increased $11.1% or by $1 million over the same quarter last year on lower year-over-year revenues. Second, 83% of our Q1 revenues were generated by repeat clients who turned to us for value-added services above and beyond the scope of their initial projects. Our growth margin as a percentage of revenues increased at 31.9% compared to 28.9% for the same quarter last year.

Speaker Change: So first in Q1, our team delivered yet another quarter of adjusted EBITDA above $10 million. In fact, our adjusted EBITDA increased 11.1% or by $1 million over the same quarter last year on lower year-over-year revenues.

Speaker Change: Second, 83% of our Q1 revenues were generated by repeat clients who turned to us for value-added services above and beyond the scope of their initial projects.

Speaker Change: Our gross margins as a percentage of revenues increased at 31.9% compared to 28.9% for the same quarter last year.

Paul Raymond: Third, in maintaining our efficiency focus, our SG&A spending remains sequentially steady in Q1 despite company-wide salary increases and decreased by 2.6% compared to the same quarter last year. And one more thing, should also be noted that our team delivered very strong net cash flow from operating activities of $16.7 million.

Speaker Change: Third, in maintaining our efficiency focus, our SG&A spending remains sequentially steady in Q1 despite company-wide salary increases and decreased by 2.6% compared to same quarter last year.

Speaker Change: And one more thing, it should also be noted that our team delivered very strong net cash flow from operating activities of $16.7 million. This represents 120% improvement over the same period last year, further reducing our long-term debt.

Paul Raymond: This represents 120% improvement over the same period last year, further resourcing our long-term debt.

Bernard Dockville: I will now pass it on to Bernard to discuss our operations in more detail. Bernard? Thank you, Paul. Despite soft global market conditions, we reported stable sequential revenues while maintaining our focus on profitability improvements.

Speaker Change: I will now pass it on to Bernard to discuss our operations in more detail. Bernard?

Bernard Dockrill: Thank you, Paul. Despite soft global market conditions, we reported stable sequential revenues while maintaining our focus on profitability improvement. Geographically, we experienced a revenue decrease in Canada, primarily due to slower-than-expected information technology investments in the banking sector and certain client projects reaching maturity compared to the same quarter last year. We've continued to reduce the number of subcontractors and increase the proportion of our permanent employees. This has been a priority for a few years now, and we are pleased to see the result having positive impacts on our gross margin.

Bernard Dockrill: Thank you, Paul. Despite soft global market conditions, we reported stable sequential revenues while maintaining our focus on profitability improvements.

Bernard Dockville: Geographically, we experienced a really new decrease in Canada primarily due to slower than expected information technology investments in the banking sector and certain client projects reaching maturity, compared to the same quarter last year. We have continued to reduce the number of subcontractors and increase the proportion of our current employees. This has been a priority for a few years now, and we are pleased to see the result having positive impacts on our gross margins. Since the fall of the year, we have successfully secured opposition in several contractual vehicles with our largest public sector clients in Quebec.

Bernard Dockrill: Geographically, we experienced a revenue decrease in Canada, primarily due to slower-than-expected information technology investments in the banking sector and certain client projects reaching maturity compared to the same quarter last year.

Speaker Change: We have continued to reduce the number of subcontractors and increase the proportion of our permanent employees. This has been a priority for a few years now, and we are pleased to see the result having positive impacts on our gross margins.

Bernard Dockrill: Since the start of the year, we have successfully secured our position in several contractual vehicles with our largest public sector clients in Quebec. These agreements cover areas such as access management and security, organizational consulting, and cloud architecture and infrastructure.

Speaker Change: Since the start of the year, we have successfully secured our position in several contractual vehicles with our largest public sector clients in Quebec. These agreements cover areas such as access management and security, organizational consulting, and cloud architecture and infrastructure.

Bernard Dockville: These agreements cover areas such as access management and security, organizational consulting, and cloud architecture and infrastructure. This demonstrates our ability to stand out and excel in a competitive market. Also, our six-year Oracle Cloud Supply Chain Management project to the Quebec government and the healthcare sector continues according to plan. Despite some delays in new project signings, our backlog remains strong. As of June 30th, our backlog represents approximately 16 months of trailing 12-month revenues. We see great problems and projects discussed with our largest clients, and our partnership with AWS is providing valuable support for the assistance modernization work being conducted by our Digital Solutions Center in Quebec and our SMARTURE operations in Morocco.

Bernard Dockrill: This demonstrates our ability to stand out and excel in a competitive market. Also, our six-year Oracle Cloud supply chain management project for the Quebec government in the healthcare sector continues according to plan. Despite some delays in new project signings, our backlog remains strong. As of June 30th, our backlog represents approximately 16 months of trailing 12-month revenue. We see great progress on projects discussed with our largest clients, and our partnership with AWS is providing valuable support for the systems modernization work being conducted by our Digital Solutions Center in Quebec and our SmartShare operations in Morocco.

Speaker Change: This demonstrates our ability to stand out and excel in a competitive market.

Speaker Change: Also, our six-year Oracle Cloud Supply Chain Management project for the Quebec government and the healthcare sector continues according to plan.

Speaker Change: Despite some delays in new project signings, our backlog remains strong. As of June 30th, our backlog represents approximately 16 months of trailing 12-month revenues.

Speaker Change: We see great promise and projects discussed with our largest clients and our partnership with AWS is providing valuable support for the systems modernization work being conducted by our Digital Solutions Center in Quebec and our SmartShare operations in Morocco.

Bernard Dockville: Another key strength that we continue to build upon is our SMART Sharing strategy. Our experts in Morocco, USIN Europe, and India are engaged in the delivery of major projects for some of our largest clients. By the end of Q1, we increase our SMARTURE workforce to 8.6% of our total workforce, up from 8.1% at the end of Q4. Additionally, let's be a continuous established self as a leader in cybersecurity expertise surrounding new standards in Canada for critical industries, particularly in the nuclear energy sector. On that note, in Q1, we secured a $14 million operational technology implementation project, reinforcing our leadership in this sector.

Bernard Dockrill: Another key strength that we continue to build upon is our smart shoring strategy. Our experts in Morocco, Eastern Europe, and India are engaged in the delivery of major projects for some of our largest clients. By the end of Q1, we increased our Smartrule workforce to 8.6% of our total workforce, up from 8.1% at the end of Q4. Additionally, Alithya continues to establish itself as a leader in cybersecurity expertise surrounding new standards in Canada for critical industries, particularly in the nuclear energy sector.

Speaker Change: Another key strength that we continue to build upon is our smart shoring strategy. Our experts in Morocco, Eastern Europe , and India are engaged in the delivery of major projects for some of our largest clients.

Speaker Change: At the end of Q1, we increase our smart drill workforce to 8.6% of our total workforce, up from 8.1% at the end of Q4.

Speaker Change: Additionally, Alethia continues to establish itself as a leader in cybersecurity expertise surrounding new standards in Canada for critical industries, particularly in the nuclear energy sector.

Bernard Dockrill: On that note, in Q1, we secured a $14 million operational technology implementation project. Reinforcing our leadership in this sector, in addition to providing cutting-edge cybersecurity technologies, including AI-powered threat detection, Alithya's regulatory expertise assists clients to be compliant with relevant laws and standards. Now, looking at our U.S.

Speaker Change: On that note, in Q1, we secured a $14 million operational technology implementation project reinforcing our leadership in this sector.

Bernard Dockville: In addition to providing cutting-edge cybersecurity technologies, including AI-powered threat detection, this year's regulatory expertise assists clients to be compliant with relevant laws and standards.

Speaker Change: In addition to providing cutting-edge cybersecurity technologies, including AI-powered threat detection, Alicia's regulatory expertise assists clients to be compliant with relevant laws and standards.

Bernard Dockville: Now, looking at our US business, the ongoing reduction of lower margin business in Canada was largely offset the growth in a US operation. The Do the Kickoff, a project from a strong bookings performance in fiscal 2024. US revenues increased by 3% year-over-year, largely due to our Oracle Cloud and Microsoft Analytics European practices and a favorable US dollar exchange rate. Beyond maintaining our active presence in the US healthcare industry with Oracle Cloud, we have successfully expanded our business to include other sectors, including manufacturing and professional services. Our Oracle practice welcomed new projects in Q1 in these sectors, which demonstrates that we are on the right path to diversification.

Speaker Change: Now, looking at our US business.

Bernard Dockrill: The ongoing reduction of lower-margin business in Canada was largely offset by growth in our U.S. operations, due to the kickoff of projects from a strong bookings performance in fiscal 2024. U.S. revenues increased by 3% year-over-year, largely due to our Oracle Cloud and Microsoft Dynamics ERP practices and a favorable U.S. dollar exchange rate. Beyond maintaining our active presence in the U.S. healthcare industry with a local cloud, we have successfully expanded our business to include other sectors, including manufacturing and professional services.

Speaker Change: The ongoing reduction of lower margin business in Canada was largely offset by growth in our U.S. operations.

Speaker Change: This is due to the kickoff of projects from a strong bookings performance in fiscal 2024.

Speaker Change: U.S. revenues increased by 3% year-over-year, largely due to our Oracle Cloud and Microsoft Dynamics ERP practices and a favorable U.S. dollar exchange rate.

Speaker Change: Beyond maintaining our active presence in the U.S. healthcare industry with a local cloud, we have successfully expanded our business to include other sectors including manufacturing and professional services.

Bernard Dockrill: Our work will practice, welcome new projects in Q1 in these sectors, which demonstrates that we are on the right path to diversification. Oracle practice also continues its long-term focus on managed services to generate additional recurring revenue. We are initiating discussions as early as possible during the execution of our implementation project.

Speaker Change: Our Oracle practice welcomes new projects in Q1 in these sectors, which demonstrates that we are on the right path to diversification.

Bernard Dockville: Our Oracle practice also continues its long-term focus on managed services to generate additional recurring revenues. We are initiating discussions as early as possible during the execution of our implementation projects as clients become aware of such future needs. Our Microsoft Business also posted a strong performance in the first quarter of fiscal 2025. At the end of the quarter, our team achieved an important recognition for our efforts and innovation initiatives. As Alithia was named as a finalist for the 2024 Microsoft Dynamics 365 Supply Chain Global Partner of the Year award, honoring top Microsoft partners to demonstrate excellence in innovation and implementation of solutions based on Microsoft technologies.

Speaker Change: Our Oracle practice also continues its long-term focus on managed services to generate additional recurring revenues.

Speaker Change: We are initiating discussions as early as possible during the execution of our implementation projects as clients become aware of such future needs.

Bernard Dockrill: Our clients become aware of such future needs. Our Microsoft business also posted a strong performance in the first quarter of fiscal 2025. At the end of the quarter, our teams achieved important recognition for our efforts and innovation initiatives. Alithya was named a finalist for the 2024 Microsoft Dynamics 365 Supply Chain Global Partner of the Year Award, honoring top Microsoft partners who have demonstrated excellence in innovation and implementations of solutions based on Microsoft technology.

Speaker Change: Our Microsoft business also posted a strong performance in the first quarter of fiscal 2025. At the end of the quarter, our teams achieved an important recognition for our efforts and innovation initiatives.

Speaker Change: Alithya was named as a finalist for the 2024 Microsoft Dynamics 355 Supply Chain Global Partner of the Year Award.

Speaker Change: honoring top Microsoft partners who have demonstrated excellence in innovation and implementations of solutions based on Microsoft technologies.

Bernard Dockrill: Rithia has also achieved Microsoft Advanced Specialization for Infrastructure and Database Migration, which is an important step aligned with Microsoft's recommendation that its clients preferentially turn to partners with such advanced specializations for their projects. Alithya is currently one of only 220 Microsoft partners worldwide with multiple specializations in Microsoft Azure, spanning analytics, AI, and Machine Learning, and Business Solutions. Additionally, Alithya has achieved three of six Microsoft Specialization Designations, with two more awaiting the auditing phase. This puts us in a very select group globally.

Bernard Dockville: Alithia has also achieved its Microsoft Advanced Specialization for Infrastructure and Database Migration, which is an important step aligned with Microsoft's recommendation as its clients preferentially turn to partners with such advanced specializations for their projects. Alithia currently won of only 220 Microsoft partners worldwide with multiple specializations of Microsoft Azure, spanning analytics, AI machine learning, and business solutions. Additionally, Alithia has achieved three of six Microsoft specialization designations, with two more awaiting the auditing phase. This puts us in a very select group globally. Our long-standing Microsoft partnership continues to open many doors, including a recent agreement to serve as a strategic Microsoft partner for clients migrating their end-to-end cloud automation platforms to Microsoft Power Automate.

