ALYA Q1 2026 Earnings Call

Operator: Good morning. Welcome to Alithya's First Quarter of Fiscal 2026 Results Conference Call. I would now like to turn the meeting over to Alithya's management team. Please go ahead.

Nathalie Forcier: Thank you for joining us today for Alithya's First Quarter Fiscal 2026 Results Conference Call. The press release, along with the MD&A containing condensed financial 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. 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, and expertise to meet client needs, excelling in a competitive market, achieving our 3-year strategic plan, and deploying our smart shoring capabilities. For more information, please refer to the cautionary note included in our presentation and the forward-looking statements and Risks and Uncertainties section of our MD&A, which are both accessible on our website. All figures discussed today are in Canadian dollars, unless otherwise stated, and 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 details. Presenting this morning are Paul Raymond, Alithya's President and Chief Executive Officer; Bernard Dockrill, Chief Operating Officer; and Debbie Di Gregorio, VP, Finance. Also present is our new CFO, Pierre Blanchette. I will now turn the call over to Paul Raymond. Paul?

Paul Raymond: Thank you, Nathalie. Good morning, everyone, and thank you for joining us today. I'm very proud to be here to present our team's achievements for our first quarter of fiscal '26. We will also provide an update on eVerge's integration status and talk about some of our exciting client projects. I will start with a few notable highlights before turning things over to Bernard Dockrill, our Chief Operating Officer, for more color on our operations. Bernard will be followed by Debbie Di Gregorio, who will go over the financial highlights. So back to the results. Our disciplined approach and commitment to our long-term strategy has enabled the Alithya team to deliver another quarter of year- over-year improvements in many key areas in Q1 of fiscal 2026. So first, we delivered another year-over-year improvement of our adjusted EBITDA. Secondly, we also grew year-over-year gross margin as a percentage of revenue. Both of these are a direct result of our ongoing focus on higher-value services and efficiency gains. Thirdly, I'd like to highlight our year-over-year growth in revenue -- in quarterly revenues and sequential growth on a constant currency basis. Again, this growth is mostly driven by our higher-value service offerings in the U.S., which showed double-digit organic growth. These offerings, which are designed to help clients consolidate disparate and older systems, enables our clients to leverage better enterprise-wide data to ultimately achieve greater efficiency and flexibility in their mission-critical system, which in turn enables them to use AI-based solutions. As I've stated in the past, decisions to start these projects can sometimes be delayed, but given their business value and benefits, they are necessary investments for our clients during these turbulent times. We saw this accelerate in the U.S. in the past few quarters despite slower adoption in Canada. Finally, we were able to leverage our financial position to execute the eVerge acquisition with a 100% cash approach. I will now turn things over to Bernard to provide some specifics on our first quarter performance as well as an update on the integration of our latest acquisitions. Bernard?

