Executive Summary

Q3 FY2025 delivered mixed results: total revenue $17.61M (-6.8% YoY; +4.3% QoQ) with gross margin ~23%, while net income was $2.05M driven by non-operating fair value gains; Core Adjusted EBITDA improved to $1.50M from $(0.02)M YoY, signaling progress in focusing on North American GCC clients .
Management reiterated FY25 guidance (revenue $71–$73M; Core Adj. EBITDA $6–$7M) and introduced FY26 outlook (revenue $74–$80M; Adj. EBITDA $6–$8M), underscoring confidence in cost actions and a core-North America strategy; FY26 will exclude Core Adj. EBITDA as non-core credit losses should be fully addressed in FY25 .
North America revenue rose 13.1% YoY to $16.43M and now exceeds 93% of mix, reflecting exit of non-core Middle East work and repositioning toward recurring, long-tenure GCC relationships .
Potential stock reaction catalysts: reiterated FY25 guidance and new FY26 outlook, leadership changes (new CEO and CFO), core profitability traction (Core Adj. EBITDA positive), and AI wins demonstrating tangible client ROI (e.g., 90% churn prediction accuracy; 40% reduction in IT support human intervention) .

What Went Well and What Went Wrong

What Went Well

Core profitability inflected: Core Adjusted EBITDA reached $1.50M vs $(0.02)M YoY, as the company emphasized exiting non-core and focusing on core North American GCC relationships .
North America growth and mix: NA revenue rose 13.1% YoY to $16.43M and represented >93% of total, supporting a more predictable revenue base with multi-year engagement characteristics .
Strategic clarity and AI traction: Management highlighted AI-driven projects with measurable outcomes (e.g., 90% accuracy in churn prediction for a telecom client; 40% reduction in human intervention for IT support in healthcare) that differentiate Aeries and may support improved margins over time .

What Went Wrong

Top-line and margins under pressure YoY: Revenue declined 6.8% YoY to $17.61M and gross profit fell to $4.04M (gross margin ~23%) due to project timing/mix and the deliberate shift away from non-core markets .
Operating leverage deteriorated: Income from operations was $(5.16)M vs $0.73M YoY as SG&A rose, with management indicating ongoing cost optimization expected to benefit upcoming quarters .
Adjusted EBITDA remained negative: Adjusted EBITDA of $(2.04)M vs $2.36M YoY reflects both revenue/mix headwinds and elevated costs; net income turned positive primarily due to fair value gains, not core operations .

Financial Results

Consolidated Metrics – YoY and QoQ Comparison

Metric	Q3 FY2024	Q2 FY2025	Q3 FY2025
Revenue ($USD Millions)	$18.90	$16.87	$17.61
Gross Profit ($USD Millions)	$6.05	$3.58	$4.04
Gross Margin (%)	32.0% (calc from $6.05/$18.90)	21.2%	23.0%
Income from Operations ($USD Millions)	$0.73	$(4.10)	$(5.16)
Net Income ($USD Millions)	$(16.30)	$(2.31)	$2.05
Adjusted EBITDA ($USD Millions)	$2.36	$(2.30)	$(2.04)
Core Adjusted EBITDA ($USD Millions)	$(0.02)	$0.18	$1.50
Basic & Diluted EPS ($)	$(1.08)	$(0.05)	$0.08

Notes:

Gross Margin Q3 FY2024 is calculated from disclosed components ($6.05M/$18.90M). Q3 FY2025 gross margin was stated as ~23% on the call .
Q3 FY2025 net income benefited from $5.77M in “other income,” primarily the change in fair value of the forward purchase agreement put option liability and settlement gain .

Geographic Revenue Mix

Geography	Q3 FY2024 ($M)	Q2 FY2025 ($M)	Q3 FY2025 ($M)
North America	$14.53	$15.73	$16.43
Asia Pacific & Other	$4.36	$1.15	$1.18
Total	$18.90	$16.87	$17.61

Selected Mix Metrics (calculated):

NA % of Total: 76.9% (Q3’24) , 93.2% (Q2’25) , 93.3% (Q3’25) .

Sequential Trend (FY2025)

Metric	Q1 FY2025	Q2 FY2025	Q3 FY2025
Revenue ($USD Millions)	$16.70	$16.87	$17.61
Adjusted EBITDA ($USD Millions)	$0.40	$(2.30)	$(2.04)
Core Adjusted EBITDA ($USD Millions)	N/A	$0.18	$1.50

Non-GAAP Reconciliations and Notes

Adjusted EBITDA Q3 FY2025 excludes stock-based compensation, M&A/transaction-related costs, and fair value changes in derivative liabilities; Core Adjusted EBITDA further excludes contribution from non-core business .
Q3 FY2025 “other income” items included a $5.09M favorable change in fair value of the forward purchase agreement put option liability and a $0.58M gain on its settlement, which supported positive net income despite an operating loss .

