Q4 2025 Alithya Group Inc Earnings Call
Unknown Executive: Good morning. Welcome to Alithya's fourth quarter and fiscal 2025 results conference call.
Good morning, welcome to Lithia is fourth quarter and fiscal 2025 results conference call I would now like turn the meeting over to Olivia's management. James. Please go ahead.
Unknown Executive: I would now like to turn the meeting over to Alithya's management team. Please go ahead. Thank you.
Thank you.
Unknown Executive: Thank you for being here today for Alithya's Fourth Quarter Fiscal 2025 Results Call. The press release, along with the MD&A containing complete functional statements and related notes, was published this morning and is now accessible on our website. The webcast presentation can also be found on our website in the investors section.
Speaker Change: Thank you for being here today trilogy of sports.
But you're 25 results call.
Speaker Change: The press release, along with the MD&A containing complete financial statements and related notes was published this morning and is now accessible on our website.
Speaker Change: The webcast presentation can also be found on our websites investors section.
Unknown Executive: Please be advised that this call will contain forward-looking statements which are subject to various risks and uncertainties that may cause actual results to differ materially from those anticipated. These statements include our estimates, plans, expectations, and statements regarding future growth, operational results, performance, and business prospects that do not solely relate to historical facts. These statements may also refer to future events, including expectations around client demand, business opportunities, leveraging our services, IP, AI, expertise to meet client needs, excelling in the competitive market, achieving our three years strategic plan, and deploying our smart shoring capabilities.
Speaker Change: Please be advised that this call will contain forward looking statements, which are subject to various risks and uncertainties that may cause actual results to differ materially from those anticipated.
Speaker Change: These statements include our estimates plans and expectations and statements regarding the future growth operational results performance and business prospects that do not solely relate to historical facts.
Speaker Change: These statements May also refer to future events.
Speaker Change: Putting expectations around claims and many business opportunities leveraging our services IP AI expertise to meet quite meet excel and you're in a country that doesn't like it achieving our three year strategic plan and deploying our smart shrink if their ability.
Unknown Executive: For more information, please refer to the cautionary notes included in our presentation and the forward-looking statements and risks and uncertainties sections of our MD&A, which are accessible on our website.
Speaker Change: For more information please refer to the cautionary note included in our presentation and the forward looking statements and the risks and uncertainties sections are in Guinea.
Speaker Change: Our accessible on our website.
Unknown Executive: All figures discussed on today's calls 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 included in our presentation and to the non-IFRS and other financial measures section of our MD&A for more detail.
Speaker Change: All figures discussed today on today's call are in Canadian dollars, unless otherwise stated and we may refer to certain indicators that are.
Speaker Change: None of your friends measure.
Speaker Change: Please refer to the cautionary note included in our presentation and to be none I asked Forex and other financial measures section of our MD&A for more details.
Unknown Executive: Presenting this morning are Paul LeDemond, Alithya's President and Chief Executive Officer, Bernard Dockrill, Chief Operating Officer, and Debbie Gregorio, Interim Chief Financial Officer.
Speaker Change: Presenting this morning are.
Speaker Change: One of them, that's president and Chief Executive Officer.
Speaker Change: Now is that true chief operating officer, and interim Chief Financial Officer.
Paul LeDemond: I'll turn the call over to Paul and Amal. Thank you, Nathalie, and good morning, everyone. Thank you for joining us today.
Speaker Change: Now I will turn the call over to part with them.
Speaker Change: Yeah.
Speaker Change: Thank you Natalie and good morning, everyone. Thank you for joining us today.
Paul LeDemond: I'm very proud to be here to present our team's achievements for our fourth quarter and full 2025 fiscal year.
Speaker Change: I'm very proud to be here to present, our team's achievements for fourth quarter, but slow 2025 fiscal years.
Paul LeDemond: We will also discuss our latest acquisition and this morning's announcement about our new CFO. I will start with a few notable highlights before turning things over to Bernard Dockrill, our Chief Operating Officer for MoreColor on our operations, followed by Debbie D.
Speaker Change: We will also discuss our latest acquisition and this morning's announcement about our new CFO.
Speaker Change: I will start with a few notable highlights before turning things over to Bernard Dark real our chief operating officer for more color on our operations followed by Debbie D. Gregorio, our interim Chief Financial Officer, who will provide the financial highlights.
Paul LeDemond: Gregorio, our Interim Chief Financial Officer, who will provide the financial highlights. So back to the results. First, with the Q4 results, the Alithya team delivered another quarter of ongoing improvements at many key areas. Our disciplined approach and commitment to our long-term strategy are bearing fruit. We delivered another sequential and year-over-year quarterly improvement of our adjusted EBITDA, largely due to our continued focus on higher value business growth, ongoing operational efficiencies, and a few positive one-time events tied to successful project completion. Of note, we would still be showing improvements without these one-time events, which resulted in an adjusted EBITDA of 14.4% for the quarter and 10.1% for the fiscal year.
Speaker Change: So back to the results.
Bernard Dark: First with the Q4 results the elite your team delivered another quarter of ongoing improvements in many key areas, our disciplined approach and commitment to our long term strategy are bearing fruit.
Speaker Change: We delivered another sequential and year over year quarterly improvement of our adjusted EBITDA largely due to our continued focus on higher value business growth.
Speaker Change: Ongoing operational efficiencies and a few positive one time events tied to successful project completions.
Speaker Change: Of note, we would still be showing improvements without these one time events, which resulted in an adjusted EBITDA of 14, 4% for the quarter and 10, 1% for this fiscal year.
Paul LeDemond: Secondly, Q4 was also a high watermark for gross margin as a percentage of revenue at 36.8%. Again, this is the result of our focus on delivering higher value services to our clients, improve utilization, and leveraging our IP and SmartShore business model, in addition to the positive items previously mentioned. Thirdly, I'd like to highlight our sequential and year-over-year growth in quarterly revenues. That growth is mostly derived from our higher value service offerings in all our geographies. These offerings designed to help clients achieve greater efficiency and flexibility in their mission critical systems by leveraging the cutting edge technologies such as AI and our proprietary IP accelerators continue to be highly sought after even during periods of economic uncertainty.
Speaker Change: Secondly, Q4 was also a high watermark for gross margin as a percentage of revenue at 36, 8% again. This is the result of our focus on delivering higher value services to our clients improve utilization and leveraging our IP and smart sure business model. In addition to the positive items previously mentioned.
Speaker Change: Yeah.
Speaker Change: Thirdly, I'd like to highlight our sequential and year over year growth in quarterly revenues that growth is mostly derived from our higher value service offerings in all of our geographies. These offerings designed to help clients achieve greater efficiency and flexibility in their mission critical systems by leveraging the cutting edge technologies, such as AI and our.
Speaker Change: Our proprietary IP accelerators continue to be highly sought after even during periods of economic uncertainty.
Paul LeDemond: Decisions to start these projects can sometimes be delayed, but given their given their business value, and demonstrable benefits, they are viable investments for our clients during these turbulent times. Finally, our strong cash flow allowed us to conclude the year with a net debt to adjust it a bit the ratio of less than two times.
Speaker Change: The decision to start these projects can sometimes be delayed, but giving the given their business value and demonstrable benefits they are viable and investments for our clients. During these turbulent times.
Speaker Change: Finally, our strong cash flow allowed us to conclude the year with a net debt to adjusted EBITDA ratio of less than two times.
Paul LeDemond: This financial position provides us with the flexibility to pursue high quality acquisition should promising opportunities arise.
Speaker Change: This financial position provides us with the flexibility to pursue high quality acquisition should promising opportunities arise.
Paul LeDemond: That brings me to our recent announcement of the eVerge acquisition.
Speaker Change: That brings me to our recent announcement of the <unk> acquisition.
Paul LeDemond: So again, I'd like to publicly welcome Esteban Neely, who is on the call listening this morning, and the eVirg team to the Alithya family. I will let Bernard give you more color, but we feel eVirg checks all the boxes when we look for high quality, accretive, complimentary acquisitions with similar culture.
Speaker Change: So again I'd like to publicly welcome Esteban Neely was on listening on the call listening this morning, and he seemed to be at Lithia family.
Speaker Change: I will let Bernard can give you more color, but we feel Ivor <unk> checks all the boxes, when we look for high quality accretive complementary acquisitions with similar cultures.
Bernard Dockrill: I will now turn things over to Bernard to provide some specifics on our four-quarter performance, as well as our latest acquisition. Bernard?
Speaker Change: I will now turn things over to Bernard to provide some specifics on our fourth quarter performance as well as our latest acquisition Bernard.
Bernard Dockrill: Thank you, Paul. Good morning, and thank you for joining our call today. I would like to start by thanking the Alithya professionals throughout North America, Europe, and Asia-Pacific for their dedication and commitment. As a result, the Alithya team continues to meet or exceed our clients' expectations as demonstrated by the 194 customer satisfaction surveys completed in fiscal year 2025 with an average rating of 9.0 of 10. As we continue to execute on the priorities we set forth in our strategic plan to deliver profitable growth, we are pleased with the results we generated in the fourth quarter.