Bernard Dockrill: Thank you, Paul. Good morning, everyone, and thanks for being with us today. I would like to start by thanking all our employees globally for their dedication and commitment to our clients and executing our 3-year strategic priorities, which has resulted in another quarter with strong results. As we remain focused on the 4 pillars of our growth plan, leading with our deep industry knowledge, developing our strong partnerships with industry-leading solution providers, accelerating time to value for our clients, leveraging Alithya proprietary IP and increasing our access to talent with our smart shore delivery centers, we have, again, this quarter, generated year-over-year improvement on revenue, gross margins and adjusted EBITDA. Within our U.S. operating segment, we have achieved double-digit profitable growth of 17.3%, which I will discuss further a little later. As for repeat business, 84.8% of our revenues came from clients that work with Alithya in the first quarter of last year. Our recent acquisitions of XRM Vision, announced last December, and eVerge, announced in June, are contributing to our growth as complementary offerings, and increased scale are generating new opportunities. As I mentioned last quarter, the addition of XRM Vision has enabled us to pursue opportunities that neither party would have been able to pursue prior to combining forces. The new engagements that I spoke to last quarter are ramping up, and we should see their impact on revenues in future quarters. eVerge joined the Alithya family on May 31, and we've seen early signs that our combined entities will enable us to deliver greater value to our clients. Our acquired capabilities with Salesforce are resonating. For example, our deep U.S. healthcare provider capabilities are positioning Alithya to deliver additional services within this portfolio of accounts with Salesforce Health Cloud. With our expanded healthcare offering, we have identified opportunities within our existing client base to strengthen patient-focused engagement, enable more personalized data-driven experiences, including leveraging agent force. We continue to expand our smart shore capabilities and reached a new high of 13% of Alithya employees in our smart shore locations as of the end of the first quarter. Both the acquisition of XRM Vision and eVerge have had a positive impact on our smart Shore centers with the addition of talent in Morocco and India. Turning to our Q1 results. In the quarter, we delivered double-digit growth in the U.S. market, primarily driven by our Oracle and Microsoft practices. Our strong performance in the U.S. market highlights our differentiated value proposition for enterprise application and transformation services in our targeted industries with our partner solutions. This includes our data and AI services that drive operational efficiencies, support new ways of working, and maximize the ROI for our clients. For example, in our Oracle practice for Virtua Health, an academic nonprofit healthcare system in Southern New Jersey that operates a network of hospitals, surgery centers, physician practices, and more, we completed a 15-month Oracle Cloud ERP and supply chain management implementation, empowering Virtua to deliver exceptional care and service with leading-edge tools. Virtua will soon leverage Alithya's purpose-built healthcare, cost of care analytics solution, proprietary framework of artifacts, and preconfigured capabilities built on Oracle EPM Cloud and Oracle Cloud, and Rx Cloud. This will enable South Jersey's largest health system to identify opportunities for profitability and efficiencies through the integration of financial, operational, and clinical data and better understand the true cost of care. For Mosaic Life Care, we are implementing the full suite of Oracle cloud-based business applications. After a troubled engagement, the hospital canceled their previous implementation and turned to Alithya based on our deep healthcare qualifications. We will modernize back-office systems, enabling greater agility, enhanced insights, and streamlined operations to support their long-term growth and innovation goals. Like so many of our Oracle clients, the hospital seeks to leverage real-time data and embedded AI to optimize operations, accelerate decision-making, and adapt quickly to industry changes. For Cigna, a leading U.S.-based healthcare payer and #13 on the Fortune 500, we recently completed the second phase of their Oracle Cloud Enterprise Performance Management implementation. This effort retired multiple legacy applications and delivers enhanced financial reporting, streamlined consolidations, improved account reconciliations, and advanced profitability analysis tools with governed master data, empowering the controllership and finance teams to operate with greater efficiency and insights. In our Microsoft practice with Prichard Industries, the largest privately held facility maintenance provider, we supported them with their implementation of Dynamics 365 across multiple divisions. The integration of finance, supply chain, and customer engagement facilitated the automation of manual processes, streamlined operations, and enhanced business visibility. I share these examples to give you a better perspective on the work we are performing with our partners to realize our clients' digital transformation objectives. As technologies such as GenAI and Agentic AI continue to evolve, the demand for enterprise applications and transformation services will increase, and our industry depth, technology partners, IP accelerators, and smart shore delivery model should position us well. Before I move to our Canadian business, I would also like to share that once again, for the 20th time, Alithya has been selected by Microsoft for a '25, '26 inner circle partner for Microsoft AI Business Solutions. In Canada and more specifically in the Quebec market, our strategy to increase our revenues from higher-value consulting and projects continues to be a priority. During the quarter, Canadian revenues fell year-over-year as we maintained our rigor and did not pursue or renew some lower-margin contracts, namely within the public sector. This, in addition to the successful completion and ramp down of a large engagement, accounts for most of the decrease in revenues. With respect to our efforts to secure higher-value projects, we engaged with a Quebec-based financial institution who have taken a leading role in modernizing their legacy systems. Similarly, for a large insurance company, we're implementing a scalable migration factory to accelerate their transition to the AWS cloud. These are examples of high-value work we continue to pursue in Quebec. In the Canadian energy sector, we continue to leverage our nuclear industry knowledge and have renewed it and expanded our revenues with key clients. Turning to bookings. Although the uncertainty in the global economic and geopolitical environment continue to result in longer sales cycles, we continue to see demand for our enterprise application and transformation services. Bookings in the quarter were $118.1 million, which translated into a book-to-bill ratio of 0.95 compared to $98.2 million, which translated into a book-to-bill ratio of 0.81 for the same quarter last year. Bookings for the trailing 12 months amounted to $440.6 million, which translated into a book-to-bill ratio of 0.92. If revenues from the 2 long-term contracts signed as part of an acquisition in the first quarter of fiscal year 2022 were excluded, the book-to-bill ratio would be 1.06 compared to 0.92 for the same quarter last year. For the trailing 12 months, the book-to-bill ratio, excluding revenues from the 2 long-term contracts, would be 1.03. Again, this quarter, more than half of bookings were in the U.S. market, and our backlog at the end of the quarter was approximately 15 months of revenue based on our trailing 12 months. And now I'll let Debbie provide financial highlights for the first quarter of fiscal 2026. Debbie, over to you.