Speaker Change: Alithya has also achieved its Microsoft Advanced Specialization for Infrastructure and Database Migration, which is an important step aligned with Microsoft's recommendation that its clients preferentially turn to partners with such advanced specializations for their projects.

Speaker Change: Lithy is currently one of only 220 Microsoft partners worldwide with multiple specializations of Microsoft Azure, spanning analytics, AI and machine learning, and business solutions.

Ulysses: Additionally, Ulysses has achieved three of six Microsoft specialization designations, with two more awaiting the auditing phase. This puts us in a very select group globally.

Bernard Dockrill: Our longstanding Microsoft partnership continues to open many doors, including a recent agreement to serve as a strategic Microsoft partner for clients migrating their end-to-end cloud automation platforms to Microsoft Power Automate. In June, this will be the launch of the Alithya Co-Pilot Academy during our quarterly call. Vincent Femme, who has seen a surge in interest from our clients. In Q1, we delivered co-pilot services, including Discovery Workshops. Technical Readiness Assessments and Training to Set a Client.

Ulysses: Our longstanding Microsoft partnership continues to open many doors, including a recent agreement to serve as a strategic Microsoft partner for clients migrating their end-to-end cloud automation platforms to Microsoft Power Automate.

Bernard Dockville: In June, Alithia launched the Alithia Co-Pilot Academy during a quarterly call. Since then, we have seen a surge in interest from our clients. In Q1, we've delivered co-pilot services, including discovery workshops, technical readiness assessments, and training to several clients. Co-Pilot services are just one of many ways in which we are helping our clients improve their AI preparedness. We continue to build up our portfolio, a proprietary, AI-leveraged product and solutions, including our Alithia Rapid Capture and Alithia Rapid QA solutions. All over, we were completing more of the express projects now, and these initiatives, combined with our IP and the description services, currently represent over 27% of our total revenues.

Jim: In June , we discussed the launch of the Alithya Co-Priority Academy during our quarterly call. Since then, we have seen a surge in interest from our clients.

Jim: In Q1, we delivered co-pilot services, including discovery workshops, technical readiness assessments, and training to several clients.

Debbie DeGregorio: Co-Pilot services are just one of the many ways in which we are helping our clients improve their AI preparedness. We continue to build up our portfolio of proprietary and leveraged products and solutions, including our Alithya RapidCapture and Alithya RapidQA solutions. Moreover, we are completing more fixed-price projects now, and these initiatives, combined with our IP and description services, currently represent over 27% of our total revenue. I will now turn things over to my colleague, Debbie D'Aguirre-O'Neal, Alithya's interim CFO, to take a closer look at the numbers. Debbie?

Jim: Co-Pilot services are just one of many ways in which we are helping our clients improve their AI preparedness.

Speaker Change: We continue to build up our portfolio of proprietary, sky-leveraged products and solutions.

Speaker Change: including our Alithya Rapid Capture and Alithya Rapid QA solutions.

Speaker Change: Moreover, we are completing more fixed price projects now, and these initiatives, combined with our IP and subscription services, currently represent over 27% of our total revenues.

Debbie Di Gregorio: I will now turn things over to my colleague, Debbie DeGroreal, who is in terms of taking a closer look at the numbers. Debbie? Thank you for joining us today. It is a privilege to address you all for the first time and present our latest financial result. I've been spearheading the team that prepares financial disclosures for more than six years now. So I'm excited to share our achievements with you today during this call. As mentioned, our first quarter fiscal 2025 was highlighted by continued performance improvements on many levels. First, we are reporting stable sequential revenues. Consolidated revenues came in at $120.9 million.

Speaker Change: I will now turn things over to my colleague Debbie D'Aguirre-O'Neal, Alithya's interim CFO , to take a closer look at the numbers. Debbie?

Debbie DeGregorio: Merci Bernard. Good morning, everybody. And thank you for joining us today. It is a privilege to address you all for the first time and present our latest financial results. I've been spearheading the team that prepares financial disclosures for more than six years now, so I'm excited to share our achievements with you today during this call. As mentioned, our first quarter of fiscal 2025 was highlighted by continued performance improvements on many levels. First, we are reporting stable sequential revenues.

Debbie: Merci Bernard. Good morning everybody and thank you for joining us today.

Debbie: It is a privilege to address you all for the first time and present our latest financial results.

Speaker Change: I've been spearheading the team that prepares financial disclosures for more than six years now.

Speaker Change: So, I'm excited to share our achievements with you today during this call. As mentioned, our first quarter fiscal 2025 was highlighted by continued performance improvements on many levels.

Speaker Change: First, we are reporting stable sequential revenues. Consolidated revenues came in at $120.9 million.

Debbie DeGregorio: Consolidated revenues came in at $120.9 million, a sequential increase of $400,000 from $120.5 million for the fourth quarter of fiscal 2024. Despite the current global market conditions, approximately 83.1% of Alithya's Q1 sales came from existing clients, which we had in Q-1 of last year. This demonstrates strong client relationships, trust, and satisfaction in Alithya's services regardless of market trends.

Debbie Di Gregorio: A sequential increase of $400,000 from $120.5 million for the fourth quarter of fiscal 2024. Despite the current global market conditions, approximately 83.1% of Alithia's Q1 sales came from existing clients, which we had in Q1 of last year. This demonstrates strong client relationship, trust, and satisfaction in Alithia's services, regardless of market trend. If we dive a little deeper, we can see that revenues in the US increase by $1.5 million or 3% to $50.7 million in Q1. To primarily to organic growth in certain areas of the business, including a favorable US dollar exchange rate impact of $900,000 between the two periods.

Speaker Change: A sequential increase of $400,000 from $120.5 million for the fourth quarter of fiscal 2024.

Speaker Change: Despite the current global market conditions, approximately 83.1% of Alithya's Q1 sales came from existing clients.

Speaker Change: which we had in Q1 of last year. This demonstrates strong client relationship, trust and satisfaction in Aletheia's services regardless of market trends.

Debbie DeGregorio: If we dive a little deeper, we can see that revenues in the U.S. increased by $1.5 million or 3% to $50.7 million in Q1, due primarily to organic growth in certain areas of the business, including a favorable U.S. dollar exchange rate impact of $900,000 between the two periods. On a sequential basis, Q1 revenues in the U.S. also increased by $300,000, including a favorable U.S. exchange The U.S. now represents 42% of our revenue. Bernard addressed the challenges we faced in our Canadian business, as shown by our revenue numbers year-over-year. Revenues in Canada decreased by $11.9 million, or 15.4%, to $65.1 million in two months.

Speaker Change: If we dive a little deeper, we can see that revenues in the U.S. increased by $1.5 million, or 3%, to $50.7 million in Q1.

Speaker Change: Due primarily to organic growth in certain areas of the business, including a favourable U.S. dollar exchange rate impact of $900,000 between the two periods.

Debbie Di Gregorio: On a sequential basis, Q1 revenues in the US also increased by $300,000, including a favorable US exchange rate impact of $200,000. The US now represents 42% of our revenues.

Speaker Change: On a sequential basis, Q1 revenues in the U.S. also increased by $300,000, including a favorable U.S. exchange rate impact of $200,000.

Speaker Change: The U.S. now represents 42% of our revenues.

Debbie Di Gregorio: Bernard addressed the challenges we faced in our Canadian business, as shown by our revenue numbers. Revenues in Canada decreased by $11.9 million or 15.4% to $65.1 million in Q1. But on a sequential basis, revenues in Canada increased by $500,000.

Speaker Change: Bernard addressed the challenges we faced in our Canadian business, as shown by our revenue numbers year-over-year.

Speaker Change: Revenues in Canada decreased by $11.9 million, or 15.4%.

Speaker Change: to $65.1 million in Q1, but on a sequential basis, revenues in Canada increased by $500,000.

Debbie DeGregorio: But on a sequential basis, revenues in Canada increased by $500,000. Regarding our gross margin as a percentage of revenues, we are reporting a third consecutive quarter of improved performance. As noted in previous quarterly calls, it is challenging for organizations to increase gross margins during times of slower revenue growth. However, once again, we achieved good performance, with our gross margin as a percentage of revenues increasing to 31.9%, up from 28.9% in Q1 of last year when we reported revenues that were 8.1% higher than this quarter.

Debbie Di Gregorio: Regarding our growth margin as a percentage of revenues, we are reporting a third consecutive quarter of improved performance. As noted in previous quarterly calls, it is challenging for organizations to increase growth margins during times of slower revenue growth. However, once again, we achieved good performance, with our growth margin as a percentage of revenues increasing to 31.9%, up from 28.9% in Q1 of last year, when we reported revenues that were 8.1% higher than this course. On a sequential basis, gross margin as a percentage of revenues decreased only slightly compared to 32.1% for the fourth quarter of last year, despite salary increases that came into effect at the beginning of this fiscal year on April 1st.

Speaker Change: Regarding our gross margin as a percentage of revenue, we are reporting a third consecutive quarter of improved performance.

Speaker Change: As noted in previous quarterly calls, it is challenging for organizations to increase gross margins during times of slower revenue growth.

Speaker Change: However, once again, we achieved good performance.

Speaker Change: with our gross margin as a percentage of revenues increasing to 31.9%.

Speaker Change: Up from 28.9%

Speaker Change: in Q1 of last year when we reported revenues that were 8.1% higher than this quarter.

Debbie DeGregorio: Honesty Quential Basin Gross margin as a percentage of revenues decreased only slightly compared to 32.1% for the fourth quarter of last year, despite salary increases that came into effect at the beginning of this fiscal year on April 1st.

Speaker Change: On a sequential basis,

Speaker Change: Gross Margin as a Percentage of Revenues decreased only slightly compared to 32.1% for the fourth quarter of last year, despite salary increases.

Speaker Change: that came into effect at the beginning of this fiscal year on April 1st.

Debbie Di Gregorio: Our gross margin percentage increased across North America, both year over year and sequentially, mainly due to a proportionately larger decrease in the use of subcontractors compared to permanent employees, as mentioned by Bernard, and due to higher utilization rates. And this, again, despite salary increases which came into effect during the quarter.

Debbie DeGregorio: Our gross margin percentage increased across North America, both year-over-year and sequentially, mainly due to a proportionally larger decrease in the use of subcontractors compared to permanent employees, as mentioned by Bernard, and due to higher utilization rates. And this, again, despite salary increases which came into effect during the quarter. Now, looking at SG&A expenses, we have continued to witness significant improvements over consecutive quarters, and we are happy to see our cost efficiency efforts continuing to bear fruit. In the first quarter, total SG&A expenses amounted to $31.7 million, a decrease of 2.6% year over year.

Speaker Change: Our gross margin percentage increased across North America.

Speaker Change: Both year-over-year and sequentially, mainly due to a proportionally larger decrease in the use of subcontractors compared to permanent employees, as mentioned by Bernard, and due to higher utilization rates.

Bernard Dockrill: And this, again, despite salary increases, which came into effect during the quarter.

Debbie Di Gregorio: Now, looking at S-GNA expenses, we have continued to witness significant improvements over consecutive quarters, and we are happy to see our cost efficiency efforts continuing to bear fruit. In the first quarter, total S-GNA expenses amounted to $31.7 million, a decrease of 2.6% year over year. S-GNA expenses as a percentage of revenues came in at 26.2% in Q1 compared to 24.7% for the same period last year. This was driven mainly by decreases spending from impairment charges last year as part of Alithia's on-born review of its real estate strategy following the integration of acquisition and changes in working conditions in order to reduce the company's footprint and realize synergies, along with decreases in other costs, partially offset by increases in employee compensation costs.

Bernard Dockrill: Now, looking at SG&A expenses, we have continued to witness significant improvements over consecutive quarters and we are happy to see our cost efficiency efforts continuing to bear fruit.

Bernard Dockrill: In the first quarter, total SG&A expenses amounted to $31.7 million, a decrease of 2.6% year over year.

Debbie DeGregorio: SG&A expenses as a percentage of revenues came in at 26.2% in Q1, compared to 24.7% for the same period last year. This was driven mainly by decreases stemming from impairment charges last year as part of Alithya's ongoing review of its real estate strategy following the integration of acquisitions and changes in working conditions in order to reduce the company's footprint and realize synergies along with decreases in other costs, partially offset by increases in employee compensation costs.

Bernard Dockrill: SG&A expenses as a percentage of revenues came in at 26.2% in Q1 compared to 24.7% for the same period last year.

Bernard Dockrill: This was driven mainly by decreases stemming from impairment charges last year as part of Alethea's onboarding review of its real estate strategy.

Bernard Dockrill: following the integration of acquisitions and changes in working conditions in order to reduce the company's footprint and realize synergies along with decreases in other costs.

