Aeries Technology, Inc.

Greetings and welcome to the Ares Technology Fiscal Second Quarter Conference Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Ryan Gardella, Investor Relations for Ares Technology. Thank you. You may begin.

Technologies Fiscal Second Quarter 2025 Earnings Call. Joining us from the company is Chief Executive Officer and Co-Founder of ARIES, Sudhir Pandekastran, Chief Investment Officer, Daniel Webb, and Chief Financial Officer, Rajiv Nair. Today's call consists of commentary around the results from the fiscal second quarter 2025, which ended on September 30th, 2024. As a reminder, this conference call contains statements about future events and expectations, which are forward-looking in nature. Statements on this call may be deemed as forward-looking and actual results may differ materially. Words such as believe, estimate, and expect, as well as similar expressions are intended to identify forward-looking statements. For a full list of risks inherent to the business and the company, please refer to the company's SEC filings and earnings press release. ARES undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that occur after the call. Today's call and webcast will include non-GAAP financial measures from the meeting of SEC Regulation G. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from GAAP measures. When required, reconciliations of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the earnings release or other materials available on the company's website. With that, I'll turn the call over to Sudhir.

Thank you, operator, and thank you, everyone, for joining us. Let's start with a high-level review of our results, followed by a discussion on our next strategy steps to reorient and reinvest in the business for sustainable long-term growth. After that, I'll pass the call over to Daniel to discuss more details of these actions. On today's call, I'll be discussing both our full results as well as the results of our core business, which I'll refer to as core. Our core business consists of U.S.-based, long-tenured, high-quality clients that have served as a consistent revenue base for ARIES. Our non-core markets and businesses consist of consulting projects in the Middle East, which we have now exited. For the fiscal second quarter of 2025, our revenues were $16.8 million, down 4% from the year prior period. While our gross profit was $3.6 million, resulting in gross margin of 21.2%. However, for the second fiscal quarter, our North America revenue, which is where our core business is, was up over 13% to $15.7 million. The core business contributed positive $183,000 to a registered EBITDA. Our results in the second fiscal quarter reflect the decision to solely focus on the PE-backed portfolio businesses that serve as our core clients. This core business is primarily Global Capability Center or GCC and is growing significantly faster than the North American IT services industry. We are seeing new client opportunities with large contracts at favorable margins and we have a high level of visibility into a pipeline of future clients that will make ideal partners going forward. As I have mentioned on prior calls, North America remains our strongest and target market, representing approximately 93% of our revenue in the first fiscal quarter. This business is at the heart of the Aries Way, and we believe it will continue to be so in the near to medium term while we continue to assess potential markets worldwide based on profitability and risks of doing business. We have also made the decision to exit the current non-core markets, which consists of consulting projects in the Middle East. Additionally, these Middle East accounts have consistently slower collection cycles, which has resulted in higher than expected credit losses, which is reflected in our financial statements. While we do expect to receive payment from majority of these in the future, the timing of payment remains uncertain. This non-core business has now gone to zero revenue and we do not anticipate pursuing any additional business there in the near to medium term unless certain critical business parameters are met. Further, as I discussed last quarter, we are laser focused on realigning our costs to an optimum level that enhances profitability by laying the foundation for sustained future growth. Between our previous call and today, we have cut over $4 million of additional annualized expenses. We expect to see the full effect of these savings starting in our third fiscal quarter. In fact, even our executives, myself included, will be taking pay cuts to ensure we can quickly return to the profitable growth that our investors expect. This will be coupled with renewed focus on organic revenue growth. Finally, I wanted to mention that one of our large clients have exercise the contractual right to buy out the offshore operations portion of their business managed buyers. They will remain a client albeit in a smaller capacity going forward. The end result will be a large lump sum of high margin revenue in the fourth fiscal quarter of this year but lower recurring revenue from them going forward from there. This has occurred only two other times in our history and typically happens when there is a significant shift in the client's business strategy necessitating them to move the operations in-house. We believe that some of these actions will lead us to sustained growth and deliver value to our stakeholders across the board. In fact, we are already seeing improving sequential results and expect our third quarter to be better on both the top and bottom line than the second quarter. We also expect the fourth quarter to be sequentially better than the third quarter. With this in mind, I'd like to provide an updated financial outlook for fiscal 2025. For revenue, we are currently expecting a range of $71 to $73 million. For core-registered EBITDA, we are currently expecting a range of $6 to $7 million. Both of these items are solely inclusive of our core business. And now I would like to pass the call over to Daniel for some additional details on our strategic actions. Daniel.