Revenue Performance - Total revenue for the three months ended June 30, 2025, was $15.33 million, a decrease of 8.0% from $16.67 million in the same period in 2024[165]. - Revenue from North America was $13.40 million, down from $15.51 million in the prior year, indicating a decline of 13.6%[165]. - Revenue from Asia Pacific and Other increased to $1.93 million, up 66.2% from $1.16 million in the previous year[165]. - For the three months ended June 30, 2025, the company's net revenues decreased by $1.34 million or 8%, totaling $15.33 million compared to $16.67 million in the same period of 2024[167]. Profitability and Expenses - The cost of revenue for the same period decreased by $1.11 million or 9%, amounting to $11.55 million, primarily due to a reduction in employee compensation and benefits[168]. - Gross profit decreased by $0.23 million or 6%, resulting in a gross profit of $3.78 million, with a gross profit margin increase of 50 basis points to 24.6%[169][170]. - Selling, general, and administrative expenses saw a significant decrease of $17.47 million or 86%, down to $2.96 million, largely due to reductions in stock-based compensation and employee benefit costs[170]. - The company reported a net income of $1.68 million for the three months ended June 30, 2025, a significant turnaround from a net loss of $15.32 million in the same period of 2024[176]. - Adjusted EBITDA for the period was $1.03 million, with an Adjusted EBITDA margin of 6.7%, compared to a margin of 2.4% in the prior year[176]. Cash Flow and Liquidity - The company generated positive operating cash flow of $1.37 million for the quarter, indicating improved financial health[180]. - Net cash provided by operating activities increased by $3.09 million, from a net cash used of $1.72 million in Q2 2024 to a net cash provided of $1.37 million in Q2 2025[182]. - Cash at the end of the period decreased to $2.14 million in Q2 2025 from $4.20 million in Q2 2024, a decline of $2.06 million[181]. - The increase in net cash from operating activities was primarily due to improved net profitability and better working capital management, which contributed $17.05 million[182]. - Adjustments related to changes in fair value of derivative warrant liabilities and other factors offset the increase in operating cash flow by $13.96 million[182]. - Management plans to address liquidity challenges by raising additional funds, restructuring liabilities, and focusing on organic growth in North America[180]. Financial Position and Debt - As of June 30, 2025, the company had a working capital deficit of $10.62 million, primarily due to current liabilities related to forward purchase agreements and short-term borrowings[177]. - The company has a revolving credit facility of INR 320,000 (approximately $3.74 million) with Kotak Mahindra Bank, with interest rates linked to the Repo Rate[158]. - Aeries has an outstanding unsecured loan of $0.8 million from a director at an interest rate of 12% per annum[159]. - Net cash used in financing activities was $1.15 million in Q2 2025, primarily due to net repayment of short-term borrowings of $1.11 million[185]. Client and Market Overview - The company had over 30 clients across various industries, including e-commerce, telecom, security, healthcare, and engineering as of June 30, 2025[150]. - Customer retention is critical, as a significant portion of revenue comes from long-term contracts, which may be terminated by clients[155]. - The company is exposed to macroeconomic headwinds, including inflation and geopolitical uncertainties, which may impact operational performance[154]. Accounting and Reporting - The effective tax rate varies based on jurisdiction and tax strategies, with operations in India, Mexico, Singapore, and the United States[156]. - The company reported no material off-balance sheet arrangements as of June 30, 2025[187]. - The company has consistently applied its significant accounting policies in preparing its financial statements[189]. - There have been no material changes to the company's critical accounting estimates since the last annual report filing[190].
Aeries Technology(AERT) - 2025 Q2 - Quarterly Report