Alithya Group Q3 2026 Earnings Call Transcript

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Provided by Quartr
February 13, 2026

Key Takeaways

  • Positive Sentiment: Bookings were over CAD 130.9 million in Q3 with a book-to-bill of 1.14, driven by renewals and new AI- and cloud-focused engagements, supporting a healthy pipeline.
  • Positive Sentiment: The company reported positive net earnings (CAD 0.7M), operating cash flow of CAD 25.5 million, trailing‑12‑month Adjusted EBITDA of CAD 52.6 million, and reduced leverage to 1.9x, reflecting progress on deleveraging and financial discipline.
  • Positive Sentiment: U.S. revenue grew 12.7% to CAD 55 million (now 48% of total revenue), with the eVerge integration proceeding well and notable wins including a US$9 million Oracle Cloud engagement at University Hospital Newark.
  • Negative Sentiment: Canada revenues declined 12.5% to CAD 54 million as public‑sector contracts matured and the company shifts away from lower‑margin work toward higher‑value services, creating near‑term revenue headwinds despite improved gross margins.
  • Neutral Sentiment: Alithya signed a deal to spin off Datum’s AI‑based IP into a new venture (Alithya to retain just under 25% equity) and will repurchase ~2.5M Class A shares from a shareholder to fund that entity; the company will not receive cash proceeds from the transaction.
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Earnings Conference Call
Alithya Group Q3 2026
00:00 / 00:00

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Operator

Good morning. Welcome to Alithya's third quarter of fiscal 2026 results conference call. I would now like to turn the meeting over to Alithya's management team. Please go ahead.

Dominic Blais
Dominic Blais
Senior Advisor and Public Relations at Alithya Group

Thank you, Sylvie. Good morning, everyone, and thank you for joining us today for Alithya's third quarter of fiscal 2026 results conference call. The press release, along with the MD&A containing condensed financial statements and a related note, was published this morning and is now accessible on our website. The webcast presentation can also be found on our website in the Investors section. Please be advised that this call will contain forward-looking statements, which are subject to various risks and uncertainties that may cause actual results to differ materially from those anticipated. These statements include our estimates, plan, expectations, and statements regarding future growth, operational results, performance, and business prospects that do not solely relate to historical facts.

Dominic Blais
Dominic Blais
Senior Advisor and Public Relations at Alithya Group

These statements may also refer to future events, including expectations around client demand, business opportunities, leveraging our services, IP, AI, and expertise to meet clients' needs, excelling in a competitive market, achieving our three-year strategic plan, and deploying our Smart Shoring capabilities. For more information, please refer to the cautionary note included in our presentation and the forward-looking statements and risk and uncertainties section of our MD&A, which are accessible on our website. All figures discussed on today's call are in Canadian dollars, unless stated otherwise, and we may refer to certain indicators that are non-IFRS measures. Please refer to the cautionary note included in our presentation and to the non-IFRS and other financial measures section of our MD&A for more details. Presenting this morning are Paul Raymond, Alithya President and Chief Executive Officer, Bernard Dockrill, Chief Operating Officer, and Pierre Blanchette, Chief Financial Officer.

Dominic Blais
Dominic Blais
Senior Advisor and Public Relations at Alithya Group

I'll now turn the call over to Paul Raymond. Paul?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Thank you, Dominic. Good morning, everyone, and thank you for joining us today. Before diving into their results, I want to begin by thanking our team for their continued discipline and commitment to our clients' success. Their focus and resilience are core to our ability to deliver mission-critical projects for our clients as we advance our long-term strategy. We remain fully committed to our transformation towards higher value services, and this shift is underway and continues to be in demand by our clients. While our third quarter faced some headwinds, the team has stayed focused on our long-term goals of enhancing key areas of the business, improving execution, and building the foundation for sustained profitable growth. Here are my three key, key takeaways from the quarter. First, the bookings.