Debbie Di Gregorio: 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 first quarter fiscal 2026 was highlighted by continued performance improvements on many levels. Let's begin with a review of those improvements. In the first quarter, consolidated revenues came in at $124.2 million, up $3.3 million or 2.7% on a year-over-year basis. Looking at profitability, we are reporting another quarter of year-over-year improvement on gross margin in dollars and as a percentage of revenues. Gross margin reached 32.1% in the quarter, up from 31.9% last year. This performance comes from our increased efficiencies and continued evolution towards a higher-value business mix, 2 key priorities of our long-term plan. Looking at adjusted EBITDA, we are reporting $11.6 million, a 15.6% increase over last year. I will now turn to a review of our performance by region, starting with Canada. Revenues in Canada reached $59.6 million in Q1, down $5.5 million or 8.5% on a year-over-year basis. The decrease in revenues was primarily due to reduced revenues from government contracts, one customer's major transformation project reaching maturity, and 1 less billable day in the period. This was partially offset by the continued recovery in the banking sector and the contribution of XRM Vision acquired on December 1, 2024. Looking at our gross margin in Canada, we saw a decrease compared to the same quarter last year, mainly due to a decrease in the utilization rates and tax credits, and salary increases, which came into effect at the beginning of our fiscal year. This was partially offset by the positive gross margin contribution from XRM since its acquisition. In the U.S., revenues increased $8.8 million or 17.3% to $59.5 million. The increase is due primarily to the organic growth in the enterprise application and transformation services, namely our Oracle and Microsoft practices. Higher billing rates as we continue to evolve towards a higher-value business mix, revenues from eVerge acquisition on May 31, 2025, and a favorable U.S. dollar rate exchange impact of $0.7 million between the 2 periods. On a sequential basis, U.S. revenues increased by $5.3 million despite an unfavorable U.S. dollar exchange rate impact of $2.2 million from the fourth quarter of last year. Our U.S. gross margin as a percentage of revenues increased compared to the same quarter last year, primarily due to increased efficiencies, higher hourly billing rates, and the increased use of our smart shoring capabilities. In our international business, revenues were slightly higher versus the prior year with lower gross margin as a percentage of revenue, mainly due to lower utilization. Overall, from a geographic perspective, we continue to see a higher proportion of revenue growth in the U.S. versus the rest of our business. This, along with our ongoing efforts in expanding our smart shore capabilities, positively impacted our consolidated gross margin and is in line with our strategic plan. 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 first quarter, SG&A expenses amounted to $30.6 million, an increase of $1.1 million or 3.4% year-over-year. This is despite the additional expenses from XRM Vision and eVerge since their acquisition. The decrease in SG&A expenses was driven mainly by decreases in employee compensation costs stemming from variable compensation and severance in the same quarter last year. SG&A expenses as a percentage of revenues decreased to 24.6% in Q1 compared to 26.2% for the same period last year. On a sequential basis, SG&A expenses increased by $0.9 million from $29.7 million. This increase takes into account salary increases that came into effect at the beginning of our fiscal year on April 1, 2025, and expenses from eVerge, since its acquisition. Thanks to our U.S. growth, increased revenue margin due to higher efficiencies, and our performance on cost management, the adjusted EBITDA margin reached 9.4% in Q1, up compared to 8.3% last year. Our first quarter adjusted EBITDA amounted to $11.6 million, a 15.6% increase year-over-year. Again, this reflects the continued progress we made on operational performance and on cost optimization. Our adjusted net earnings came in at $6.5 million, representing an increase of $1.6 million or $0.07 per share year-over- year. Finally, let's review our cash flow and financial position. Cash generated from operating activities adjusted for noncash items amounted to $8.7 million in the quarter, an increase of $1.4 million compared to the prior year, primarily due to net income in the current quarter compared to net loss in the prior year. Net cash used in operating activities was $4.2 million in the quarter compared to net cash from operating activities of $16.7 million in the prior year, representing a change of $20.9 million. This is primarily due to unfavorable changes in noncash working cap items related to a couple of items. The first, $1.2 million increase in income in tax credits receivable compared to $7.9 million decrease in the prior year, representing an unfavorable change of $9.1 million due to timing of the receipt of tax credits. The second, a $9.1 million decrease in accounts payable and accrued liabilities compared to a $3.7 million decrease from the prior quarter, representing an unfavorable change of $5.4 million, mainly relating to timing of payments. Third, a $6.5 million decrease in deferred revenue compared to a $1.5 million decrease in the prior period, representing an unfavorable change of $5.0 million due to timing of client invoices. And finally, other changes amounting to $1.4 million. As of June 30, 2025, net debt amounted to $118.3 million, and our leverage ratio increased to 2.4x net debt to trailing 12 months adjusted EBITDA, all within Alithya's targeted leverage levels. On a sequential basis, net debt increased by $24.3 million to $118.3 million from $94 million as at March 31, 2025, primarily due to an increase in long-term debt of $27.5 million despite a favorable U.S. exchange rate impact of $3.5 million. The increase is mainly due to an increase of $18.4 million in amounts drawn under the credit facility, resulting primarily from cash paid on closing of the eVerge acquisition and the addition of a $9.2 million balance of purchase price payable, also as part of the acquisition, partially offset by an increase in cash. I will now pass it over to Paul for closing remarks.

