Aeries Technology, Inc (AERT) on Q4 2025 Results - Earnings Call Transcript
Operator: Good morning, and welcome to the Aeries Technology Full Year 2025 Earnings and Business Update Call. Joining us today are Aeries Chief Executive Officer, Ajay Khare; and Chief Financial Officer, Daniel Webb. This call will review the results for the year ended March 31, 2025, and discuss strategic and priorities moving forward. Before we begin, please note that today's discussion contains forward-looking statements, including Aeries' expectations regarding future performance and market opportunities. Actual results may differ materially. Please refer to the SEC filings and the earnings press release for a full discussion of risks and uncertainties. Additionally, this call will include certain non-GAAP financial measures. Reconciliations of these measures to the most comparable GAAP measures are available in our earnings press release and on our website. With that, I'll now turn the call over to Ajay.
Bhisham Khare: Thank you, operator. Good morning, everyone, and thank you for joining us. I'm Ajay Khare, CEO of Aeries Technology. Today, we will review our performance for fiscal year 2025 and walk through the initiatives that are shaping the next phase of growth for Aeries. After that, I will hand it over to Daniel to take you through the detailed financial and forward outlook. For financial year 2025, we guided to $6 million to $7 million in core adjusted EBITDA. I'm pleased to report that we ended the year having achieving $7.4 million beating our guidance. The outperformance underscores the strength of our focused execution and results of our realignment efforts. Financial year 2025 was a pivotal year for Aeries. We made intentional decisions to sharpen our strategy and focus. That meant doubling down on our core business, that is helping private equity-backed companies, build and scale global capability center, GCCS, and stepping away from lower-value noncore geographies. We exited the Middle East consulting markets, completed all the associated write-offs and significantly tightened our cost structure. Those legacy issues are now fully behind us. Our focus on private equity firms and portfolio companies with a presence in North America has created a resilient and focused business for us. We have built deep relationships with leading private equity funds and our value proposition that is transformation through innovation, speed, efficiency and flexibility has started to resonate strongly. We continue to see high client retention, long tenured engagements and increased adoption of large-scale digital transformation missions. North America now represents over 93.3% of our revenue base and we continue -- and we see continued momentum through both new logos and deeper engagements with existing clients. We expect our momentum to accelerate now that we have hired a Chief Growth and Strategy Officer. We will continue to make key hires with the relationships in the PE industry to expand our pipeline and network. Excluding the discontinued Middle East operations, our North America revenue grew 15% year-over-year from $57 million to now $65.5 million for financial year 2025, highlighting the strength of our core markets. At the heart of our delivery is our GCC model, also known as Global Capability Centers model. GCCs are no longer optional. They have become the preferred way for companies to gain scalable capabilities in technology, operations and transformation, which they can then leverage throughout their business. With over 13 years of GCC expertise, we are now seeing that experience convert into competitive advantage and real deal momentum. Recently, we began partnering with a leading global cybersecurity software and services provider to establish and scale global capability centers in both India and Mexico to enhance their existing India-based workforce while adding a nearshore hub to support core business function. We are delivering purpose-built solutions that are allowing them to innovate efficiently and to pursue their digital transformation objectives. Consistent with our capabilities, we are working in partnership with this customer from setup to scale up, reflecting the full range of technology and operational capabilities that our team possess. We look forward to a long partnership with this customer. We also signed a recent letter of intent with a leading global SaaS company in the sustainability and compliance space to establish AI-driven GCCs in India and Mexico. These centers will initially support core business functions with a road map to expand as the client scales. This engagement further demonstrate how our GCC model can align with long-term innovation and global growth strategies from day one. Building on our momentum, financial year 2025 marked the launch of our new AI-centered global capability center framework and approach that integrates intelligent automation, generative AI agents and data-driven DCN systems into GCCs that we build and operate. We are excited to bring this new generation of capabilities to our customers as they look to increase the speed of their value creation initiatives, which in turn helps them to successfully innovate, serve their customers and do it in the most cost-effective and technically advanced way possible. We have already deployed this framework within a flagship health care portfolio company, where we scaled a 300-plus member GCC within 15 months, which is starting to see meaningful business results. Our AI-centered GCC framework will serve as the operating system for the next-generation enterprises transformation, and we will continue to build on early success by enhancing it further with more detailed, more domain-specific AI tools, predictive benchmarking and enterprise-grade LLM integration. With that, I will hand it over to Daniel to continue the discussion and walk you through the broader strategy and outlook.
Daniel S. Webb: Thanks, Ajay. Let me start with the consolidated financials. For FY 2025, we reported $70.2 million in total revenue compared to $72.5 million in FY 2024. This slight decline was anticipated and driven by our exit from the Middle East business. Excluding that impact, our North America revenue grew 15% year-over-year from $57 million to $65.5 million, demonstrating strong momentum in our core market. As Ajay mentioned, we had originally guided to $6 million to $7 million in core adjusted EBITDA. We closed the year at $7.4 million, exceeding our guidance and reaffirming the strength of our realigned business model. Our financials in fiscal 2025 reflect onetime items that we don't expect to happen in 2026. The majority of our SG&A in 2025 was from onetime items. The Middle East business has now been fully written off. Our restructuring is complete. Stock-based compensation is expected to be significantly lower, we believe 2026 is on track to be our best year yet. Let me now walk you through our full year financial performance. Full year FY 2025, total revenue, $70.2 million; gross profit, $16.7 million, margin of 23.8%. Operating loss, negative $28.8 million; adjusted EBITDA, negative $4.7 million; core adjusted EBITDA, positive $7.4 million; net loss negative $21.6 million. These full year results reflect the structural transition we've made away from noncore and toward a more focused scalable operating model. The core adjusted EBITDA reached $7.4 million, an increase of 365% over the $1.6 million reported in the previous year and above the guidance we have provided. This outperformance marks a clear validation of that strategic shift. We ended the year with $2.8 million in cash and $1.1 million in long-term debt, providing ample flexibility to support our ongoing initiatives. As a final note, we previously shared that FY 2025 would be the last to report core adjusted EBITDA as a separate metric. Going forward, we will rely on adjusted EBITDA and GAAP measures as more representative of our performance. Core adjusted EBITDA was useful during our transition period, but with the noncore business behind us, it is no longer needed to explain underlying trends. FY 2026 outlook. We are reaffirming our guidance. Revenue, $74 million to $80 million; adjusted EBITDA, $6 million to $8 million. These projections are based on our strength and focus on North American market, the maturation of our global capability center, GCC model and the growing demand for digital transformation services among private equity-backed companies. We are confident in this outlook and here's why. We're seeing strong traction with clients. Existing clients are deepening their partnerships. Our PE network is expanding, boosted by the addition of our Chief Growth Officer. Our cost structure is now lean and proven. AI-led transformation is gaining pace and our modular agents are already active in client environments. With strong relationships, a validated delivery model and growing interest from PE portfolio companies, we are excited to be entering FY 2026 with clarity, confidence and momentum. Thank you for your continued support, and we look forward to delivering sustained value in the coming fiscal year.
Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