Paul Raymond
Paul Raymond
CEO at Alithya Group

An important leading indicator, our bookings were over CAD 130 million in Q3, with several key renewals, as well as new engagements in strategic areas that include our AI-driven capabilities. This was accomplished while maintaining a healthy pipeline of opportunities and growing our U.S. business. Second, financial discipline. We generated positive net earnings and strong cash flow and maintained a trailing 12-month Adjusted EBITDA of CAD 52.6 million. Our Adjusted EBITDA to debt ratio now sits at 1.9 as we continue to reduce our debt. Our capital allocation priorities remain focused on long-term value creation for our shareholders, and we continue to execute in alignment with that mindset. And third, our spin-off.

Paul Raymond
Paul Raymond
CEO at Alithya Group

We're announcing the signature of an agreement to spin off our equity interests related to the Datum Consulting Group in consideration for a minority stake in a venture which will be led by Amar Bukkasagaram, Senior Vice President, Data Solutions at Alithya. This strategic partnership will be focused on bringing specialized AI-based solutions to the healthcare industry. This initiative reflects our assessment that these assets will reach their full potential with a dedicated structure and greater operational focus, enabling them to scale more rapidly and generate stronger returns. We see this as the best path to unlock value while staying aligned with our strategic roadmap. And with that, I'll now turn it over to Pierre for financial highlights of the quarter, followed by Bernard with an update on operations. Pierre?

Pierre Blanchette
Pierre Blanchette
CFO at Alithya Group

Merci, Paul. Good morning, everyone. I will now address our financial results for the third quarter of fiscal 2026. Consolidated revenue came in at CAD 115.2 million, down CAD 0.6 million or 0.5% on a year-over-year basis. Gross margin as a percentage of revenue reached 31.7% in the quarter, down from 32.3% last year. Let's look at our performance by segment, starting with Canada. Revenues in Canada reached CAD 54 million in the third quarter, down CAD 7.7 million or 12.5% on a year-over-year basis. The decrease in revenues was due primarily to reduced revenues from public sector contracts, certain clients' project reaching maturity, partially offset by revenues from the acquisition of XRM Vision.

Pierre Blanchette
Pierre Blanchette
CFO at Alithya Group

Our gross margin in Canada as a percentage of revenues increased compared to the same quarter last year, mainly due to a proportionally larger decrease in the use of subcontractor compared to permanent employees. A positive margin contribution from XRM Vision and a reduction in revenues from lower gross margin clients in favor of value, value offerings, partially offset by a slight decrease in utilization rates. In the U.S., revenues increased by CAD 6.2 million, or 12.7% to CAD 55 million. This increase is due to revenues from the acquisition of eVerge and organic growth in enterprise transformation services, partially offset by an unfavorable U.S. dollar exchange rate....

Pierre Blanchette
Pierre Blanchette
CFO at Alithya Group

Gross margin as a percentage of revenue for our U.S. operation decreased compared to the same quarter last year, primarily due to lower utilization rates, partially offset by the increase of use of Smart Shoring capabilities and a proportionally larger decrease in the use of subcontractor compared to permanent employees. Last year, it is important to note that our utilization rate was higher due to a larger number of projects reaching their go-live phase. In our international segment, revenues increased by CAD 1 million or 19.2% to CAD 6.2 million. This was primarily due to organic growth in enterprise transformation services and a favorable foreign exchange rate. The gross margin as a percentage of revenue decreased year-over-year, mainly due to one client's project coming to maturity, which historically had a higher gross margin.

Pierre Blanchette
Pierre Blanchette
CFO at Alithya Group

Now, looking at SG&A expenses, we are continuing to focus on optimizing our cost structure to ensure greater efficiency and long-term performance. In the third quarter, SG&A totaled CAD 28.5 million, a decrease of CAD 0.3 million or 1% year-over-year. This sets our SG&A as a percentage of revenue at 24.7% for the quarter, compared to 24.9% last year. On a sequential basis, SG&A expenses decreased by CAD 2.8 million from CAD 31.3 million, mainly stemming from variable compensation. Looking at our adjusted EBITDA, we are reporting CAD 10 million or 8.7% of revenues in Q3, compared to CAD 10.3 million or 8.9% of revenues last year. This slight drop is due primarily to a decreased gross margin, driven by lower revenues, partially offset by decreased SG&A.