Balance Sheet Highlights (end of Q3 FY2025)

Cash & cash equivalents: $2.39M; Long-term debt: $1.48M .
CFO reiterated these rounded figures on the call: cash ~$2.4M and long-term debt ~$1.5M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	$71–$73M (Q2 update)	$71–$73M	Maintained
Core Adjusted EBITDA	FY2025	$6–$7M (Q2 update)	$6–$7M	Maintained
Revenue	FY2026	—	$74–$80M	New
Adjusted EBITDA	FY2026	—	$6–$8M	New
Reporting Note	FY2026	—	Core Adj. EBITDA to be discontinued as non-core credit issues expected fully addressed in FY25	New

Additional color: Q2 commentary indicated a client exercised a contractual right to buy out offshore operations, creating a lump-sum, high-margin revenue event in Q4 FY2025, with lower recurring revenue thereafter .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 FY2025 and Q2 FY2025)	Current Period (Q3 FY2025)	Trend
AI/Technology Initiatives	Emphasis on AI and digital solutions to drive growth; investments in AI talent; Mexico near-shoring expansion to support clients .	AI practice “gaining traction”; examples: 90% churn prediction accuracy (telecom), 40% reduction in human intervention for IT support (healthcare) .	Strengthening adoption and proof points.
Market Focus & Mix	Shift to core North American GCC clients; non-core Middle East projects exited; NA ~93% in Q1; $4M run-rate cost cuts initiated .	NA revenue up 13.1% YoY; >93% of mix; continued cost discipline and focus on profitable growth .	Continued pivot to NA core with improving core profitability.
Cost Actions	Multi-phase expense reductions; executives taking pay cuts; $4M annualized savings; benefits expected to begin in Q3 .	Further SG&A optimization underway; benefits expected in upcoming quarters .	Ongoing execution; benefits rolling through.
Client Dynamics	Noted a large client buyout of offshore ops → one-time Q4 benefit, lower recurring thereafter .	Reiterated focus on long-term, recurring GCC relationships with PE-backed clients .	Transition to higher-quality, recurring core mix.
Leadership & Governance	CEO Sudhir led strategic pivot in Q2; CFO Rajeev provided detail –.	Leadership transition: Ajay Khare as CEO; Daniel Webb as CFO (also CIO), emphasizing financial discipline and profitable growth .	Refresh at the top; reinforced strategic focus.
Guidance/Tone	Introduced FY25 guidance in Q2: revenue $71–$73M; Core Adj. EBITDA $6–$7M .	FY25 reiterated; FY26 introduced (revenue $74–$80M; Adj. EBITDA $6–$8M); tone confident on core trajectory .	Confidence sustained with longer-term framing.

Management Commentary

Strategic focus on profitable growth: “We have realigned our business model to concentrate on high-value, long-term engagement with our core North American clientele… designed to… achieve profitable growth on both cash flow and adjusted EBITDA basis.” — CEO Ajay Khare .
AI differentiation: “Our AI practice is gaining traction… telecom client achieve 90% accuracy in churn prediction… healthcare… reduced human intervention by 40%.” — CEO Ajay Khare .
Financial discipline and outlook: “Reiterating… FY2025 revenue between $71M and $73M, Core adjusted EBITDA between $6M and $7M… Introducing FY2026 outlook… revenues between $74M and $80M and Adjusted EBITDA between $6M to $8M.” — CFO Daniel Webb .

Q&A Highlights

The published transcript contained prepared remarks and did not include an extended Q&A section; key clarifications were embedded in management commentary (e.g., guidance reiteration and FY26 outlook, cash/debt levels, and cost optimization timing) .

Estimates Context

Comparison to Wall Street consensus: S&P Global consensus for Q3 FY2025 EPS and revenue was unavailable at the time of analysis due to data access limits; therefore, we cannot assess beat/miss versus consensus for the quarter. Values retrieved from S&P Global were unavailable at the time of this analysis.*

Where estimates may need to adjust: With NA growth and Core Adjusted EBITDA momentum, but continued negative Adjusted EBITDA and operating losses, sell-side models may revisit operating expense run-rate and margin recovery cadence following the cost actions and non-core exit once more data points are available .

Key Takeaways for Investors

Core engine strengthening: NA revenue growth (+13% YoY) and Core Adjusted EBITDA inflection to $1.50M indicate the pivot to core GCC clients is taking hold .
Quality of earnings watch-out: Positive net income was primarily driven by non-operating fair value gains; operating income and Adjusted EBITDA remain negative, making upcoming expense reductions and core mix expansion crucial for sustained profitability .
Guidance confidence: FY25 guidance maintained and FY26 introduced suggests management visibility into core pipeline and cost trajectory; track execution against Core Adj. EBITDA targets .
AI as a differentiator: Tangible AI outcomes (churn prediction, automation) support a premium engagement positioning that could aid pricing and margin recovery over time .
Near-term trading implications: Focus on sequential progress in Adjusted EBITDA, Core Adjusted EBITDA, and gross margin; any confirmation of sustained cost savings and core client wins could be incremental catalysts .
Medium-term thesis: A successful migration to recurring, PE-backed NA GCC revenue with measurable AI-led value creation could compress operational volatility and rebuild margins; monitor client concentration (e.g., effects of the client buyout) and working capital collection dynamics .

Sources and Citations:

Q3 FY2025 8-K/Press Release and financial statements .
Q3 FY2025 Earnings Call Transcript and duplicate transcript –.
Q2 FY2025 8-K/Press Release and financials .
Q2 FY2025 Earnings Call Transcript .
Q1 FY2025 Earnings Call Transcript .

*Estimates disclaimer: S&P Global consensus data could not be retrieved due to access limits at analysis time.

Aeries Technology, Inc. (AERT)·Q3 2025 Earnings Summary