The following is a summary of the Alithya Group Inc. (ALYAF) Q1 2025 Earnings Call Transcript:

Financial Performance:

• Alithya reported a stable revenue with a sequential increase from $120.5 million in the fourth quarter of fiscal 2024 to $120.9 million in Q1 2025.

• Adjusted EBITDA increased by 11.1% year-over-year, reaching $10.1 million.

• Gross margin as a percentage of revenue increased to 31.9%, up from 28.9% in the same quarter last year.

• Net cash flow from operating activities improved significantly to $16.7 million, which is a 120% increase year-over-year.

Business Progress:

• Alithya has maintained repeat client revenue at 83.1%, indicating strong client relationships and trust.

• They have reduced the usage of subcontractors, increasing the proportion of permanent employees which positively impacts their gross margin.

• Notable strategic reinforcement in cybersecurity, particularly within the nuclear energy sector, with a $14 million operational technology project secured.

• Achievements in the U.S. market include growth in Oracle Cloud and Microsoft Dynamics ERP practices, alongside key Microsoft partnership recognitions.

• Launched the Alithya Copilot Academy to enhance AI preparedness for clients.

Opportunities:

• Expanding Alithya's digital solutions with existing public sector clients in Quebec and deployments in new government sectors.

• Utilization of smart-shoring strategy, leveraging talents from Morocco, Eastern Europe, and India.

• Leveraging partnerships, such as the recent strategic partnership with Microsoft for end-to-end Cloud Automation, to push into new markets and sectors.

Risks:

• Revenue challenges in the Canadian market, particularly with a 15.4% decrease to $65.1 million due to slower IT investments in the banking sector and maturing client projects.

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