Alithya Group (ALYA) Investor Day 2024 summary

Strategic direction and growth outlook

• Aims for 5%-10% annual organic growth and CAD 150 million in acquisition-driven revenue over the next three years, targeting an 11%-13% EBITDA margin by focusing on higher-value services and margin expansion.

• Plans to leverage industry expertise, proprietary IP, and strong partnerships with Microsoft, Oracle, and AWS to differentiate and accelerate growth.

• U.S. market is a key growth driver, already representing 40% of revenue, with faster growth than other regions and significant potential for smart shoring and margin improvement.

• M&A strategy focuses on high-margin tuck-in acquisitions, with a preference for leadership retention and cross-selling opportunities, maintaining historical acquisition multiples of 5x-7x EBITDA.

• Smart shoring and automation are central to cost efficiency, with a goal to increase offshore delivery and automate wherever possible to drive margin expansion.

Financial performance and guidance

• Revenue has trended upward since 2021, driven by acquisitions and organic growth, with 80% of revenue from existing clients, reflecting strong customer relationships.

• Gross margin improved from 26.5% in 2022 to 30.4% in 2024, with a high of 32.1% in Q4 2024, attributed to integration of acquisitions, higher-value services, and reduced subcontractor use.

• Adjusted EBITDA margin increased from 5.2% in 2022 to 7.2% in 2024, despite a 6% revenue decline in 2024, due to cost optimization and margin focus.

• Net debt to trailing twelve-month adjusted EBITDA decreased from 5.4x in 2022 to 2.7x in 2024, reflecting strong cash management and deleveraging.

• Committed to further deleveraging to enable future acquisitions and sustainable growth.

Business model evolution and differentiation

• Transitioning from staff augmentation and project-based work to solution-based and trusted advisor roles, emphasizing industry-specific expertise and business outcomes.

• Proprietary IP and accelerators, such as RapidSuite and AI-FI, are increasingly central, with IP-driven revenue rising from 2.8% to 12.1% over three years.

• Actively partners with clients and technology vendors to co-develop and license IP, enhancing differentiation and recurring revenue streams.

• Focused on high-value, complex projects in core industries: financial services, insurance, healthcare, manufacturing, public sector, and energy.

• Client satisfaction and employee engagement are rigorously measured and prioritized, supporting the trusted advisor positioning.