Alithya Group Inc.

Alithya reported Q1 revenue of $105.1 million, down 15.4% year over year. Gross margin was $31.9 million versus $39.8 million last year, and gross margin as a percentage of revenue was 30.4% compared with 32.1%. Adjusted EBITDA was $5.4 million, or 5.2% of revenue, versus $11.6 million, or 9.4%, a year ago. Net loss was $2.4 million, or $0.03 per share, versus net earnings of $0.2 million, or $0.00 per share, and adjusted net earnings were $2.9 million, or $0.03 per share, versus $6.5 million, or $0.07 per share. Bookings were $89.0 million with a 0.85 book-to-bill ratio; trailing 12-month bookings were $405.1 million with a 0.88 book-to-bill ratio. Net cash used in operating activities was $4.8 million, and net debt to trailing 12-month adjusted EBITDA was 2.9x. The company did not provide formal next-quarter or full-year financial guidance on the call.

Paul Raymond framed the quarter as a transitional period for a company that has changed materially over several years, citing stronger industry focus, deeper partnerships, expanded cloud/data/AI capabilities and a more differentiated delivery model. He said the quarter was softer mainly because client decisions and project starts took longer, but emphasized that demand for enterprise applications, digital transformation, AI enablement and modernization remains strong. He also highlighted the board’s strategic review, saying the company believes public-market valuation does not fully reflect intrinsic value and that management remains focused on execution while the review proceeds.

Pierre Blanchette said revenue declined to $105.1 million and gross margin pressure came from lower utilization, lower tax credits and salary increases that began at the start of the fiscal year. SG&A fell 7.5% to $28.3 million, helped by lower variable compensation, professional fees, share-based compensation and recruiting/training costs, but SG&A rose to 27% of revenue versus 24.6% last year because of the lower top line. He noted adjusted EBITDA of $5.4 million, a net loss of $2.4 million, operating cash use of $4.8 million due partly to $8.3 million of unfavorable working capital timing, and a net debt-to-EBITDA ratio of 2.9x, which he described as comfortable. He said the company is focused on aligning costs with current revenue while preserving capacity to invest.

Analysts focused on whether the weaker quarter reflected one-time items, softness in the U.S., the size and mix of bookings, fixed-price trends, and the rationale for the strategic review. Management said the biggest issue was utilization while waiting for larger projects to start, with some additional pressure from tax and salary increases; they also pointed to Salesforce timing as the main source of U.S. softness. On bookings, management said over 70% of first-quarter bookings were new business, about 28% came from new customers, and fixed-price/fixed-fee work is around 40% and growing. On the strategic review, Paul Raymond said the board is evaluating multiple options because the company believes it is undervalued and needs better access to growth capital.