Aeries Technology - Earnings Call - Q2 2026

Executive Summary

• Q2 FY2026 delivered revenue of $17.36M (+2.9% YoY, +13.2% QoQ), GAAP net income of $0.64M ($0.01 EPS), and Adjusted EBITDA of $2.55M (14.7% margin), marking a second straight profitable quarter and the strongest first half in company history per management.
• Profitability was driven by disciplined cost control, AI-led delivery, and private equity sponsor network expansion; management emphasized the turnaround is “complete” and the company is entering a “new phase” of growth.
• Guidance: AERT reiterated FY2026 Adjusted EBITDA of $6–$8M; revenue guidance was not reiterated in Q2 (previously $74–$80M from Q1 and FY25 calls).
• Potential stock catalysts: sustained profitability with rising EBITDA margins, visibility into H2 contract ramps, and ongoing AI/GCC momentum across the PE ecosystem highlighted by planned hiring (+500 roles) and operational wins.

What Went Well and What Went Wrong

• What Went Well

  • Two consecutive profitable quarters with stronger margins; Q2 Adjusted EBITDA margin expanded to 14.7% (from 6.7% in Q1 and -13.6% in Q2 FY2025) on AI-led delivery leverage and cost discipline.
  • “Turnaround complete”: CEO underscored shift to a growth phase powered by AI and GCC scale; new enterprise client wins and multi-million-dollar AI partnerships support pipeline.
  • H1 FY2026 positive operating cash flow ($2.39M) and net income ($2.32M) vs losses in prior-year period, evidencing structural improvements in execution and collections per management.

• What Went Wrong

  • EPS declined QoQ ($0.01 vs $0.03 in Q1) despite higher revenue, reflecting mix and below-the-line items; YoY EPS improved from $(0.05), but QoQ optics softened.
  • Shareholders’ equity remains negative (deficit of $(2.9)M at 9/30/25), and the company flagged going-concern and other macro/FX/regulatory risks in its forward-looking statements.
  • Revenue guidance was not reiterated in Q2 materials (previously $74–$80M), which may reduce near-term visibility despite reiterated EBITDA outlook.

Transcript

Operator (participant)

Good day, and welcome to Aeries Technology's Second Quarter Fiscal 2026 Earnings Conference Call. Joining us today are Aeries Chief Executive Officer Ajay Khare, and Chief Financial Officer Daniel Webb. The call will review the results for the quarter ended September 30, 2025, and outline strategic priorities that are shaping the next stage of our growth. 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 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 directly comparable GAAP measures are available in our earnings release and on our website. With that, I'll turn the floor over to Ajay.

Ajay Khare (CEO)

Thank you. Thank you, and good morning, everyone. Quarter two financial year 2026, that is quarter ending September 30, 2025, represents a defining milestone in Aeries' journey. The quarter that marks the completion of our turnaround and beginning of our next phase of disciplined growth, designed to help propel Aeries towards long-term sustainable profitability. We build on to this momentum from Q1 and achieved strong financial performance. The $17.36 million in revenue, $0.64 million in net income, and $2.55 million in adjusted EBITDA, representing a 14.7% Adjusted EBITDA margin. For the first half of the fiscal year ended September 30, 2025, we generated $32.69 million in revenue, $2.32 million in net income, $3.59 million in adjusted EBITDA, and $2.39 million in cash flow from operations. The strongest six-month performance in Aeries' history. These results demonstrate that our strategy is working.

We are now operating from a position of strength driven by operational excellence, focused execution, and AI-powered delivery. During the quarter ending September 30, 2025, we continued to execute against our strategic priorities and achieved several important milestones that reinforced both our operational strength and long-term positioning. We expanded our India and Mexico operations with plans to hire over 500 new roles, strengthening our delivery capability and scalability. We added multiple new enterprise clients across technology, healthcare, and software segments, including several private equity-backed companies adopting our GCC model. We also signed AI partnerships, extending our automation footprint and deepening our capabilities across enterprise clients. These wins reinforce that our GCC, AI, and automation capabilities can address a growing market demand for greater cost efficiency and innovation speed. These achievements are not isolated wins.