Pierre Blanchette
Pierre Blanchette
CFO at Alithya Group

Net earnings for the third quarter was CAD 0.7 million, an increase of CAD 4.4 million compared to the same period last year. This variance was primarily due to the decreased impairment of goodwill recorded in Q3 last year. To conclude on our profit and loss, our adjusted net earnings came in at CAD 5.1 million or CAD 0.05 per share, compared to CAD 5.7 million or CAD 0.06 per share for the same quarter last year. Finally, turning to our cash flow and financial position. Net cash from operating activities was CAD 25.5 million, a year-over-year increase of CAD 13.8 million. This resulted primarily from CAD 17.4 million in favorable changes in non-cash working capital items and CAD 7.4 million of other non-cash adjustments and net financial expenses.

Pierre Blanchette
Pierre Blanchette
CFO at Alithya Group

As part of our capital allocation strategy, we pursue our normal course issuer bid, which allows us to purchase our shares under certain conditions set by the TSX. As at December 31, 2025, 347,000 shares were repurchased for cancellation. In connection with the Datum transaction that Paul alluded to earlier, we will be repurchasing close to 2.5 million Class A shares from Amar. The proceeds from this repurchase will be used to fund the working capital needs of Datum. As at December 31, net debt was CAD 101.9 million, compared to CAD 94 million as at March 31, 2025. This is primarily due to an increase in long-term debt related to the acquisition of eVerge, offset by the repayment of CAD 21 million in the third quarter.

