Aeries Technology Reports 2% Revenue Growth, Significant Net Loss in Q2 2024

Aeries Technology, Inc. (ATI), a global provider of professional and management services, reported its financial results for the three months ended June 30, 2024, revealing significant changes in revenue, profitability, and operational expenses compared to the same period in 2023.

For the quarter, ATI generated revenue of $16.7 million, a modest increase of 2% from $16.3 million in the prior year. This growth was attributed to new client acquisitions, although it was partially offset by a $2.9 million decline from existing client project closures. The cost of revenue rose to $12.7 million, up 7% from $11.9 million, primarily due to increased employee compensation and benefits. Consequently, gross profit decreased by 10% to $4.0 million, with a gross profit margin decline of 300 basis points, reflecting reduced business from project-based consulting.

Selling, general, and administrative (SG&A) expenses surged to $20.4 million, a staggering 457% increase from $3.7 million in the same quarter last year. This rise was driven by an $11.4 million increase in stock-based compensation, alongside higher legal and professional fees. As a result, ATI reported an operating loss of $16.4 million, a significant decline from an operating income of $777,000 in the previous year. The net loss for the quarter was $15.3 million, compared to a net income of $494,000 in the same period in 2023.

The company’s accumulated deficit increased to $(26.5 million) as of June 30, 2024, up from $(11.7 million) at the end of the previous quarter. Total current assets rose to $33.8 million, while total assets increased to $51.8 million. Long-term debt also grew to $1.7 million from $1.4 million.

Strategically, ATI completed a business combination with Aark Singapore Pte. Ltd. on November 6, 2023, which has been accounted for as a reverse recapitalization. This transaction has positioned Aark as a subsidiary of ATI, enhancing its operational capabilities and market reach. The company also engaged in a private placement in April 2024, raising approximately $4.68 million through the issuance of 2,261,778 Class A ordinary shares at $2.21 per share.

Despite these developments, ATI faces challenges, including a significant net loss and ongoing concerns regarding its ability to continue as a going concern. The company is actively working on a mitigation plan that includes raising additional funds and restructuring liabilities. As of June 30, 2024, ATI had cash and cash equivalents of $4.2 million, an increase from $2.1 million at the end of the previous quarter.