Alithya Group Q3 Earnings Call Highlights

Core Insights - Alithya Group reported mixed financial results for Q3 fiscal 2026, with consolidated revenue remaining flat year over year at CAD 115.2 million, while net earnings increased to CAD 0.7 million, attributed to lower goodwill impairment [6][4]. Revenue Performance - International revenue increased by CAD 1.0 million, or 19.2%, to CAD 6.2 million, driven by organic growth in enterprise transformation services and favorable foreign exchange [1]. - U.S. revenue rose by CAD 6.2 million, or 12.7%, to CAD 55.0 million, supported by the acquisition of eVerge and organic growth, although impacted by an unfavorable U.S. dollar exchange rate [2]. - Canadian revenue decreased by CAD 7.7 million, or 12.5%, to CAD 54.0 million, primarily due to reduced public sector contract revenues and maturing client projects, partially offset by contributions from the XRM Vision acquisition [3][8]. Profitability Metrics - Adjusted EBITDA was CAD 10.0 million, representing 8.7% of revenues, down from 8.9% the previous year, mainly due to lower gross margins [5]. - Gross margin for the consolidated revenue was 31.7%, a decline from 32.3% year over year [5]. Bookings and Pipeline - Alithya reported bookings of CAD 130.9 million, with a book-to-bill ratio of 1.14 for the quarter [9][11]. - Bookings by segment included CAD 62.1 million in Canada, CAD 56.6 million in the U.S., and CAD 12.2 million internationally, with over CAD 52 million in renewals [12]. Strategic Initiatives - The company plans to spin off Datum IP in exchange for a minority stake, with no cash involved, and intends to repurchase approximately 2.5 million Class A shares to fund this initiative [7][18]. - Management emphasized a focus on higher-value services and noted that 13.9% of professionals are now engaged in Smart Shoring [21]. Cash Flow and Debt Management - Alithya generated net cash from operating activities of CAD 25.5 million, an increase of CAD 13.8 million year over year [15]. - Net debt stood at CAD 101.9 million, with a leverage ratio improving to 1.9 times net debt over trailing 12-month adjusted EBITDA [16]. Management Insights on AI and Market Trends - Management addressed concerns regarding AI's impact on IT services, stating that AI enhances productivity by shifting tasks rather than eliminating jobs [20]. - The company is investing in training to adapt to the evolving market landscape, particularly in AI-based solutions for the healthcare industry [17].