Alithya Group inc.

Good morning, ladies and gentlemen. Welcome to Aletheia's first quarter fiscal 2023 results conference call. I would now like to turn the meeting over to Rachel Andrews, Vice President, Communications and Marketing at Aletheia. Please go ahead, Ms. Andrews.

Thank you very much. Good morning, everyone, and thank you once again for joining us for Aletheia's first quarter fiscal 2023 results conference call. The press release and MD&A with complete financial statements and related notes were issued this morning and are now posted on our website. The webcast presentation can also be found on our website in the Investors section. Before we begin, I would like to specify that this conference call is intended for the financial community. Also, please be advised that this call will contain statements that are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. For more information, please refer to the cautionary note in our presentation and to the forward-looking statements and risks and uncertainties section of our MD&A available on our website. All figures discussed on today's call are in Canadian dollars, unless otherwise stated, and we may refer to certain indicators that are non-IFRS measures. Please refer to the cautionary note in our presentation and to the non-IFRS measures section of our MD&A for more details. Presenting this morning are Paul Raymond, Alicia's President and Chief Executive Officer, as well as Claude Thibault, our Chief Financial Officer. Now, I'm delighted to turn the call over to Paul Raymond.

Merci, Rachel, and good morning, everyone. Thank you all for joining us on the call this morning. I'm pleased to share the details of the beginning of a new fiscal year. We're kicking off the second year of our three-year strategic plan with continued revenue growth and strong bookings. Alethea continues to carve its position to a competitive landscape and to build upon a reputation for trust and execution excellence. In that regard, I would like to take a moment to put our recent results in the context of our long-term business objectives. In terms of revenues, we continue to pursue sustained organic growth and selective strategic acquisitions in order to reach the $600 million mark. Currently, organic growth and acquisitions of the past year have brought us to the half a billion dollar annual revenue run rate. For gross margin, we believe our long-term strategies remain appropriate and relevant for gradual improvement. We also intend to leverage our new offshore capabilities and to keep targeting acquisitions with higher gross margin profile. The recent data and Vitalis acquisitions are certainly very good examples of that. For SG&A, we believe that we have now reached a certain critical mass and a stabilization of certain expense categories, including corporate and head office costs. Moving forward, we expect those expenses to grow at a slower pace than our revenues, hence, We intend to continue our downward trend on SG&A as a percentage of revenues, with some acquisition synergies still to come, including longer-term savings relating to rent. In a nutshell, that is the step-by-step playbook of how Aletia believes it can realistically achieve its three-year objective of $600 million in revenue with an EBITDA margin of 9% to 13%. So before jumping ahead to a review of our operations, let's first take a look at three key highlights of our first quarter performance. First and foremost, Aletheia has achieved industry-leading organic growth. Again, our revenues amounted to $127 million in the first quarter. That's a 23% increase compared to the same quarter last year. It's also important to note that we are reporting our repeat revenues or revenues from repeat customers for the first time. In the first quarter, 85% of our revenues came from clients we also served during the same quarter last year. In other words, that's 85% of repeat revenues. Second, business continues to be fueled by strong bookings in Canada and in the United States. Despite the global economic context, which I will address in a few minutes, we are encouraged by our funnel, and our bookings remain the best predictor of what's to come. So to start our new fiscal year, our booking reached $145 million, which translated into a book-to-bill ratio of 1.15%. It's important to keep in mind that when we remove the recurring revenues from our two large 10-year contracts with Benevent Québécois, the book-to-bill ratio for the rest of our business would be above 1.3. Third, we achieved sequential growth in terms of gross margins at a percentage of revenue. It increased by 40 basis points sequentially to 26.9%, despite company-wide annual salary increases which came into effect at the beginning of the first quarter of this year. So despite unfavorable comparisons to last year's first quarter, which included significant PPP loan recognition, we showed sequential growth of our gross margin as we deploy our plan to gradually move away from subcontractors and begin to leverage our new offshore capacity. For Alethea, the future is now, and that extends to all of our practices across all of our geographies. In fact, the quarter was marked by the addition of 15 new clients, which reflects the reputation of trust that Alethea continues to garner. Let's take a more granular look at these geographies. In the United States, it was a record quarter in terms of bookings, with the addition of some major new logos, including a large insurer offering dental coverage to millions of Americans. This new customer signed a contract that could reach US$10 million with Oracle Enterprise Cloud Practice. That is a record for Oracle Practice, who will accompany them through important stages of their digital transformation processes. Of note, our Oracle and Microsoft practices, including Vitalist, both in Canada and the United States, now represent over 40% of our total revenues. In Canada, Aledia's business continues to be driven by strong bookings from the public sector, as well as new contracts from existing clients. In fact, on July 28th, we announced the signing of potentially more than $10 million in service agreements with the Quebec Government