Calian Group (CGY) Q2 2025 earnings summary

Executive summary

• Q2 revenue was CAD 194 million, down 4% year-over-year, mainly due to ITCS segment headwinds, while defense, health, and advanced technologies showed resilience and growth; international revenues reached a record 42% of total.

• Adjusted EBITDA fell 36% to CAD 17.4 million, with margin at 9% versus 13.5% last year, reflecting lower ITCS profitability and increased investments in marketing and sales.

• Net profit was CAD 0.3 million ($0.02 per diluted share), down from CAD 4.9 million ($0.41 per diluted share) year-over-year; adjusted net profit was CAD 11 million ($0.93 per diluted share).

• Delays in Canadian government procurement and U.S. commercial customer decisions impacted ITCS revenue and margins; the company is transitioning its cybersecurity platform to Microsoft, incurring temporary duplicate costs and investing in AI-driven managed services.

• Acquisition of AMS expands healthcare footprint in northern Canada, adding a CAD 250 million backlog and cross-selling opportunities.

Financial highlights

• Q2 revenues decreased 4% to CAD 194 million; ITCS revenue down 25%, while advanced tech, learning, and health grew 7%.

• Organic growth down 8% overall, but excluding ITCS, organic growth was 1%.

• Gross margin at 33% (Q2 2025: 33.4%), slightly below last year; adjusted EBITDA fell from CAD 27 million to CAD 17 million, with margin dropping to 9% from 13.5%.

• Adjusted net profit was CAD 11 million or $0.93 per share, down from CAD 19 million prior year.

• Cash flow from operations was CAD 10 million, down from CAD 36 million last year; operating free cash flow conversion at 56% for the quarter.

Outlook and guidance

• FY2025 guidance withdrawn due to economic/geopolitical uncertainty and limited ITCS visibility.

• Excluding ITCS, adjusted EBITDA from health, learning, and advanced tech expected to grow over FY2024.

• Robust backlog of CAD 1.1 billion, increasing to CAD 1.4 billion with AMS acquisition; strong signings of CAD 248 million in the quarter.

• Share buybacks to be accelerated, targeting up to 6% of public float in FY25.