Paul Raymond: Thank you, Debbie. As you can see, we are pleased with our quarter, and our key indicators are moving in the right direction. We delivered year-over-year revenue growth with double-digit organic growth in the U.S. We also delivered year-over-year gross margin and adjusted EBITDA growth. Finally, before opening the lines for questions, I'd like to officially welcome Pierre Blanchette, who is with us today. We're looking forward to setting up follow-up meetings to meet him for you. And I'd also like once again to thank Debbie for stepping up and leading the team through this exciting period. Thank you, Debbie. We will now open the lines for questions. Joel?

Operator: [Operator Instructions] Your first question comes from Gavin Fairweather with Cormark Securities.

Gavin Fairweather: I wanted to start out on the U.S. I mean, certainly very impressive results here in the Q1. I'm curious when you speak to the business leaders in healthcare, manufacturing, insurance, eVerge, and kind of look into the pipeline and backlog, what's your confidence you can maintain these types of levels of growth? And how do you kind of characterize the business environment and outlook from here?

Paul Raymond: Thank you for the question, Gavin, and congratulations on your transaction. The best way, I think, to look at it in terms of the business environment, most of the growth that we've had in the U.S. has come from our ERP business with Microsoft and Oracle. I think a good way to look at it is if you look at Microsoft and Oracle themselves, the results they reported were record results. They're seeing significant growth in their businesses, which basically drives growth on our side as well because we implement those solutions. So I think a good way to look at it is to track those 2 companies and see how they're doing on their ERP, cloud, and AI rollout because that's what drives our business. So many of our leads come directly from them. As Bernard mentioned, we're in the inner circle on the Microsoft side. We're a very close partner with Oracle. We're helping them develop their own AI interfaces for their solutions. So we're very close to what's happening. And usually, we tend to follow what they do. So I think that's a good way to look at it.