Bernard: Hey, Paul Good morning, and thank you for joining our call today.
Bernard: I would like to start by thanking you Olivia professionals throughout North America, Europe, and Asia Pacific for their dedication and commitment.
Bernard: As a result lithium team continues to meet or exceed our clients' expectations as demonstrated by the 194 customer satisfaction surveys completed in fiscal year 2025, with an average rating of 9.0 okay.
Bernard: As we continue to execute on the priorities, we set forth in our strategic plan to deliver profitable growth.
Bernard: We're pleased with the results we generated in the fourth quarter.
Bernard Dockrill: Our quarterly revenues, sequentially and year-over-year, increased. Outdid our gross margin and adjusted EBITDA as a percentage of revenues. On a sequential basis, revenue increased at all segments of the business, and 87% of revenues delivered in Q4 came from clients that worked with Alithya in Q4 of the prior year. Across all segments, we continue to focus on expanding our smart shore capabilities to access new talent pools and drive greater efficiency. As of the end of the fourth quarter, 10.9% of our employees were based in smart shore centers.
Bernard: Our quarterly revenues sequentially and year over year increase.
Bernard: How did our gross margin and adjusted EBITDA as a percentage of revenue.
Bernard: On a sequential basis revenue increased in all segments of the business.
Bernard: 87% of revenues delivered in Q4 came from clients that work with a lift in Q4 of the prior year.
Bernard: Across all three units, we continue to focus on expanding our smart store capabilities to access new talent pools and drive greater efficiencies.
Bernard: As of the end of the fourth quarter 10, 9% of our employees were based on smart shore centers and with the recent addition to reverse in India, which while I just I will discuss later that number has now risen to over 12%.
Bernard Dockrill: And with the recent addition of eVersion India, which I will discuss later, that number has now risen to over 12%. Globally, we continue to invest in the development of our existing talent. Over the year, Alithya employees completed over 30,000 hours of learning across more than 5,400 courses, with 75% of all learning efforts dedicated to advancing technology skills. Among the most sought after competencies, Microsoft's AI-driven co-pilot emerged as a top technology skill, while project management was a leading business development skill. Further reinforcing our adoption of AI through a partnership with Udemy, Alithya hosted constructor-led learning on generative AI for all Alithya employees.
Bernard: Globally, we continue to invest in development of our existing talent.
Bernard: For the year Lithia employees completed over 30000 hours of learning across more than 5400 courses with 75% walgreen efforts dedicated to advancing technology skills.
Bernard: Among the most sought after call it six Microsoft's AI, driven copilot emerge as a top technology skill.
Bernard: Project management is a leading business development skill.
Speaker Change: Further reinforcing our adoption of AI through a partnership with Phlebotomy Olivia hosted constructor led learning on generative AI for all of Us here.
Bernard: Bouygues.
Bernard Dockrill: We are honored with the recognition of our accomplishments in Fiscal 2025, including being selected by Microsoft for the Business Applications Inner Circle Award. earning a spot in this category for the 19th time. We also celebrated the innovation achievements of two valued clients, Oklahoma State University Medical Center and McKesson. who have received prestigious Oracle Customer Excellence Awards for the groundbreaking use of Oracle Cloud Applications.
Bernard: We were honored with the recognition of our adult students in fiscal 2025, including being selected by Microsoft business applications Inner Circle Award.
Bernard: A spot in this category for the 19th time.
Bernard: We also celebrated the innovation achievements of two value points, Oklahoma State University Medical Center with Mckesson.
Bernard: We have received prestigious Oracle customer Excellence awards for the groundbreaking use of Oracle cloud applications.
Bernard Dockrill: The awards highlight the real world value of Oracle Cloud and reinforce Alithya's role as a strategic partner in helping organizations navigate their digital transformation.
Bernard: The awards highlight real world value with Oracle cloud and reinforce the lithia as well as a strategic partner in helping organizations navigate their digital transformation.
Bernard Dockrill: Turning to current market conditions and our Q4 booking. market uncertainty and economic conditions have caused some buyer hesitancy and longer sales cycle. Our higher value offerings continue to resonate as clients seek to modernize their enterprise applications and leverage Alithya data and AI capabilities to drive efficiency. Q4 bookings were 100.1 million or 0.8 times revenue. Suggesting for the large commercial agreements signed in April 2021, our book to bill for the quarter was 0.9 times revenue. On a trailing 12-month basis, bookings were $420.7 million, or $0.9 times revenue. Suggesting for the same large agreement, book-to-bill was 1.0 times revenue.
Bernard: Turning to current market conditions, and our Q4 bookings.
Bernard: Market uncertainty and economic conditions have caused some buyer hasnt C and longer sales cycles.
Bernard: Our higher value offerings continue to resonate as clients seek to modernize their enterprise applications and leverage the lithia data and AI capabilities to drive efficiencies.
Bernard: Q4 bookings were $100 1 million or 0.8 times revenue.
Bernard: Adjusting for the large commercial agreements signed in April 2021 book to Bill for the quarter was 0.9 times revenue.
Bernard: On a trailing 12 month basis bookings were $427 million or 0.9 times revenue.
Bernard: Adjusting for the same alerted agreement book to Bill was 1.0 times revenue.
Bernard Dockrill: Our backlog at the end of Q4 was approximately 16 months of revenue based on our trailing 12 months. in the quarter. More than half of bookings were in the U.S. market, where a Microsoft and Oracle enterprise application and transformation offerings continue to be in demand.
Bernard: Our backlog at the end of Q4 was approximately 16 months of revenue based on our trailing 12 months.
Bernard: In the quarter.
Bernard: More than half of those were in the U S market, where Microsoft and Oracle enterprise application and transformation offerings continue to be in demand.
Bernard Dockrill: Key client wins include Delta Dental of California, where we were awarded a multi-million dollar engagement to implement Oracle Enterprise Performance Management. In addition, we signed AI enablement engagements in collaboration with Microsoft Industry Solutions Delivery for M365 Home Pilot Deck Readiness, Deployment, and Adoption Services. A long-term Microsoft Dynamics client, Hayward Holdings, a global outdoor products manufacturer, has selected Alithya to deploy Microsoft D365 and Azure in Spain and France. They're also leveraging our organizational change management tools training to ensure user adoption across the organization. This marks the first step for Hayward in standardizing global manufacturing processes and enhancing customer service through a unified technology platform.
Bernard: Key client wins include Delta dental of California.
Bernard: We were awarded a multimillion dollar engagement to implement Oracle enterprise performance management.
Bernard: In addition, we signed AI enablement engagements in collaboration with Microsoft industry solutions delivery for M 365, Oh pilot readiness deployment and adoption services.
Bernard: Our long term, Microsoft dynamics client Hayward holdings, a global outdoor products manufacturer selected Olympia to deploy Microsoft D 365, and as you're in Spain and France.
Bernard: We're also leveraging our organizational change management tools training.
Bernard: To ensure the user adoption across the organization.
Bernard: This marks the first step for Hayward, and standardizing global manufacturing processes, and enhancing customer service through a unified technology platform.
Bernard Dockrill: This is one example of how our increased capacity enables us to accompany our clients in their deployments around the world. Q4 bookings in Canada saw a rebound in the banking sector as well as bookings within the nuclear sector. Our enterprise application and transformation services are also resonating in the Canadian market, where we are awarding engagements to integrate Microsoft Dynamics ERP and Field Service, including a multi-year digital transformation engagement with Neutronore. Other bookings included renewals of our contracts with two Canadian banks, an expansion of our partnership with AWS for legacy application modernization services, and migration to the cloud.
Bernard: This is one example of our increased capacity enables us to accompany our clients and their deployments around the world.
Bernard: Q4 bookings in Canada saw a rebound in the banking sector as well as bookings within the nuclear sector.
Bernard: Our enterprise application transformation services are also resonating in the Canadian market, where we were awarded engagements to integrate Microsoft dynamics European Field service.
Bernard: A multi year digital transformation transformation engagement with neutral or.
Bernard: Other bookings include renewals of our contracts with two Canadian banks and expansion of our partnership with AWS for legacy application modernization services and migration to the cloud.
Bernard Dockrill: Workees in Europe included several contract renewals and extensions, as well as a new opportunity through our partnership with AWS for application modernization and migration to the cloud. From a services mix perspective, the majority of our Q4 bookings were for project services, software and IP, and managed services, with the remainder being in consulting services.
Bernard: Okay, and Europe, including several contract renewals and extensions as well as a new opportunity through our partnership with AWS for application modernization and migration to the cloud.
Bernard: From a services mix perspective, the majority of our Q4 bookings were for product services software and IP and managed services with the remainder being in consulting services.
Bernard Dockrill: Before handing the discussions over to Debbie, I would like to share updates on our recent acquisition of eVIRG announced last week, as well as provide progress on the integration of XRM acquired last December. Beaverton has a rich client portfolio, an expanded industry presence, a complimentary geographic reach, and established consultancy specializing in Oracle and Salesforce solutions. Alithya is now able to address the market-leading CRM solution needs for our clients, whether it be Microsoft Dynamics, Salesforce, or Oracle CS. We now have multi-pillar capabilities and increased industry diversification with Oracle Cloud and we're adding to our smart sharing capacity with operations in Bangalore.