Pierre Blanchette
Pierre Blanchette
CFO at Alithya Group

Our leverage ratio stands at 1.9 net debt over our trailing twelve-month Adjusted EBITDA, compared to 2.3 times for the second quarter. We are comfortable with this leverage position. Even with the acquisition of eVerge in June 2025, we were able to reduce our leverage ratio, demonstrating our ability to generate positive cash flow and deleverage following an acquisition. I will now turn things to Bernard for our operational highlights.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Thank you, Pierre, and good morning to everyone with us today. I would like to begin by thanking the Alithya team for their continued commitment to executing on our three-year strategic priorities. As Pierre just shared, the results of these efforts have generated improvements in many of our key metrics in most segments of our operations. Bookings for the quarter were CAD 130.9 million. This translates into a book-to-bill ratio of 1.14 for the quarter and 0.9 on a trailing twelve-month basis. The book-to-bill ratio for the quarter is 1.26, when revenues from the two long-term contracts signed as part of an acquisition in the first quarter of fiscal year 2022 are excluded, and 1.0 on a trailing twelve-month basis.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Bookings in the Canadian operating segment were CAD 62.1 million, CAD 56.6 million in the U.S. operating segment, and CAD 12.2 million in the international segment. New bookings include a $9 million U.S. engagement with University Hospital in Newark, New Jersey, under which Alithya will implement Oracle Cloud, inclusive of ERP, HCM payroll, supply chain, and EPM. UHNJ is a public academic health center, which is a first for Alithya in the U.S. public healthcare space. We also secured additional Oracle Cloud work with a large international organization. Our teams are delivering advisory and project services to drive a global HCM implementation across a highly complex, multi-country, multi-currency environment as part of a transformation with multiple integration partners. This win underscores the depth of our expertise and our ability to execute in some of the most challenging settings.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Bookings also included over CAD 52 million in renewals as we continue to extend our work within our key long-term accounts, specifically in Canada and international. These renewals span industries in which we have a strong footprint and a proven track record, including financial services and energy. From a pipeline perspective, the volume of new opportunities remains healthy as we continue to drive cross-selling activities, focusing on our core industries. We are witnessing positive momentum in commercial and business services from our increased focus in this sector and our recent acquisition of eVerge, which added relevant capabilities, including Salesforce. Now I'd like to take you through our performance for the quarter within our two key operating segments. Starting with our U.S. segment, where we continue to grow our revenues, achieving 12.7% year-over-year growth as a result of our acquisition of eVerge.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Our integration continues to go well, and we delivered our most significant Salesforce project since announcing the acquisition, implementing Manufacturing Cloud for more than 600 sales users in North America for a global manufacturer. We're also seeing our industry-first model generate positive momentum, as Alithya is being called upon as a trusted advisor for complex engagements, where our deep industry expertise, our collaboration with market-leading partners, and our proprietary accelerators enable us to create value for our clients. For instance, for a global manufacturer of wax-based products, we successfully migrated their finance and supply chain operations to the cloud, leveraging our proprietary FoodXpress accelerator for Microsoft D365. The project included the introduction of Copilot and AI agents, as well as enhanced business intelligence capabilities. We began with the U.S. deployment, and Alithya is now kicking off the implementation in Belgium.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Additionally, we continue to see new revenue streams as companies recognize that unlocking the full value of Generative AI and Agentic AI starts with modernizing and connecting their core systems. One example is our work with Gorilla Glue, where we have led modernization of their contact center by combining the latest Microsoft technologies with our customer experience capabilities, creating a flexible platform that helps them to adopt Agentic AI and elevates the customer experience. In summary, our U.S. segment now accounts for 48% of our total revenue, up from 39% when we began our current three-year strategic cycle, as we take advantage of the opportunities available in this larger market.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Turning to Canada, and more specifically, the Quebec market, we continue to shift our activities, stepping away from lower-margin contracts that compete primarily on price and redirecting our efforts toward more specialized transformational services, where we provide greater value to our clients and differentiate based on our expertise, partnerships, accelerators, and leverage our Smart Shoring delivery network. During the third quarter, we deepened our collaboration with AWS as we see opportunities to support organizations transitioning to cloud-based solutions. Our successful cloud migration project with Beneva, that I've discussed on prior calls, is one example of this shift and serves as a launchpad to unlock new opportunities for Alithya. This project is also a great example of how we use GenAI to increase our productivity and elevate our output quality.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Our Migration Factory offering harnesses AWS AI-powered tools to speed up problem resolution, ensure consistent application structures, and accelerate our delivery timelines. Leveraging AI increases our efficiency, differentiates our services, and delivers greater value to our clients. As with many transformations, we are experiencing an adjustment period with our shift to more profitable services that is impacting revenue in Canada. This is being partially offset by steady performance outside of Quebec in the nuclear and financial services sectors, where we have a strong presence and continue to expand our work with key clients. Although revenue growth in Canada is taking time to materialize, we are seeing positive signs as gross margin as a percentage of revenue improved compared to the same quarter last year.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Turning to our Smart Shoring operations, we now have 13.9% of our professionals located in our Smart Shoring centers, where we attract the top talent with an attractive cost structure. The acquisition of eVerge not only added critical mass in these geographies, it also brought a strong leadership team in India, further strengthening our global execution capabilities. Before turning things to Paul for closing remarks, I would like to highlight our recent recognition from Microsoft Copilot Specialization, validating our expertise across Microsoft 365 Copilot. This achievement reflects our ongoing investment in key partnerships that enable us to deliver complex solutions for our clients and how our teams are driving effective AI adoption across our portfolio. We are encouraged by the momentum we're building, and we remain confident in the resilience of our business over time. Paul?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Thank you, Bernard. Again, the defining theme of our third quarter was financial discipline, for the past period was marked by strong bookings, improved cash flow generation, debt reduction, and growth in our U.S. operations. All these strengthen our flexibility to pursue strategic growth opportunities. We remain focused on creating long-term value and actively pursuing a range of opportunities to drive meaningful outcomes. Among those opportunities is the announcement to spin off certain of our AI-based IP assets, along with the associated support professionals, into a new strategic partnership... Before heading into question, I'd also like to comment on the impact of GenAI in our industry, as this seems to be an area of concern for some. The early promise of major efficiency gain hasn't fully materialized for many companies, as organizations look to maximize return on their technology investment.

