Aeries Technology(AERT) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2024, the company's revenue was $18.9 million, representing a 49% year-over-year growth, driven by new client acquisitions [5][13] - Year-to-date revenue for the first three quarters was$ 52.8 million, reflecting a 39% increase compared to the same period last year [6][13] - Adjusted EBITDA for Q3 2024 was $2.4 million, showing a decrease of less than 1% year-over-year, which was in line with expectations [16] - The company reported a GAAP net loss of$ 16.4 million for Q3 2024, compared to a net loss of $270,000 in the same period of 2023 [16] Business Line Data and Key Metrics Changes - The gross profit for Q3 was$ 6 million, a 161% increase year-over-year, resulting in a gross margin of approximately 32%, up from 18% in the same period last year [14] - The revenue mix has shifted towards higher-margin services such as digital transformation, AI, and analytics, positively impacting gross margins [14] Market Data and Key Metrics Changes - North America accounted for approximately 77% of the company's revenue in the quarter and fiscal year-to-date [7] - The company opened a new center of excellence in Mexico to better serve North American customers, indicating a strategic focus on near-shoring [7][8] Company Strategy and Development Direction - The company is executing a growth strategy focused on acquiring new clients and expanding services in digital transformation and AI [5][11] - A dual-shoring strategy is being implemented, combining near-shoring in Mexico with existing operations in India to enhance service delivery and reduce costs [8] - The company is also evaluating acquisition targets to drive inorganic growth [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing momentum in new client acquisition and the expected revenue growth of 40% to 54% in calendar year 2024 compared to 2023 [11][16] - The management highlighted a positive trend in client retention and the availability of talent, indicating an easier labor market compared to previous years [31] Other Important Information - SG&A expenses for Q3 were $5.3 million, a 162% increase year-over-year, primarily due to legal and professional services related to the company's transition to a public entity [15][16] - The company expects total revenue for calendar year 2024 to be between$ 95 million and $105 million, with adjusted EBITDA projected between$ 16 million and $20 million [16] Q&A Session Summary Question: How many clients were added in calendar 2023 and what is the revenue mix? - The company added about 10 new clients in 2023, marking its best year for new client acquisitions, with expectations for continued acceleration in 2024 [22] Question: What is the anticipated shift in revenue towards digital and consulting services? - Management noted a clear shift towards digital transformation offerings, which is reflected in higher gross margins [24] Question: How does the company view AI as an opportunity or threat? - AI is seen as a productivity and business enhancement tool, with opportunities expanding in high-value areas like technology and analytics [26] Question: What is the current labor market situation and talent retention? - Retention has improved to about 4%, and the market for talent is becoming easier compared to two years ago [31] Question: What are the plans for sales investment? - The company is investing in its sales team to accelerate growth, particularly in private equity relationships and mid-sized U.S. companies [34][36]