Alithya Group Inc. (NASDAQ:ALYA) Q3 2023 Earnings Call Transcript

Claude Thibault: Yeah, sure. Thanks for the question again. Well, in one year, we went from 0% to 5%. So in theory, we should be able to double that in a year. So I’d say if you asked me for an objective, that would be my — my personal goal would be to double that within a year. Of course, M&A can also impact that. We looked at targets today that have offshore or smart-shore components so that could impact it. But we need to grow that. I think we need to get to a threshold of 30% real fast to be able to compete with some of our larger players out there. And again, I think that’s very doable through a combination of organic growth and M&A. But I think we can do that within the foreseeable future.

Gavin Fairweather: Okay, that’s great. And so maybe just on an organic basis, like as you’re looking to hire in Eastern Europe or Morocco or in India, like how are you finding the talent pools that if you kind of take M&A and put it to the side?

Paul Raymond: Excellent. The talent pool if you look at the different areas, geographies, Morocco we’ve been able to find a lot of very qualified individual, a lot of French speaking, as well. So that’s great to support our Canadian and European operations. In Eastern Europe and India there is more English speaking, but again talent, significantly larger talent pool than here. So no, it is very — not easy, but a lot easier to find people in those areas than in North America today.

Gavin Fairweather: Okay, great to hear. And then just lastly, for me, if I kind of look at the U.S. business, pre Vitalyst and Datum, it kind of looks like organic growth and constant currency is being kind of flat the last couple of quarters. And I know this business is a bit more maybe transactional in nature, maybe you can just discuss the sales pipeline and backlog for this business. And just kind of your overall expectations for the next few quarters?

Paul Raymond: Our backlog and sales pipeline is up year-over-year in the U.S. You have to take into consideration that the acquisitions, a lot of the growth that’s coming from the acquisitions is from existing customers that we had prior to the acquisitions. So it’s kind of a combination, when you look at organic growth, you have to be conscious of the fact that even though it’s coming from the offerings, from the acquisition very often, it’s because it’s an existing customer that we have and the rest of the business that we’ve been able to cross sell to. So it’s really a combination of the two, but now we’re pretty happy with how the funnel is growing year-over-year and the backlog as well in the U.S. as a whole.

Claude Thibault: And just to add directionally what Paul wanted to say is our bookings in the U.S. excluding Datum and Vitalyst, so in our historical business, the bookings this year are higher than one year ago. So we’re kind of comfortable with the trends over there, generally speaking.

Gavin Fairweather: Okay, great, congrats on the progress. Thanks for taking my questions.

Paul Raymond: Thank you Gavin.

Operator: Your next question comes from Divya Goyal from Scotiabank. Please go ahead.

Divya Goyal: Good morning, guys. Good quarter. Just on the Datum and Vitalyst discussion, I wanted to get some color on how should we think about the two businesses on a go forward basis, I did see that there was a slight step down between Q2, Q3 — Q2 and Q3 revenue, so if you could just help us guide there? Thank you.

Paul Raymond: Sorry, we missed the beginning. Are you talking about the two recent acquisitions?

Divya Goyal: The Datum and Vitalyst acquisitions is what I was referring to, if you could help us see how could that acquisition — how would that acquisition sort of pan out going forward, Q2, from the numbers, we have them at 13.3 million versus Q3 came in at 12.6 million. So, going forward trying to understand what would be the run rate revenue for the two acquisitions?

Claude Thibault: So maybe, obviously, those two acquisitions are very powerful cross selling platforms, because they bring new services, new expertise to Alithya, which we can bring to our clients. So the expectation is certainly for that growth to accelerate and be strong going forward. We commented directionally about Datum having a good sequential increase. Obviously, we’re starting from a small base, so it’s easy to pile up the numbers and show a good sequential growth. But we’re expecting that to continue, the reception with our teams internally, and with some clients we pitched the technologies that they have is very good. So we’re kind of optimistic there with Vitalyst. And Paul touched on that as well, the learnings of certain services that sometimes are perceived to be less critical and maybe more cyclical.

So over the short term, we’re not really going to comment, but on the long term, mid to long term, I mean again, these are services that combined so well with everything we already do, in terms of post implementation. So when the team is great and the technology that they have to perform their services is very good so — and they’re also fairly small compared to our overall operation. So maybe we have a bit of a pause because of the economic cycle, but mid to long term, we remain very bullish on those two acquisitions.

Divya Goyal: That’s good color. Thanks guys.

Paul Raymond: Thank you Divya.

Operator: . Your next question comes from John Shao from National Bank. Please go ahead.