Gavin Fairweather: And then maybe coming north of the border in the Canadian Financial Services business. It sounds like the revenue was up year- over-year. Do you think that business has normalized now? Do you see some further upside for that business? And maybe you can characterize the project mix and gross margins that you have coming out of that practice.

Paul Raymond: Yes. So maybe I can -- a few reference points that could help. If you -- we're -- next quarter, we're going to be lapping probably our lowest quarter revenue. So if you look at our run rate, I mean, I don't want to give any guidance, we're going to be lapping a pretty low quarter last year. At the same time, it is the summer, which is in general. Financial services, specifically in Quebec specifically. So as we've been saying for quite some time now, we're really focusing on changing the business. So we are seeing growth in our financial service business. But the growth that we're seeing is in the right stuff, right? So as we grow our financial services business, we're very selective on what we bid on to make sure it's the higher-margin business and the transformative type stuff. We've exited many things in the past. We are exiting a lot of government business that like we've said, but we're replacing this with better margin business. So we've gotten rid of most of the very low-margin stuff. I think what you're seeing now is tweaking, right? So as we bring in new business, we're going to incrementally improve the situation in Quebec. But we need to get it to the same level as the U.S., which means we need to do more of the transformational type ERP-type, large projects. But the adoption in general and without focusing on financial services, but the adoption in general in Canada is slower than what we're seeing in the U.S.

Gavin Fairweather: And then maybe just on a related point, I mean, the gross margins in Canada, I think, were down a little bit. year-over-year in Q1. I think that was just tied to a bit lower utilization. I'm not sure who wants to take this, you or Bernard, but how do you think about the pathway of getting back towards target gross margins and utilization? Are you seeing what you need in the bookings in the pipeline? Or are you thinking about maybe some capacity coming out?

Paul Raymond: Maybe talk about the pipeline.

Bernard Dockrill: Yes. So well, first, on the utilization side, as we are changing. So there's a little bit of a transition period. So you saw a little lower utilization. The other thing, as Debbie mentioned, in the Canadian gross margins, the impact of the tax credit, tax credits were lower in the quarter that had an impact on our gross margins. I think, Paul, you covered it very well when you talked about the adoption being a little slower in Canada. But I do expect that we're going to stick with our priority and the rigor. I think we've seen good results where we're going. And we are continuing to build the pipeline of this more higher-value transformational work. And as we're weaning off a lot of that lower-margin business that we had historically. So I think you'll see more of the same. It will be incremental growth on the profitability side in Quebec.

Paul Raymond: Maybe to add to that, Gavin, I'd just say for the first time, our revenues in the U.S. are the same size of our revenues in Canada, which is part of our plan. The long-term plan is actually to get the U.S. larger than the rest of the business. It's the largest market in the world and the fastest-growing one. So we kind of like where we're at right now in terms of our positioning, given the growth that we're seeing.

Gavin Fairweather: And just lastly, for me, I mean, you've been highlighting automation as one of your levers to drive efficiency gains and project delivery. I'm curious how far along you are on that journey and whether you still see some really good low-hanging fruit to go and capture as you continue to put more automation into the delivery aspect.

Paul Raymond: Are you talking about our clients or internally for ourselves?

Gavin Fairweather: No, internally. Yes, on delivery.

Paul Raymond: Yes. I think there's still opportunities there. We're doing it for our clients. It's something that we look at continually internally as well, both automation and global delivery. So we're looking at both options. And as you've seen, we're showing year-over-year improvements, and even if you remove the acquisitions sequential as well. So these are incremental things that we do every quarter. Some are longer-term initiatives, some are short-term ones. We have Pierre, who just showed up. So I know we have other initiatives planned on the financial side, but we look at every option. I mean we use it in every department today. Our legal team uses AI tools to help them be more efficient. human capital use it, financial services, I mean, it's used in every area, and we keep finding new stuff. And as we're helping -- so for example, internally, we use Oracle and Microsoft as well. And we're helping Microsoft and Oracle develop new tools within their own applications. So we have a great test bed here to try new stuff before we actually roll it out to our clients. So we're going to keep doing that.

Operator: Your next question comes from Jerome Dubreuil with Desjardins.