Bernard: We're having the discussions over to Debbie I would like to share updates on our recent acquisition of <unk> announced last week as well as provide progress on the integration of XR EM acquired last December.
Bernard: He brings a rich client portfolio expanded industry presence, a complementary geographic reach and established consultancy specializing in oracle or Salesforce solutions.
Bernard: Lithia is now able to address the market, leading CRM solution needs for our clients, whether it'd be Microsoft dynamics Salesforce or Oracle.
Bernard: We now have multiple or capabilities and increased industry diversification with Oracle cloud.
Bernard: And we are adding to our smart short capacity with operations in Bangalore.
Bernard Dockrill: As part of this acquisition, we are very excited to welcome Mike Burns, who will lead our Salesforce business, Chris Healig, our new Vice President of AI and Innovation, and 160 eVeRgE professionals. As for the integration of XRM Vision, four months into the process, we have completed most of our integration activities and are seeing growth opportunities from our combined business. As you are aware, Alithya had a strong Microsoft practice pre-merger, and the addition of XRM has added further scale to our CRM and SmartShort capabilities, as well as added new capabilities for project operations. Since the acquisition, we have closed several opportunities that neither party would have pursued prior to the merger.
Bernard: As part of this acquisition we are very.
Speaker Change: We're excited to welcome Mike Burns, who will lead our Salesforce business, Chris Healy, our new Vice President of AI, and innovation and 160 <unk> professionals.
Bernard: As for the integration of XR envision four months into the process. We have completed most of our integration activities and are seeing growth opportunities from our combined business.
Bernard: As you are aware the Lithia had a strong Microsoft practice pre merger.
Bernard: The addition of XR EM has added further scale to our CRM and smart short capabilities as well as added new capabilities for product operations.
Bernard: Since the acquisition, we have closed several opportunities that neither party would have pursued prior to the merger.
Bernard Dockrill: These opportunities are larger than XRM would have been able to take on and require capabilities that Alithya did not have. This includes implementations and POCs of Microsoft Project Operations, a provincial government agency, a large global payments company, and a private nonprofit organization.
Bernard: These opportunities are larger than extra that we would've been able to take off and require capabilities that you did not have.
Bernard: This includes implementations and Poc's of Microsoft project operations were proficient a provincial government agency, a large global payments company and a private nonprofit organization.
Debbie Gregorio: And we continue to pursue several additional opportunities that have arisen because of the consolidation of our I will now turn things over to Debbie Gregorio to provide financial highlights regarding our Q4 and fiscal 2025 achievement. Good morning, everyone. I am very happy to join this conference call and to highlight some of the company's significant achievements this past quarter. As mentioned, our fourth quarter fiscal 2025 was highlighted by continued performance improvements on many levels. Let's begin with a review of those improvements. In the fourth quarter, consolidated revenues came in at $125.3 million, up $4.8 million, or 4% on a year-over-year basis.
Bernard: And we continue to pursue several additional opportunities that have arisen because of the consolidation of our teams.
Debbie: I will now turn things over to Debbie.
Debbie: To provide financial highlights regarding our Q4 and fiscal 2025 achievements have been talking about.
Debbie: Good morning, everyone I am very happy to join this conference call and to highlight some of the company significant achievements this past quarter.
Debbie: As mentioned our fourth quarter fiscal 2025 was highlighted by continued performance improvement on many levels.
Debbie: Let's begin with a review of Pelican Lake.
Debbie: In the fourth quarter consolidated revenue came in at $125 3 million.
Debbie: $4.8 million or core percent on a year over year basis.
Debbie Gregorio: On a sequential basis, revenues were up $9.5 million, or 8.3%, versus the third quarter of this year, with growth in all our geography. Looking at profitability, we are reporting another quarter of continued improvement on gross margin as a percentage of revenue. Gross margin reached 36.8%, a record level for Alithya in the quarter, up 470 base points from 32.1% last year, and up 450 base points from 32.3% in the third quarter of this year. On a sequential basis, the increase in gross margin came from all geographies in our business. This performance comes from increased efficiency and our continued evolution towards a higher value business mix.
Debbie: On a sequential basis revenues were up nine $5 million or eight 3% versus the third quarter of this year with growth in all.
Debbie: All of our geography.
Debbie: Looking at profitability, we are reporting another quarter of continued improvement on gross margin as a percentage of revenue.
Debbie: Gross margin reached 36, 8% a record level for elite, yes in the quarter.
Debbie: 470 basis point.
Debbie: 32, 1% last year and up 450 basis points from 32, 3% in the third quarter of this year.
Debbie: On a sequential basis the increase in gross margin came from all geographies.
Debbie: Yes.
Debbie: This performance comes can increase efficiency and our continued evolution towards a higher value business snakes.
Debbie Gregorio: two key priorities of our long term plan. Looking at adjusted EBITDA, we are reporting $18 million, a high watermark for Alithya.
Debbie: Two key priority of our long term plan.
Debbie: Looking at adjusted EBITDA, We are reporting 18 million a high watermark for at least yet.
Debbie Gregorio: I will now turn to review a review of our performance by region, starting with Canada. Revenues in Canada reached $65.4 million in Q4, up $0.8 million or 1.3% on a year-over-year basis. The increase in revenues was primarily due to a recovery in the banking sector, the contribution of XRM Vision acquired on December 1st, 2024, and one additional fillable day, partially offset by one client's transformation project reaching maturity and a reduction in revenues from certain government contracts. Of note, revenues in Canada were also up sequentially from the third quarter by 6.1%. Looking at our gross margin in Canada, we saw improvement compared to the same quarter last year, due to higher efficiencies and hourly billing rates, as a result of providing a greater proportion of higher valued services.
Debbie: I will now turn to review.
Debbie: A review of our performance by region, starting with Canada.
Debbie: Revenues in Canada reached $65 four.
Debbie: $4 million in Q4.
Debbie: $8 million or one 3% on a year over year basis.
Debbie: The increase in revenues was primarily due to a recovery in the banking sector contribution and XR ambition acquired on December one 2024.
Debbie: And one additional billable day.
Debbie: Partially offset by one client transformation project, reaching maturity and a reduction in revenues from certain government contracts.
Debbie: I don't know revenues in Canada were also up sequentially from the third quarter by six 1%.
Debbie: Looking at our gross margin in Canada, we saw an improvement compared to the same quarter last year due to higher efficiency and hourly billing rates as a result of providing a greater proportion of <unk>.
Debbie: Higher valued services.
Debbie Gregorio: and a proportionally larger decrease in the use of subcontractors compared to permanent employees, a positive margin contribution from XRM and a $1 million tax credit recovery from a previous acquisition. In the U.S., revenues increased by $3.8 million, or 7.3%, to $54.2 million. The increase is due primarily to organic growth in enterprise transformation services and support revenues, including Oracle and Microsoft Crafting. and a $3.3 million favorable U.S. dollar exchange rate impact between the two periods.
Debbie: And a proportionally larger decrease in the use of subcontractor compared to permanent employees.
Debbie: The positive margin contribution from XR, EM, and a 1 million tax credit recovery from a previous acquisition.
Debbie: In the U S revenues increased by $3 8 million or seven 3% to $54 2 million.
Debbie: Greece is due primarily to organic growth and enterprise transformation services and support revenues.
Debbie: Including Oracle and Microsoft practice.
Debbie: And the $3 $3 million favorable U S dollar exchange rate impact between the two periods.
Debbie Gregorio: On a sequential basis, revenues increased by $5.4 million and $3.3 million in constant dollar revenue from the third quarter. Our U.S. gross margin as a percentage of revenues increased compared to the same quarter last year, primarily due to higher hourly billing rates, efficiencies, and improved project performance.
Debbie: On a sequential basis revenues increased by $5 4 million and $3 3 million in constant dollar revenue from the third quarter.
Debbie: Our U S gross margin as a percentage of revenues increased compared to the same quarter last year Prime.
Debbie: Primarily due to higher hourly billing rates.
Debbie: <unk> and improved project performance.
Debbie Gregorio: partially offset by lower digital adoption revenues, which historically had a higher gross margin as a percentage of revenue. In our international business, revenues were slightly higher versus prior year, with higher gross margin as a percentage of revenues, mainly due to efficiency and improved project performance. Overall, from a geographic perspective, we saw a higher proportion of revenues in the U.S. versus the prior year. This, along with our ongoing efforts in expanding our smart shore capacity, positively impacted our consolidated gross margin.
Debbie: Partially offset by lower digital adoption revenues, which historically had a higher gross margin as a percentage of revenue.
Debbie: In our international business revenues were slightly higher versus prior year.
Debbie: With higher gross margin as a percentage of revenues, mainly due to efficiency and improved project performance.
Debbie: Overall from a geographic perspective, we saw a higher proportion of grabbing is in the U S versus the prior year.