Bernard Dockrill: partially offset by increases in employee compensation costs.

Debbie Di Gregorio: Overall, thanks to the above performance on cost management, our first quarter adjusted EBITDA amounted to $10.1 million and an 11.1% increase year over year, which is much higher than the same period last year when our revenues were notably higher. Again, this reflects our rigorous approach to not losing ground on the progress we've made in terms of operational performance, and it will position us well once we return to our higher historical revenue levels. Our adjusted net earnings came in at $4.9 million or three cents per share, an increase of 65.1% year over year. I would point out that our accounting net income of negative $2.8 million in Q1 improved significantly from negative $7.2 million in the same period of last year.

Debbie DeGregorio: Overall, thanks to the above performance on cost management. Our first quarter adjusted EBITDA amounted to $10.1 million, an 11.1% increase year over year, which is much higher than the same period last year when our revenues were notably higher. Again, this reflects our rigorous approach to not losing ground on the progress we've made in terms of operational performance, and it will position us well once we return to our higher historical revenue level. Our adjusted net earnings came in at $4.9 million, or $0.03 per share, an increase of 65.1% year-over-year.

Bernard Dockrill: Overall, thanks to the above performance on cost management.

Bernard Dockrill: Our first quarter Adjusted EBITDA amounted to $10.1 million.

Bernard Dockrill: and 11.1% increase year-over-year, which is much higher than the same period last year when our revenues were notably higher.

Unknown Executive: Fiscal 2025 Results Conference Call.

Unknown Executive: I would not like to turn the meeting over to Allidias Management team. Please go ahead.

Unknown Executive: Good morning and thank you once again for joining us for Alita's first quarter fiscal 2025 Results Conference Call. The press release and NGNA with complete financial statements and related notes were issued this morning and are now posted on our website. The webcast presentation can also be found on our websites in the Investors section.

Bernard Dockrill: Again, this reflects our rigorous approach to not losing ground on the progress we've made in terms of operational performance, and it will position us well once we return to our higher historical revenue level.

Bernard Dockrill: Our adjusted net earnings came in at $4.9 million, or $0.03 per share, an increase of 65.1% year-over-year.

Unknown Executive: Please be advised that this call will contain statements that are forward looking in which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These statements include, without limitation, our estimates, plans, expectations, and other statements regarding the future growth, results of operations, performance, and business prospects of Alita that do not exclusively relate to historical facts. These statements can also refer to future events, including those regarding our expectation of our clients, demands for our services, our ability to take advantage of business opportunities, to leverage our service offering, IT, AI, and expertise to meet clients needs, to stand out and excel in a competitive market, and to meet our goals set in our three-year strategic plan, as well as our ability to deploy our smart showing capabilities.

Debbie DeGregorio: I would point out that our accounting net income of negative $2.8 million in Q1 improved significantly from negative $7.2 million in the same period of last year. Finally, considering our $10.1 million of adjusted EBITDA and our $16.7 million of cash generated from operating activities, this translates into an impressive cash flow conversion of 165.3%. Net cash generated from operating activities represented an increase of 120% year-over-year. As of June 30, 2024, when combined with other cash flow elements, this resulted in a long-term debt reduction of $9.5 million. Two hundred and seven point nine million.

Bernard Dockrill: I would point out that our accounting net income of negative $2.8 million in Q1 improved significantly from negative $7.2 million in the same period of last year.

Debbie Di Gregorio: Finally, considering our $10.1 million of adjusted EBITDA and our $16.7 million of cash generated from operating activities, this translates into an impressive cash flow conversion of 165.3%. Next cash generated from operating activities represented an increase of 120% year-over-year. As of June 30th, 2024, when combined with other cash flow elements, this resulted in a long-term debt reduction of $9.5 million to $17.9 million. As for Alithya's next debt, during Q1, it decreased to $97 million from $109 million at the end of fiscal 2024. Primarily as a result of the decrease in long-term debt, partially offset by an increase in cash.

Bernard Dockrill: Finally, considering our $10.1 million of adjusted EBITDA and our $16.7 million of cash generated from operating activities,

Bernard Dockrill: This translates into an impressive cash flow conversion of 165.3%.

Bernard Dockrill: Net cash generated from operating activities represented an increase of 120% year-over-year.

Unknown Executive: For more information, please refer to the cautionary note in our presentation and to the non-IFRS and other financial measures section of our MDNA for more details.

Bernard Dockrill: As of June 30, 2024, when combined with other cash flow elements, this resulted in a long-term debt reduction of $9.5 million to $107.9 million.

Debbie DeGregorio: As for Alithya's net debt, during Q1, it decreased to $97 million from $109 million at the end of fiscal 2024, primarily as a result of the decrease in long-term debt, partially offset by an increase in cash. Now I pass it back to Paul.

Speaker Change: As for Alithya's net debt, during Q1, it decreased to $97 million from $109 million at the end of fiscal 2024.

Speaker Change: primarily as a result of the decrease in long-term debt partially offset by an increase in cash.

Unknown Executive: Presenting this morning are Paul Raymond, Alita's president and chief executive officer, Bernard Dockville, chief operating officer, and Debbie Di Gregorio, interim chief financial officer.

Paul Raymond: Now, I pass it back to Paul. Paul? Thank you, Debbie. So, as you can see, it's going public just over five years ago. Alithya has made great strides. Between our first full fiscal year of the public company, which ended March 31, 2019, and our trailing 12 months based on our most recent first quarter, fiscal 2025, Alithya's revenues have grown 120.9%. And our gross margin dollars have grown 175%. Over the same period, our adjusted and did the dollars have increased 487%. But our market capitalization over the same period has decreased almost 13%. As our progress demonstrates, we believe we are doing the right things to build a sustainable Alithya over the long term.

Paul Raymond: Now I pass it back to Paul. Paul?

Paul Raymond: Thank you, Debbie. So, as you can see... Going public just over five years ago, Alithya has made great strides. Between our first full fiscal year as a public company, which ended March 31, 2019, and our trailing 12 months based on our most recent first quarter in fiscal 2025, Alithya's revenues have grown 129%, and our gross margin dollars have grown 175. Over this same period, our adjusted EBITDA dollars have increased

Paul: Thank you, Debbie.

Unknown Executive: I will now turn the call over to Paul Raymond, Paul.

Paul: So, as you can see,

Paul: Since going public just over five years ago, Alithya has made great strides.

Paul Raymond: Bonjour, good morning everyone, and thank you for joining us today. I'd like to begin by highlighting three notable achievements by our team for the first quarter.

Paul Raymond: But our market capitalization over the same period has decreased almost 13%. As our progress shows, we believe we are doing the right things to build a sustainable Alithya over the long term, but the market has not recognized this progress yet. We believe Alithya is a much more valuable company today than it was five years ago. We have greater scale, and we are more diverse.

Paul: Between our first full fiscal year as a public company, which ended March 31st, 2019,

Paul: and our trailing 12 months based on our most recent first quarter fiscal 2025.

Paul Raymond: I will then turn things over to our chief operating officer, Bernard Dockville, to break down some of the specifics around our operational performance.

Paul: Alithya's revenues have grown a hundred and twenty nine percent.

Paul Raymond: Followed by Debbie, our interim chief financial officer to cover some financial highlights. So first in Q1, our team delivered yet another quarter of adjusted he did above $10 million. In fact, our adjusted he did, they increased $11.1% or by $1 million over the same quarter last year on lower year-over-year revenues. Second, 83% of our Q1 revenues were generated by repeat clients who turned to us for value-added services above and beyond the scope of their initial projects.

Paul: and our gross margin dollars have grown 175%.

Paul: Over the same period, our adjusted EBITDA dollars have increased 487%.

Paul: But our market capitalization over the same period has decreased almost 13%.

Paul: As our progress demonstrates, we believe we are doing the right things to build a sustainable elitia over the long term, but the market has not recognized this progress.

Paul Raymond: But the market has not recognized this progress yet. We believe Alithya is a much more valuable company today than it was five years ago. We have greater scale and we are more diversified. We are in higher end services of our industry, and over 80% of our revenues are from repeat clients. We are more profitable and we are a growing company in a growing sector. As I often like to remind people, there will be more technology in our lives ten years from now. Alithya has been serving as a trusted advisor to its clients for over 32 years, and we plan on being around for a long time to come.

Paul: yet.

Paul: We believe Alithya is a much more valuable company today than it was five years ago.

Paul Raymond: Our growth margin as a percentage of revenues increased at 31.9% compared to 28.9% for the same quarter last year. Third, in maintaining our efficiency focus, our SGNA spending remains sequentially stead in Q1 despite company-wide salary increases and decreased by 2.6% compared to the same quarter last year. And one more thing, should also be noted that our team delivered very strong net cash flow from operating activities of $16.7 million. This represents 120% improvement over the same period last year, further resourcing our long-term debt.

Paul: We have greater scale and we are more diversified.

Paul Raymond: We are in the higher end services of our industry, and over 80% of our revenues are from repeat clients. We are more profitable, and we are a growing company in a growing sector. As I often like to remind people, there will be more technology in our lives 10 years from now. Alithya has been serving as a trusted advisor to its clients for over 32 years, and we plan on being around for a long time.

Paul: We are in higher end services of our industry and over 80% of our revenues are from repeat clients.

Paul: We are more profitable and we are a growing company in a growing sector.

Paul: As I often like to remind people, there will be more technology in our lives ten years from now.

Alivia: Alithya has been serving as a trusted advisor to its clients for over 32 years and we plan on being around for a long time to come.

Paul Raymond: We have gone through many different phases of our economy. We have lived through recessions, hyperinflation, global pandemics, global and local crises, and everything in between. We have lived through many technological revolutions, evolutions, and fads, and we have always emerged stronger. Today, our clients are leaders in their respective industries across North America and Europe, and they turn to us in growing numbers for trusted advice. Our experts operate from five different continents, and our future is bright. Still, Alithya is trading at a significant discount to its peers despite these facts. Rest assured that we remain undaunted and more focused than ever on delivering on our three-year plan.

Paul Raymond: We have gone through many different phases of our economy. We have lived through recessions, hyperinflation, global pandemics, global and local crises, and everything in between. We have lived through many technological revolutions, evolutions, and fads, and we have always emerged strong. Today, our clients are leaders in their respective industries across North America and Europe, and they turn to us in growing numbers for trusted advice. Our experts operate on five different continents, and our future is bright. Phil, Alithya is trading at a significant discount, so it rises despite these facts.

Alivia: We have gone through many different phases of our economy. We have lived through recessions, hyperinflation, global pandemics, global and local crises, and everything in between.

Bernard Dockville: I will now pass it on to Bernard to discuss our operations in more detail. Bernard? Thank you, Paul. Despite soft global market conditions, we reported stable sequential revenues while maintaining our focus on profitability improvements.

Alivia: We have lived through many technological revolutions, evolutions, and fads, and we have always emerged stronger. Today, our clients are leaders in their respective industries across North America and Europe , and they turn to us in growing numbers for trusted advice.

Bernard Dockville: Geographically, we experienced a really new decrease in Canada primarily due to slower than expected information technology investments in the banking sector and certain client projects reaching maturity, compared to the same quarter last year. We have continued to reduce the number of subcontractors and increase the proportion of our current employees. This has been a priority for a few years now, and we are pleased to see the result having positive impacts on our gross margins.

Alivia: Our experts operate on five different continents, and our future is bright.

Alivia: Still, Aletheia is trading at a significant discount to its peers despite these facts.

Paul Raymond: Rest assured that we remain undaunted and more focused than ever on delivering on our three-year plan. Before we move on to questions, period. I'd like to take a moment to remind you that our virtual annual general and special shareholders meeting will take place at 10 a.m. on September 10th. Additionally, please note that our ESG report will be disclosed on the same day. Following the annual meeting, you're all invited to attend our Investor Day at 1 p.m., also in September. It will be a hybrid event, so please join us online if you are unable to make it in person in Montreal.

Alivia: Rest assured that we remain undaunted and more focused than ever on delivering on our three-year plan.

Paul Raymond: So before we move on to questions, I'd like to take a moment to remind you that our virtual annual general and special shareholders' meeting will take place at 10 a.m. on September 10th. Additionally, please note that our ESG report will be disclosed on the same day. Following the annual meeting, you're all invited to attend our Investor Day at 1 p.m. also on September 10th. It will be a hybrid event, so please join us online if you are unable to make it in person in Montreal. Details for attending can be found in our Q1 press release and on the investor page of our website.

Alivia: So.