Jerome Dubreuil: First one is on the AI impact. We're seeing with the larger caps now that the market seems to have a bit of concerns on the AI, but it's not clear to me if it's -- the slower growth is caused by macro uncertainty or AI, but it's kind of difficult to prove. So I'd really like to kind of give you a chance to update us on what you are seeing out there? And if you can discuss what you think the kind of near-to- long-term impact of AI will be on your business?

Paul Raymond: The long-term impact of AI on the industry in general, the market, or clients may be?

Jerome Dubreuil: What do you think the impact will be on your business from AI specifically?

Paul Raymond: If I just take AI on its own, forget the rest of the world or whatever. I mean, if you look at our business today, everything that we do today, 95% of it, we didn't do 10 years ago, right? So we're consistently innovating in what we do because we need to be a step ahead of our clients because our clients are going through these changes, whether it's cyber, cloud, AI, Gen AI, Agentic AI, you name it, whatever the next thing is going to be, our clients need our help to roll out whatever it is that they're going to do. The key thing with AI is data. If you do not have data, consistent data, enterprise-wide data, it's very difficult for you to roll out any scalable AI solution. So if you see the growth that Microsoft and Oracle reported in the last quarter, that's what's driving our ERP business. So the companies are trying to consolidate disparate systems to have consistent data, enterprise-wide data, so they can leverage technology and AI, and data analytics and get efficiencies and whatever. That's what's driving our business today. Once that's rolled out, which is just at the beginning, by the way, the opportunity, the market is huge for this, there's going to be something else. So once we do this over the next several years, we help our clients do this, then it's how do we leverage AI at scale. We're doing a lot of stuff around Agentic AI. Will it impact? It's going to impact everything, the same way cloud impacted everything. If you go back 10 years ago, I mean, if you had cloud in the name of your company, you had these crazy multiples. Then it was something else. And then it was something else. Every 4 or 5 years, there's a new technology, there's something else that's going to impact what we do. AI will impact everything. It's going to be gradual. Some people are going to get there faster than others. We think we're in a great position to help our clients get there. So we have a front row seat to what's happening. And I like the business that we're in. There won't be less technology in our lives 10 years from now, and our clients will still need us 10 years from now. So I like where we're at.

Jerome Dubreuil: My second one is on the margins. Significant improvement again, maybe a bit less than last quarter though. So I know there were contingencies last quarter, but if you can help us, maybe in terms of the puts and takes you're seeing on margins and what direction we should be expecting in the coming quarters?

Paul Raymond: Well, we said our long-term plan was to keep improving the gross margins. I mean, I think the gross margin is the result of our strategy to focus on higher-value services. So as we continue to do that, the gross margin should follow. I mean it's -- our ERP business, our U.S. business is now half of it's as big as our revenues in Canada. It's only going to grow faster given the size of the market. And if you look at our gross margins between the U.S. and Canada today, they're much higher in the U.S. So if that grows faster, the gross margins should grow faster. We're much more selective on the business that we do in Canada to Bernard's point earlier, to focus on higher-margin business. So that in itself, over time, should be generating higher gross margins. So we -- growth is good, profitable growth is better, right? That's where we want to focus. We're increasing our revenue per headcount, which means we're doing higher-value business, leveraging our tools in AI and IP. Again, you're increasing the revenue per employee. So all these things that are part of our strategy, we're focused on. And it's also driving our acquisition strategy. If you look at the last 2 acquisitions that we did, very high gross margins, very specialized higher value type offerings that are complementary to what we're doing today, which are generating growth, right? Because we've won some deals in the past few months that we could not have won on our own, and the acquisitions, XRM Vision and eVerge, could not have gone after on their own. So our theory is actually working out in these acquisitions. So that's what we want to keep doing. We've got the cash position to do it. We just saw that we're generating good cash. We've been able to do the last acquisition 100% in cash, and we still have powder to do the next one. So I think we're in a good position.

Operator: Your next question comes from Rob Goff with Bentham.

Robert Goff: My question would be forward-looking. And just could you talk to any RFPs that may be outstanding, what you are seeing, looking forward in the pipeline network?

