Alithya(US:ALYA) seekingalpha.comยท2024-05-17 11:28Core Viewpoint - Alithya, a Canadian tech consulting firm, is navigating a challenging macroeconomic environment with marginal revenue growth and a focus on cost management while exploring new market opportunities in AI consulting [2][3][10]. Company Overview - Alithya reported Q2 FY24 revenue of C$118.5 million and Q3 FY24 revenue of C$120.5 million, indicating a slight increase in sales [3]. - The company has maintained a sales breakeven operation, with a focus on reducing SG&A expenses, which totaled C$29.5 million in Q3, reflecting a 5.4% year-over-year decrease [9][10]. Market Outlook - The tech consulting industry is experiencing a bearish macro outlook, leading to reduced discretionary IT spending and a slowdown in new large-scale contracts [3][9]. - Despite the challenging environment, Alithya signed new contracts in Q3, including a C$12 million ERP contract with a U.S. healthcare provider, contributing to a book-to-bill ratio of 1.2 [10][11]. Financial Performance - Alithya's adjusted EBITDA increased by 46% from Q2 to Q3, with the adjusted EBITDA margin rising by 240 basis points to 7.8% [13]. - Non-GAAP net earnings per share remained flat year-over-year at C$0.04, showing a recovery from the previous quarter's adjusted net loss [13]. Customer Retention - Approximately 85% of Alithya's Q3 sales were generated from existing clients, indicating strong customer relationships and satisfaction [11]. AI Consulting Opportunities - The global AI consulting market is projected to grow significantly, with forecasts indicating a double-digit CAGR, potentially reaching 34.2% from 2023 to 2028 [19]. - Alithya is positioning itself in this growing market by offering AI consulting services, including solutions for trade surveillance and compliance [17][19].