Bernard Dockville: Since the fall of the year, we have successfully secured opposition in several contractual vehicles with our largest public sector clients in Quebec. These agreements cover areas such as access management and security, organizational consulting, and cloud architecture and infrastructure. This demonstrates our ability to stand out and excel in a competitive market. Also, our six-year Oracle Cloud supply chain management project to the Quebec government and the healthcare sector continues according to plan. Despite some delays in new project signings, our backlog remains strong.

Alivia: Before we move on to questions period...

Alivia: I'd like to take a moment to remind you that our virtual annual general and special shareholders meeting will take place at 10 a.m. on September 10th.

Alivia: Additionally, please note that our ESG report will be disclosed on the same day.

Alivia: Following the annual meeting you're all invited to attend our Investor Day at 1 p.m. also on September 10th.

Alivia: It will be a hybrid event, so please join us online if you are unable to make it in person in Montreal.

Operator: Details on attending can be found in our Q1 press release and on the investor page of our website. The event will feature live presentations from our executive team, as well as video presentations from our senior management team, outlining our operating model for implementing our. The management team looks forward to discussing our strategic plant targets and the strategies being implemented to achieve that. So please be sure to mark the date, September 10th, on your calendar.

Alivia: Details for attending can be found in our Q1 press release and on the investor page of our website.

Bernard Dockville: As of June 30th, our backlog represents approximately 16 months of trailing 12 month revenues. We see great problems and projects discussed with our largest clients and our partnership with AWS is providing valuable support for the assistance modernization work being conducted by our Digital Solutions Center in Quebec and our SMARTURE operations in Morocco. Another key strength that we continue to build upon is our SMART sharing strategy. Our experts in Morocco, USIN Europe, and India are engaged in the delivery of major projects for some of our largest clients.

Paul Raymond: The event will feature live presentations from our executive team, as well as video presentations from our senior management team, outlining our operating model for implementing our strategic plan. The management team looks forward to discussing our strategic plan targets and the strategies being implemented to achieve them. So please be sure to mark the date September 10th on your calendar.

Alivia: The event will feature live presentations from our executive team, as well as video presentations from our senior management team, outlining our operating model for implementing our strategic plan.

Alivia: The management team looks forward to discussing our strategic plan targets and the strategies being implemented to achieve them. So please be sure to mark the date, September 10th, on your calendar.

Unknown Executive: We will now be happy to take questions. Thank you, ladies and gentlemen. We will now begin the question and answer session for financial analysts. If you'd like to ask a question, please press star one. To which right question, press star two. One moment, please, for your first question. Your first question. Oh, thank you. Your first question comes from Rob. Goff, from Vencom. Please go ahead. Good morning, and congrats on the quarter. I know there are a lot of hard thought one gains within the quarter. Thanks, Joe. So from a question, it's one of, how would you characterize the financial services outlook?

Operator: We will now be happy to take questions. Thank you, ladies and gentlemen. If you would like to ask a question, please press To try a question, press star. Norman, please, for your first question. Colicchio. Your first question comes from Rob Goff from Ventum. Please go ahead. Good morning, and congratulations on the quarter.

Speaker Change: We will now be happy to take questions.

Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session for financial analysts. If you'd like to ask a question, please press star 1. To withdraw your question, press star 2. One moment, please, for your first question.

Bernard Dockville: By the end of Q1, we increase our SMARTURE workforce to 8.6% of our total workforce, up from 8.1% at the end of Q4. Additionally, let's be a continuous established self as a leader in cybersecurity expertise surrounding new standards in Canada for critical industries, particularly in the nuclear energy sector. On that note, in Q1, we secured a $14 million operational technology implementation project reinforcing our leadership in this sector. In addition to providing cutting-edge cybersecurity technologies, including AI-powered threat detection, this year's regulatory expertise assists clients to be compliant with relevant laws and standards.

Speaker Change: Your first question you.

Speaker Change: Your first question comes from Rob Goff from Ventum. Please go ahead.

Paul Raymond: I know there are a lot of hard-fought gains within a few minutes. Thanks, Sean. So from a question, it's one of, how would you characterize, you know, the financial services outlook? Is it fair to say it's one of stabilization where there are signs of growth, or would that be overly optimistic pessimists? Thanks for the question. It's pretty stable right now.

Speaker Change: Good morning and congrats on the quarter. I know there are a lot of hard-fought one games within the quarter.

Joe: Thanks, Joe.

Speaker Change: Thanks for watching, and don't forget to like, share, and subscribe to our channel.

Rob Goff: So for my question, it's one of how would you characterize, you know, the financial services outlook? Is it fair to say it's one of stabilization where there are signs of growth or would that be overly optimistic, pessimistic?

Rob Goff: Is it fair to say it's one of stabilization where there are signs of growth, or would that be overly optimistic, pessimistic? Thanks for the question. It's pretty stable right now. I mean, we're not seeing a rapid increase, and we're not seeing further decrease. The decisions are just taking a lot longer. People are very careful, and there seems to be more interest in the business case driven or efficiency driven type projects, which of course take more times to close and negotiate just because of this structure of deals. But I'd say it's pretty stable right now. Very good.

Paul Raymond: I mean, we're not seeing a rapid increase, and we're not seeing a further decrease. The decisions are just taking a lot longer because people are very careful.

Bernard Dockville: Now, looking at our US business, the ongoing reduction of lower margin business in Canada was largely offset the growth in a US operation.

Speaker Change: Yeah, thanks for the question. It's pretty stable right now. I mean, we're not seeing a rapid increase, and we're not seeing a further decrease. The decisions are just taking a lot longer. People are very careful. And there seems to be more interest in the

Bernard Dockville: The Do The Kickoff, a project from a strong bookings performance in fiscal 2024. US revenues increased by 3% year-over-year largely due to our Oracle Cloud and Microsoft Analytics European practices and a favorable US dollar exchange rate. Beyond maintaining our active presence in the US healthcare industry with Oracle Cloud, we have successfully expanded our business to include other sectors, including manufacturing and professional services. Our Oracle practice welcomed new projects in Q1 in these sectors, which demonstrates that we are on the right path to diversification.

Paul Raymond: And there seems to be more interest in business case driven or efficiency-driven type projects, which of course take more time to close and negotiate, just because of the structure of deals, but I'd say it's pretty stable right now. Very good. And it's the same question, even mentioned in the Quebec Health and Social Services Ministry contract. Is there any more color or perspective you could provide in terms of how this could unfold and expand with success?

Speaker Change: in business case driven or efficiency driven type projects, which of course take more more time to close and negotiate just because of the structure of deals. But yeah, I'd say it's pretty stable right now.

Paul Raymond: And it's the same question, even mentioned of the Quebec Health and Social Services Ministry contract. Is there any more color or perspective you could provide in terms of how this could unfold and expand with success? Sure. First of all, the project is on plan, and I'd want to remind people that it is a six-year project with a very long tail in terms of support maintenance. So the revenue coming from that project is very gradual, and it's on plan. It is one and one department only. So, within the department, to have these regions, this is one region only.

Speaker Change: And as a second question, you made mention of the Quebec Health and Social Services Ministry contract. Is there any more color or perspective you could provide in terms of how this could unfold and expand with success?

Bernard Dockville: Our Oracle practice also continues its long-term focus on managed services to generate additional recurring revenues. We are initiating discussions as early as possible during the execution of our implementation projects as clients become aware of such future needs.

Paul Raymond: Sure. First of all, the project is on plan, and I just want to remind people that it is a six-year project with a very long tail in terms of support and maintenance, so the revenue coming from that project is very gradual, and it's on plan. It is one... Um, um, one department only.

Speaker Change: Sure, first of all the project is on plan and I want to remind people that it is a six-year project with a very long tail in terms of support and maintenance, so the revenue coming from that project is very gradual and it's on plan.

Bernard Dockville: Our Microsoft Business also posted a strong performance in the first quarter of fiscal 2025. At the end of the quarter, our team achieved an important recognition for our efforts and innovation initiatives. As Alithia was named as a finalist for the 2024 Microsoft Dynamics 365 Supply Chain Global Partner of the Year award, honoring top Microsoft partners to demonstrate excellence in innovation and implementation of solutions based on Microsoft technologies. Alithia has also achieved its Microsoft Advanced Specialization for Infrastructure and Database Migration, which is an important step aligned with Microsoft's recommendation as its clients preferentially turn to partners with such advanced specializations for their projects.

Paul Raymond: So within the department, to have these regions, this is just one region out of many in the province. So if this goes well, it does position us for the other regions as well. So it could be a much larger project over time. But this is not going to happen overnight. And when might you have clarity in terms of adding additional regions? It's going to be, it's going to be probably a couple of years.

Speaker Change: One department only, so within the department they have these regions. This is one region only. There are many regions in the province, so if this goes well, it does position us for the other regions as well. So it could be a much larger project over time, but this is not going to happen overnight.

Paul Raymond: There are many regions in the province. So if this goes well, it does position us for the other regions as well. So it could be a much larger project over time, but this is not going to happen overnight. And when might you have clarity in terms of adding additional regions to the contract? It's going to be, it's going to be probably a couple of years. I mean, if you look at the typical roll out of a project of this size, it's usually a multi-year project. So, before the other regions start moving, I bet it's several quarters out.

Speaker Change: And when might you have clarity in terms of adding additional regions to the contract?

Paul Raymond: I mean, if you look at a typical rollout of a project of this size, it's usually a multi-year project. So before the other regions start moving, it's several quarters out. Very good. Thank you. Thank you. Hey, your next question, please ask John Shao from National Bank.

Speaker Change: It's going to be it's going to be probably a couple of years. I mean, if you look at typical rollout of a project of this size, it's usually a multi-year project. So before the other regions start moving, it's several quarters out.

Bernard Dockville: Alithia currently won of only 220 Microsoft partners worldwide with multiple specializations of Microsoft Azure, spanning analytics, AI machine learning, and business solutions. Additionally, Alithia has achieved three of six Microsoft specialization designations with two more awaiting the auditing phase. This puts us in a very select group globally. Our long-standing Microsoft partnership continues to open many doors, including a recent agreement to serve as a strategic Microsoft partner for clients migrating their end-to-end cloud automation platforms to Microsoft Power Automate.

Unknown Executive: Very good. Thank you.

Speaker Change: Very good. Thank you.

John Shao: Hey, you're next question. Come, some John Shao from National Bank. Please go ahead. Good morning. Thanks for taking my questions. So how should we think about your gross profit margin potential in a situation where the demand environment improves? Thanks. Thanks for the question, John. What Alaska Bernard to give you a bit more color on the gross margin because we do get a lot of questions on that because of the improvements that we're showing. And he can give you a bit more color. Thanks for the question, John. And yes, gross margin has remained a priority for us, even in the slower market that we've been in.

Speaker Change: Thank you.

Speaker Change: Your next question comes from John Shahou from National Bank. Please go ahead.

Paul Raymond: Good morning, thanks for taking my questions. So how should we think about your gross profit margin potential in a situation where the demand environment improves? Thanks for the question, John. You know what, I'll ask Bernard to give you a bit more color on the gross margin because we do get a lot of questions on that because of the improvements that we're showing. And he can give you a bit more color.

John Shabo: Hey, good morning. Thanks for taking my questions. So how should we think about your gross profit margin potential in a situation where the demand environment improves?

Speaker Change: Thanks. Thanks for the question, John. You know what, I'll ask Bernard to give you a bit more color on the gross margin because we do get a lot of questions on that because of the improvements that we're showing.

Bernard Dockrill: and he can give you a bit more color.

Bernard Dockrill: Thanks for the question, John. And yes, gross margin has remained a priority for us, even in the slower market that we've been in. There are a number of levers that we have.

Bernard Dockrill: Thanks for the question, John , and yes, gross margin has remained a priority for us, even in the slower market that we've been in.

Bernard Dockville: In June, Alithia launched the Alithia Co-Pilot Academy during a quarterly call. Since then, we have seen a surge in interest from our clients. In Q1, we've delivered co-pilot services, including discovery workshops, technical readiness assessments, and training to several clients. Co-Pilot services are just one of many ways in which we are helping our clients improve their AI preparedness. We continue to build up our portfolio, a proprietary, AI-leveraged product and solutions, including our Alithia rapid capture and Alithia rapid QA solutions. All over, we were completing more of the express projects now, and these initiatives, combined with our IP and the description services, currently represent over 27% of our total revenues.

Bernard Dockville: There's a number of leaders that we have. We talked a little bit about the reduction of our subcontractors and use of more permanent employees that has a positive impact on our gross margins. Our utilization rates continue to, and as we grow and have more work, it's easier to increase those utilization rates. And as I mentioned in our discussion, our smart showing strategy continues to be a big part of where we want to go. And as we are growing, it's easier to increase the or accelerate the use of smart drawing, and that also comes with strong gross margin improvement as well.

