WORLDWIDE WEBB(WWAC) - 2024 Q3 - Quarterly Results

Financial Performance Overview Aeries Technology experienced a revenue decline and significant profitability downturn in Q2 FY2025, leading to a strategic refocus on the North American GCC market Q2 FY2025 Financial Highlights Aeries Technology reported a 4% year-over-year decline in total revenue to $16.9 million for the second fiscal quarter of 2025, experiencing a significant downturn in profitability with income from operations swinging to a loss of $(4.1) million and net income turning to a loss of $(2.3) million Q2 FY2025 Key Financial Metrics (vs. Q2 FY2024) | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $16.9M | $17.6M | -4.0% | | Income (Loss) from Operations | $(4.1)M | $1.5M | Down | | Net Income (Loss) | $(2.3)M | $0.9M | Down | | Adjusted EBITDA | $(2.3)M | $3.0M | Down | | Core Adjusted EBITDA | $0.2M | $1.0M | -82.0% | - Despite the overall revenue decline, North America revenue grew 13.3% year-over-year to $15.7 million, highlighting the strength in the company's core market[1][2][3] Business Strategy and Outlook The company is implementing significant strategic changes, including cost structure alignment, to refocus on its core business: the North American Global Capability Center (GCC) market, where it sees strong client pipeline visibility - Aeries is re-focusing its business on the core North American Global Capability Center (GCC) market, targeting US-based, private equity-backed companies[1][2] - The management has strong visibility into the new business pipeline, which gives them confidence in their new guidance for fiscal 2025[2] Financial Statements Aeries Technology's Q2 FY2025 financial statements reflect a net loss, increased liabilities, and a decrease in operating cash flow, despite a slight increase in total assets Condensed Consolidated Balance Sheets As of September 30, 2024, Aeries Technology's total assets increased slightly to $52.0 million from $49.4 million on March 31, 2024, while total liabilities also grew to $53.3 million, resulting in an increased total shareholders' deficit of $(2.0) million Balance Sheet Summary (as of Sept 30, 2024 vs. Mar 31, 2024) | Metric (in thousands) | Sept 30, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,627 | $2,084 | | Accounts receivable, net | $18,477 | $23,757 | | Total current assets | $29,447 | $32,836 | | Total assets | $51,960 | $49,407 | | Total current liabilities | $39,223 | $38,125 | | Total liabilities | $53,274 | $50,587 | | Total shareholders' equity (deficit) | $(1,999) | $(1,914) | Condensed Consolidated Statements of Operations For the three months ended September 30, 2024, the company reported a net loss of $(2.3) million, a sharp reversal from a net income of $0.9 million in the prior year, driven by a 4% revenue decrease and a significant increase in selling, general & administrative expenses Statement of Operations Summary (Three Months Ended Sept 30) | Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Revenue, net | $16,873 | $17,578 | | Gross profit | $3,575 | $4,824 | | Selling, general & administrative expenses | $7,670 | $3,338 | | Income from operations | $(4,095) | $1,486 | | Net income / (loss) | $(2,306) | $927 | | Basic and diluted net loss per Class A ordinary share | $(0.05) | N/A | Condensed Consolidated Statements of Cash Flows For the six months ended September 30, 2024, net cash provided by operating activities significantly decreased to $0.2 million, while net cash provided by financing activities increased to $2.2 million, primarily due to share issuance, resulting in a $1.5 million increase in cash and cash equivalents Cash Flow Summary (Six Months Ended Sept 30) | Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $205 | $1,387 | | Net cash used in investing activities | $(988) | $(809) | | Net cash provided by financing activities | $2,249 | $195 | | Net increase in cash and cash equivalents | $1,543 | $751 | | Cash and cash equivalents at end of period | $3,627 | $1,882 | Supplemental Information and Non-GAAP Measures This section details the reconciliation of non-GAAP financial measures, provides a geographical breakdown of revenue, and defines the company's core business and forward-looking statements Reconciliation of Non-GAAP Financial Measures This section reconciles GAAP Net Income to non-GAAP measures, showing Adjusted EBITDA declined significantly to $(2.3) million and Core Adjusted EBITDA decreased to $0.2 million for the three months ended September 30, 2024, with the Adjusted EBITDA margin turning negative Non-GAAP Reconciliation Summary (Three Months Ended Sept 30) | Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net income | $(2,306) | $927 | | EBITDA | $(2,414) | $1,946 | | Adjusted EBITDA | $(2,295) | $2,939 | | Core adjusted EBITDA | $183 | $1,010 | | Adjusted EBITDA margin | (13.6)% | 16.7% | Revenue by Geography The company's revenue breakdown by geography for the three months ended September 30, 2024, shows a strategic shift towards North America, with its revenue increasing by 13.3% to $15.7 million and accounting for 93% of total revenue, while Asia Pacific and Other regions saw a sharp 69% decrease Revenue by Geography (Three Months Ended Sept 30) | Region (in thousands) | 2024 | 2023 | YoY Change | | :--- | :--- | :--- | :--- | | North America | $15,728 | $13,879 | +13.3% | | Asia Pacific and Other | $1,145 | $3,699 | -69.0% | | Total revenue | $16,873 | $17,578 | -4.0% | Non-GAAP Financial Measures Definition The company defines its non-GAAP financial measures, Adjusted EBITDA and Core Adjusted EBITDA, to evaluate operating performance, with Core Adjusted EBITDA specifically excluding the non-core business of one-time consulting services outside its primary North American market - The company defines its core business as global capability center services for private equity-backed companies, primarily in North America, with long-term, recurring contracts[10] - The non-core business includes consulting services, mainly for Middle Eastern customers, which are typically one-time engagements, and the company does not plan to enter new customer contracts outside North America[10] Forward-Looking Statements This section contains a standard safe harbor statement, cautioning investors that forward-looking statements are subject to various risks and uncertainties, including market conditions, competition, and regulatory changes, which could cause actual results to differ materially from expectations - The report includes forward-looking statements regarding future operating results, guidance, and business strategy, which are based on current expectations and subject to change[12] - Numerous risks and uncertainties are cited, including market conditions, inflation, geopolitical conflicts, and the ability to remediate a material weakness in internal controls, which could impact actual results[12]