Executive Summary

Q2 2024 revenue grew 33.9% year over year to $135.5M; Adjusted EBITDA was $4.0M with a 2.9% margin, while GAAP net loss was $314.0M due to large non-recurring fair value and stock-based compensation items .
ARR reached $520.8M (+33.2% YoY) and trailing 12-month NDR remained ~130%, signaling strong customer expansion momentum .
Operating costs spiked: SG&A rose to 101.6% of revenue (vs. 36.4% last year) primarily from business combination-related items; cost of revenue ticked up to 30.9% (from 29.7%) on implementation revenue mix .
Versus street: third-party aggregators show Q2 EPS of $0.03 vs. -$0.05 estimate and revenue of $135.54M vs. $129.53M estimate, implying a beat on both; S&P Global consensus was unavailable for AILE/ARRW mapping .

What Went Well and What Went Wrong

What Went Well

Strong top-line momentum: revenue +33.9% YoY to $135.5M; gross profit +31.7% YoY to $93.7M, reflecting demand for ILE’s applied AI platform .
Durable customer economics: ARR reached $520.8M (+33.2% YoY) and NDR ~130%, with the addition of 108 end customers and 176,000 licensed users in the quarter .
CEO tone confident on demand: “We delivered 33.9% year-over-year top line revenue growth… We continue to see strong demand for the ILE AI platform as we added over a hundred end customers this quarter.” — Harish Chidambaran, CEO .

What Went Wrong

Heavy GAAP net loss (-$314.0M) driven by non-recurring items: $82.3M catch-up share-based comp; $169.9M change in fair value of convertible notes; $37.4M change in fair value of warrant liability; partially offset by $8.2M debt extinguishment gain .
SG&A escalated sharply to 101.6% of revenue ($137.7M), reflecting business combination-related items and public company ramp, diluting near-term margins .
Cost of revenue mix impact: increased to 30.9% due to implementation revenue on new contracts, modestly pressuring gross margin vs. last year .

Financial Results

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$101.2	$124.9	$135.5
Gross Profit ($USD Millions)	$71.2	$86.2	$93.7
GAAP Net (Loss) Income ($USD Millions)	($1.9)	($25.9)	($314.0)
Adjusted EBITDA ($USD Millions)	$1.3	$9.0	$4.0
Adjusted EBITDA Margin (%)	1.3%	7.2%	2.9%
Cost of Revenue (% of Revenue)	29.7%	31.0% (calc: $38.7/$124.9)	30.9%
R&D (% of Revenue)	30.1%	$37.1 on $124.9 (29.7% equivalent)	30.4%
SG&A (% of Revenue)	36.4%	$41.2 on $124.9 (33.0% equivalent)	101.6%

Notes: Adjusted EBITDA and margin are non-GAAP; reconciliations provided in the press releases .

Versus Estimates (third-party aggregators; S&P Global unavailable):

Metric	Consensus	Actual	Surprise
EPS ($USD)	-$0.05	$0.03	Beat
Revenue ($USD Millions)	$129.53	$135.54	Beat

KPIs and Operating Metrics:

KPI	Q1 2024	Q2 2024
Annual Recurring Revenue (ARR, $USD Millions)	$478.9	$520.8
Net Dollar Retention (NDR, TTM)	132%	~130%
Licensed Users	>4.7M	>4.9M
VARs Signed	N/A	>30 VARs (representing >1,000 end customers)
End Customers Added (quarter)	N/A	108; 176k licensed users added
Shares Outstanding (period-end)	95.8M issued/outstanding at 3/31/24	~141.2M common shares outstanding at 6/30/24; warrants 22.6M; RSUs ~1.3M
Liquidity (Cash + AR, $USD Millions)	$83.7 cash+AR (cash $0.8, AR $82.9)	$130.4 cash+AR (cash $39.2, AR $91.2)
Total Debt ($USD Millions)	Current/long-term debt $26.0/$0 at 3/31 (plus notes)	Revolving line ~$60.0 (net $59.3) following accordion draw

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q3 2024	Not provided	Not provided	Maintained (no formal guidance)
EBITDA/Margins	FY/Q3 2024	Not provided	Not provided	Maintained (no formal guidance)
OpEx (SG&A/R&D)	FY/Q3 2024	Not provided	Not provided	Maintained (no formal guidance)
OI&E / Fair Value Items	FY/Q3 2024	Not provided	Not provided	Maintained (no formal guidance)
Tax Rate	FY/Q3 2024	Not provided	Not provided	Maintained (no formal guidance)
Segment-specific	FY/Q3 2024	Not applicable	Not applicable	N/A (no segments disclosed)
Dividends	Ongoing	None	None	Maintained

Earnings Call Themes & Trends

(Transcript not available in our internal document catalog; themes derived from Q1/Q2 press releases and corporate 8-Ks.)