Bernard Dockrill: We talked a little bit about the reduction in our subcontractors and the use of more permanent employees that have had a positive impact on our gross margins. Our utilisation rates continue to improve, and as we grow and have more work, it's easier to increase those utilisation rates. And as I mentioned in our discussion, our smart showing strategy continues to be a big part of where we want to go. And as we are growing, it's easier to increase or accelerate the use of smart showing.

Bernard Dockrill: There's a number of leaders that we have. We talk a little bit about the reduction of our subcontractors and the use of more permanent lois that has a positive impact on our reverse margins. Our utilization rates continue to, and as we grow and have the more work, it's easier to increase those utilization rates.

Bernard Dockrill: And as I mentioned in our discussion, our Smart Showing Strategy continues to be a big part of

Bernard Dockrill: of where we want to go. And as we are growing, it's

Bernard Dockrill: And that also comes with a strong gross margin improvement as well. So a number of leaders that we have at our disposal. And as we continue to get back into a growth mindset here, we will hopefully see more in the gross margins. Yeah, thanks for the color.

Bernard Dockrill: easier to increase the or accelerate the use of smart drawing. And that also comes with strong gross margin improvement as well. So

Debbie Di Gregorio: So a number of leaders that we have at our disposal, and because we continue to get back into a growth mindset here, we will see hopefully more gross margins. Thanks for the color. So it's a strong quarter of operating cash rule. So just carry any changes to your working capital policy. I'll let Debbie take that one. Good morning. Well, we're always looking at conserving cash and making sure to manage our cash. So we continue to turn our journey through our cash management, but just just talk good policies going forward and continuing what we're doing. Nothing, nothing overly special; paying down the debt and managing that debt and the cash.

Bernard Dockrill: A number of leaders that we have at our disposal, and as we continue to get back into a growth mindset here, we will see hopefully more in the growth margins time.

Debbie Di Gregorio: I will now turn things over to my colleague, Debbie DeGroreal, who is in terms of taking a closer look at the numbers. Debbie? Thank you for joining us today.

Debbie DeGregorio: So it's a strong quarter for operating cash flow. So just curious, any changes to your working capital policy? I'll let Debbie take that one.

Speaker Change: Thanks for the color. So it's a strong quarter of operating cash flow. Just curious, any changes to your working capital policy?

Speaker Change: I'll let Divya take that one, John .

Debbie DeGregorio: Good morning. Well, we're always looking at conserving cash and making sure to manage our cash. So we continue our journey through cash management, but just good policies going forward and continuing what we're doing. Nothing overly special, paying down the debt and managing that debt and the cash. A lot of discipline there. A lot of discipline, Doug. Thank you. I'll pop along.

Debbie: Good morning. Well, we're always looking at conserving cash and making sure to manage our cash. So we continue our journey through our cash management, but just good policies going forward and continuing what we're doing. Nothing overly special, paying down the debt and managing that debt and the cash.

Debbie Di Gregorio: It is a privilege to address you all for the first time and present our latest financial result. I've been spearheading the team that prepares financial disclosures for more than six years now. So I'm excited to share our achievements with you today during this call. As mentioned, our first quarter fiscal 2025 was highlighted by continued performance improvements on many levels. First, we are reporting stable sequential revenues. Consolidated revenues came in at $120.9 million.

Debbie Di Gregorio: A lot of this, a lot of discipline, a lot of discipline job. Thank you. All right.

Debbie: A lot of this, a lot of discipline, a lot of discipline, Jack.

Jack: Thank you all for the line.

Divya Goyal: Your next question comes from Divya Goyal from Scotia Bank. Please go ahead. Good morning, everyone. Paul, I actually wanted to get some more color on the booking momentum here. It looks like the booking scheme and slightly weaker than what we have seen over the recent quarters. So could you potentially provide some color and what are the signs of stabilization that you are seeing across Canada and the US, which verticals that you've seen stabilizing the FSI and government. So help us understand how things are trending here. Sure, thanks, Divya, for the question. I guess my first comment would be, we always look at our bookings, and I've said this before on a kind of a 12 rolling 12 months basis because of the size of the some of the contracts that we signed.

Operator: All right. All right. Your next question comes from Divya Goyal from Scotiabank. Please go ahead. Good morning, everyone.

Jack: All right.

Speaker Change: Your next question comes from Divya Goyal from Scotiabank. Please go ahead.

Paul Raymond: Paul, I actually wanted to get some more color on the bookings momentum here. It looks like the bookings came in slightly weaker than what we have seen over the recent quarters. So, could you potentially provide some color and what are the signs of stabilization that you are seeing across Canada and the US, which verticals are you seeing stabilizing BFSI and government? So, help us understand how things are trending here. Sure.

Debbie Di Gregorio: A sequential increase of $400,000 from $120.5 million for the fourth quarter of fiscal 2024. Despite the current global market conditions, approximately 83.1% of Alithia's Q1 sales came from existing clients, which we had in Q1 of last year. This demonstrates strong client relationship, trust and satisfaction in Alithia's services, regardless of market trend. If we dive a little deeper, we can see that revenues in the US increase by $1.5 million or 3% to $50.7 million in Q1.

Divya Goyol: Good morning everyone. Paul, I actually wanted to get some more color on the bookings momentum here.

Divya Goyol: It looks like the bookings came in slightly weaker than what we have seen over the recent quarters. So could you potentially provide some color and what are the signs of stabilization that you are seeing across Canada and U.S.?

Speaker Change: which vorticals are you seeing stabilizing BFSI and government? So help us understand how things are trending here.

Paul Raymond: Thanks, Divya, for the question. I guess my first comment would be, we always look at our bookings, and I've said this before, kind of on a rolling 12-month basis, because of the size of some of the contracts that we sign, a shift of a week from one quarter to the next can have a big impact, like we had in Q4. We brought in a lot of deals that might have been might have taken longer got got into q4 so we had a very strong q4 q1 was a little lighter, but we look at it on a rolling 12 months.

Speaker Change: Sure, thanks for the question. I guess my first comment would be we always look at our bookings and I've said this before and I kind of on a 12 rolling 12 months basis because of this is size of the some of the contracts that we sign

Paul Raymond: A shift of a week from one quarter to the next can have a big impact, like we had in Q4. We brought in a lot of deals that might have been, might have taken longer, got into Q4, so we got a very strong Q4. Q1 was a little lighter. But we look at it on a rolling 12 months. So, on a 12-month basis, we think is a better representation of what the future business is going to look like. So we like that. You have to take into consideration. There's a lot of things that go into what goes into the quarter, not so, for example, a big part of our backlog, our projects tied to Microsoft and Oracle implementations as an example. Depending on where they're when their year end is, you'll see a lot of big contracts being signed before their year ends.

Speaker Change: A shift of a week from one quarter to the next can have a big impact, like we had in Q4. We brought in a lot of deals that...

Debbie Di Gregorio: To primarily to organic growth in certain areas of the business, including a favorable US dollar exchange rate impact of $900,000 between the two periods. On a sequential basis, Q1 revenues in the US also increased by $300,000, including a favorable US exchange rate impact of $200,000. The US now represents 42% of our revenues.

Speaker Change: might have been might have taken longer got got into q4 so we got a very strong q4 q1 was a little lighter but we look at it on a

Paul Raymond: So on a 12 month basis, we think is a better representation of what the future business is going to look like. So we like that, you you have to take into consideration there's a lot of things that go into what goes into the quarter not so for example a big part of our our backlog are projects tied to Microsoft and Oracle implementations as an example well depending on where their when their year-end is you'll see a lot of big contracts being signed before their year-end so that happened in June in the in Q4 so that's going to happen in future quarters as well depending on the the partners themselves, I think just things are taking longer to close and then moving from one quarter to the next.

Speaker Change: rolling 12 months. So on a 12 months basis, we think is a better representation of what the future business is going to look like. So we like that.

Speaker Change: You have to take into consideration, there's a lot of things that go into what goes into the quarter, not so, for example, a big part of our backlog, our projects tied to Microsoft.

Speaker Change: and Oracle Implementations, as an example, or depending on where their, when their year-end is, you'll see a lot of big contracts being signed before their year-end, so that happened in June , in the, in Q4.

Debbie Di Gregorio: Bernard addressed the challenges we faced in our Canadian business as shown by our revenue numbers. Revenues in Canada decreased by $11.9 million or 15.4% to $65.1 million in Q1. But on a sequential basis, revenues in Canada increased by $500,000.

Paul Raymond: So that happened in June in the Q4. So that's going to happen in future quarters as well, depending on the partners themselves. I think just things are taking longer to close and then moving from one quarter to the next. We did have very strong bookings last year that are converting into projects this year. So we shouldn't be seeing optics coming from that eventually, but I know, Bernard, if you want to add anything else on that. No, I think you covered it, Paul. Look at the train 12 months; our numbers are where we expect them to be, especially when we take into consideration the large contracts of these sides for the acquisition.

Speaker Change: So that's going to happen in future quarters as well depending on the the partners themselves. I think just things are taking longer to close and then moving moving from one quarter to the next.

Paul Raymond: We did have very strong bookings last year that are converting into projects this year, so we shouldn't be seeing upticks coming from that, eventually. But I don't know, Bernard, if you want to add anything else on that. No, I think you covered it, Paul.

Speaker Change: We did have very strong bookings last year that are converting into projects this year.

Speaker Change: So we should be seeing upticks coming from that eventually, but I don't know, Bernard, if you want to add anything else on that.

Debbie Di Gregorio: Regarding our growth margin as a percentage of revenues, we are reporting a third consecutive quarter of improved performance. As noted in previous quarterly calls, it is challenging for organizations to increase growth margins during times of slower revenue growth. However, once again, we achieved good performance with our growth margin as a percentage of revenues increasing to 31.9% up from 28.9% in Q1 of last year when we reported revenues that were 8.1% higher than this course.

Paul Raymond: If you look at the trade in 12 months, our numbers are where we expect them to be, especially when you take into consideration the large contracts that we signed as part of the acquisition. Very helpful. So one question that I wanted to understand was the cost containment effort. Alithya has been doing a great job managing the costs over the last few quarters here. I wanted to understand the cost cutting that you've been doing on the real estate footprint and trying to minimize the footprint.

Bernard Dockrill: No, I think you covered it, Paul. If you look at the train 12 months, our numbers are where we expect them to be, especially when you take into consideration the large contracts that we assigned as part of the acquisition.

Bernard Dockville: Very helpful.

Paul Raymond: So one question that I wanted to understand was on the cost containment effort. So Alita has been doing a great job managing the cost over the recent over the last few quarters here. I wanted to understand these cost cutting that you've been doing on the real estate footprint and trying to minimize the footprint footprint. Is it fair to assume that this cost cutting would be sustainable given your increase in smart showing. And if you could provide some for the color on what's how should we anticipate this cost cutting to go on for the coming quarters.

Speaker Change: Very helpful.

Speaker Change: So, one question that I wanted to understand was on the cost containment efforts. So, Alita has been doing a great job managing the cost over the last few quarters here. I wanted to understand these cost cutting that you've been doing on the real estate footprint and trying to minimize the footprint. Is it fair to assume that

Paul Raymond: Is it fair to assume that this cost cutting would be sustainable given your increase in smart shoring? And if you could provide some color on how we should anticipate this cost cutting to go on for the coming quarters? Thank you. Yeah, sure. A couple of things on there.

Speaker Change: This cost-cutting would be sustainable given your increase in smart shoring, and if you could provide some further color on how should we anticipate this cost-cutting to go on for the coming quarters. Thank you.

Debbie Di Gregorio: On a sequential basis, Gross Margin as a percentage of revenues decreased only slightly compared to 32.1% for the fourth quarter of last year despite salary increases that came into effect at the beginning of this fiscal year on April 1st. Our gross margin percentage increased across North America, both year over year and sequentially, mainly due to a proportionately larger decrease in the use of subcontractors compared to permanent employees as mentioned by Bernard and due to higher utilization rates. And this, again, despite salary increases which came into effect during the quarter.

Paul Raymond: Thank you. Yeah, sure. A couple of things on there. Actually, just maybe that on your previous question that did you on the bookings one thing that does not appear in our bookings. So in Q1, this latest quarter. We signed Bernard, mentioned it in his comments, but we signed many very large MSAs in the government sector. Multi million dollar MSAs, but we do not recognize that in the bookings because the way we work with government is will qualify for something when the MSA and will only put in our bookings when we have signed. Contracts or so double use within those MSAs.

