Aeries Technology Q3 2025 Earnings Call Transcript

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February 18, 2025
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Operator

Good morning. Welcome to Ares Technologies Third Fiscal Quarter twenty twenty five Business Update Call. Joining us today are Ares' Chief Executive Officer, Ajay Khare and Chief Financial Officer, Daniel Webb. This call will review the results of the quarter ended 12/31/2024 and discuss strategic priorities moving forward. Before we begin, please note that today's discussion contains forward looking statements, including Ares' expectations regarding future performance and market opportunities.

Operator

Actual results may differ materially. Please refer to the 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 direct comparable GAAP measures are available on our earnings release and on our website. With that, I will now turn the call over to Ajay.

Ajay Khare
Ajay Khare
CEO at Aeries Technology

Thank you, and good morning, everyone. I'm Ajay Khare, the newly appointed CEO of Ares Technology. Many of you know me from my previous role as Chief Operating and Revenue Officer for the past ten years here at Ares. I'm honored to step into this role and lead the Company into a new phase of transformation and growth. I would like to take this opportunity to appreciate outgoing CEO, Sudhir Panikhesi's leadership, which has set a strong foundation for our growth.

Ajay Khare
Ajay Khare
CEO at Aeries Technology

I'm also pleased to announce that Daniel Webb has been appointed as our Chief Financial Officer in addition to continuing his role as Chief Investment Officer. Daniel brings extensive experience in public market and investment banking. We believe his strategic insight will be instrumental in strengthening our financial discipline and ensuring that we deploy resources effectively to achieve our long term objectives. Today, I would want to focus on three key areas. Number one, strategic focus on profitable growth.

Ajay Khare
Ajay Khare
CEO at Aeries Technology

We have realigned our business model to concentrate on high value long term engagements with our core North American clientele, accounts that represent over 93% of our revenue. By existing non core segments such as Middle East, we are sharpening our focus on transformation led partnerships. This approach is designed to not only enhance our service quality, but also support our strategy of achieving profitable growth on both cash flow and adjusted EBITDA basis. Number two, robust cost discipline and financial health. Our recent cost optimization efforts have already delivered significant benefits.

Ajay Khare
Ajay Khare
CEO at Aeries Technology

This quarter, we further eliminated significant SG and A costs and annual expenses, a saving that is expected to positively impact our bottom line starting next quarter. Combined with our disciplined approach to resource allocation, these measures are designed to put us on a clear path to being cash flow positive for our foreseeable future. Lastly, innovation and AI driven transformation. The industry is evolving from legacy cost saving models towards transformation led engagements. Our Global Capability Center, GCC model, remains central to our growth strategy.

Ajay Khare
Ajay Khare
CEO at Aeries Technology

In parallel, we have observed that our AI practice is gaining traction. We now offer a complementary AI assessment to help clients analyze optimal areas for AI automation to drive process optimization and operational efficiency. Some recent examples of AI projects we have done include helping a telecom client achieve 90% accuracy in churn prediction. And in healthcare space, our automation solution for IT support has reduced human intervention by 40%. We believe these initiatives not only differentiate us in the marketplace, but also create tangible value for our clients.

Ajay Khare
Ajay Khare
CEO at Aeries Technology

In summary, with a strong leadership in place, our focused strategy on high value engagements and disciplined cost management, we believe Ares is well positioned to drive sustainable, profitable growth. We remain committed to excellence and delivering value to our stakeholders as we navigate an evolving market landscape. Now, I will turn the call over to Daniel to discuss our financial performance and outlook in greater detail.

Daniel Webb
Daniel Webb
CFO and Chief Investment Officer at Aeries Technology

Good morning, everyone, and thank you for joining us today. As mentioned earlier, I'm Daniel Webb, newly appointed as CFO, while continuing in my role as Chief Investment Officer. I'm excited to share our financial highlights and strategic outlook for fiscal years 2025 and 2026. For the third fiscal quarter of twenty twenty five, our key financial metrics are as follows: Revenues, North American revenue of $16,400,000 representing 13.1% year over year growth. Total revenues reached $17,600,000 down 6.8% year over year.

Daniel Webb
Daniel Webb
CFO and Chief Investment Officer at Aeries Technology

Importantly, North American revenue now represents over 93% of our business. Gross profit and margins. Our gross profit for the quarter was $4,000,000 resulting in gross margin of 23%. Income from operations. Income from operations for the third fiscal quarter of twenty twenty five was negative $5,200,000 compared to $700,000 for the third fiscal quarter of twenty twenty four.

Daniel Webb
Daniel Webb
CFO and Chief Investment Officer at Aeries Technology

Net income. Net income was $2,000,000 compared to negative $16,300,000 for the third fiscal quarter of twenty twenty four. Adjusted EBITDA. Adjusted EBITDA for the quarter was negative $2,000,000 While we experienced some headwinds in this period, our ongoing cost optimization efforts, including significant SG and A expense reductions, are expected to generate meaningful benefits in the upcoming quarters. Core adjusted EBITDA.

Daniel Webb
Daniel Webb
CFO and Chief Investment Officer at Aeries Technology

Core adjusted EBITDA for the third fiscal quarter twenty twenty five was $1,500,000 compared to negative $20,000 for the third fiscal quarter of twenty twenty four. Balance sheet. At 12/31/2024, we had $2,400,000 in cash and cash equivalents with the total long term debt at $1,500,000 Looking ahead, the company is reiterating its stated guidance for the fiscal year twenty twenty five. Revenue between $71,000,000 and $73,000,000 Core adjusted EBITDA between $6,000,000 and $7,000,000 In addition, we are introducing our fiscal year twenty twenty six outlook with expected revenues between $74,000,000 and $80,000,000 and adjusted EBITDA between $6,000,000 to $8,000,000 Fiscal 20 20 6 reporting and guidance will not include core adjusted EBITDA as we anticipate that all expected credit losses from prior non core markets will have been fully addressed this fiscal year. We believe our renewed focus on profitable growth backed by robust cash flow expectations and stringent cost controls, enhances Ares' ability to achieve the same success.

Daniel Webb
Daniel Webb
CFO and Chief Investment Officer at Aeries Technology

We are committed to maintaining a clear strategic focus and leveraging our capabilities in AI, automation and GCC operations to drive value for our clients and shareholders. Thank you for joining the call.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

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Executives
    • Ajay Khare
      Ajay Khare
      CEO
    • Daniel Webb
      Daniel Webb
      CFO and Chief Investment Officer
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Aeries Technology Q3 2025
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