Debbie: This along with our ongoing efforts in expanding our smart short capacity positively impacted our consolidated gross market.
Debbie Gregorio: and is in line with our strategic plan.
Debbie: It's in line with our strategic plan.
Debbie Gregorio: Now, looking at SG&A expenses, we are continuing to focus on optimizing our cost structure to ensure greater efficiency and long-term performance. In the fourth quarter, SG&A expenses amounted to $29.7 million, an increase of $100,000 or 0.4% year over year. The increase in SG&A expenses was driven mainly by increases in employee compensation costs, resulting primarily from higher variable compensation and the addition of the XRM SG&A. partially offset by a decrease in professional fees, business development, information, technology and communication, and other costs. SG&A expenses as a percentage of revenue were 23.7% in Q4 compared to 24.6% for the same period last year.
Debbie: Now looking at SG&A expenses, we are continuing to focus on optimizing our cost structure to ensure greater efficiency and long term performance.
Debbie: In the fourth quarter, SG&A expenses amounted to $29 $7 million, an increase of $100000 or 0.4% year over year.
Debbie: The increase in SG&A expenses was driven mainly by increases in employee compensation costs.
Debbie: <unk> primary from higher variable compensation and the addition of the XR in SG&A.
Debbie: Partially offset by a decrease in professional fees business development information technology and communication and other costs.
Debbie: SG&A expenses as a percentage of revenue were 23, 7% in Q4 compared to 24, 6% for the same period last year.
Debbie: Okay.
Debbie Gregorio: Thanks to our revenue growth, increased gross margin due to higher efficiencies and our performance on cost management, the adjusted EBITDA margin reached a record high at 14.4% in Q4, up compared to 8.7% last year and up sequentially from 8.9% in the third quarter of this year. Our fourth quarter adjusted EBITDA amounted to $18 million, a 71.8% increase year-over-year. Again, this reflects the progress we made on operational performance and on cost optimization. Our adjusted net earnings came in at $12.2 million, representing an increase of $6.1 million, or $0.06 per share, year over year.
Debbie: Thanks to our revenue growth increased gross margin due to higher efficiency and our performance our cost management adjusted EBITDA margin reached a record high at 14, 4% in Q4.
Debbie: That's compared to eight 7% last year and up sequentially from eight 9% in the third quarter of this year.
Debbie: Our fourth quarter, adjusted EBITDA amounted to $18 million or 71, 8% increase year over year.
Debbie: Again this week.
Debbie: The progress we made on our operational performance and on cost optimization.
Debbie: Our adjusted net earnings came in at well.
Debbie: Well quite a $2 million, representing an increase of $6 $1 million or six cents per share year over year.
Debbie Gregorio: Finally, let's review our cash flow and financial position. Net cash from operating activities remains strong, reaching $17.1 million in the quarter, an increase of $7.4 million versus the prior year, primarily from the net earnings and positive working capital variation. As of March 31, 2025, net debt amounted to $94 million, and our leverage ratio decreased to two times net debt to trailing 12-month adjusted EBITDA, all within Alithya's target leverage level and our lowest level reporting. The sequential decrease in net debt of approximately $14.1 million reflects our goal of continued deleveraging through the strong performance of the company and management of our net cash from operating activities.
Debbie: Finally, let's review, our cash flow and financial position.
Debbie: Net cash from operating activities remained strong reaching $17 $1 million in the quarter and.
Debbie: An increase of $7.4 million versus the prior year, primarily from the net earnings and positive working capital variation.
Debbie: As at March 31, 2025, net debt amounted to $94 million and our leverage ratio decreased to two times net debt to trailing 12 months adjusted EBITDA.
Debbie: Always in our leak as target leverage level.
Debbie: Our lowest level reported.
Debbie: The sequential decrease in net debt of approximately $14 $1 million reflects our goal of continued deleveraging through the strong performance of the company and management of our net cash from operating activities.
Debbie Gregorio: positioning as well for capital deployment for the right business acquisition opportunity. Therefore, liquidity remains strong with cash on hand and availability under the credit agreement amounting to $131.1 million.
Debbie: Positioning us well for capital deployment for the right business acquisition opportunities.
Debbie: Therefore liquidity remains strong with cash on hand, and availability under the credit agreement amounting to 131 by $1 million.
Paul LeDemond: I will now pass it over to Paul for concluding remarks. Thank you very much, Debbie. So as you can see, we are very pleased with our report and our key indicators are all moving in the right direction. We delivered sequential and year-over-year revenue growth. We delivered sequential and year-over-year gross margin and adjusted EBITDA growth, and we continue to deleverage. We finished the year with a net debt to have been the ratio of under two times. We completed another acquisition that increases our Oracle AI and smart shoring capabilities while adding a new world-class partner in Salesforce.
Paul: I will now pass it over to Paul for concluding remarks.
Speaker Change: Very much Debbie so as you can see we are very pleased with our quarter.
Speaker Change: And our key indicators are all moving in the right direction.
Speaker Change: We delivered sequential and year over year revenue growth, we delivered sequential and year over year gross margin and adjusted EBITDA growth and we continue to deleverage we.
Speaker Change: We finished the year with a net and definitely had been the ratio of under two times. We completed another acquisition that increases our Oracle AI and smart shoring capabilities, while adding a new world class partner in Salesforce and we delivered positive net earnings for the full year.
Paul LeDemond: And we delivered positive net earnings for the full year.
Paul LeDemond: But my most important takeaway from our four quarters are disciplined approach and commitment to deliver measurable progress towards our long-term vision.
Speaker Change: But my most important takeaway from our four quarters, our disciplined approach and commitment to deliver measurable progress towards our long term vision.
Paul LeDemond: Finally, before opening the lines for questions, I would like to officially welcome Pierre Blanchet, who will join as a PES CFO at the end of July. Pierre is well known in the financial world and brings a wealth of experience to Alithya. He will be a key contributor in supporting our growth strategy. We're very happy to welcome him to the team.
Speaker Change: Finally before opening the lines for question I would like to officially welcome Diablo ships, who will join as CFO at the end of July that.
Speaker Change: <unk> is well known in the financial World and brings a wealth of experience to our lithia. He will be a key contributor in supporting our growth strategy. We're very happy to welcome him to the team and I would like once again to thank Debbie for stepping up and leading the team through this year and period, she's a NASA to alithia and we're very fortunate to have her.
Paul LeDemond: And I would also like once again to thank Debbie for stepping up and leading the team through this year and period. She's an asset to Alithya and we're very fortunate to have her on Thank you.
Unknown Executive: We will now open the line for questions.
Speaker Change: Thank you we will now open the line for question Joanne.
Unknown Executive: Joanne? Thank you.
Unknown Executive: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys.
Speaker Change: Thank you, ladies and gentlemen, well now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone, you'll hear a prompt on your hand have some raised should you wish to declare a friend the polling process. Please press star followed by the Q.
Speaker Change: If you are using a speaker phone please lift the handset before pressing any case. Your first question comes from what.
Jerome Dubreuil: Your first question comes from Jerome Dubreuil with Desjardins. Your line is now open. Thanks for taking my question. Congrats on the big margin improvement. So let's start there. I mean, a lot of investors were looking at your story and the bulls on your story where we're seeing that there was some some low hanging fruits on the margin side. So kudos for focusing your efforts there.
Speaker Change: Your line is now open.
Bob: Hey, Bob Thanks for taking my question.
Speaker Change: Congrats on the big margin improvement so let's start there I mean, a lot of investors, where we're looking at to your story.
Speaker Change: The Bulls on your story, where we're seeing that there was some some low hanging fruit on the margin side. So.
Speaker Change: Kudos for focusing your efforts there.
Paul LeDemond: But the big question this morning is how sustainable is the new level of margin, you know, the big improvement. Sequentially, obviously, we know about the 1 million Good morning, Jerome. Thank you for the question. We've always said that, you know, the long-term view was to get the gross margins up into the higher, you know, the upper 30s in terms of percentage. So we're seeing progress, to your point, there were some one times. You also have to remember that Q4 is usually our strongest quarter, just because it's the longest quarter, there are less vacation, more billable day extra.
Speaker Change: But the Big question. This morning is how sustainable is the new level of margin. This is this is a big improvement.
Speaker Change: Sequentially, obviously, we know about the $1 million.
Speaker Change: Tax return there.
Speaker Change: But this do you think this is a level that are that can be sustained going forward.
Speaker Change: Good morning, gentlemen, thank you for the question.
Speaker Change: We've always said that the long term view was to get the gross margins up into the higher.
Speaker Change: The upper <unk> in terms of percentage. So we're seeing progress to your point there were some one times you also have to remember that Q4 is usually our strongest quarter just because it's the longest quarter. There are less less vacation more billable day extra and then Q1, which is our current quarter usually.
Paul LeDemond: And then Q1, which is our current quarter, usually is the slowest quarter because of the summer months and vacations and so on. But I do think that the improvements, which is what we had put in our long-term plan, I mean, you're going to see continuous improvements over time. I mean, that's our goal. Whether it's going to be that high of a jump every quarter, I doubt it. We had a lot of one time things this quarter, but still without the one times, it'd still be an improvement from the previous quarter. So that's our long term plan.