Paul Raymond: Actually, just maybe to add to your previous question, Divya, on the bookings, one thing that does not appear in our bookings, so in Q1, this latest quarter, we signed, Bernard mentioned it in his comments, but we signed many very large MSAs in the government sector, multi-million dollar MSAs, but we do not recognize that in the bookings because the way we work with government is we'll qualify for something when the MSA So again, that kind of impact has a zero impact in the short term, but it's very positive for us in the longer term.

Speaker Change: Yeah, sure. A couple of things on there. Actually, just maybe to add on your previous question, Divya, on the bookings.

Speaker Change: One thing that does not appear in our bookings, so in Q1, this latest quarter, we signed, Bernard mentioned it in his comments, but we signed many very large MSAs in the government sector.

Speaker Change: multi-million dollar MSAs, but we do not recognize that in the bookings because the way we work with government is we'll qualify for something, win the MSA, and we'll only put it in our bookings when we have it signed.

Paul Raymond: So again, that kind of impacts that is a zero impact short term, but it's very positive for us on the longer term. That's on the bookings on the cost cutting. I just want to differentiate between two things on the real estate side. It has a cash impact, but it does not really have a P&L impact because of the IFRS rules. So the cost cutting that we've done on the real estate side, you don't see a big impact in our numbers on that. The rest that is more efficiency driven type things that Bernard was talking about.

Speaker Change: Contracts or SOWs within those MSAs. So again that kind of impacts that is a zero-impact short term but it's very positive for us on the longer term. That's on the bookings. On the cost cutting I just want to differentiate between two things. On the real estate side

Debbie Di Gregorio: Now, looking at S-GNA expenses, we have continued to witness significant improvements over consecutive quarters and we are happy to see our cost efficiency efforts continuing to bear fruit. In the first quarter, total S-GNA expenses amounted to $31.7 million, a decrease of 2.6% year over year. S-GNA expenses as a percentage of revenues came in at 26.2% in Q1 compared to 24.7% for the same period last year. This was driven mainly by decreases spending from impairment charges last year as part of Alithia's on-born review of its real estate strategy following the integration of acquisition and changes in working conditions in order to reduce the company's footprint and realize synergies along with decreases in other costs, partially offset by increases in employee compensation costs.

Paul Raymond: That's on the bookings. On the cost cutting, I just want to differentiate between two things. On the real estate side, it has a cash impact, but it does not really have a P&L impact because of the IFRS rules.

Speaker Change: It has a cash impact, but it does not really have a P&L impact because of the IFRS rules. So the cost cutting that we've done on the real estate side, you don't see a big impact in our numbers on that. The rest is more efficiency driven.

Paul Raymond: So the cost cutting that we've done on the real estate side, you don't see a big impact in our numbers on that. The rest is more efficiency-driven type things that Bernard was talking about. So one is focusing on the right business. So higher profitability, and the better business that we go after. That means picking our battles and being more selective in terms of what we go after, which also reduces our cost of sales because then you're only chasing things that you know we have a good chance of winning that have higher margins. The other piece in reducing our cost is really where do we do the work from? Where do we leverage?

Paul Raymond: So one is focusing on the right business. So higher profitability, better business that we go after. That means picking our battles and being more selective in terms of what we go after, which also reduces our cost of sales because then you're only chasing things that you know we have a good chance of winning that have higher margins. The other the other piece in reducing our costs is really where do we do the work from where do we leverage leverage lower cost areas to do more work, which again impacts our cost savings, and there's still significant opportunity there if you look at our cops out there.

Bernard Dockrill: type things that Bernard was talking about. So one is focusing on the right business, so higher profitability, better business that we go after. That means picking our battles.

Bernard Dockrill: and being more selective in terms of what we go after which also reduces our cost of sales because then you're only chasing things that you know we have a good chance of winning that have higher margins.

Bernard Dockrill: The other piece in reducing our costs is really where do we do the work from, where do we leverage. We leverage lower cost areas to do more work, which again impacts our cost savings. And there's still significant opportunity there if you look at our comps out there.

Paul Raymond: We leverage lower-cost areas to do more work, which again impacts our cost savings, and there's still significant opportunity there. If you look at our comps out there, you know, the 30, 40, 50% range of offshore usage, we're at just under 9%. So it is an area of focus that we believe we can grow. The other areas are the use of IP, AI, and IP-enabled services, which is also growing.

Paul Raymond: You know, then the 30, 40, 50% range of offshore usage were at just under 9%. So it is an area of focus that we believe we can grow. The other areas are use of IP, AI, and IP leverage services, which is also growing. So the services that we do around that have higher, higher margins, higher value. Even growing our offshore operations, we see that as even if we need to add real estate in those locations, we don't see that as an incremental cause. We actually see it as a savings opportunity. Thank you, that's great color.

Bernard Dockrill: You know, in the 30, 40, 50% range of offshore usage, we're at just under 9%. So it is an area of focus that we believe we can grow. The other areas are use of IP.

Debbie Di Gregorio: Overall, thanks to the above performance on cost management, our first quarter adjusted EBITDA amounted to $10.1 million and 11.1% increase year over year, which is much higher than the same period last year when our revenues were notably higher. Again, this reflects our rigorous approach to not losing ground on the progress we've made in terms of operational performance, and it will position us well once we return to our higher historical revenue levels.

Bernard Dockrill: AI and IP leveraged services, which is also growing, so the services that we do around that have higher margins, higher value.

Bernard Dockrill: Even growing our offshore operations, we see that as even if we need to add real estate in those locations, we don't see that as an incremental cost, we actually see it as a savings opportunity.

Paul Raymond: So the services that we do around that have higher margins and higher value. Even growing our offshore operations, we see that as even if we need to add real estate in those locations, we don't. We don't see that as an incremental cost; we actually see it as a savings opportunity. Thank you. That's great, Colin. I don't know if that answers your question. I'm not sure if that completely answers your question, Divya, but no, it very well answers my question. Thanks a lot for all the color.

Unknown Executive: I don't know if that answers. I'm not sure if that answers your completely your question. It very well answers my question. Thank you, Lord, for the color. Appreciate it. Thank you.

Speaker Change: Thank you, that's great, Colin. I don't know if that answers, I'm not sure if that answers completely your question, Divya. No, it very well answers my question. Thanks a lot for all the color, I appreciate it.

Gavin Fairweather: Your next question comes from Gavin Fairweather from Carmer. Please go ahead. Oh, hey, good morning. Maybe just on the bookings outlook, so looking forward, you know, you talked about longer sales cycles and a bit more focused on business cases, which has been kind of similar to commentary in recent quarters. But I guess I'm curious if you characterize the buying or demand environment as similar or worse to three or six months ago, and maybe you could just touch on the pipeline size and whether that's good. Thanks. Thanks for the question. As you know, we don't give outlook.

Operator: I appreciate it. Thank you. Your next question comes from Gavin Fairweather from Carmark. Please go ahead.

Debbie Di Gregorio: Our adjusted net earnings came in at $4.9 million or three cents per share, an increase of 65.1% year over year. I would point out that our accounting net income of negative $2.8 million in Q1 improved significantly from negative $7.2 million in the same period of last year.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Gavin Furweather from Carmark. Please go ahead.

Operator: Oh, hey, good morning. I'm curious if you characterize the buying or demand environment as similar or worse to three or six months ago, on the pipeline side. Thanks for the question, Gavin. As you know, we don't give outlooks.

Gavin Furweather: Oh, hey, good morning. Maybe just on the bookings outlook. So looking forward, you know, you talked about longer sales cycles and a bit more focus on business cases, which is

Gavin Furweather: I guess I'm curious if you characterize the buying or demand environment as similar or worse to three or six months ago and maybe you could just touch on the pipeline size and whether that's growing.

Debbie Di Gregorio: Finally, considering our $10.1 million of adjusted EBITDA and our $16.7 million of cash generated from operating activities, this translates into an impressive cash flow conversion of 165.3%. Next cash generated from operating activities represented an increase of 120% year-over-year. As of June 30th, 2024, when combined with other cash flow elements, this resulted in a long-term debt reduction of $9.5 million, to $17.9 million. As for Alithya's next debt, during Q1, it decreased to $97 million from $109 million at the end of fiscal 2024. Primarily as a result of the decrease in long-term debt partially offset by an increase in cash.

Paul Raymond: What I can say is we're not seeing a big change in the "Good man" market, whatever you want to call it, six months ago. For us, we're still focused on the same things. We're focused on growing the same areas that we're in. Some deals are taking longer, but they were taking longer six months ago as well.

Speaker Change: Thanks for the question, Gavin. As you know, we don't give Outlook. What I can say is we're not seeing a big change in the

Paul Raymond: What I can say is we're not seeing a big change in the demand market, or whichever, whatever you want to call it, than six months ago. I mean, for us, we're still focused on the same things. We're focused on growing the same areas that we're in. Some some deals are taking longer, but they were taking longer six months ago as well. It's really a question that more of timing, like I was saying earlier. The seasonality of the bookings in our business varies. Like when the summer months, right now, things are slower. It's always the case.

Speaker Change: Demand market or whatever you want to call it that six months ago I mean for us we're still focused on the same things we're focused on growing the the same areas that we're in.

Speaker Change: Some deals are taking longer, but they were taking longer six months ago as well. It's really a question that more of a timing, like I was saying earlier, the seasonality of the bookings in our business varies, like we're in the summer months right now, things are slower.

Paul Raymond: It's really a question of timing, like I was saying earlier, the seasonality of the bookings in our business varies, like we're in the summer months right now, and things are slower. It's always the case; it's always been the case. And then things pick up based on events or cycles that are sometimes outside of our control, like the year ends of our clients or the year ends of Microsoft or Oracle or AWS. Whenever you're into those, you're working with those partners; their year ends usually drive many deals. So we stay close to those things. We're comfortable working in the current environment. It changes.

Paul Raymond: It's always been the case. And then things pick up based on events or cycles that are sometimes outside of our control, like the year ends of our clients. Or the year ends of Microsoft or Oracle or AWS, whenever you're into those, you're working with those partners that their year end usually drives many deals. So, so we stayed close to those things, but we're comfortable working in the current environment. I mean, it's, it's, it changes. We work in many different environments and economic cycles, and then we adapt. So we're we're we're okay with what's happening right now.

Speaker Change: It's always the case. It's always been the case. And then things pick up based on...

Speaker Change: Events or cycles that are sometimes outside of our control, like the year-ends of our client or the year-ends of Microsoft or Oracle or AWS. Whenever you're working with those partners, their year-end usually drives many deals.

Speaker Change: So we stay close to those things, but we're, we're comfortable working in the current environment. And it's, it's, it changes. We work in many different environments and economic cycles, and we adapt. So we're, we're, we're okay with what's happening right now.

Paul Raymond: We work in many different environments and economic cycles, and we adapt. So we're okay with what's happening right now. Pipeline. Stop at the second.

Paul Raymond: Now, I pass it back to Paul. Paul? Thank you, Debbie. So as you can see, it's going public just over five years ago. Alithya has made great strides. Between our first full fiscal year of the public company, which ended March 31, 2019, and our trailing 12 months based on our most recent first quarter, fiscal 2025, Alithya's revenues have grown 120.9%. And our gross margin dollars have grown 175%. Over the same period, our adjusted and did the dollars have increased 487%. But our market capitalization over the same period has decreased almost 13%.

Paul Raymond: I'm curious if the pipeline. The second question around the pipeline size. I'm curious if you're seeing just an expanding pipe and potentially, and you know, a year or so, maybe if the environment's a little bit better, we could see, you know, bookings we accelerate if you have that bigger pipeline. No, we're how that we have a healthy pipeline. We're very comfortable where we're at. Okay, got it.

Speaker Change: I'm curious if the pipeline

Speaker Change: I don't know if you want to comment on this, but the second question around the pipeline size, I'm curious if you are seeing just an expanding pipe and potentially in, you know, a year or so, maybe if the environment's a little bit better, we could see, you know, bookings reaccelerate if you have that bigger pipeline.

Operator: I'm curious if you are. A year or so, maybe, in the environment. No, we have a healthy pipeline. We're very comfortable where we're at. Okay, got it.

Speaker Change: We have a healthy pipeline, we're very comfortable, we're at. [inaudible]

Bernard Dockrill: And then maybe, maybe for Bernard, just on the offshore mix, I mean, I used to see that ticking higher this quarter, despite, you know, the organic growth not being as fast. I'm curious if you view the current pace of the offshore mix moving higher. Stabletop. Great question.

Bernard Dockville: And then maybe, just maybe for Bernard, just on the offshore mix, we need to see that ticking higher this quarter despite, you know, the organic growth not being as fast. I'm curious if you view kind of the current pace of offshore mix moving higher as a reasonable expectation, you know, maybe before a macro recovery. Like, can you with a stable top on, can you keep pushing that higher? I guess that's my question. Great question, and looking at the race that we've had in past quarters and the growth and revenue slow growth and revenue, we haven't been able to incrementally.