Paul Raymond
Paul Raymond
CEO at Alithya Group

They're recognizing that strong foundations, particularly around data quality and security, are essential to unlocking the value of AI, and that's where we step in. Alithya is increasingly recognized as a trusted partner for complex digital transformations, particularly those leveraging the latest technologies from our market-leading partners. This recognition is a direct result of the strategic focus that we put in place several years ago, and our continued shift towards services that differentiate us in a global market. We're building a stronger, more focused Alithya, one that competes on differentiated values, trusted advisory, and the ability to help our clients leverage AI-enabled, mission-critical tools across their organizations. Thank you for your attention, and with that, we'll go to questions. Sylvie?

Operator

Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touchtone phone. You will then hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you have any questions. Thank you. First, we will hear from Kevin Krishnaratne at Scotiabank. Please go ahead, Kevin.

Kevin Krishnaratne
Analyst at Scotiabank Global Banking and Markets

Hey there. Good morning. A couple of questions on the U.S. So it looks like, you know, after a couple of quarters of pretty decent organic growth there, it kind of came in softer this quarter. I know in your press release, you talked about, you know, a slower 3Q versus last year. Can you just click into what's going on there? Was there some deals that are getting pushed out? Are you following industry trends? Anything on the competitive front? Just curious, because you did have some good momentum heading into this quarter, and then it kind of got a little bit softer this quarter.

Paul Raymond
Paul Raymond
CEO at Alithya Group

Yeah, sure. Thank you for the question, Kevin. Good morning. And very simple answer. Last year, if you remember, we had a record number of go-lives in January. Basically, when people roll out ERP systems, very often the go-live date is January 1 because it's beginning of a calendar year and fiscal year. So we had a record number of go-lives in Q4 last year, January. So basically, leading up to that, that means a lot of work in Q3. So many of our people worked through the holidays, and so utilization was significantly higher last year. So without that, kind of we're able to come out at about the same level in terms of revenue. So the issue was more timing. All right?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Just difference in timing on project deliveries impacted utilization in Q3, which meant that revenues are down a bit, but again, we're not concerned. We believe it's a timing issue.

Kevin Krishnaratne
Analyst at Scotiabank Global Banking and Markets

Okay, okay, thanks, thanks for that, the color there. On maybe switching to the M&A, on your eVerge, performance, it looked like, relative to Q2, there was a step down there, CAD 7 million, this quarter, CAD 8.6 million in, in the previous quarter. Is that, is that typical of that business? You know, what was happening there? I would have thought that you would have seen a, a bit of a pickup, sequentially.

Paul Raymond
Paul Raymond
CEO at Alithya Group

I'll let Bernard comment on that one, but we're not seeing a... Maybe Bernard, you want to-

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

No, nothing specific to highlight there. The, you know, the type of work we're doing there with eVerge is just projects. It's Oracle implementations, Salesforce implementations, but nothing to highlight that happened in Q3. As I mentioned in my comments, we're really happy with the integration. We're seeing some very strong capabilities. One of our strategies in our three-year plan was to diversify some of our Oracle capabilities into other industries, and they have done that. I mentioned commercial and business services, really, and more specifically, construction and engineering. Some of the capabilities they had and some investments we've made are generating very positive results. So all in all, the eVerge integration is going all delivering to our expectations.

Paul Raymond
Paul Raymond
CEO at Alithya Group

Maybe just to add on that, one of the reasons why eVerge was very interesting was just to what Bernard was saying. One of the industries that we're seeing as growing significantly, that will not be displaced by AI, is engineering. The infrastructure replacement globally is drawing a lot of investments as countries are trying to replace aging infrastructure and build new infrastructure. And we're now positioned very well in that industry for these large engineering and construction firms.