Speaker Change: He is our slowest quarter because of the summer the summer months and vacations and so on.
Speaker Change: But I do think that the improvements which is what we had put into our long term plan.
Speaker Change: You're going to see continuous improvements over time, I mean, that's our goal and whether it's going to be that high of a jump every quarter I doubt. It we had a lot of one time things this quarter, but still well under one times it would still be an improvement from the previous quarter. So that's our long term plan and that's what we're striving for I think the mix of business makes a big difference.
Paul LeDemond: That's what we're striving for. I think the mix of business makes a big difference. And that's what we're growing. We're growing our higher margin business. So yeah, I'd say that's our goal.
Speaker Change: Yeah.
Speaker Change: And that's what we're growing we're growing our higher margin business. So, yes, I'd say, that's our goal.
Paul LeDemond: Great. Then just to clarify on the one-times, were there other items in the one million tax relief There were a couple of problems. Actually, the this is where I think this is positive news as well. As you know, we do more and more large projects. So as we manage those projects and those projects complete, you know, in years past, we had many write offs on projects. Now we have the the opposite. We actually, because Bernard mentioned the client satisfaction results that we have that are very high. We, uh, we, uh, We had positive or good guys because we delivered on time and on budget and many of these projects had positive contingencies tied to them.
Speaker Change: Great and then just to clarify on the one time so are there other items in the $1 million tax related.
Speaker Change: There were a couple of broad it was actually the this is where I think this is positive news as well as you know, we do more and more large projects.
Speaker Change: So as we manage those projects and those projects complete you know in years past, we had many write offs on projects now we have the opposite we actually because Bernard mentioned the client satisfaction and resolve that we have that are very high.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: We had positive.
Speaker Change: Positive or a good guys because we delivered on time and on budget and in many of these projects had a had positive contingencies tied to them. So so that's good. The other thing you have to remember on the gross margin is Q1 I forgot to say on your first question. So as we also have our salary increases that hit April 1st right. So he used.
Paul LeDemond: So that's good. The other thing you have to remember on the gross margin is Q1. I forgot to say in your first question, because we also have our salary increases that hit April 1st, right? So usually Q1, we always have a challenge. But like I said, that's directionally, that's where the gross margins are going. That's great.
Speaker Change: Q1, we always.
Speaker Change: We always have a challenge, but like I said long term that's.
Speaker Change: Directionally, that's where the gross margins are going.
Speaker Change: That's great. So if I understand correctly. The one timers are we're more in the past and in this quarter right here reflects more of the.
Paul LeDemond: So if I understand correctly, the one timers are we're more in the past and this quarter right here reflects more True Nature of the Business. Well, Q1, like I said, Q1 is usually our slowest quarter because of vacations and salary increases and everything else. But if you look at previous years, and I mean, the gross margin is on an upward trend, and that's where we want to be long term. So. No, it makes sense.
Speaker Change: The true nature of the business if you will.
Speaker Change: Okay.
Speaker Change: Well she was like I said Q1 is usually our slowest quarter because of vacations and salary increases.
Speaker Change: And everything else, but if you look at previous years.
Speaker Change: The gross margin is on an upward trend and Thats, where we want to be long term. So.
Speaker Change: Yeah, no. It makes sense, thank you and Oh I'll just put another one here just because its so.
Unknown Executive: Thank you. And I'll just put another one here.
Paul LeDemond: So, probably important, you withdrew the longer term guidance, you know, a bit of a head-scratcher given that a very good quarter here, if you can talk about the rational of removing the guidance, was it more of a top-line thing that, you know, didn't want to rely on maybe more unpredictable M&A? Oh, there's several reasons. Good question. Good question, Jerome. Several reasons. One is if you look at our EBITDA and gross margins, we're actually a year ahead of our plan on the EBITDA and two years ahead of our plan on the gross margin. So from that perspective, you know, some of those targets are kind of out the window now.
Speaker Change: Probably important to you withdrew the longer term guidance.
Speaker Change: Uh huh.
Speaker Change: A bit of a head scratcher given the very good quarter here. If you can talk about the the rational.
Speaker Change: Our free moving the guidance was it more of a of a topline thing that you don't didn't want to rely on maybe more unpredictable M&A or.
Speaker Change: Oh, there's several several reasons good question.
Speaker Change: Good question.
Speaker Change: Several reasons one is if you look at R. R.
Speaker Change: And gross margins were actually a.
Speaker Change: A year ahead of our plan on the.
Speaker Change: EBITDA in two years ahead of our plan on the gross margin.
Speaker Change: So from that perspective, some of those targets are kind of out the window now.
Paul LeDemond: to the uncertainty in the market right now around everything that's happening, even though on the tariffs, we're not directly impacted. Some of our clients might be, and all of our clients are pulling their guidance, and as you've seen, many other companies do. So we thought it was the reasonable and safe thing to do to take that out without changing our vision. of growing the margins and doubling the company over the next three to five years, you know, that's that's where we're going. That's what we want to do.
Speaker Change: To the uncertainty in the market right now around everything that's happening even though when the tariffs were not directly impacted.
Speaker Change: Some of our clients might be and all of our clients are pulling pulling their guidance and as you've seen many other companies do so.
Speaker Change: We thought it was the.
Speaker Change: A reasonable and a safe thing to do to take that out without <unk>.
Speaker Change: Changing our our vision of.
Speaker Change: Growing the margins and doubling the company over the next three to five years, that's where we're going and that's why we wanted to do so instead of having fixed numbers in there that would be out of date right now we decided to make it more generic.
Paul LeDemond: So instead of having fixed numbers in there that would be out of date right now, we decided to make it more generic.
Unknown Executive: Merci beaucoup.
Speaker Change: Okay.
Speaker Change: Massive recall.
Unknown Executive: Thank you.
Speaker Change: Thank you.
Divya Goyal: Your next question comes from Divya Goyal with Scotiabank. Your line is now open. Good morning, everyone. Congratulations on a good quarter here. Paul, I wanted to get a little bit more clarity on this revenue growth. So I was looking at the breakdown and Debbie talked about it as well. You saw a significant upside coming out of the FX as well. So overall, I think your FX currency impact for the quarter was close to 3%.
Duffy Doyle: Your next question comes from Duffy Doyle with Scotiabank. Your line is now open.
Duffy Doyle: Good morning, everyone. Congratulations on a good quarter here, Paul I wanted to get a little bit more clarity on this revenue goes I was looking at the breakdown and Debbie talked about it as well U S saw a significant upside coming out of the FX as well. So overall I think FX currency impact for the quarter was close to 3% and.
Paul LeDemond: And now that you're not giving guidance, could you provide some directional guidance as to how do you see your pipeline progress? Good morning, Divya. Thank you for the question. As you know, we don't give guidance, but maybe I can give some color. So in Canada, as Bernard was mentioning, we're seeing a turnaround in the banking sector. So we're seeing growth there. We're still lapping a very large project, as we mentioned, a very, very large transformation project that has still a couple of quarters until we've lapped that, because that was in last year, which wound down.
Speaker Change: Now that you're not giving guidance could you provide some directional guidance for two how do you see your pipeline.
Duffy Doyle: Pipeline program right.
Duffy Doyle: Okay.
Duffy Doyle: Yeah sure. Good morning, Thank you for the question.
Duffy Doyle: As you know, we don't give guidance, but maybe I can give some some color.
Duffy Doyle: So in Canada as as Bernard was mentioning we're seeing a turnaround in the.
Duffy Doyle: The banking sector. So we're seeing growth there we're still we're still lapping a very large project as we've mentioned that very very large transformation project that has still a couple of quarters until we lap that because that was in last year, which were wound down and then we have new business coming in and of course, the new business.
Paul LeDemond: Then we have new business coming in. And of course, the new business coming in is higher margin, which we like. In the US, we had a bit of an upside on the exchange rate, on the revenue in the quarter. So we don't want to fight that. But at the same time, what we're seeing growing, I mean, you saw Oracle report their numbers yesterday. They showed incredible growth. Microsoft is doing very well as well. And of course, we kind of piggyback on those companies for much of our business in the US. And now with the addition of eVerge, which is not in our numbers, which is going to start June 1st, so the end of the Q1.
Duffy Doyle: Coming in is higher margin, which which which we like.
Duffy Doyle: In the U S. We had a bit of an upside on the on the exchange rates.
Duffy Doyle: On the revenue in the quarter. So we don't want to fight that but at the same the same time, but we're seeing growth I mean, you saw Oracle report their numbers yesterday, they've showed incredible growth.
Duffy Doyle: Microsoft is doing very well as well and of course, we kind of piggyback on those on those companies for much of our business in the U S and now with the addition of <unk>, which is not in our numbers, which is going to start.
Duffy Doyle: June 1st so at the end of Q1, so maybe in future quarters, Youre going to see that and we've also added the salesforce component and as you know our sales forces.