Bernard Dockrill: Okay, got it. And then maybe just maybe for Bernard, just on the offshore mix, I mean, I just see that ticking higher this quarter despite, you know, the organic growth, not being as fast. I'm curious if you view kind of the current pace of...

Paul Raymond: As our progress demonstrates, we believe we are doing the right things to build a sustainable Alithya over the long term. But the market has not recognized this progress yet. We believe Alithya is a much more valuable company today than it was five years ago. We have greater scale and we are more diversified. We are in higher end services of our industry and over 80% of our revenues are from repeat clients. We are more profitable and we are a growing company in a growing sector.

Speaker Change: offshore mix moving higher as a reasonable expectation you know maybe before a macro recovery like can you with a stable top line can you keep pushing that higher

Bernard Dockrill: And looking at the race that we've had in recent quarters, and the growth and revenue, slow growth and revenue, we haven't been able to do it incrementally. As we do get back to larger growth. You know, we will have more opportunities to increase that, but that will come with growth as well. But I do believe we'll be able to maintain the momentum that we've had in recent quarters as we go forward as well. Lastly, for me, I'd like to see the leverage tick-low, or I know M. Paul, M&A. David Backdad, David Backdad, David Backdad, or is there a level where?

Speaker Change: I guess that's my question.

Bernard Dockrill: Yeah, great question. And I think looking at the race that we've had in past quarters and the growth and revenue, slow growth and revenue, we haven't been able to do it incrementally.

Gavin Fairweather: Has we do yet back to larger growth? You know, we will have more opportunities to increase that, but that will come with growth as well. But I do believe we'll be able to maintain the momentum that we've had in past quarters as we go forward as well. Okay, great to hear. And then lastly, for me, nice to see the leverage tick lower.

Speaker Change: As we do get back to larger growth, we will have more opportunities to increase that. But that will come with growth as well, but I do believe we'll be able to maintain the momentum that we've had in past quarters as we go forward as well.

Paul Raymond: As I often like to remind people, there will be more technology in our lives ten years from now. Alithya has been serving as a trusted advisor to its clients for over 32 years and we plan on being around for a long time to come. We have gone through many different phases of our economy. We have lived through recessions, hyperinflation, global pandemics, global and local crises and everything in between. We have lived through many technological revolutions, evolutions and fads and we have always emerged stronger. Today, our clients are leaders in their respective industries across North America and Europe and they turn to us a growing numbers for trusted advice. Our experts operate from five different continents and our future is bright.

Speaker Change: Okay, great to hear. And then lastly for me, nice to see the leverage tick lower. I know M&A is in your plans, but absent.

Paul Raymond: I know M&A is in your plans, but absent, you know, additional M&A, is the plan to just let the leverage on the balance sheet keep ticking lower and pay back that, or is there a level where, if you got to maybe, you'd start to consider more share buybacks? Yeah, thanks for the question, Gavin. As I was saying earlier, given where the stock price is, it gets very diluted for us to use our stock and transaction, so our balance sheet is very important to us right now. But, as you can see, we're de-leveraging very fast. We were around 2.6 right now in the net depth, 2.5, 2.6.

Speaker Change: You know additional M&A is the plan to just let the leverage on the balance sheet keep ticking lower and pay back debt Or is there a level where if you got to maybe you'd start to consider you know

Paul Raymond: Yeah, thanks for the question, Gavin. As I was saying earlier, that, given where the stock price is, [inaudible] It gets very diluted for us to use our stock and transaction so, Our balance sheet is very important to us right now, but as you can see we're de-lavering very fast we were.., around 2.6 right now the net depth 2.5 2.6 we said we were comfortable between two and three, We'll keep deleveraging, and when we have the right acquisition to pull the trigger on, we'll have the cash to do it.

Speaker Change: More share buybacks.

Speaker Change: Yeah, thanks for the question, Gavin. As I was saying earlier, given where the stock price is, it gets very diluted for us to use our stock in transactions, so

Speaker Change: Our balance sheet is very important to us right now. As you can see, we're deleveraging very fast.

Paul Raymond: Still, Alithya is trading at a significant discount to its peers despite these facts. Rest assured that we remain undonted and more focused than ever on delivering on our three-year plan.

Speaker Change: around 2.6 right now the net depth 2.5 2.6 we said we were comfortable between two and three

Paul Raymond: We said we were comfortable between two and three. We'll keep de-leveraging, and when we have the right acquisition to pull the trigger on, we'll have the cash to do it. Absent that, our stock is probably the best deal out there in the market right now for us to buy back. If you go based on our priorities, the first one is to reinvest in the company, so acquisition. I'd say buy back with probably number two after that. Paying down to depth is very good right now based on where the markets are. And I think in previous quarters, you'd characterize the deal environment as one where high quality companies hadn't seen a big revision in terms of the multiples that the vendors were looking for.

Paul Raymond: So before we move on to questions, I'd like to take a moment to remind you that our virtual annual general and special shareholders meeting will take place at 10 a.m, on September 10th. Additionally, please note that our ESG report will be disclosed on the same day.

Speaker Change: We'll keep deleveraging and when we have the right acquisitions to pull the trigger on, we'll have the cash to do it.

Paul Raymond: Absent that, our stock's probably the best deal out there in the market right now for us to buy back. So, you know, if you go based on our priorities, the first one is to reinvest in the company, so acquisition. I'd say my back would probably be number two after that, paying down the debt is very good right now based on where the markets are.

Speaker Change: Absent that, our stock's probably the best deal out there in the market right now for us to buy back. So, if you go based on our priorities, first one is to reinvest in the company, so acquisition.

Paul Raymond: Following the annual meeting, you're all invited to attend our investor day at 1 p.m, also on September 10th. It will be a hybrid event, so please join us online if you are unable to make it in person in Montreal. Details for attending can be found in our Q1 press release and on the investor page of our website. The event will feature live presentations from our executive team, as well as video presentations from our senior management team, outlining our operating model for implementing our strategic plan. The management team looks forward to discussing our strategic plan targets and the strategies being implemented to achieve them. So please be sure to mark the date September 10th on your calendar.

Speaker Change: I'd say my back would probably be number two after that, so.

Unknown Executive: We will now be happy to take questions.

Speaker Change: Paying down the debt is very good right now based on where the markets are.

Paul Raymond: In previous quarters, you'd characterize the deal environment as one where high- Is that still the case, or is maybe the more mixed macro environment? We're still seeing very interesting deals, Gavin, in the range that we typically pay for. And the reason for that is our M&A strategy is a bit different than many other players. And I've mentioned this before, but we look for organizations that are very high quality, that fit into our platform, where the leaders want to stick around. And the leaders who want to stick around and see us as a platform for growth have a very different perspective than somebody who wants to sell the cash out and leave. So we still see many opportunities. Again, we just need to make sure that three key factors are aligned, right? It's the right company at the right price, and the people want to stick around.

Speaker Change: And I think in previous quarters you'd characterize the deal environment as one where high-quality companies hadn't seen a big, you know, revision.

Paul Raymond: Did that still the case, or is maybe the more mixed macro environment starting to lead to a more favorable purchasing environment? We're still seeing very interesting deal deals, Gavin, in the range that we typically pay for, and the reason for that is our M&A strategies a bit different than many other players. I mentioned this before, but we look for organizations that are very high quality that fit into our platform where the leaders want to stick around. And the leaders who want to stick around and see us as a platform for growth have a very different perspective than somebody who wants to sell the cash out and lead.

Speaker Change: In terms of the multiple that

Speaker Change: vendors we're looking for. Would you say that's still the case or is maybe the more mixed macro?

Speaker Change: environment starting to lead to a more favorable.

Speaker Change: and Paul Perkissing Environment.

Speaker Change: We're still seeing very interesting deals, Gavin, in the range that we typically pay for. And the reason for that is our M&A strategy is a bit different than many other players. I've mentioned this before, but we look for organizations that are very high quality, that fit into our platform, where the leaders want to stick around.

Unknown Executive: Thank you, ladies and gentlemen. We will now begin the question and answer session for financial analysts. If you'd like to ask a question, please press star one. To which right question, press star two. One moment please for your first question. Your first question. Oh, thank you.

Speaker Change: And the leaders who want to stick around and see us as a platform for growth have a very different perspective than somebody who wants to sell the cash out and leave.

Paul Raymond: So we still see many opportunities again; we just need to make sure that three key factors are aligned right: is the right company at the right price, and the people want to stick around. So we're still looking actively; we have a healthy final. We'll pull the trigger when all those conditions are met.

Speaker Change: So, we still see many opportunities again, we just need to make sure that three

Rob Goff: Your first question comes from Rob. Goff, from Vencom. Please go ahead. Good morning and congrats on the quarter. I know there are a lot of hard thought one gains within the quarter. Thanks, Joe.

Speaker Change: Three key factors are aligned, right? It's the right company at the right price and the people want to stick around.

Paul Raymond: So we're still looking actively; we have a healthy finalist. We'll pull the trigger when all those conditions are met. All right. Thank you, Gavin. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star. The next question comes from Rob Goff, from Ventum. Please go ahead.

Speaker Change: So we're still looking actively. We have a healthy funnel. We'll pull the trigger when all those conditions are met.

Rob Goff: So from a question, it's one of, how would you characterize the financial services outlook? Is it fair to say it's one of stabilization where there are signs of growth or would that be overly optimistic, pessimistic? Thanks for the question.

Speaker Change: That's it for me. I'll pass the line. Thank you.

Rob Goff: Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one. Your next question comes from Rob Gulf from Ventum. Please go ahead. Thank you for taking my follow up. You have commented in previous quarters that you found yourself bidding on more larger contracts. Could you talk to whether that remains the case and any RFPs outstanding in such a category? Thanks for the question, Rob. So I won't comment on the outstanding stuff, but yes, we are still bidding on very large projects. As you saw in our latest bookings, we won one for $14 million in cybersecurity in the energy sector in Canada.

Speaker Change: All right, thank you, Gavin.

Speaker Change: Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star 1. Your next question comes from Rob Goff from Ventum. Please go ahead.

Paul Raymond: Thank you for taking my follow up. You have commented in previous quarters that you found yourself, and I'm bidding on more larger contracts. Could you talk to whether that remains the case? Any RFPs outstanding in such a category? Thanks for the question, Rob. So I won't comment on the outstanding stuff.

Paul Raymond: It's pretty stable right now. I mean, we're not seeing a rapid increase and we're not seeing further decrease. The decisions are just taking a lot longer. People are very careful and there seems to be more interest in the business case driven or efficiency driven type projects, which of course take more times to close and negotiate just because of this structure of deals, but I'd say it's pretty stable right now.

Rob Gough: Thank you for taking my follow up. You have commented in previous quarters that you find yourself

Unknown Executive: Very good.

Speaker Change: Bidding on more larger contracts?

Rob Gough: Could you talk to whether that remains the case and any RFPs outstanding in such a category?

Paul Raymond: But yes, we are still bidding on very large projects. As you saw in our latest bookings, we won one for $14 million in cybersecurity in the energy sector in Canada. So, we compete with very large companies in that area for these contracts. So, yes, we continue to see them. And actually, what's nice about that is our scale; our current scale gives us access to those types of deals. So, with less competition, we compete with the very large companies. And for us, there are opportunities to differentiate what we do and how we do it. So, yeah, we're going to keep looking for those at larger opportunities.

Speaker Change: Thanks for the question Rob. So I won't comment on the outstanding stuff but yes we are still bidding on very large projects.

Speaker Change: As you saw in our latest bookings, we won one for $14 million in cybersecurity.

Unknown Executive: And it's the same question, even mentioned of the Quebec Health and Social Services Ministry contract.

Paul Raymond: So we compete with very large companies in that area for these contracts. So yes, we continue to see those, and actually what's nice about that is our scale; our current scale gives us access to those types of deals. So if less competition, we compete with the very large company. and for us, there's a lot of opportunities to differentiate there, what we do and how we do it. So, yeah, we're going to keep looking for those at larger opportunities. Thank you. And there are no further questions at this time.

Speaker Change: in the energy sector in Canada. So

Speaker Change: We compete with very large companies in that area.

Paul Raymond: Is there any more color or perspective you could provide in terms of how this could unfold and expand with success? Sure. First of all, the project is on plan and I'd want to remind people that it is a six year project with a very long tail in terms of support maintenance. So the revenue coming from that project is very gradual and it's on plan. It is one and one department only. So within the department to have these regions, this is one region only.

Speaker Change: for these contracts. So yes, we continue to see those. And actually, what's nice about that is our scale, our current scale, gives us access to those types of deals. So less competition, we compete with the very large companies.

