Alithya reports year over year continued improvement

Executive Summary

• Alithya Group reported financial results for the first quarter of fiscal 2026 (ended June 30, 2025), showing year-over-year improvements in revenue, profitability, and adjusted metrics.
• The company completed the acquisition of eVerge Interests, Inc. in May 2025 and reported a CFO appointment and debt maturity extension subsequent to the quarter-end.
• U.S. operations drove significant organic growth, while Canadian revenues declined slightly; overall bookings remained strong with a Book-to-Bill ratio of 0.95.

Key Details

• Revenues: Increased 2.7% to $124.2 million (CAD) from $120.9 million in Q1 FY2025.
  • Canada: Decreased 8.5% to $59.6 million due to reduced government contracts and project maturities, partially offset by XRM Vision acquisition revenues.
  • U.S.: Increased 17.3% to $59.5 million, driven by organic growth in enterprise transformation, higher billing rates, eVerge acquisition revenues, and a favorable $0.7 million foreign exchange impact.
  • International: Increased 0.7% to $5.1 million.
• Profitability Metrics:
  • Gross Margin: Increased 3.3% to $39.8 million; margin percentage rose to 32.1% from 31.9%.
  • SG&A Expenses: Decreased 3.4% to $30.6 million; SG&A as a percentage of revenue fell to 24.6% from 26.2%.
  • Net Earnings: Turned positive at $0.2 million (nil per share), compared to a net loss of $2.8 million ($0.03 per share) in the prior year.
  • Adjusted Net Earnings: Increased 31.8% to $6.5 million ($0.07 per share) from $4.9 million ($0.05 per share).
  • Adjusted EBITDA: Increased 15.6% to $11.6 million (9.4% margin) from $10.1 million (8.3% margin).
• Operational Metrics:
  • Bookings: Reached $118.1 million, resulting in a Book-to-Bill Ratio of 0.95. Excluding specific legacy acquisition contracts, the ratio would have been 1.06.
  • Backlog: Represented approximately 15 months of trailing twelve-month revenues as of June 30, 2025.
  • Clients: Signed 20 new clients.
• Acquisitions:
  • Acquired eVerge Interests, Inc. on May 31, 2025, for a purchase price of US$23.5 million (cash), including a potential earn-out of US$4.7 million. eVerge specializes in enterprise application and transformation services (Salesforce CRM, Oracle HCM/CX) with ~160 professionals in the U.S. and India.
  • Previously acquired XRM Vision Inc. on December 1, 2024.
• Liquidity & Capital:
  • Net cash used in operating activities was $4.2 million (a decrease of $20.9 million from the $16.7 million generated in Q1 FY2025), primarily due to unfavorable changes in non-cash working capital (timing of payments/collections).
  • Drawings on the Credit Facility: $96.1 million.
  • Available capital resources: $115.7 million (cash + credit facility availability).
• Corporate Actions (Subsequent to June 30, 2025):
  • Pierre Blanchette joined as Chief Financial Officer.
  • The Company extended the maturity of subordinated unsecured loans to October 2027.

Notable Quotes

• Paul Raymond, President and CEO: "The Alithya team has delivered another quarter of year over year improvements in many areas of the business. We achieved double digit organic growth in our US operations, as clients seek to roll out the latest mission critical cloud enterprise systems to better leverage data and AI capabilities. This is a clear indication of our position as a trusted advisor. We have also harnessed synergies from our latest acquisitions to bolster our client offerings, enabling us to better support our clients. Our team remains focused on executing our long-term plan of profitable growth and value creation."