Kevin Krishnaratne
Analyst at Scotiabank Global Banking and Markets

Got it. Good to hear. Then maybe just the last one for me, just on the Datum transaction. I know, it's less than 5% of revenue, but can you give us any parameters on that? What was the, the revenue growth, the growth margin, and EBITDA margin profile on that asset?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Sure. So, Datum, we acquired back several years ago, was very good for us from a revenue and margin perspective for several years. What we're seeing is that we were developing many IP assets and under leveraging them. We're a services company first, so we use AI accelerators to help us provide our services better, faster, more efficiently. But some of these assets, we believe, have a lot of potential value in a more of a software-focused, structured organization. Like many of the startups that we're seeing that are focused on AI products, and we think there's more value for us to spin that off in that context and to be part of that.

Paul Raymond
Paul Raymond
CEO at Alithya Group

This is new for us, this is a first, we'll see how it goes, but we think that was the best way. We think we were stifling growth of that company within the organization, so we see this as an opportunity for growth.

Kevin Krishnaratne
Analyst at Scotiabank Global Banking and Markets

To be clear, like, very high gross margin, is it like a software margin, or what, what did it, what did it kinda look like, at least from a gross margin perspective?

Paul Raymond
Paul Raymond
CEO at Alithya Group

We didn't share that, Kevin. We haven't shared that information, but yes, very good gross margins.

Kevin Krishnaratne
Analyst at Scotiabank Global Banking and Markets

Okay, okay. No, appreciate that. I'll, I'll pass the line. Thank you.

Paul Raymond
Paul Raymond
CEO at Alithya Group

Sure.

Operator

Thank you. Next question will be from Jérôme Dubreuil at Desjardins Capital Markets. Please go ahead, Jérôme.

Jérôme Dubreuil
Analyst at Desjardins Securities Inc.

Hey, bonjour, everyone. Thanks for taking my questions. First, thanks for the update on AI. Good to see that, still on track, despite what we're seeing in the public markets. I wanna focus a bit on Canada. I wanna know where we are in terms of your migration to the focus on higher value. What innings—what inning are we in? Are we kind of second inning there? Are we mostly through it? I know there's challenges with some of the government levels as well. If you can just comment on that, to help us understand where, when the tides can turn. Thank you.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Yeah. Thanks, Jérôme, for the question. And yeah, it remains focused, you know, as part of our three-year strategy here is to change the profile of our work, specifically in Quebec. And these are some of these, especially the government contracts, were longer term contracts. So as they come up for renewals, our strategy is to approach them differently and make sure they have a margin profile that's acceptable to us. So it's not an exact science of, does it go away? Does it renew on that? So I'd say we're kinda in the middle of the process here. I'm happy with the results we're seeing on the gross margin side, as we're really more focused.

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

The other thing is the ramp up of the, you know, as we transition and shift to some of this higher value work, you know, landing these projects and then ramping the skill sets up takes a little bit of time as well. So even as we, you know, land the new projects, it's a quarter or two before they take impact on the results. But overall, we're executing through our strategy. I'd say we're somewhere in the middle of kind of where we started and progressing to what we had set forth in our three-year plan.

Jérôme Dubreuil
Analyst at Desjardins Securities Inc.

That's great. Thank you.

Operator

Thank you. Next question will be from Gavin Fairweather at ATB Cormark. Please go ahead, Gavin.

Gavin Fairweather
Gavin Fairweather
Analyst at ATB Cormark

Oh, hey, good morning. Thanks for taking my questions. Maybe just to close the loop on Datum, can you elaborate on the minority stake that you've retained in that business, and talk about the size of that, and also talk about how you came up with the presumably the cash amount that you're gonna receive on the close of that acquisition, how you valued that business?

Paul Raymond
Paul Raymond
CEO at Alithya Group

It's a minority stake, Gavin. It's under 25%.

Gavin Fairweather
Gavin Fairweather
Analyst at ATB Cormark

Okay, and presumably, like, you're receiving cash for that sale?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Can you repeat the question, please?

Gavin Fairweather
Gavin Fairweather
Analyst at ATB Cormark

Like, presumably, you're receiving cash for this... I don't think I saw it in the press release. Can you talk about the, how you valued the business and the cash that you're gonna receive?

