Aeries Technology - Earnings Call - Q1 2026

Executive Summary

• Q1 FY2026 was Aeries’ strongest first quarter ever, delivering positive operating cash flow ($1.37M), positive EBITDA ($2.31M), positive operating income ($0.8M), and net income of $1.68M, a $17.0M YoY swing from a loss in Q1 FY2025.
• Revenue was $15.33M, down 8.0% YoY (vs. $16.67M), reflecting focus on core AI-powered GCC services and cost discipline; Adjusted EBITDA improved to $1.03M (6.7% margin) from $0.40M (2.4%) a year ago.
• Management reaffirmed FY2026 guidance: Revenue $74–$80M and Adjusted EBITDA $6–$8M, citing momentum with PE-backed clients and scalable AI-led GCC delivery.
• Key stock reaction catalysts: sustained profitability signals (cash flow, operating profit), large YoY cost reset (SG&A down >85%), and guidance reaffirmation; a near-term watch item is sequential revenue decline vs Q4 FY2025 as the company exits non-core and normalizes the base.

What Went Well and What Went Wrong

• What Went Well

  • “Financial trifecta”: EBITDA $2.3M, net income $1.7M, and operating cash flow $1.4M, underscoring improved core earnings power and cash generation.
  • Material cost reset: SG&A reduced by “more than 85% YoY,” enabling a leaner cost base and scalability; operating profit improved by $17.2M YoY to $0.8M.
  • Structural repositioning: exit of non-core ops, integrated nearshore (Mexico) and offshore (India) delivery, and AI-led GCC platforms (OneGCC Automation, AeriesOne) driving client ROI and margin protection.

• What Went Wrong

  • Revenue declined 8% YoY to $15.33M in Q1 FY2026 (vs. $16.67M a year ago), reflecting transition and focus; sequentially, revenue was below Q4 FY2025 ($19.05M*). [$19.05M*]
  • Continued reliance on non-GAAP to capture underlying trends: Adjusted EBITDA $1.03M excludes fair value changes and other items, requiring careful interpretation of quality of earnings.
  • No segment/geographic breakout disclosed for Q1; limited visibility on mix drivers beyond qualitative emphasis on PE-backed clients and AI-GCC services.

Transcript

Speaker 0

Good morning and welcome to the Aeries Technology first quarter fiscal year 2026 earnings call. Joining us today are Aeries Technology Chief Executive Officer, Ajay Khare, and Chief Financial Officer, Daniel Webb. The call will review the results for the quarter ended June 30, 2025, and discuss strategic priorities moving forward. Before we begin, please note that today's discussion contains forward-looking statements, including Aeries Technology's expectations regarding future performance and market opportunities. Actual results may differ materially. Please refer to 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. Reconciliation of these measures to the most directly comparable GAAP measures is available in our earnings release and on our website. With that, I'll turn the call over to Ajay.

Speaker 2

Thank you, and good morning, everyone. I'm Ajay Khare, CEO of Aeries Technology, and today we will review our performance for the first quarter of fiscal year 2026. Q1 2026 was just not another quarter for Aeries. It was the quarter that showcased our transformation into a profitable, scalable, and innovation-led enterprise. We delivered results that validated our strategy, energized our teams, and confirmed to our investors and clients that Aeries is built for sustainable momentum and growth. We reported positive EBITDA of $2.3 million, net income of $1.7 million, and positive cash from operations of $1.4 million, a financial trifecta that better positioned us for discipline and repeatable growth. These numbers are not an accident. These are the outcome of strategic clarity, rigorous execution, and relentless focus on what we do best, that is delivering measurable client outcomes through AI-powered Global Capability Centers.

Over the past few months, in connection with our leadership changes, we have taken deliberate steps to simplify our structure, sharpen our client focus, and reduce operational complexity, which helped to result in an 85.5% year-over-year reduction in SG&A expenses, improved margins, and delivered a model that is designed to scale without sacrificing quality. We have been focused on strengthening the foundation of the business to set it up for long-term profitability and growth. We exited non-core operations so we could put more of our energy into high-value GCCs and AI-powered transformation services. We have doubled down on the private equity-owned businesses and GCC opportunities, and that sharper focus has already led to multiple new client wins. We have also strengthened our leadership team and aligned skills directly to our core offering.

On the delivery side, we have integrated our nearshore capabilities in Mexico to our offshore teams in India, which is giving our clients faster turnout, better cost efficiency, more scalability, and greater innovation. We have tightened our project governance and delivery processes to protect margins and help us accelerate client outcomes. We have sought to eliminate non-recurring costs while putting in place stronger expense controls. All of these changes are about creating a more agile, efficient, and scalable Aeries, one that can grow consistently and profitably. We have also reinforced our leadership foundation with the formation of an independent advisory board, an elite group of transformation and market leaders who can help us seize growth opportunities, fine-tune our AI strategy, and expand our influence in the private equity market. This quarter, we continue to see meaningful progress from our AI-led Global Capability Center initiatives.

With one Global Capability Center automation, clients are running more streamlined and connected operations, which is improving day-to-day efficiency and decision-making. Aeries One is allowing us to roll out enterprise-grade AI faster than before, combining ready-to-use components with custom-built capabilities so we can adapt to each client's needs. Through our AI partner network, we are helping clients accelerate AI adoption and enhance delivery speed. The real impact is that these solutions are shortening the time it takes for clients to see results and making those results more consistent. Previous one-time costs, restructuring, listing expenses, and other adjustments are behind us now. What we saw in Q1 financial results is a profitable return to our core business. This is a new era for Aeries Technology, one we believe will be defined by growth, expanding client relationships, and operational excellence.

With this strong start, we are confident in delivering our financial year 2026 priorities and achieving our guidance. With that, I'll hand it over to Daniel.

Speaker 1

Thanks, Ajay. Q1 FY 2026 is a snapshot of our core earnings power, and the transformation is clear. We delivered total revenue at $15.3 million, gross profit $3.8 million, operating profit $0.8 million, EBITDA $2.3 million, adjusted EBITDA $1 million, adjusted EBITDA margin 6.7%, net profit $1.7 million, cash from operations $1.4 million. The year-over-year story is even more compelling. Net income swing of over $17 million from last year, $15.3 million loss. SG&A expenses down more than 85%. Operating profit up $17.2 million year-over-year. Cash from operations is positive, a significant reversal from prior quarters of negative cash flow, driven by disciplined cost control, healthy revenue mix, and expansion within high-value client accounts. Our momentum in the private equity segment accelerated this quarter. Several clients transitioned from pilot programs to scale multi-year engagements, increasing delivery volumes and expanding margins. We are reaffirming our fiscal year 2026 guidance.

Revenue $74 million to $80 million, adjusted EBITDA $6 million to $8 million. Our foundation is strong, our model is proven, and our growth opportunities are expanding. We are well positioned to sustain growth and scale our impact in the quarters ahead. Thank you.

Speaker 0

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.