Alithya Group Q4 Earnings Call Highlights

Alithya Group (TSE:ALYA) reported lower fourth-quarter revenue and a net loss as the IT services company continued to reposition its business toward higher-margin transformation work, particularly in Canada, while seeing growth in its U.S. and international segments.

On the company’s fiscal 2026 fourth-quarter earnings call, President and Chief Executive Officer Paul Raymond said Alithya maintained “a strong focus on execution” while shifting the business toward higher-value services and improving its gross margin profile. For the full fiscal year, Raymond said revenue and gross margin increased year over year, while adjusted net earnings remained stable.

Raymond attributed the full-year progress to team discipline, the evolution of Alithya’s portfolio, increased artificial intelligence activity, and the integration of the eVerge and XRM Vision acquisitions. He said the company remains focused on its “industry-first approach” and on supporting clients with AI and digital transformation initiatives.

Fourth-Quarter Revenue Declines Against Tough Comparison

Chief Financial Officer Pierre Blanchette said fourth-quarter revenue totaled CAD 113.8 million, down 9.2% from the prior-year period. He noted that the fourth quarter of fiscal 2025 was unusually strong because a higher number of project go-lives elevated revenue, creating a difficult comparison.

Gross margin as a percentage of revenue rose to 37.8% from 36.8% a year earlier. Blanchette said both periods benefited from tax credit recognition, with the latest quarter receiving a larger contribution from CAD 5.8 million of non-refundable tax credits available for carry-forward. Excluding the tax credit recognition, gross margin was 32.7% in the quarter.

Adjusted EBITDA was CAD 12.7 million, or 11.1% of revenue, compared with CAD 18 million, or 14.4% of revenue, in the prior-year quarter. Blanchette said the decrease reflected lower revenue and gross margin, along with higher selling, general and administrative expenses. SG totaled CAD 31.8 million, up CAD 2.1 million, driven by costs related to the eVerge acquisition, higher share-based compensation, professional fees and employee compensation costs.

Alithya posted a net loss of CAD 8.7 million, compared with net earnings of CAD 8 million in the same quarter last year. Adjusted net earnings were CAD 7.7 million, or CAD 0.08 per share, versus CAD 12.2 million, or CAD 0.12 per share, a year earlier.

U.S. Segment Grows, Canada Remains in Transition

Alithya’s U.S. revenue reached CAD 55.6 million, up 2.6% year over year. In constant currency, U.S. revenue would have been CAD 58.2 million, up 7.5%. Blanchette said the increase was driven primarily by revenue from eVerge since its acquisition and organic growth in enterprise transformation services, despite a lower contribution from Datum, which was sold on March 31, 2026.

Blanchette said Alithya sold all shares of Datum in exchange for a minority equity interest in Medivra Holdings. Before the transaction, Alithya recorded a CAD 3.1 million impairment of intangibles. Datum represented close to CAD 15 million in revenue and CAD 1.2 million in EBITDA in fiscal 2026, according to Blanchette, who said the divestiture aligns with the company’s focus on core activities.

In Canada, revenue declined 24% year over year to CAD 49.7 million. Blanchette said the decrease was mainly due to reduced revenue from government contracts and client projects reaching maturity, as the company chose not to renew lower-margin work awarded primarily on price. Chief Operating Officer Bernard Dockrill said the company has deliberately exited low-value commoditized work, particularly in the Quebec public sector, and that higher-quality replacement work has taken longer to ramp in the current Quebec market.

International revenue rose 49.1% to CAD 8.5 million. In constant currency, international revenue would have been CAD 8 million, up 39.2%. Blanchette said gross margin in the international segment improved due to additional enterprise transformation services delivered there.

Bookings and Pipeline Reflect Mixed Regional Dynamics

Dockrill said fourth-quarter bookings totaled CAD 94.3 million, while full-year bookings were CAD 434.2 million. That represented a book-to-bill ratio of 0.83 for the quarter and 0.91 on a trailing 12-month basis. Excluding revenue associated with two long-term contracts acquired in the first quarter of fiscal 2022, fourth-quarter book-to-bill was 0.90, and trailing 12-month book-to-bill was 1.0.

Bookings were CAD 33.9 million in Canada, CAD 56.7 million in the U.S. and CAD 3.7 million internationally. Dockrill said the pipeline of qualified opportunities was stable sequentially, with client conversations shifting toward modernization, cloud transformation and AI adoption.

During the question-and-answer session, Raymond said the U.S. book-to-bill was above one while Canada was below one, reflecting the different state of each region. He said the U.S. business is focused on higher-margin, mission-critical enterprise software projects, while Canada remains in transition, especially in Quebec.

AI Adoption Seen as Gradual, With Modernization Opportunity

Management said AI remains a key part of Alithya’s strategy, but Raymond cautioned that the pace of adoption has been overhyped in some areas. He said AI-related Copilot rollout projects are not yet large enough to “move the needle” at scale, even though Alithya has several opportunities and completed projects in that area.

Raymond said regulated industries face additional hurdles when changing work processes or automating tasks. He identified modernization of legacy systems as a major opportunity for systems integrators, saying tools from hyperscalers such as AWS, Google and Microsoft now make legacy modernization more cost-effective than in the past.

Dockrill said Alithya achieved the Microsoft Copilot specialization and is helping nine Fortune 500 companies, as well as healthcare and public sector organizations, with Copilot and AI-related work. He also said the company introduced Alithya Fabric Express, a proprietary accelerator designed to shorten the time required to prepare data for analytics and AI.

On AI agents, Raymond cited an example of a large U.S. grocery chain where Alithya replaced a customer call center with an AI-driven system on Microsoft technology. Dockrill said current monetization is primarily services-based, including outcome-based fixed-price or time-and-materials models, and that he does not yet see a large volume of recurring revenue from agent deployments in Alithya’s portfolio.

Balance Sheet, Internal Controls and Strategic Focus

Blanchette said net cash from operating activities was CAD 3.5 million in the fourth quarter, compared with CAD 17.1 million a year earlier. As of March 31, 2026, net debt was CAD 1.8 million, and the leverage ratio was 2.4 times net debt over trailing 12-month adjusted EBITDA, within Alithya’s targeted leverage levels.

The company also continued its normal course issuer bid. Blanchette said approximately 3.2 million shares had been purchased for cancellation as of March 31, including about 2.5 million shares purchased for cancellation as part of the Datum transaction.

Blanchette also said Alithya remediated a previously disclosed material weakness related to control activities in revenue processes for fixed-fee and time-and-material arrangements applying the input method. He said the weakness did not result in material errors, and management completed testing of enhanced controls during the fourth quarter.

Raymond said Alithya remains focused on execution, delivery excellence and advancing its operating model. “Across the organization, we’re strengthening our foundations and continuing to evolve our business towards higher-value engagements,” he said.

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.

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