Ministry for Cyber Security. projects to be implemented over the next three years. Those projects will encompass Aletheia's specializations across multiple domains and will involve more than 140 Aletheia experts in application development and security, just to name a few areas. Our gross margins continue to improve as we convert some contractors into regular employees. That is a gradual process that takes time, but a continuous step in our commitment to accompanying our clients on their digital transformation journeys. In France, our operations experienced a very good quarter, and we are particularly pleased with the fact that this was achieved through 100% organic growth in European market. While talent attraction retention continued to be a major challenge in our industry, Aletheia has demonstrated its ability to respond to those challenges. In 1992, 30 years ago, Aletheia started out with 11 professionals and one bold vision, to become the trusted advisor to our clients. It was a tall order back then, but since that initial creation phase, Aletheia has advanced from one strategic chapter to the next, threading carefully but confidently through periods of diversification and growth and picking up speed as we went, a path culminating in this latest phase of consolidation. With numerous acquisitions along our road, Aliti has now reached a critical mass with 3,900 highly skilled professionals. That means that 2,300 professionals have joined our ranks in the past four years since going public in November 2018. In the past year alone, 400 team members have joined our growing professional family, which now has a footprint on five continents. Now let's take a closer look at our newly formed offshore delivery teams. First, We are very pleased with the growth potential and margin improvement that come from our offshore operations. Our first such center was opened in Morocco this past year and now counts over 40 professionals. The closing of the datum acquisition on July 1st, a leader in IP services for insurers and other regulated entities, such as governments, will grow our workforce by 120 professionals, excluding the 30 datum individuals who are based in the United States. Aletia now has global teams of professionals in Canada, the United States, and Europe who are supported by delivery teams in Morocco, Spain, Eastern Europe, and India. We expect to accelerate the growth of our offshore activities in order to better support our clients in the future and to improve our efficiency. This brings me to reiterate that we continue to embrace our clearly articulated plan, which focuses on serving our current and future customer base in Canada, the United States, and Europe. Our acquisitions continue to complement our strong organic growth. In acquiring U.S.-based Datum, Aletheia continues its steady penetration of the fast-growing insured tech market and adds a client base that includes six of the top ten health insurers in the United States, as well as a suite of proprietary product and cloud-based SaaS offerings. The response from our customers in the insurance market in Canada and the United States have been enthusiastic, and we have already begun offering Datum's data capture services to our legacy customers. Additionally, our fiscal 2022 acquisition of Vitalis and its proprietary learning platform generated an $8.4 million revenue contribution over the quarter. Vitalist's platform allows Aletheia to assist customers with ongoing training and change management and their adoption of new technologies. That complementary expertise now extends to our service offering to the complete life cycle of the technology solutions that we deliver. As Microsoft continues to expand the offering of its new Viva suite for Office 365, Vitalis Collaborative Tools positions Aletheia to accompany adopters of the platform as they accelerate their digital transformation projects. Currently, 25% of Fortune 500 companies are using Viva, and Aletheia is leveraging the recently acquired Vitalis technologies to build a brand-new employee experience suite that we foresee as a high-growth opportunity for us. Those are both good examples of the leverage that we get from our long-term, disciplined approach to quality acquisitions. As we continue to forge ahead with an agile and innovative plan, our efforts have been validated by several exclusive industry accolades that remind us that we are on the right path. In the past few months, out of thousands of potential candidates, Alethea was awarded the Microsoft Partner of the Year honors in two separate categories. Alicia also received an Impact Award in Canada, recognizing Microsoft partners who demonstrated excellence in Microsoft Dynamics 365. We also received accolade as an Oracle Partner of the Year finalist during the Oracle Change Agent Awards. And lastly, we received two Octus Awards, which is a prestigious contest in Canada. We won an award for an automation project that we delivered for national banks, Canada's sixth largest bank, and another award for the Biniclick app for St. Justin Children's Hospital to help sick kids and their families. Now back to our strategic plan. Following a period of sustained growth, we began fiscal 2023 with a focus on rationalization. We implemented processes targeting company-wide SG&A optimization in line order 2021-2024 strategic objectives. This is especially timely as everyone is monitoring the global economic situation very closely. While the effects of world events are significant and far-reaching, Aletheia strives to build a business that is as recession-resistant as possible. Typically, during periods of recession, companies tend to look for efficiencies through automation and migration to lower cost cloud solution. That is where we excel at helping our clients. Additionally, with no major infrastructure investments underway at Aletheia, with cost reduction initiatives in progress, and with a favorable debt situation, we believe that we are well positioned in business and financial terms as we look ahead with optimism to the rest of our fiscal year and to the achievement of our 2024 objectives. I will now pass it over to Claude for more financial metrics. Claude?