Paul Raymond
Paul Raymond
CEO at Alithya Group

We're not receiving cash, Gavin. This is. We're contributing some of our assets to that new company, and in exchange for that, we're getting just under 25% of the equity.

Gavin Fairweather
Gavin Fairweather
Analyst at ATB Cormark

Oh, I see. Okay, maybe for Bernard, can you-

Paul Raymond
Paul Raymond
CEO at Alithya Group

And as part of that, sorry, we're also purchasing 2.5-ish million shares from Amar are gonna be used to as the for cash for the company to operate.

Gavin Fairweather
Gavin Fairweather
Analyst at ATB Cormark

And then on that, Medivara Holdings, are there other assets in that company, or is that just to hold that?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Correct. Yes, there are other assets in that company and other partners as well.

Gavin Fairweather
Gavin Fairweather
Analyst at ATB Cormark

I see.

Paul Raymond
Paul Raymond
CEO at Alithya Group

When everything's finalized, that's gonna be made public. It's just we're not completely finalized yet.

Gavin Fairweather
Gavin Fairweather
Analyst at ATB Cormark

I see. Okay, thanks for that. That's helpful. Maybe for Bernard, can you just discuss kind of, you know, you did talk about you know, U.S. utilization in the quarter and, and some of the puts and takes there, but maybe just looking forward into your Q4 and Q1, how are you thinking about your utilization? Do you see kind of demand and billings coming back, given recent bookings, or are you thinking about doing some work on capacity to improve utilization there?

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Yeah, yeah, but thanks for the question, and as you know, we don't, we don't provide guidance looking forward, on that. The utilization, as Paul mentioned, in Q3, we had a really hot December last year and January with those go-lives. And it's also a typical vacation period. So as you think in Q3 of fiscal 25, our folks were not only billing, they weren't taking a vacation. So that kinda is a double whammy, that we hit in this quarter with fewer go-lives at this time. We're kind of more in a normalized state for that, but that was really the impact that you saw this quarter.

Gavin Fairweather
Gavin Fairweather
Analyst at ATB Cormark

Thanks so much. I'll pass the line.

Operator

Next question will be from Vincent Colicchio at Barrington Research. Please go ahead, Vincent.

Vincent Colicchio
Analyst at Barrington Research Associates Inc.

Yes, Paul, I'm curious, how are bookings trending in early Q4?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Hey, Vincent, thanks for the question. We again, we're not providing guidance. All I can say is that we have a strong funnel. We've mentioned in the past that things are taking longer from a cycle, but as you saw from Q3, we had very strong bookings, and a lot of those were annual renewals as well. So we have clients where we know we're gonna have work for the next year. So, you know, I think there's a, I keep coming back to this, but I think the concern about AI replacing our business are understandable, but I think it's oversimplified. You know, if I look at AI, it's eliminating tasks, not outcomes, right? It automates research, drafting, analysis, some coding, but clients don't hire us for that.

Paul Raymond
Paul Raymond
CEO at Alithya Group

They hire us for accountability, they for owning complex transformations and integrating AI into mission-critical systems, managing risk, security, regulatory stuff, change. So that doesn't disappear. That accountability doesn't disappear with AI. It actually becomes more valuable. So, you know, we like the bookings that we had in Q3. We like our funnel, the opportunities that we have, and we love the business that we're in. So...

Vincent Colicchio
Analyst at Barrington Research Associates Inc.

Are you on the labor side for AI skill sets are you seeing any challenges in terms of meeting the demand?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Not so far. Actually, you know, if anything, AI is reducing labor, right? So I think many organizations are still experimenting with AI. Very few are successful at really scaling it in a way that delivers real financial impact. But when you look at what we do, like coding now, a person can do 10 times what they used to do, and instead of coding, it's reviewing code and validating that it's okay, doing integration work, analysis work. So all these things, I think our people are becoming more productive, which means we need less people. We just need different folks. But we're spending a lot of time on training and developing our folks to be able to use those tools.