Paul Raymond: Thanks for the question, Rob. I can't give you any kind of forward-looking thing. But maybe, Bernard, you could give some color on the funnel of what we're seeing.

Bernard Dockrill: Yes. I'd say, Paul, we continue our focus on these deals. And one thing you mentioned before, if you take a look at the results of our partners, they've had good quarters, and our revenue follows that as they're growing, we're in partnership with them on the implementation side of the sales of their solutions. So that feeds into our pipeline. So as you see growth in those companies, it kind of gives us a leading indicator there. But I think it's more consistent of what we've seen. I don't have any one-time material things that would change it either way.

Robert Goff: And I know you've been busy on the acquisition front, but is this a time of integration? Or do you look to be -- continue being busy on tuck-in acquisitions?

Paul Raymond: Well, I think Bernard talked about the integration of the last 2, which have gone extremely well. The interesting part of the last 2 acquisitions is they were complementary to what we did today. So they can roll in rapidly into the organization, and they have a home, and they have a team that's there to work with them. We like those types of acquisitions. We have a healthy funnel. We have the resources to execute on them. We'll -- again, like I say, we need 3 things, right, the right acquisition at the right price, that's actually for sale. So we're actively looking. And when we find the right one, we'll be ready to pull the trigger.

Operator: Your next question comes from Vincent Colicchio with Barrington Research.

Vincent Alexander Colicchio: Yes. Any thoughts on when we may see the government contract business improve in Canada?

Paul Raymond: Thanks, Vince. I think you have to look at it 2 ways, Vince. So the profitable government contracts are doing very well and growing. We're just exiting a lot of lower-margin stuff that we've had over the years. So as those contracts finish, we don't go after them. There's a particular situation, I'd say, in Quebec specifically, where there are a lot of subcontractors going after business at ridiculously low prices. And of course, the government very often has these lowest bidder wins rules. We stay away from those RFPs. There are other RFPs that are value-driven, like the one that we won with the Department of Health, where they go after the best solution and not the lowest price. Those are the ones that we go after and the ones we prefer, and we're going to keep doing that. We think it's the best way to create value for the company. We're not very present in the rest of Canada and at the government level. It's something that we're always looking at. It's something that we said in the past, from our acquisition targets, we'd like to have more business in government. But right now, I'd say, given how well the private sector is doing, we like where we're at.

Vincent Alexander Colicchio: It's nice to see the offshore contribution improve. Was that solely from acquisitions? Or are you also benefiting from hiring organically?

Paul Raymond: Yes, it's a bit of both, more from the acquisitions in the last 6 months because both of them had a significant presence in Morocco and India, but we also have organic growth over there.

Vincent Alexander Colicchio: Would you say you're getting better at organic growth offshore?

Paul Raymond: Well, it's driven by -- if you remember, our offshore organic growth is 100% driven by our local business here, right? So we had 17% year-over-year growth in the U.S., which is incredible. That is driving some growth offshore as well. If you look at our headcount, the U.S. is 48% of our revenues today, it's 27% of our headcount, which means that the balance of people that we need to do those projects are somewhere else around the world. So when you see significant growth like that in the U.S., you know it's going to drive some growth in our global delivery centers as well.

Operator: [Operator Instructions] Your next question comes from Divya Goyal with Scotiabank.

Divya S. Goyal: Paul, could you talk to us a little bit more about the higher-value offerings? And I know you mentioned a few times on the call today, and we broadly have talked about in the past. Could you talk to us a little bit more about what exactly drives the higher billing rate with these higher-value offerings? And how exactly are they differentiated from what is getting broadly offered across the market?

