Alithya Group Inc. (NASDAQ:ALYA) Q4 2019 Earnings Conference Call Transcript

Jun 19, 2019 • 09:00 am ET

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Alithya Group Inc. (NASDAQ:ALYA) Q4 2019 Earnings Conference Call Transcript

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Presentation
Executive
Paul Raymond

ago. This growth was essentially driven by the contribution from the US acquisition, with solid organic growth. Our rapid and efficient integration allowed us to generate growth early on, after the closing of the transaction.

In Canada, our operations continued its ongoing transformation as temporary softness among some larger customers was offset by important digital transformation wins with new and existing customers.

If we take a step back and look at the numbers only three years ago, where we had approximately 75% of our revenue coming from a handful of customers, we are much more diversified today with only one client representing more than 10% of our revenues. So, together with our US acquisition, our efforts to gradually increasing client and segment diversification is paying off. We are building the business for the long term and have clearly created a strong foundation to do so.

From a macro perspective, I wanted to share with you some recent industry insights. Gartner's recent forecast suggests that global IT spending is expected to increase by only 1.1% in 2019, down from 4% in 2018. Gartner reports that uncertain economic and political environments and trade wars are impacting growth in IT spending. However, they also mention that IT services and enterprise software segments, the two segments in which we operate, will expand at much higher growth rates of 3.5% and 7.1%, respectively. These are the segments we are targeting.

In terms of our operations, the integration of our US operation is progressing very well. It is a great fit for us all around. Its contribution exceeded our expectation so far. As mentioned before, organic revenue growth in the fourth quarter was 6% in US dollars on a comparable basis. Profitability also improved significantly as opposed to an important loss last year.

Also note that additional synergies will be realized as we continue to decrease the corporate expenses related to our US operations. As we pursue the integration and progressively generate more cross-selling opportunities, the full potential of this acquisition will continue to materialize over the coming quarters.

As a result of this acquisition, Alithya has stepped into the US market with a solid foundation based on our experts' excellent reputation. The combination of the two companies' expertise in implementing Microsoft and Oracle Cloud solutions now make Alithya a significant player in the North American market and provides access to a new tier of customers. And we are not the only ones saying this, as we have been named recently, as was announced yesterday by Microsoft, as a global finalist in the 2019 Microsoft Dynamics 365, or Cloud Solutions, for Finance and Operations Partner of the Year Award.

We are honored to be recognized among a global field (ph) of top Microsoft partners for excellence in innovation and implementation of customer solutions based on Microsoft Cloud Technologies.

Claude will now review our Q4 results and finance position, and I will be back for the conclusion. Claude?

Executive
Claude Thibault

Thank you, Paul, and good morning. Please turn to