Topic	Previous Mentions (Q1 2024)	Current Period (Q2 2024)	Trend
AI/technology initiatives	“Leader in AI-powered learning automation and information intelligence”; ARR +34%, NDR 132%	Applied AI platform demand; ARR $520.8M, NDR ~130%; >100 end customers added	Improving scale
Go-to-market / VAR channel	Not specifically quantified	>30 VARs representing >1,000 end customers; strong customer adds	Expanding
R&D execution	R&D $37.1M; investment in industry-specific datasets	R&D 30.4% of revenue ($41.2M); “Hyper Automation apps” roadmap	Consistent investment
Financing/Liquidity	Business combination closed; revolving credit up to $40M + $20M accordion; cash ~$28M at 4/30	Drew $20M accordion; total debt $60M; Cash $39.2M; cash+AR $130.4M	Strengthened cash/AR
Non-recurring / fair value items	Warrant/convertible note fair value changes; loss on debt extinguishment in Q1	Large fair value changes (convertible notes, warrants), catch-up SBC; GAAP net loss dominated by one-offs	Elevated in Q2
Index/Listing	Became public; trading as AILE	Added to Russell 3000 and related indices	Visibility rising

Management Commentary

“We delivered 33.9% year-over-year top line revenue growth… We continue to see strong demand for the ILE AI platform as we added over a hundred end customers this quarter.” — Harish Chidambaran, CEO (Q2 release) .
Q2 narrative emphasized that GAAP net loss was “driven entirely by one-time items” and highlighted Adjusted EBITDA of $4.0M .
Q1 tone: “We achieved 33% revenue growth year-over-year and grew annual recurring revenue by 34%… well positioned to invest in continued platform growth.” — Harish Chidambaran (Q1 release) .

Q&A Highlights

Transcript not available within our document repository; based on Q2 press release disclosures:

Clarifications on profitability: management attributed GAAP net loss to one-time catch-up SBC and large fair value changes in convertible notes and warrants .
Cost mix: cost of revenue increased due to implementation revenue on new contracts; S&M stable at ~31% while G&A rose sharply amid public company transition and combination-related items .
Demand/pipeline: continued strong adoption with >100 customer adds and licensed users rising to >4.9M .

Estimates Context

S&P Global/Capital IQ consensus was unavailable for ARRW/AILE due to CIQ mapping limitations. We therefore referenced third-party aggregators indicating Q2 2024 EPS of $0.03 vs. -$0.05 estimate and revenue of $135.54M vs. $129.53M estimate, implying beats on both .
Given GAAP net loss driven by non-recurring items, estimate revisions may focus on normalization of SG&A, reduction of fair value volatility from financial instruments, and sustainability of ARR/NDR trends .

Key Takeaways for Investors

Underlying growth remains robust: revenue +33.9% YoY; ARR +33.2% YoY; NDR ~130% suggests strong net expansion across the installed base .
Reported GAAP loss is predominantly non-recurring; Adjusted EBITDA positive ($4.0M), but SG&A intensity (101.6% of revenue) needs to normalize for sustained margin expansion .
Go-to-market leverage building via VARs (>30) and customer adds (108 in quarter) supporting scale; licensed users now >4.9M .
Liquidity improved (cash+AR $130.4M) and debt capacity expanded ($60.0M revolving) to fund growth; watch covenant and leverage metrics as public company cadence continues .
Near-term trading: headline “EPS and revenue beat” per third-party aggregators could be supportive, but investors should look through one-time items and focus on Adjusted EBITDA trajectory and SG&A normalization .
Medium-term thesis: sustained ARR growth, sticky NDR, and expanding VAR ecosystem position ILE to monetize applied AI use cases; execution hinges on managing implementation mix (COGS) and scaling opex efficiently .

Sources: Q2 2024 8-K (Item 2.02 and Exhibit 99.1 press release, financial tables, non-GAAP reconciliations) ; Q1 2024 8-K press release and financials ; April 22, 2024 corporate 8-K (public listing, financing, dividends) ; Third-party aggregator estimate context .

iLearningEngines, Inc. (ARRW)·Q2 2024 Earnings Summary