Alithya Group TSE: ALYA reported lower first-quarter revenue and profitability as longer client decision-making and project conversion cycles reduced utilization, while management said its pipeline of late-stage opportunities continued to build.
Revenue for the quarter totaled CAD 105.1 million, down 15.4% from a year earlier. Adjusted EBITDA fell to CAD 5.4 million, or 5.2% of revenue, from CAD 11.6 million, or 9.4% of revenue, in the prior-year period. The company recorded a net loss of CAD 2.4 million, or CAD 0.03 per share, compared with net earnings of CAD 0.2 million a year earlier.
Management said the quarter’s primary issue was utilization, as some larger projects took longer than expected to begin while the company continued to carry personnel costs. The company also cited lower tax credits and salary increases that took effect at the start of the fiscal year as factors weighing on gross margin.
New Reporting Structure
Beginning April 1, 2026, Alithya adopted a new reporting structure following the integration of recent acquisitions and a business divestiture. The company now reports two segments: Enterprise Transformation and Industry Services and Solutions.
According to CFO Pierre Blanchette, Enterprise Transformation includes consulting, implementation, integration and managed services for enterprise platforms including Microsoft, Oracle and Salesforce. The segment covers areas such as ERP, EPM, CRM, HCM, SCM and AI-enabled business transformation.
Industry Services and Solutions combines sector expertise, consulting, advisory services, business enablement and cloud migration work across AWS and Microsoft Azure. Blanchette said the business supports clients from planning and implementation through organizational change and value realization.
Comparative figures also include a third segment associated with Datum, which was sold on March 31, 2026.
Segment Results and Margins
Enterprise Transformation revenue was CAD 62.6 million, down CAD 3.2 million, or 4.9%, year over year. Blanchette said the decline reflected client projects reaching maturity and lower billable hours, partly offset by a full quarter of eVerge. Margin in the segment declined due to lower utilization from delayed project starts and salary increases.
Industry Services and Solutions revenue totaled CAD 42.5 million, down CAD 11.7 million, or 21.6%, from the prior year. The decline reflected maturing client projects as well as lower government-contract revenue and reduced activity in Quebec financial services. The Datum divestiture accounted for an additional CAD 4.2 million revenue decline.
Companywide gross margin was CAD 31.9 million, down 19.8% from CAD 39.8 million a year earlier. Gross margin as a percentage of revenue fell to 30.4% from 32.1%.
Selling, general and administrative expense decreased 7.5% to CAD 28.3 million, driven by lower variable compensation, professional fees, share-based compensation, recruiting and training costs. However, SG&A represented 27% of revenue, compared with 24.6% a year earlier, because revenue declined more quickly than expenses.
Adjusted net earnings were CAD 2.9 million, or CAD 0.03 per share, down from CAD 6.5 million, or CAD 0.07 per share, in the previous year.
Bookings, Pipeline and AI Initiatives
COO Bernard Dockrill said first-quarter bookings were CAD 89 million, producing a book-to-bill ratio of 0.85. Excluding revenue from two large long-term contracts, the ratio was 0.92. On a trailing 12-month basis, bookings were CAD 405.1 million and the book-to-bill ratio was 0.88, or 0.96 after the same adjustment.
More than 70% of first-quarter bookings came from new business, including 28% from new customers, Dockrill said. The company also saw a larger proportion of fixed-price and fixed-fee contracts. Blanchette said fixed-price and fixed-price-like engagements account for about 40% of the business.
- Enterprise Transformation bookings were CAD 61.2 million, for a quarterly book-to-bill ratio of 0.99.
- Industry Services and Solutions bookings were CAD 27.8 million, for a book-to-bill ratio of 0.64, or 0.78 excluding the two long-term contracts.
Within Enterprise Transformation, Dockrill highlighted an $11.7 million U.S. contract signed by Alithya’s Oracle practice with a global engineering and construction company. The project involves an Oracle HCM modernization initiative for the client’s global workforce operations.
He also said Alithya’s Microsoft AI and Copilot practice supported the deployment of more than 300,000 Microsoft 365 Copilot licenses globally, while the company develops industry-specific AI agents based on client data. Salesforce revenue was softer as projects were completed and new starts were delayed, though Dockrill said the qualified opportunity pipeline was increasing.
Strategic Review Underway
The company’s board launched a strategic review on July 27 and engaged Scotiabank as financial adviser. Management said the review will consider alternatives including a merger or other business combination, privatization, a sale, recapitalization, strategic investment or partnerships, or continuing as a publicly listed company.
Management said the review was initiated because it believes public-market valuations may not fully reflect Alithya’s intrinsic value or support its next phase of growth. The company said it would not comment on specific parties or developments in the process.
Net cash used in operating activities was CAD 4.8 million, compared with CAD 4.2 million a year earlier, reflecting the net loss and CAD 8.3 million in unfavorable working-capital changes. Net debt to trailing 12-month adjusted EBITDA was 2.9 times.
Management said it remains focused on aligning costs with current revenue levels while maintaining capacity to invest, and cited continuing demand for enterprise applications, digital transformation, AI enablement and modernization services.
About Alithya Group (TSE:ALYA)
Alithya Group Inc is a leader in Strategy and digital transformation, with professionals in Canada, the us, and Europe. Its integrated offering is laid out as follows: Strategy, custom solutions, Microsoft solutions, and Oracle solutions. Clients entrust the company with their strategic projects across Banking, Investment and Insurance, Energy, Manufacturing, Retail and Distribution, Telecommunications, Transportation, Professional Services, Healthcare, and Government sectors. Geographically, it derives a majority of revenue from Canada.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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