Paul Raymond
Paul Raymond
CEO at Alithya Group

Like Bernard mentioned, our new certification from Microsoft on Copilot, I mean, we're leading the pack there, so, well, we like the position we're in.

Vincent Colicchio
Analyst at Barrington Research Associates Inc.

Last question, could you update us on your acquisition priorities, and what your pipeline looks like?

Paul Raymond
Paul Raymond
CEO at Alithya Group

Pipeline is still very healthy. As you saw from Pierre's presentation, we've shown that we can leverage up, use our cash, and leverage down real fast after. So we completed two acquisitions last year. They've been paid off. Our debt is below where it was, so we're under 2x our EBITDA from our debt ratio, so we're in a great position to execute on that. But no, we like our position.

Vincent Colicchio
Analyst at Barrington Research Associates Inc.

Okay. Thanks for answering my questions.

Paul Raymond
Paul Raymond
CEO at Alithya Group

Hey, no problem. Thank you for the questions.

Operator

Once again, ladies and gentlemen, a reminder to please press star one if you have any questions. Next, we will hear from Rob Goff at Ventum. Please go ahead, Rob.

Rob Goff
Analyst at Ventum Financial Corp.

Thank you, and, good morning, guys. Thank you for taking my question.

Paul Raymond
Paul Raymond
CEO at Alithya Group

Thanks, Rob.

Rob Goff
Analyst at Ventum Financial Corp.

Welcome. So I understand where Q3 of 2025 was like a blow-out quarter, like a really, really tough comparison for you. How would you describe Q4 of 2025? So in terms of looking forward, should we be considering that Q4 2025 was equally difficult as a benchmark or a bogey?

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Yeah. So, thanks for the question, Rob. It's a good pick-up there. As I mentioned, the go-lives, they went live January 1. Of course, these-

Rob Goff
Analyst at Ventum Financial Corp.

Yeah

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

These projects go into a hypercare state after they go live. So some of that effect that you saw in Q3, naturally, it's a bit of a headwind there as we look at Q4 fiscal 2025.

Paul Raymond
Paul Raymond
CEO at Alithya Group

It's, it's a tough comparison, especially with the go-lives. You always recognize the contingencies because we delivered the projects on time, on budget, so you reverse contingencies. They'll all hit as positive hits on the P&L. So yeah, it was a good quarter last year. Very good quarter last year.

Rob Goff
Analyst at Ventum Financial Corp.

Right. So in terms of things outside of the backlog, could you talk about the health of your pipeline or any proof of concepts?

Bernard Dockrill
Bernard Dockrill
COO at Alithya Group

Thanks, Rob. As I mentioned in the script there, I think we're seeing new opportunities come into the pipeline that are aligned to the strategic vision that we have of higher value transformational projects. So we're happy what we're seeing there. And the backlog has stayed at relatively consistent at 14 months there. So we're really, you know, that is leading us to, you know, where we are, but the pipeline of new opportunities is executing as we expected.

Rob Goff
Analyst at Ventum Financial Corp.

Good. Thank you. Good luck.

Operator

Thank you. Ladies and gentlemen, at this time, we have no other question registered, which concludes our conference call for today. We would like to thank you for attending, and ask that you please disconnect your lines. Have a good weekend.

Executives
    • Bernard Dockrill
      Bernard Dockrill
      COO
    • Dominic Blais
      Dominic Blais
      Senior Advisor and Public Relations
    • Paul Raymond
      Paul Raymond
      CEO
    • Pierre Blanchette
      Pierre Blanchette
      CFO
Analysts
    • Gavin Fairweather
      Analyst at ATB Cormark
    • Jérôme Dubreuil
      Analyst at Desjardins Securities Inc.
    • Kevin Krishnaratne
      Analyst at Scotiabank Global Banking and Markets
    • Rob Goff
      Analyst at Ventum Financial Corp.
    • Vincent Colicchio
      Analyst at Barrington Research Associates Inc.
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