Speaker Change: And for us, there's some opportunities to differentiate there with what we do and how we do it. So, so yeah, we're going to keep looking for those larger opportunities.

Speaker Change: Very good. Thank you.

Operator: Thank you. Thank you. And there are no further questions at this time. I will turn the call back over to Paul Raymond for closing. Thank you very much, Julie. Thank you everybody for joining us today and I look forward to seeing you at our investor day. This concludes today's conference call. You may now disconnect. Thank you.

Speaker Change: Thank you.

Paul Raymond: I will turn the call back over to Paul Raymond for closing remarks. Thank you very much, Julie. Thank you, everybody, for joining us today, and I look forward to seeing you at our investor day.

Speaker Change: And there are no further questions at this time. I will turn to call back over to Paul Raymond for closing remarks.

Paul Raymond: There are many regions in the province. So if this goes well, it does position us for the other regions as well. So it could be a much larger project over time, but this is not going to happen overnight.

Paul Raymond: Thank you very much, Julie. Thank you everybody for joining us today and I look forward to seeing you at our Investor Day.

Unknown Executive: This concludes this conference call. You may now disconnect. Thank you.

Speaker Change: This concludes today's conference call. You may now disconnect. Thank you.

Paul Raymond: And when might you have clarity in terms of adding additional regions to the contract? It's going to be, it's going to be probably a couple of years. I mean, if you look at typical roll out of a project of this size, it's usually a multi-year project. So before the other regions start moving, I bet it's several quarters out.

Unknown Executive: Very good. Thank you.

Meng Shao: Hey, you're next question. Come some John Shao from National Bank. Please go ahead.

Meng Shao: Good morning. Thanks for taking my questions.

John Shao: So how should we think about your gross profit margin potential in a situation where the demand environment improves? Thanks. Thanks for the question, John. What Alaska Bernard to give you a bit more color on the gross margin because we do get a lot of questions on that because of the improvements that we're showing. And he can give you a bit more color. Thanks for the question, John. And yes, gross margin has remained priority for us, even in the slower market that we've been in.

John Shao: There's a number of leaders that we have. We talked a little bit about the reduction of our subcontractors and use of more permanent employees that has a positive impact on our gross margins. Our utilization rates continue to, and as we grow and have more work, it's easier to increase those utilization rates. And as I mentioned in our discussion, our smart showing strategy continues to be a big part of where we want to go.

John Shao: And as we are growing, it's easier to increase the or accelerate the use of smart drawing and that also comes with strong gross margin improvement as well. So a number of leaders that we have at our disposal and because we continue to get back into a growth mindset here, we will see hopefully more gross margins. Thanks for the color. So it's a strong quarter of operating cash rule.

Debbie Di Gregorio: So just carry any changes to your working capital policy.

Debbie Di Gregorio: I'll let Debbie take that one.

Debbie Di Gregorio: Good morning. Well, we're always looking at conserving cash and making sure to manage our cash. So we continue to turn our journey through our cash management, but just just talk good policies going forward and continuing what we're doing. Nothing, nothing overly special, paying down the debt and having managing that debt and the cash. A lot of this a lot of discipline, a lot of discipline job. Thank you.

Divya Goyal: All right. Your next question comes from Divya Goyal from Scotia Bank. Please go ahead.

Divya Goyal: Good morning, everyone. Paul, I actually wanted to get some more color on the booking momentum here. It looks like the booking scheme and slightly weaker than what we have seen over the recent quarters. So could you potentially provide some color and what are the signs of stabilization that you are seeing across Canada and US, which verticals that you've seen stabilizing the FSI and government. So help us understand how things are trending here.

Divya Goyal: Sure, thanks, Divya, for the question. I guess my first comment would be, we always look at our bookings and I've said this before on a kind of a 12 rolling 12 months basis because of this size of the some of the contracts that we signed. A shift of a week from one quarter to the next can have a big impact like we had in Q4. We brought in a lot of deals that might have been, might have taken longer, got into Q4 so we got a very strong Q4, Q1 was a little lighter.

Divya Goyal: But we look at it on a rolling 12 months. So on a 12 month basis, we think is a better representation of what the future business is going to look like. So we like that. You have to take into consideration. There's a lot of things that go into what goes into the quarter, not so, for example, a big part of our backlog, our projects tied to Microsoft and Oracle implementations as an example, depending on where they're when their year end is, you'll see a lot of big contracts being signed before their year ends.

Divya Goyal: So that happened in June in the Q4. So that's going to happen in future quarters as well, depending on the the partners themselves. I think just things are taking longer to close and then moving moving from one quarter to the next. We did have very strong bookings last year that are converting into projects this year. So we shouldn't be seeing optics coming from that eventually, but I know Bernard if you want to add anything else on that.

Divya Goyal: No, I think you covered it Paul. Look at the train 12 months, our numbers are where we expect them to be, especially when we take into consideration the large contracts of these sides for the acquisition. Very helpful.

Paul Raymond: So one question that I wanted to understand was on the cost containment effort. So Alita has been doing a great job managing the cost over the recent over the last few quarters here. I wanted to understand these cost cutting that you've been doing on the real estate footprint and trying to minimize the footprint footprint. Is it fair to assume that this cost cutting would be sustainable given your increase in smart showing.

Paul Raymond: And if you could provide some for the color on what's how should we anticipate this cost cutting to go on for the coming quarters. Thank you. Yeah, sure. A couple of things on there. Actually, just maybe that on your previous question that did you on the bookings one thing that does not appear in our bookings. So in q1, this latest quarter. We signed Bernard mentioned it in his comments, but we signed many very large MSAs in the government sector.

Paul Raymond: Multi million dollar MSAs, but we do not recognize that in the bookings because the way we work with government is will qualify for something when the MSA and will only put in our bookings when we have signed. Contracts or so double use within those MSAs. So again, that kind of impacts that is a zero impact short term, but it's very positive for us on the longer term. That's on the bookings on the cost cutting.

Paul Raymond: I just want to differentiate between two things on the real estate side. It has a cash impact, but it does not really have a PNL impact because of the IFRS rules. So the cost cutting that we've done on the real estate side, you don't see a big impact in our numbers on that the rest that is more efficiency driven type things that Bernard was talking about. So one is focusing on the right business.

Paul Raymond: So higher profitability, better business that we go after that means picking our battles and being more selective in terms of what we go after, which also reduces our cost of sales because then you're only chasing things that you know we have a good chance of winning that have higher margins. The other the other piece in reducing our costs is really where do we do the work from where do we leverage leverage lower cost areas to do more work, which again impacts our cost savings and there's still significant opportunity there if you look at our cops out there.

Paul Raymond: You know, then the 30 40 50% range of offshore usage were at just under 9%. So it is an area of focus that we believe we can grow the other areas are use of IP AI and IP leverage services, which is also growing so the services that we do around that have higher higher margins higher value. Even growing our offshore operations, we see that as even if we need to add real estate in those locations, we don't see that as an incremental cause.

Paul Raymond: We actually see it as a savings opportunity. Thank you, that's great color. I don't know if that answers, I'm not sure if that answers your completely your question. It very well answers my question. Thank you Lord for the color. Appreciate it.

Gavin Fairweather: Thank you. Your next question comes from Gavin Fairweather from Carmer. Please go ahead.

Gavin Fairweather: Oh, hey, good morning. Maybe just on the bookings outlook, so looking forward, you know, you talked about longer sales cycles and a bit more focused on business cases, which has been kind of similar to commentary and recent quarters, but I guess I'm curious if you characterize the buying or demand environment as similar or worse to three or six months ago, and maybe you could just touch on the pipeline size and whether that's good.

Gavin Fairweather: Thanks. Thanks for the question. As you know, we don't give outlook. What I can say is we're not seeing a big change in the demand market, or whichever, whatever you want to call it, than six months ago. I mean, for us, we're still focused on the same things. We're focused on growing the same areas that we're in. Some some deals are taking longer, but they were taking longer six months ago as well.

Gavin Fairweather: It's really a question that more of timing, like I was saying earlier, the seasonality of the bookings in our business varies, like when the summer months right now, things are slower. It's always the case. It's always been the case. And then things pick up based on events or cycles that are sometimes outside of our control, like the year ends of our clients. Or the year ends of Microsoft or Oracle or AWS, whenever you're into those, you're working with those partners that their year end usually drives many deals.

Gavin Fairweather: So, so we stayed close to those things, but we're comfortable working in the current environment. I mean, it's it's it changes. We work in many different environments and economic cycles and then we adapt. So we're we're we're okay with what's happening right now.

Gavin Fairweather: I'm curious if the pipeline. The second question around the pipeline size. I'm curious if you're seeing just an expanding pipe and potentially and you know, a year or so, maybe if the environment's a little bit better, we could see, you know, bookings we accelerate if you have that bigger pipeline. No, we're how that we have a healthy pipeline. We're very comfortable where we're at. Okay, got it.

Bernard Dockville: And then maybe just maybe for Bernard, just on the offshore mix, we need to see that ticking higher this quarter despite, you know, the organic growth, not being as fast.

Bernard Dockville: I'm curious if you view kind of the current pace of offshore mix moving higher as a reasonable expectation, you know, maybe before a macro recovery, like, can you with a stable top on, can you keep pushing that higher? I guess that's my question. Great question and looking at the race that we've had in past quarters and the growth and revenue slow growth and revenue, we haven't been able to incrementally. Has we do yet back to larger growth?

Bernard Dockville: You know, we will have more opportunities to increase that, but that will come with growth as well, but I do believe we'll be able to maintain the momentum that we've had in past quarters as we go forward as well. Okay, great to hear.

Gavin Fairweather: And then lastly, for me, nice to see the leverage tick lower.

Paul Raymond: I know M&A is in your plans, but absent, you know, additional M&A is the plan to just let the leverage on the balance sheet, keep ticking lower and pay back that, or is there a level where if you got to maybe you'd start to consider more share buybacks? Yeah, thanks for the question, Gavin. As I was saying earlier, given where the stock price is, it gets very diluted for us to use our stock and transaction, so our balance sheet is very important to us right now.

Paul Raymond: But as you can see, we're de-leveraging very fast. We were around 2.6 right now in the net depth, 2.5, 2.6. We said we were comfortable between two and three. We'll keep de-leveraging, and when we have the right acquisition to pull the trigger on, we'll have the cash to do it absent that our stock is probably the best deal out there in the market right now for us to buy back. If you go based on our priorities, first one is to reinvest in the company, so acquisition.

Paul Raymond: I'd say buy back with probably number two after that. Paying down to depth is very good right now based on where the markets are. And I think in previous quarters, you'd characterize the deal environment as one where high quality companies hadn't seen a big revision in terms of the multiples that the vendors were looking for. Did that still the case or is maybe the more mixed macro environment starting to lead to a more favorable purchasing environment?

Paul Raymond: We're still seeing very interesting deal deals Gavin in the range that we typically pay for, and the reason for that is is our M&A strategies a bit different than many other players. I mentioned this before, but we look for organizations that are very high quality that fit into our platform where the leaders want to stick around. And the leaders who want to stick around and see us as a platform for growth have a very different perspective than somebody who wants to sell the cash out and lead. So we still see many opportunities again, we just need to make sure that three key factors are aligned right is the right company at the right price and the people want to stick around.

Paul Raymond: So we're still looking actively, we have a healthy final is we'll pull the trigger when when all those conditions are met.

Unknown Executive: Ladies and gentlemen as a reminder, if you'd like to ask a question, please press star one.

Rob Goff: Your next question comes from Rob Gulf from Ventum, please go ahead. Thank you for taking my follow up. You have commented in previous quarters that you found yourself bidding on more larger contracts. Could you talk to whether that remains the case and any RFPs outstanding in such a category? Thanks for the question Rob, so I won't comment on the outstanding stuff, but yes, we are still bidding on very large projects. As you saw in our latest bookings, we won one for $14 million in cybersecurity in the energy sector in Canada.

Rob Goff: So we compete with very large companies in that area for these contracts. So yes, we continue to see those and actually what's nice about that is our scale, our current scale gives us access to those types of deals. So if less competition, we compete with the very large company, and for us, there's a lot of opportunities to differentiate there, what we do and how we do it. So, yeah, we're going to keep looking for those at larger opportunities.

Rob Goff: Thank you.

Unknown Executive: And there are no further questions at this time.

Paul Raymond: I will turn the call back over to Paul Raymond for closing remarks. Thank you very much Julie. Thank you everybody for joining us today and I look forward to seeing you at our investor day.

Unknown Executive: This concludes this conference call.

Unknown Executive: You may now disconnect.

Unknown Executive: Thank you.