Paul Raymond: Sure. If you come back to our 4-pillar strategy, Divya, one of the things that we said we wanted to do was lead with industry expertise, right? So there's a lot of companies out there selling Oracle, selling Microsoft, selling SAP, all these things. If you look at what we do, it's extremely specialized in a certain vertical. So in healthcare, I mean we're the #1 partner for Oracle in healthcare in the U.S. Bernard gave a few examples. I mean, for one health care system in the past few months, we actually rolled out a new module for Oracle for their solution around scheduling for nurses. It's the first rollout on the planet of this new module for Oracle, and they came to us because of our expertise in healthcare. We signed a deal with them to help them. We're helping Oracle, Oracle, the company, build AI APIs for their platform. They came to us because of our expertise in that domain. I mean I have so many examples like this for Oracle and Microsoft and some other IP where we are the leader on the planet for these types of things. So when you do that, I mean, you have a pricing power that clients come to us not because we're the cheapest, but because we're the best. And that's where we want to be for the whole company. That's what we're trying to get to in Canada as well. We're there in the nuclear sector. We're working on it on the financial services side. We're there in Oracle in ERP, in HCM, with the latest acquisition we've done with the CRM piece as well. So we now cover all of the CRM platforms that are out there, whether it's the Oracle platform, Salesforce, Microsoft, and we have the industry expertise that goes with it. So we're really in a very, very unique position that I don't think people realize. I mean we're not seeing it reflected in the value of the share. I can tell you that. I mean we're trading at half the average of companies in our sector. So I mean, I think we're in a great position. We've just seen the growth that we've had in the U.S. because our clients are seeing what we can bring to the table. And as somebody asked the question around AI, AI is driving significant growth for Oracle and Microsoft because these companies need data. They need consistent enterprise-wide data to be able to leverage these latest and greatest AI solutions, and this is how they can get there faster. So we really like where we're positioned right now.

Divya S. Goyal: That's incredible. I'm just trying to understand, so it's incredible that the company differentiates in so many ways. And I would like to think it's fair to assume that Microsoft and Oracle obviously bring the company, Alithya, into a lot of engagements. How can we expect to see a significant traction on the top line, considering this differentiation despite the ongoing macroeconomic uncertainty? I think that's where a little bit of disconnect is with respect to all the offerings versus where the stock price is right now.

Paul Raymond: Yes. I think if you look -- I mean, if you look at our 17% year-over-year growth in the U.S., that's not too shabby. If I look at our competitors and what they're showing for organic growth in the past year, I mean we're at the top of the pack right now. So given our size, I mean, scaling is going to be the biggest challenge, I think, which is a good thing. That's where I want to be. I want to have a growth challenge instead of the other way around. I kind of like where we're at. Is there room for improvement? Absolutely. But I like the trend.

Divya S. Goyal: That's incredible. I'll just ask one last question. Could you help us remind yourself, Bernardo, Debbie here, help us remind the seasonality of the business in the top line and from a profitability front, considering the ongoing restructuring and recent acquisitions? That would be all for me.

Paul Raymond: Yes. Usually, the summer is our slowest quarter, and it's just a billable hours type thing with vacation and holidays and all that good stuff. If you look in the -- we provided the last 24 -- last 12 quarters, I think, 8 quarters, you can see the trend there. And that's why we try to compare year-over-year instead of sequentially, just because of that. But Q2 was traditionally low. Last year was very low. So we kind of follow it that way, Divya, if that helps. This quarter -- also this quarter, there was a lot of timing on working cap stuff that should reverse next quarter. So I think that's probably one of the areas where you're going to see a big difference next quarter.

Bernard Dockrill: Maybe if I can add, Paul, on the bookings side, Q2 tends to be a lighter bookings quarter for us just based on our key partners in their fiscal years when they just had a fiscal year-end and they're in their first and early in their fiscal year. So that tends to be a lower bookings quarter in those areas of our business. And you've got July and August in there, so that's usually pretty quiet.

Operator: There are no further questions at this time. I will now turn the call over to Paul Raymond for closing remarks.

Paul Raymond: Okay. Thank you, Joel. So as you can see, our trailing 12 months adjusted EBITDA is now over $49 million and at over 10%. We're growing our business in a pretty uncertain market. We completed another acquisition. It's our second in the last 12 months, which increases the Oracle AI and smart shore capabilities, and also added a new world-class partner in Salesforce. And we maintain a good cash position, which enables us to act on future acquisition opportunities as they arise. So we are on the right track, as I was saying. I also wanted to take this opportunity to remind everyone, we will be holding our Annual General Shareholder Meeting on September 10 coming up. And thank you again for being with us today. Goodbye.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.