They represent a scalable, repeatable model of value creation, combining AI, automation, and global delivery to help clients modernize faster, operate leaner, and compete stronger. Together, these accomplishments demonstrate our core ability to grow profitability, grow profitably, expand our market reach, and strengthen our position as a leader in AI-enabled business transformation. Our transformation over the last year has been intentional and disciplined. We focused on quality of revenue, operational control, and leveraging our AI-enabled global delivery infrastructure to deliver measurable results for our clients. Today, Aeries stands as a high-performing technology and operational partner with scalable capabilities in India and Mexico that allow us to meet client demand with speed and precision. We have now reported positive cash flow from operations for two consecutive quarters that are the result of disciplined cost management, stronger collection, and efficiency-led growth.

A key driver of our success continues to be our expanding presence with the private equity ecosystem. Our approach is simple but powerful. When we deliver measurable value to one portfolio company, it builds trust across the sponsor's network. This helps create a self-reinforcing growth flywheel where each successful engagement can now open new opportunities within the same PE group, multiplying our reach and deepening our relationships. We now work with multiple portfolio companies across several leading PE firms, each leveraging AI, Aeries' AI-powered transformation, and GCC model to achieve scale, agility, and cost optimization. We are also seeing positive movements in client engagement across industries, from enterprise software and healthcare technology to digital infrastructure. The consistent theme is the same. Enterprises want partners who can help them modernize, automate, and scale more efficiently.

Aeries is positioned at that intersection, combining deep operational knowledge with practical AI implementation design to deliver measurable outcomes. Importantly, our client wins this year lay a foundation for stronger performance ahead. Most large-scale enterprise and PE-backed programs typically carry a four- to six-month run before reaching steady-state revenue contribution. This means we are currently recognizing the early phase of several new contracts with greater financial impact to be realized across financial year 2025. This run dynamic provides visibility into future growth and demonstrates the underlying strength of our sales pipeline. Operationally, we continue to invest in systems, tools, and leadership talent that will support our next phase of scale. Our teams in India and Mexico are executing with quality, and we are expanding our automation footprint to deliver speed, consistency, and delivery excellence.

The improvements we make internally are designed to translate into better delivery, higher client satisfaction, and continued financial efficiency. Before I turn the call over to Daniel, I want to highlight what this moment represents for Aeries. With two consecutive profitable quarters, we are progressing beyond the turnaround phase towards disciplined growth, focused on innovation and execution, with the goal of supporting sustained profitability over time. Our strategy is clear: strengthen our core, scale through technology and AI, and build enduring relationships with enterprise and private equity clients that compound over time. With that, I will turn it over to Daniel to review the financial results in more detail.

Daniel Webb (CFO)

Thanks, Ajay. For the quarter ended September 30, 2025, Aeries reported revenue of $17.36 million, up 3% year-over-year, compared to $16.87 million in Q2 FY 2025, and GAAP net income of $0.64 million compared to a loss of $2.3 million in the same prior period last year. Adjusted EBITDA was $2.55 million versus a loss of $2.30 million a year ago. For the first six months of fiscal year 2026, we generated $32.69 million in revenue, $2.32 million in net income, $3.59 million in adjusted EBITDA, and $2.39 million in operating cash flow, an improvement from $0.21 million in the prior period year. Our operating expenses have stabilized at levels that can support profitability and scalability by allowing for targeted investment in automation and delivery infrastructure.

Cash flow from operations was $2.39 million for the first six months of fiscal year 2026, compared to $0.21 million in the same period last year. This improvement reflects sustained operational discipline and strong conversion of earnings into cash. We continue to benefit from both new client additions and the expansion of existing accounts, particularly within private equity-sponsored networks. New contracts signed this year are currently ramping, with revenue contribution expected to increase over the next several quarters. This gives us visibility into the back half of this year and momentum heading into fiscal year 2027. We continue to expect full year fiscal 2026 Adjusted EBITDA to be between $6 million and $8 million. Looking ahead, we remain focused on balancing growth and profitability. Our balance sheet remains healthy, and our cash generation provides the flexibility to invest in innovation while maintaining financial prudence.

With a diversified client base, a dual-shored delivery model, and expanding AI-led capabilities, Aeries is positioning itself to be able to deliver sustained, profitable growth. Thank you.

Operator (participant)

Thank you. This concludes today's conference call. You may now disconnect your lines. Thank you for your participation.