#Canada #Montreal #strategic growth #XRM Vision #Alithya Group

Alithya Reports Strong Margins Despite Revenue Decline

Alithya Group Inc. recently unveiled its financial results for the third quarter of fiscal 2025, covering the period ending December 31, 2024. The report reveals a notable decrease in revenues but highlights significant advancements in margin percentages, marking a promising shift in the company's operational dynamics.

Key Financial Figures

For Q3 2025, Alithya's revenues fell by 3.9% to CAD 115.8 million, down from CAD 120.5 million in the previous year. Despite this decline, revenues increased by 3.8% from the previous quarter, with all business segments contributing positively to this sequential growth. This indicates a robust operational structure, particularly in a challenging market environment.

One of the significant highlights of this quarter is the gross margin, which rose to a record 32.3% from 31.3% in Q3 2024 and 30.6% in the preceding quarter. This improvement reflects the company’s strategic commitment to optimizing its service offerings, emphasizing higher-margin services which have become a priority in their business model.

On a less favorable note, Alithya reported a net loss of CAD 3.7 million, translating to a loss of CAD 0.04 per share, which is a decline from a net loss of CAD 2.5 million (CAD 0.03 per share) during the same period last year. The loss primarily arose from a CAD 5.1 million goodwill impairment, which has affected the financial outlook.

Operational Efficiency

In terms of operational expenses, Alithya successfully reduced selling, general, and administrative expenses by CAD 0.7 million to CAD 28.8 million, demonstrating effective cost management initiatives. As a percentage of revenue, these expenses represented 24.9%, a marginal increase from the previous year’s 24.5%. This highlights the company’s ongoing efforts to streamline operations while navigating the complexities of market demands.

Adjusted net earnings saw a positive uptick, amounting to CAD 5.7 million, or CAD 0.06 per share, compared to CAD 4.3 million, or CAD 0.04 per share, last year. This figure suggests that despite the revenue decline, operational efficiency and strategic maneuvering facilitated an improved bottom line in adjusted terms.

Strategic Acquisitions and Growth

Alithya's strategic moves include the acquisition of XRM Vision, which is expected to enhance the company's capabilities in Microsoft technology and smart-shoring service models. This acquisition not only broadens the company’s technological repertoire but also positions Alithya to capitalize on emerging market opportunities in CRM and project management domains.

Additionally, with the successful onboarding of 24 new clients during this quarter and a strong backlog indicative of future earnings potential—standing at approximately 17 months of trailing revenues—Alithya showcases its robust client acquisition strategy. Their current Book-to-Bill ratio is reported at 1.20, signaling effective demand generation and service utilization.

Looking Ahead

As Alithya enters the final quarter of fiscal 2025, CEO Paul Raymond expressed optimism regarding the company's trajectory, reinforcing their commitment to executing their three-year strategic plan aimed at driving organic and acquisition-based growth. The integration of acquired technologies and services will likely bolster their market position, allowing for enhanced service delivery across their operations.

In summary, while Alithya navigates a period of revenue contraction, its substantial improvements in margins, operational efficiencies, and strategic growth initiatives position the company favorably for long-term success in the IT services landscape. Investors and stakeholders alike are encouraged to watch for further developments as Alithya pursues its ambitious goals.