11/14/2025

speaker
Operator
Conference Operator

Good morning. Welcome to Alethea's second quarter of fiscal 2026 results conference call. I would now like to turn the meeting over to Alethea's management team. Please go ahead.

speaker
Dominic
Investor Relations

Thank you for joining us today for Alethea's second quarter fiscal 2026 results conference call. The press release, along with the MD&A containing condensed financial statements and related notes, was published this morning and is now accessible on our website. The webcast presentation can also be found on our website in the Investors section. Please be advised that this call will contain forward-looking statements which are subject to various risks and uncertainties that may cause actual results to differ materially from those anticipated. These statements include our estimates, plans, expectations, and statements regarding future growth, operational results, performance, and business prospects that do not solely relate to historical facts. These statements may also refer to future events, including expectations around client demand, business opportunities, leveraging our services, IP, AI, and expertise to meet client needs, excelling in a competitive market, achieving our three-year strategic plan, and deploying our SmartShort capabilities. For more information, Please refer to the cautionary notes included in our presentation and the forward-looking statements and risks and uncertainties section of RMDNA, which are accessible on our website. All figures discussed on today's call are in Canadian dollar unless otherwise stated, and we may refer to certain indicators that are non-IFRS measures. Please refer to the cautionary note included in our presentation and to the non-IFRS and other financial measures section of ORMDNA for more detail. Presenting this morning are Paul Rehman, the lease's president and chief executive officer, Bernard Dockrill, chief operating officer, and Pierre Blanchet, chief financial officer. I will now turn the call over to Paul Rehman. Paul?

speaker
Paul Rehman
President & Chief Executive Officer

Thank you, Dominic. Good morning, everyone, and thank you for joining us today. Before we begin, I want to take a moment to thank our clients for their trust and to recognize the dedication of our teams across all of Aletheia. Our people's commitment to excellence continues to drive our success and deliver meaningful impacts for our clients. Aletheia is not small, it is focused. Our second quarter operational results demonstrate the benefits and long-term potential of our strategy as we continue to execute our plan. Our company has transformed. And we are seeing the benefits of this approach in a challenging economic environment. So despite Q2 being our summer quarter, Elite has continued to progress on many fronts. The first KPI that should stand out from our second quarter is our gross margins. We continue to work our way up the value chain. Our gross margin percentage is now above many large integrators in our sector. This is not luck. our focus on higher value services has now reached a maturity level that enables us to differentiate at a larger scale and fight above our weight. We win on the quality of our services and our delivery reputation. This brings us to the second KPI that should retain your attention. Our revenues have decreased in the past as our shift to higher value projects has replaced some of our past commodity services. However, in Q2, Despite market uncertainties and a wavering economy, it is not our global year-over-year revenue growth of 11.5% that should hold your attention, but rather our industry-leading 34.8% growth in our U.S. operations. This impressive result by most standards comes from a combination of organic growth and the rapid integration of our e-Verge acquisition. We realigned our U.S. operations a few years ago with our long-term strategy. Since then, our enterprise application and transformation services have become a key differentiator and a strategic priority for clients looking to leverage enterprise-wide AI solutions. It is also showing the potential of our platform in the largest market in the world for these services, the USA. When you combine the strategic focus with strong execution, you get these growth results. This realignment is the same that we are implementing across all our operations. Finally, the third KPI that should pique your interest is the continued progress of our adjusted EBITDA margins and cash flow generation. Our trailing 12 months adjusted EBITDA is now over $52 million, which is a new high watermark for Aletheia. Our transformation into a high-value trusted advisory has brought us to this point at just the right time. The industry is evolving fast. AI is influencing everything we do, and our clients are looking for value creation and new ideas more than ever. Cost savings will only get you so far. We have demonstrated that we can be the trusted advisor to accompany our clients in their AI-driven digital transformation. And we know our model is scalable. You could say Aletheia has arrived. Before I pass it over to Pierre, I will also mention the non-cash impairment charge we took in the second quarter as part of the ongoing repositioning of our business. And with that, I'll pass it over to Pierre to provide some financial highlights for the second quarter of fiscal 26, followed by Bernard to share some operational updates.

Disclaimer

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Investor presentation