Paul LeDemond: So maybe in future quarters, you're going to see that. And we've also added the Salesforce component. And as you know, $36 billion company and a leader in that industry. So we like our I mean, we like our positioning in terms of the partners that we have in terms of the high quality of our revenues in the US and the potential for growth there through cross selling. So we like our position. We like where things are going. Like I said, nobody knows what's going to happen in the current market with the uncertainties, but we like our chances.
Duffy Doyle: 36, 1 billion dollar company and a leader in that industry. So so we like our.
Duffy Doyle: I mean, we like our positioning in terms of the partners that we have in terms of the high quality of our revenues in the U S and the potential for growth there through cross selling so we like our position, we like where things are going like I said, nobody knows what's going to happen in the current market uncertainties, but we like our chances.
Unknown Executive: Great.
Duffy Doyle: That's great.
Divya Goyal: On this cost efficiency standpoint, I know we've been talking about the smart shoring and the reducing mix of subcontractors. Do you see that as one of the key elements of what really drove your upside on the gross profit margin this quarter? And did XRM have a big role to play in that specific upside from an offshoring standpoint? So, I'll start with the high-level answer first, Divya. We see a huge opportunity in the smart shoring aspect. As I've said, it's part of our strategic plan. If you go back a year, you know, when we started, we were at about 6%.
Duffy Doyle: On this cost efficiency standpoint.
Speaker Change: I know we've been talking about this maturing and the reducing mix of subcontractors do you do you see that as one of the key elements of what really drove your.
Duffy Doyle: Outside on the gross profit margin this quarter and did XR EM has a big role to play in that specific upside from an all showing standpoint.
Duffy Doyle: So.
Duffy Doyle: I'll start with the high level.
Duffy Doyle: Answer first the Davita.
Duffy Doyle: We see a huge opportunity and are in the smart shoring aspect.
Duffy Doyle: As I've said, it's part of our strategic plan. If you go back a year.
Duffy Doyle: When we started we were at about 6% today. If you if you add in <unk>, we're going to be at over 12% of our of our workforce and smart shoring.
Paul LeDemond: Today, if you add in eVerge, we're gonna be at over 12% of our workforce in smart shoring centers. And more and more, these centers are very specialized. So what we're adding with eVerge is very specialized around Oracle and Salesforce. What we added with XRM was very specialized around Microsoft. So we see that as a positive as well. And we think there's a big opportunity for growth there to support our projects, existing and new. So yeah, we see that as very positive. And also, if you look at the business that eVerge and XRM brought on board, again, the gross margins are higher.
Duffy Doyle: Centers and more and more of these are these centers are very specialized so what we're adding with Ivar just very specialized around oracle and salesforce. When we added with <unk> was a very specialized around Microsoft so.
Duffy Doyle: So we see that as a positive as well and we think theres, a big opportunity for growth there to support our projects existing and new.
Duffy Doyle: So yeah, we see that as very positive and also if you look at the business that he Virgin.
Duffy Doyle: <unk> brought on board again, the gross margins are higher so.
Divya Goyal: As that grows, it's going to have a bigger and bigger impact on the business. It's small now, but as it grows, it will have a bigger impact on the business. That's very, very helpful.
Duffy Doyle: As that grows it's going to have a bigger and bigger impact on the business. It's called now but as it grows it will have a bigger impact on the business.
Speaker Change: That's very very helpful. I'll ask one more last question here is is there any significant gap that you see in the technology capabilities that you have on board that you would like to fill either organically or through acquisitions over the coming quarters that'll be all for me. Thank you.
Divya Goyal: I'll ask one small last question here is, is there any significant gap that you see in the technology capabilities that you have on board that you would like to fill either organically or through acquisitions over the coming quarters?
Unknown Executive: That'll be all for me. Thank you. Yeah, great. Thank you for the question.
Speaker Change: Yeah, great. Thank you.
Paul LeDemond: So one of the things that I keep saying that if we can get our hands on an SAP business, I'd love to find one. It took us a long time to find a company, the quality of Veeverge and we're very happy to have them on board. We went for, if you remember, we went for two years without making an acquisition and we've just completed two in six months. So it depends on what's out there, what we find, the right conditions, and then people who are interested in joining our platform. We think we have a lot to offer.
Speaker Change: So one of the things that I keep saying that if we could get our hands on in S. E T business I'd love to find one.
Speaker Change: It took us a long time too too fine.
Speaker Change: A company.
Speaker Change: The quality of <unk>, we're very happy to have them on board. We went for if you remember we went for two years without making an acquisition and we've just completed two in six months. So it depends on what's out there what we find the right conditions and then people who are interested in joining our platform. We think we have a lot to offer <unk>.
Paul LeDemond: It's just finding the right fit. So we keep looking for that. And also, if you look at Veeverge and XRM, you know, forget the Salesforce piece, but on the Oracle side, we just added a CX platform, which we didn't have. And we new markets like professional services. I mean, if you look at the professional services industry, this is all the engineering firms, the construction firms, whatever, there's a huge, huge global movement of investment in infrastructure. And all these firms are going to need to modernize and integrate the multiple acquisition and consolidations happening. They're all going to need an ERP platform.
Speaker Change: Finding the right fit so we're keep we keep looking for that.
Speaker Change: Also if you look at the Virgin XR round.
Speaker Change: Forget the Salesforce piece, but on the Oracle side, we just added a CX platform, which we didn't have and we entered new new markets like professional services.
Speaker Change: If you look at the professional services industry. This is all the engineering firms.
Speaker Change: The construction firms or whatever there's a huge.
Speaker Change: <unk> global movement of investment in infrastructure and all of these firms are going to need.
Speaker Change: To modernize and integrate the multiple acquisitions and consolidations happening, they're all going to need an ERP platform and right now the two leaders in that industry are Microsoft and Oracle.
Paul LeDemond: And right now, the two leaders in that industry are Microsoft and Oracle. So again, we think we're very well positioned by adding that new industry sector that came from the Veeverge acquisition and XRM. And we also on the XRM side added all of the project management side of the house. from a Microsoft perspective that we didn't have in our Microsoft practice. And as Bernard was mentioning, that's already opened up new opportunities. We actually won several very large opportunities to roll out the Microsoft Projects platform within ERP for several large organizations, which we would not have bid on on our own, and XRM would not have been invited to bid on on their own because they were too small.
Speaker Change: Again, we think we're very well positioned by adding that new that new industry sector that came from the <unk> acquisition and <unk>.
Speaker Change: And we also on the XR EM side added all of the project management side of the house.
Speaker Change: From a Microsoft perspective that we didn't have in our Microsoft practice and as Bernard was mentioning that's already opened up new opportunities, where we actually won several very large.
Speaker Change: <unk> the rollout with the Microsoft projects.
Speaker Change: Platform within ERP for several large organizations, which we would not have bid on on our own and SRM would not have been invited to bid on their own because they were too small, but together, we're able to get these opportunities and close them. So so we think theres still some some niche.
Paul LeDemond: But together, we're able to get these opportunities and close them. So we think, you know, there's still some niche. niche skills out there that we can add that we're going to be incremental. But we don't see any major major shortcomings and what we have today. And as Bernard was saying, all of our people have been trained on AI, we're more and more, many of our projects are now now have an AI component to them, we use it internally everywhere. Even within our back office operations, we have some tools that we use within our legal department, HR, and so on.
Speaker Change: Niche skills.
Speaker Change: Skills out there that we can add that we're gonna be incremental.
Speaker Change: But we don't see any major.
Speaker Change: Major shortcomings in what we have today and as Bernard was saying all of our people have been trained on AI. We're.
Speaker Change: More and more and more and more at many of our projects are now now have an AI component to them, we use it internally everywhere.
Speaker Change: Even within our back office operations.
Speaker Change: You have some tools that we use within our legal department HR and so on so.
Paul LeDemond: So I think we're very well positioned for the transition that's coming. So I don't know if that answers your question, but there's a lot of stuff in that question.
Speaker Change: I think we're very well positioned for the transition that's coming so.
Speaker Change: That's good I don't know if that answers your question, but theres a lot a lot of stuff in that question.
Divya Goyal: No, it answers it way, way better than I thought it would. Thank you. and thank you.
Speaker Change: No.
Speaker Change: Way way better than I thought it. Thank you so much.
Speaker Change: Thank you.
Rob Goff: Your next question comes from Rob Goff with Ventum. Your line is now open. Thank you very much and let me join in congratulating you on The results, very, very good. Sorry, can you repeat the question? It wasn't as much a question as a compliment. I thought there was a question in there. That's okay. Thank you. You're welcome.
Speaker Change: Your next question comes from Rob Goff with Phantom. Your line is now open.
Speaker Change: Thank you very much and let me join in congratulating you on the strength of the results very very very good to see.
Speaker Change: Sorry can you repeat the question.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: It wasn't so much a question does it complement thought there was a question there that's okay. Thank you.
Speaker Change: Youre welcome.
