Core Insights - Alithya Group inc. reported a 4.0% increase in revenues for Q4 2025, reaching $125.3 million compared to $120.5 million in Q4 2024, with a sequential increase of 8.3% from Q3 2025 [3][4][9] - The company achieved a record gross margin of 36.8% in Q4 2025, up from 32.1% in Q4 2024, driven by increased efficiencies and a higher value-added business mix [3][14][19] - Net earnings for Q4 2025 rose to $8.0 million, or $0.08 per share, compared to $2.3 million, or $0.02 per share, in the same quarter last year [3][19][21] Financial Performance - Revenues for the fiscal year 2025 totaled $473.5 million, a decrease of 3.6% from $491.1 million in fiscal 2024 [3][28] - Adjusted EBITDA for Q4 2025 increased by 71.8% to $18.0 million, with an Adjusted EBITDA margin of 14.4%, compared to 8.7% in Q4 2024 [3][22][38] - Selling, general and administrative expenses for Q4 2025 were $29.7 million, a slight increase of 0.4% from $29.6 million in Q4 2024, but as a percentage of revenues, it decreased to 23.7% from 24.6% [3][18][28] Client and Market Activity - The company signed 22 new clients in Q4 2025 and reported a backlog representing approximately 16 months of trailing twelve-month revenues as of March 31, 2025 [3][10][23] - Fiscal 2025 bookings reached $420.7 million, resulting in a Book-to-Bill ratio of 0.89, which would have been 1.00 excluding revenues from two long-term contracts [10][23][24] Strategic Developments - Alithya acquired eVerge Interests, Inc. on May 31, 2025, enhancing its Salesforce capabilities and Oracle expertise [3][8][10] - The company aims to leverage its industry knowledge and global delivery model to target higher value IT segments by the end of fiscal year 2027 [29][30][31]

Core Viewpoint - Jim Chanos, a renowned investor, is shorting Carvana, a used-car retailer, and believes the company is overvalued despite market perceptions of a turnaround [1][2]. Company Analysis - Carvana is perceived by the market as undergoing a significant turnaround, but it continues to incur losses and is cyclical in nature [2]. - The company's gross profit margins are inflated due to aggressive accounting practices that exclude many costs typically included by other auto dealers [3]. - Carvana's income is heavily reliant on financing rather than car sales, with subprime loans accounting for 122% of its income in the latest quarter [4]. - The stock has experienced extreme volatility, initially going public at $15 per share in 2017, peaking at around $370 in early 2021, and then plummeting to below $5 by 2022 before recovering to approximately $250 by the end of 2024 [5][6]. - As of June 2025, Carvana's enterprise value reached $73 billion, close to an all-time high, with the stock up 70% to $343 per share since early April [6]. Market Sentiment - Short interest in Carvana stock has decreased to below 10%, indicating a potential correction as it was previously one of the most shorted stocks [7]. - A significant amount of stock, valued at $1.7 billion, was sold by company executives in May, suggesting a lack of confidence in the company's future [8]. Broader Industry Context - Chanos is also shorting companies that have benefited from the AI hype but are expected to struggle, drawing parallels to the dot-com bubble [12][13]. - He has identified IT consultants and body shops, such as IBM, as companies that may face significant challenges due to outdated business models and high valuations despite stagnant growth [13].

Financial Data and Key Metrics Changes - Revenues totaled $968.3 million, a decrease of 7.7% year over year, in line with guidance expectations [31] - Adjusted EBITDA margin was 9.7% for the quarter [8][34] - Net income for the quarter was $20.9 million [34] - Free cash flow totaled $6.6 million, lower than typical due to an increase in Days Sales Outstanding (DSO) [36] Business Line Data and Key Metrics Changes - Revenues from the commercial segment were $672.2 million, a decrease of 8.1% year over year [31] - Assignment revenue totaled $382.1 million, a decrease of 16% year over year [31] - Commercial consulting revenues, the highest margin stream, totaled $290.1 million, an increase of 4.7% year over year [31] - Federal government segment revenues were $296.1 million, a decrease of 6.7% year over year [31] Market Data and Key Metrics Changes - Consulting bookings for the commercial segment were $336.9 million, improving 4.2% compared to the first quarter of 2024 [13] - Book-to-bill ratio was 1.2 times for both commercial and federal segments [12][24] - Contract backlog for the federal government segment was over $3.1 billion, with a coverage ratio of 2.6 times trailing twelve-month revenues [24] Company Strategy and Development Direction - The company aims to nurture long-standing client relationships and expand technology partnerships, focusing on IT modernization and efficiency [11] - The acquisition of TopBloc is expected to enhance solution capabilities and drive future growth [10][42] - The company is committed to providing high-value IT services while maintaining a flexible cost structure [10] Management's Comments on Operating Environment and Future Outlook - Management noted that while macroeconomic uncertainty persists, there is confidence in the company's unique business model and its ability to adapt [41] - Clients remain cautious about increasing IT spending, but demand for AI and data solutions continues to grow [9][15] - The company expects to see improvements in DSO and is cautiously optimistic about future revenue guidance [36][38] Other Important Information - SG&A expenses for the quarter were $214.5 million, including one-time costs related to acquisition and software write-offs [33] - The company repurchased approximately 0.6 million shares at an average price of $78.44, with $478.6 million remaining under the share repurchase authorization [35] Q&A Session Summary Question: Can you characterize bookings across different businesses? - Management indicated a mix of renewal and new work, with renewal being a larger percentage [52] Question: What is the impact of DOGE on the federal business? - The impact has been more on the civilian side rather than defense, with some interruptions in traditional management consulting work [55] Question: How have margins been maintained? - Margins have improved due to a higher mix of consulting work and the addition of capabilities like TopBloc [66] Question: What is the visibility on client projects? - Clients are in a cautious wait-and-see mode regarding new projects, influenced by macroeconomic factors [73] Question: How much did TopBloc contribute to Q1 results? - TopBloc's contribution was immaterial as it was only included for a few weeks in March [78] Question: What is the velocity of adjudications in relation to DOGE? - The velocity of adjudications is less visible, with agencies ensuring alignment on contract decisions [130]