Aeries Technology, Inc. (AERT)·Q2 2025 Earnings Summary

Executive Summary

• Q2 FY2025 revenue was $16.87M, down 4% year over year vs. $17.58M in Q2 FY2024, with gross margin compressing to 21.2% from 27.4%; adjusted EBITDA was $(2.30)M, while core adjusted EBITDA remained positive at $0.18M .
• North America revenue grew 13.3% YoY to $15.73M, reflecting the refocus on GCC services for U.S. PE-backed clients; Asia Pacific and Other declined materially, consistent with the exit of non-core markets .
• Management introduced FY2025 guidance: revenue $71–$73M and core adjusted EBITDA $6–$7M; they also signaled sequential improvement for Q3 and Q4 and a one-time, high-margin lump-sum revenue event in Q4 from a client buyout .
• Wall Street consensus estimates (S&P Global) were unavailable at time of writing due to API limits, preventing formal beat/miss assessment; consider focusing on guidance trajectory and North America momentum as near-term stock catalysts [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

• North America momentum: “Our North America revenue…was up over 13% to $15.7 million” and the business is “growing significantly faster than the North American IT services industry” .
• Cost actions accelerating: “We have cut over $4 million of additional annualized expenses…we expect to see the full effect of these savings starting in our third fiscal quarter,” including executive pay cuts .
• Pipeline visibility and guidance: Updated FY2025 outlook to revenue $71–$73M and core adjusted EBITDA $6–$7M; management expects Q3 and Q4 to be sequentially better, supported by GCC focus and client pipeline .

What Went Wrong

• Margin and profitability pressure: Gross margin fell to ~21.2% (vs. 27.4% prior year), operating income swung to $(4.10)M from $1.49M, and adjusted EBITDA to $(2.30)M from $2.94M .
• GAAP earnings down: Net loss of $(2.31)M vs. net income of $0.93M prior year; the quarter also reflected elevated SG&A (YoY +130% to $7.67M) and operational shifts .
• Non-core exit and credit losses: Management exited Middle East consulting engagements (now 0 revenue) and highlighted slower collection cycles leading to higher-than-expected credit losses, weighing on results .

Financial Results

Segment (Geography) breakdown:

KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our North America revenue was up over 13% to $15.7 million…We’re seeing strong interest from new prospective core clients and have strong visibility into the pipeline that gives us confidence in our new guidance for fiscal 2025.” — CEO Sudhir Panikassery .
• “Between our previous call and today, we have cut over $4 million of additional annualized expenses…we expect to see the full effect of these savings starting in our third fiscal quarter.” — CEO Sudhir Panikassery .
• “For revenue, we are currently expecting a range of $71 million to $73 million. For core adjusted EBITDA…$6 million to $7 million…we expect our third quarter to be better…than the second…and the fourth quarter to be sequentially better than the third.” — CEO Sudhir Panikassery .
• “One of our large clients have exercised their contractual right to buy out the offshore operations…The end result will be a large lump sum of high-margin revenue in the fourth fiscal quarter…but lower recurring revenue from them going forward.” — CEO Sudhir Panikassery .

Q&A Highlights

• The accessible transcript content consisted of prepared remarks with detailed strategy and guidance. No distinct Q&A exchanges were captured in the transcript segments available, but management clarified FY2025 guidance, sequential improvement expectations, and the Q4 client buyout dynamics within prepared remarks .

Estimates Context

• Wall Street consensus (S&P Global) estimates for Q2 FY2025 revenue and EPS were unavailable due to request limits at time of query, so formal beat/miss analysis cannot be provided [GetEstimates error]. In absence of consensus, investors should anchor on management’s FY2025 guidance and the sequential improvement framework while monitoring Q4’s one-time revenue event and underlying recurring run rate .

Key Takeaways for Investors

• Core North America GCC strategy is working: NA revenue grew 13.3% YoY to $15.73M in Q2, with management highlighting faster growth than broader NA IT services, a robust pipeline, and reiterated FY2025 guidance — positive for sentiment despite near-term margin compression .
• Cost actions are meaningful: >$4M annualized expense cuts and executive pay reductions should support margin recovery starting Q3; track Q3/Q4 sequential improvement claim closely for proof points .
• One-time Q4 tailwind vs. lower recurring: The client buyout sets up a high-margin lump-sum in Q4 but creates future run-rate headwind — watch how new logos and expansions backfill recurring revenue .
• Profitability still rebuilding: Gross margin fell to 21.2% and adjusted EBITDA turned to $(2.30)M; core adjusted EBITDA remained positive ($0.18M), suggesting underlying core health but smaller scale — monitor mix and SG&A progression .
• Credit losses/legacy non-core: Exit from Middle East and expected credit losses weighed on results; management expects these to be fully addressed within FY2025 — risk abates into FY2026 where reporting drops “core” concept .
• Liquidity and leverage manageable: Cash was $3.63M at Q2 end and long-term debt ~$1.5M; keep an eye on working capital dynamics and collections from legacy non-core customers .
• Trading setup: With consensus unavailable, the near-term catalyst is execution vs. sequential improvement and Q4 lump-sum flow-through to margins/cash. Medium-term thesis hinges on scaling core GCC engagements, AI-enabled projects, and sustaining cost discipline .