Rob Goff: In terms of a question, perhaps Bill and Medea had asked, can you discuss the ways in which there are revenue synergies or potential cost synergies in adding both eVerge and XRM? Peer Gould. Sure, I can start with the growth synergies, because that's always our priority. As I was mentioning just previously, like for XRM, because of the type of expertise they have around the around the projects piece of Microsoft. As you probably know, in the IT projects world, we keep reading in the papers everywhere about projects going long or not being well managed or whatever, and very often it goes back to having the right tools and people knowing how to use them.
Speaker Change: Terms of question it perhaps that builds on what day you had asked can you discuss the ways in which there are revenue synergies or potential cost synergies in adding both <unk> and <unk>.
Speaker Change: Peter Holt.
Speaker Change: Sure I can start with.
Speaker Change: The growth synergies because that's always our priority.
Speaker Change: As I was mentioning.
Speaker Change: Previously like for XR EM.
Speaker Change: Because of the type of expertise they have around the around the projects piece of Microsoft.
Speaker Change: As you probably know in.
Speaker Change: The project's world, we keep reading in the papers everywhere about projects going long or not being well managed or whatever and very often it goes back to having the right tools and people knowing how to use them that was one of the XR rems expertise, but they were limited in the size of opportunities. They could go after.
Paul LeDemond: That was one of XRM's expertise, but they were limited in the size of opportunities they could go after because of the size of the company. We don't have that limitation, but we didn't have that offering. So by bringing that on board, we've already closed new business because of that skillset. So together, we're stronger. Same thing with eVerge.
Speaker Change: Because of the size of the company.
Speaker Change: We don't have that.
Speaker Change: Limitation, but we didn't have that are that are offering so by bringing that onboard.
Speaker Change: We've already closed new business because of that skill set so together we're stronger.
Speaker Change: Anything with.
Paul LeDemond: And I won't go into the details of how we do our acquisitions, because I think it's part of our secret sauce, but many of the clients, the existing eVerge clients we already have joint opportunities with, because of the announcement and the transaction. So we, you know, the first thing that we focus on is, is the upside. From a cost perspective, the synergies come from integrating these businesses into our platform. So for example, XRM, as Bernard was saying, they're already on our platform. So that's our ERP, our CRM. So all these things, the benefits, so they're on board, they're integrated from that perspective.
Speaker Change: With <unk> and I can't I won't go into the details of how we do our acquisitions because I think it's part of our secret sauce, but many of the client is the existing <unk> clients.
Speaker Change: We already have joint opportunities with <unk>.
Speaker Change: Because of the announcement and the transaction so we.
Speaker Change: So first thing that we focus on is our is the upside from a cost perspective.
Speaker Change: Synergies come from integrating these businesses into our platform. So for example, XR EM as Bernard was saying they're already on our platform. So that's R. R. R. ERP our CRM. So all these things.
Speaker Change: The benefits so.
Speaker Change: So they're on board they are integrated from that perspective. So we can already we already have better visibility on the opportunities on the financials on areas for improvement in how we work better together with.
Paul LeDemond: So we can already, we already have better visibility on the opportunities, on the financials, on areas for improvement, and how we work better together. With the eMERGE transaction, the plan is to do that between now and the next few months. And that's where we get some synergies of, you know, economies of scale. working on the same platforms and sharing information better and leveraging the data. So what we what we do for our clients we do for ourselves. And that's where we get the synergies.
Speaker Change: The average transaction the plan is to do that between now and the next few months.
Speaker Change: And that's where we get some synergies or economies of scale.
Speaker Change: Working on the same platforms, ensuring information better and leveraging the data.
Speaker Change: So what we what we do for our clients we do for ourselves.
Speaker Change: And that's where we that's where we get the synergies.
Speaker Change: Appreciate it.
Paul LeDemond: As you referenced, making two large acquisitions within or medium sized acquisitions in the space of six months. Does that mean you're seeing more opportunities in the marketplace? And are you seeing opportunities within the SAP space? We're seeing, I'd say we're seeing the same, I mean it doesn't vary much, we're seeing the same number of opportunities. You know, we will go through over 100 opportunities a year easily from the teasers we get stuff we look at the The question isn't the quantity of opportunities, but one, is there a fit? Two, can we do something in the price range that we like?
Speaker Change: As you reference, making two large acquisitions within or medium acquisitions in that space.
Speaker Change: Six months does that mean youre seeing more opportunities in the marketplace and are you seeing opportunities within the SAP.
Speaker Change: SAP space.
Speaker Change: We're seeing I'd say, we're seeing the same I mean, it does very much we're seeing the same number of opportunities.
Speaker Change: We will go through over 100 100.
Speaker Change: Opportunities a year easily from the teasers, we get stuff we look at the.
Speaker Change: The question is isn't the the quantity of opportunities but.
Speaker Change: One is there a fifth too.
Speaker Change: <unk> can we do something in the price range that we like.
Paul LeDemond: Will these people come on board and stick around? Do we see the one plus one equals three, like in the last two that we just did? I mean, we're seeing the growth coming from those opportunities. We're seeing the client reaction. We're seeing the people. We buy people, as people joining, you want to make sure they stick around, that they see the value in the transaction. They want to join us and want to stay. So there's a lot of A lot of parameters that go into our acquisition. and many of them are more subjective than objective so once all the financial stuff is sorted out then it's really the rest that's more important to us.
Speaker Change: Well these people come on board and to stick around.
Speaker Change: Do we see do we see the one plus one equals three late like in the last two that we just did I mean, we're seeing the growth coming from those opportunities. We are seeing that the client reaction. We're seeing the the people that we buy people right as people joining you want to make sure they stick around that they see the value in the transaction they want to join us.
Speaker Change: And want to stay so there's a lot of a lot of that.
Speaker Change: A lot of parameters that go into our acquisitions.
Speaker Change: And many of them are more subjective and objective. So once all the financial stuff is sorted out and it's really the rest that's more important to us.
Paul LeDemond: We're seeing the same quantity, it's just making sure we find the right fit. And that takes a... takes more time, takes more time.
Speaker Change: We're seeing the same quantity is just making sure we find the right fit and that takes a.
Speaker Change: Takes more time.
Paul LeDemond: But when we do, we're, I mean, we're in great financial, we've never been in a better financial position than we are now. So when we do find the right ones, you know, we can pull the trigger faster.
Speaker Change: It's more time, but when we do where we are in great financial we've never been in a better financial position than we are now so when we do find the right ones, we can pull the trigger faster.
Rob Goff: Very good. And congratulations. Thank you.
Speaker Change: Okay.
Speaker Change: Great and congratulations.
Speaker Change: Thank you. Thank you.
Vincent Colicchio: Your next question comes from Vincent Colicchio with Barrington Research. Your line is now open. Yes, a nice quarter. Curious a little bit about, let's talk a little bit about the programming efficiencies from AI. Are you seeing a lot of efficiencies already? Do you expect a meaningful, you know, improvement in coming quarters? What does that look like?
Speaker Change: Your next question comes from Vincent Colicchio with Barrington Research. Your line is now open.
Speaker Change: Yeah, So a nice nice quarter.
Speaker Change: Curious.
Speaker Change: A little bit about <unk>.
Speaker Change: Talk a little bit about the programming efficiencies from AI are you seeing a lot of efficiencies already.
Speaker Change: Do you expect a meaningful.
Speaker Change: <unk>.
Speaker Change: In coming quarters.
Speaker Change: Or does that look like.
Paul LeDemond: So, thanks for the question, Vince. I'm not going to give you specifics in terms of dollars and efficiencies, and I know some people are starting to do that. But I'll give you some examples. So in the past acquisitions, the last two acquisitions, our legal team had a tool that basically enabled us to go through contracts in a data room and identify stuff in minutes and hours that would usually take several people, you know, many days, weeks to do. So these types of things, these tools that we roll out internally for us are also things that we help our clients with.
Speaker Change: So.
Speaker Change: Thanks for the question Vince I'm not going to give you specifics in terms of dollars and efficiencies and I know some people are starting to do that.
Speaker Change: But I'll give you some examples.
Speaker Change: In the in the past.
Speaker Change: Acquisitions, the last two acquisitions, our legal team.
Speaker Change: And the tool that basically enabled us to go through contracts and a data room.
Speaker Change: And identify stuff in.
Speaker Change: Minutes and hours that would usually take several people.
Speaker Change: Many days weeks to do so these types of things. These tools that we rolled out internally for US are also things that we help our clients with an.
Paul LeDemond: And, you know, I keep telling our folks that AI is not going to replace people, it's people who use AI that are going to replace people. And I think as we grow, the advantage of AI, where we're going to see the benefits is the ability to do more. with with the same people. So instead of as we grow the company, instead of saying we're going to reduce headcount is we're going to keep the same headcount and increase the business. So to me, that's where I see the opportunity is making our people more efficient, getting rid of more tedious stuff and enabling us to grow fast.
Speaker Change: I keep I keep telling our folks that AI is not going to replace people as people, who use AI going to replace people and I think as we grow.
Speaker Change: The advantage of AI, where we're going to see the benefits is the ability to do more.
Speaker Change: With the same people so instead of as we grow the company instead of saying, we're going to reduce head count. There is we're going to keep the same head count and increase the business. So.
Speaker Change: To me, that's where I see the opportunity is making our people more efficient, they're getting rid of the more tedious stuff and enabling us to grow faster.
Paul LeDemond: So I can't put a number on it today, Vince, so it's more, you know, based on what I'm seeing and what the team is doing, but I do see significant opportunities for improvement there on our side and for our clients.
Speaker Change: So I can't put a number on it today again, so it's more.
Speaker Change: Based on what I'm seeing and what the team is doing but I do see significant opportunities for improvement there on our site and for our clients.
Paul LeDemond: And on the smart shoring side, are you seeing any captive opportunities that could potentially be acquired to substantially scale your offshore program?
Speaker Change: And then the smart shoring side are you seeing any captive opportunities that could.
Speaker Change: Potentially be.
Speaker Change: Acquired to substantially.
Speaker Change: Scale your offshore program.
Paul LeDemond: So interesting, so maybe just to answer that one and pick off of your first question. So if you look at our smart touring teams today, if you had asked me two or three years ago, I probably would have said that our teams would be twice the size they are today. And they're not because of AI. So our teams also use tools and accelerators and our own we have we have over 25 proprietary solutions on Microsoft Marketplace. So we build IP, we leverage AI in that IP. We sell it to clients with services, and we use them internally as well.
Speaker Change: So interesting so maybe just to.
Speaker Change: Pick answer that one and pick off of your first question. The first question. So if you look at our smart shoring teams today. If you had asked me two or three years ago.
Speaker Change: Probably would have said that our teams will be twice the size they are today.
Speaker Change: And theyre not because of AI.
Speaker Change: Our teams also used tools and accelerators in our own and we have we have over.
Speaker Change: 25.
Speaker Change: Yeah.
Speaker Change: Proprietary solutions on Microsoft marketplace. So we build IP, we leverage AI and that IP. We are we are we sell at the clients with services and we use them internally as well so.
Paul LeDemond: I'm Part of RAC was just as in the last two, one of the, you know, when I say they check all the boxes. They both had off-store operations. Right. So for us, when we look at these acquisitions, I don't think they're mutually exclusive, quite the quite the opposite. I think as we look at potential targets, if they have a smart shoring component, it makes them that much more attractive, because it helps us on both sides.
Speaker Change: I'm.
Speaker Change: Part of our acquisitions in the last two one of the you know when I say they check all the boxes.
Speaker Change: They both had offshore operations right.
Speaker Change: So for us when we look at these acquisitions I don't think they're mutually exclusive quite to be quite the opposite I think as we look at potential targets. If they have a smart shoring component it makes them that much more attractive because it helps us on both sides.
Paul LeDemond: So I'd rather that than just finding than just finding a, you know, captive offshore, I'd rather find organizations that already have one that it, you know, instantaneously increase our capacity and that we can leverage and it's our own people. So Thanks, Paul. Thank you for the questions.
Speaker Change: So I'd rather that than just finding than just finding a.
Speaker Change: Captive offshore I'd rather <unk>.
Speaker Change: Fine.
Speaker Change: Organizations that already have won that instantaneously increase our capacity and that we can leverage and it's our own people. So.
Speaker Change: Okay.
Paul: Thanks, Paul.
Paul: Alright, Thank you for the question.
Unknown Executive: Ladies and gentlemen, as a reminder, should you have a question, please press star 1.
Paul: Ladies and gentlemen, as a reminder, should you have a question. Please press star one.
John Shao: Your next question comes from John Shao with National Bank Financial. Your line is now open. Hey, good morning. Thanks for taking my question and congrats on a strong quarter. So could you maybe help us understand a bit more about your book-to-bill ratio this quarter? Is it timing related or is this related to some of the macro uncertainties you mentioned just now? Thanks for the question, John.
Speaker Change: Your next question comes from John Shale with National Bank Financial Your line is now open.
John Shale: Hey, good morning, Thanks for taking my question and congrats on a strong quarter. So could you maybe help us help us understand a bit more about your book to Bill book to Bill ratio. This quarter is it timing related or is this related to some of the macro uncertainties you mentioned just now.
Bernard Dark: Thanks for the question Jon I'll, let the Bernard will take that one yes.
Bernard Dockrill: I'll let Bernard take that one. Yeah. Thanks for the question, John. Similar to what I said last quarter, you know, looking... I'll start with my... that's kind of where the bookings all start from. No real material changes in our pipeline from last quarter. You know, our wind loss is about the same as what it's been in past quarters. So really what we're seeing in the market is longer sales cycles. We have deals that we're very high confidence on that just take several more weeks and sometimes months to get across the goal line. And that's what we're seeing in there.
Bernard Dark: Yes, thanks for the question John.
Bernard Dark: Similar to what I said last quarter, you know looking I'll start with our bookings I'll start from.
Bernard Dark: No real material changes in our in our pipeline from from last quarter and all of our win loss savings.
Paul: Same as what its been in past quarters, So really what we're seeing in the in the market is.
Paul: Longer sales cycles, we are seeing deals that.
Paul: Alright, very high confidence on that just take a several.
Paul: Several more weeks and sometimes months to get across the goal line and that's what we're seeing it there.
Bernard Dockrill: And that's, you know, I think we'll see, you know, bookings are always lumpy, but I think we'll continue to see more lumpiness in the bookings. It's just this, you know, we have more certainty in the market. I do think things will change. Very positive news, as Paul mentioned earlier with the Oracle results. You're still seeing companies make these big decisions for their enterprise transformation, whether it's...
Speaker Change: Hey, who will see bookings are always lumpy, but I think we'll continue to see more lumpiness in the bookings.
Speaker Change: We have more certainty in the market.
Speaker Change: I do think things will change very positive news.
Speaker Change: Paul mentioned earlier with the Oracle results.
Paul: Still see A&D companies make these big decisions for their enterprise transformation, whether it's.
Bernard Dockrill: Microsoft, Oracle, Salesforce, SAP, these decisions are still being made, which is a good leading indicator for us, as well as the work we implement those systems. So hopefully that answers your question.
Paul: Microsoft Oracle.
Paul: Those force S&P. These decisions are still being made which is a good leading indicator for us as.
Paul: As well as Vista.
Paul: We implement those systems.
Paul: Hopefully that answers your question.
Bernard Dockrill: That's great colors. And you're now live on three major tech platforms, Microsoft, Oracle, and Salesforce. So what would be different going forward in terms of your go-to-market strategy? And what kind of market opportunity do you see out there given a more comprehensive coverage at this point? Yeah, great question, John. And, you know, our strategy is really consistent over the last four, over the last two years, we really set forth on four key pillars, right? Our industry first strategy, our relationship with our partners and our expertise with our partners platforms, our own IP and accelerators that help us connect quicker, as well as our smart shoring capabilities.
Speaker Change: Yes, that's great colors and you are now live on three major platforms, Microsoft Oracle and Salesforce. So what would be different going forward in terms of your go to market strategy and what kind of market opportunity do you see out there given a more comprehensive coverage at this point.
Speaker Change: <unk>.
Speaker Change: Yes, Great question, John and again, our strategy is really consistent over the last or last two years, we've really set forth on four key pillars are industry first strategy.
Speaker Change: Yes.
Speaker Change: Our relationship with our partners and our expertise with our partners' platforms.
Speaker Change: Our own IP and accelerated should help us quicker.
Speaker Change: As well as our smart store and capabilities.
Bernard Dockrill: So as I look at this and taking a customer first strategy, you know, we want to follow our customers and our customers use multiple platforms. It's not just one platform and by, you know, broadening our capabilities, it allows us to service our customers across multiple platforms. And a big thing, a big focus for us is our cross selling and being able where we may enter into applying in one area, but being able to, you know, offer services in other areas and help them with their priorities, which span across our offerings. And I see this continues to be opportunities there.
Speaker Change: So as I look at this and taking a customer first strategy.
Speaker Change: We want all of our customers and our customers use multiple platforms. It's not just one platform and died.
Speaker Change: Our our capabilities it allows us to service our customers across multiple platforms.
Speaker Change: Missing a big focus for us is our cross selling.
Speaker Change: Being able where we've made.
Speaker Change: Enter into applying it in one area, but being able to offer services in other areas and help them with their priorities, which span across our offerings and I see this continues to be opportunities there.
Unknown Executive: So it's a relatively new muscle for us, and then we're continuing to build it. It's, it's showing dividends. Perfect, thank you.
Speaker Change: It's a relatively new muscle for us and then we're continuing to build it.
Speaker Change: Showing dividends.
Speaker Change: Perfect. Thank you.
Unknown Executive: There are no further questions at this time.
Speaker Change: There are no further questions at this time I will now turn the call over to Paul Campbell for closing remarks.
Paul Raymond: I will now turn the call over to Paul Raymond for closing remarks. Thank you everyone for joining today. As you can see, we're very happy with our results and looking forward to following up as required.
Speaker Change: Okay. Thank.
Speaker Change: Thank you everyone for joining today as you can see we're very happy with our results and looking forward to following up as required.
Unknown Executive: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating in that say you. Please disconnect your lines.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].