Executive Summary / Key Takeaways

• Aeries Technology is strategically pivoting to become a specialized, AI-driven Global Capability Center (GCC) provider for private equity-backed companies, with a sharp focus on the high-growth North American market.
• The company's proprietary AI-centered GCC framework offers tangible benefits, including significant cost savings (40-60% for clients) and enhanced operational efficiency, as demonstrated by up to 90% accuracy in churn prediction for a telecom client and 40% reduction in human intervention in healthcare IT support.
• Despite a consolidated revenue decline in FY2025 due to exiting non-core Middle East operations, North American revenue surged 15% year-over-year, and the company exceeded its core adjusted EBITDA guidance, signaling successful strategic realignment.
• Aeries faces significant liquidity challenges, including a working capital deficit and a substantial Forward Purchase Agreement (FPA) liability, raising a "going concern" doubt, which management is actively addressing through fundraising and cost reductions.
• The company projects robust FY2026 revenue of $74 million to $80 million and adjusted EBITDA of $6 million to $8 million, banking on its specialized model, expanding PE network, lean cost structure, and accelerating AI adoption to drive future profitable growth.

The Strategic Evolution of Aeries Technology: AI-Driven Global Capability Centers

Aeries Technology, Inc. (NASDAQ:AERT) is carving out a distinct niche in the rapidly evolving professional and technology consulting landscape. Founded in 2012, the company initially specialized in designing, setting up, and managing Global Capability Centers (GCCs) for private equity-backed and middle-market enterprises. This foundational business model was built on the premise of delivering significant cost savings and operational efficiencies by leveraging global talent pools and process improvements.

The industry is currently undergoing a profound shift, moving beyond traditional outsourcing models focused solely on cost reduction. The emphasis has transitioned to accessing niche technologies, specialized resources, and accelerating time to market. In this dynamic environment, GCCs are no longer merely an option; they have become the preferred strategic vehicle for companies to acquire scalable capabilities in technology, operations, and transformation. Aeries' GCC model is purpose-built for this new paradigm, offering clients greater operational control, faster access to skilled global talent, and substantial cost savings, with a stated goal of achieving a minimum of 40% cost savings, and some clients experiencing over 60%.

A core differentiator for Aeries is its deep integration of cutting-edge technologies, particularly Artificial Intelligence (AI), into its GCC offerings. In fiscal year 2025, Aeries launched its new AI-centered GCC framework, which seamlessly integrates intelligent automation, generative AI agents, and data-driven systems directly into the GCCs it builds and operates. This framework is designed to enhance decision-making, automate processes, and deliver significant business value. For instance, Aeries has already helped a telecom client achieve 90% accuracy in churn prediction through AI projects. In the healthcare sector, its automation solutions for IT support have reduced human intervention by 40%. This technological edge positions Aeries' GCCs as the "operating system for the next-generation enterprises transformation."

Competitive Landscape and Market Positioning

Aeries operates in a highly competitive and fragmented industry, facing established players like Accenture (ACN), IBM (IBM), Cognizant (CTSH), and Infosys (INFY). While these larger firms offer a broader suite of services and possess immense scale, Aeries differentiates itself through its specialized GCC approach and deep understanding of private equity portfolio companies and mid-segment enterprises.

Aeries' agility and niche focus allow it to achieve superior growth rates compared to its larger, more diversified competitors. In calendar year 2023, Aeries' revenue grew 35%, significantly outpacing its public comparable peer set, which saw approximately 5% growth. The company anticipated even stronger growth for calendar year 2024, expecting revenue to increase between 40% and 54%, far exceeding the highest growth comparable company in its peer set, which projected around 17%. This indicates Aeries' strong market share capture in its targeted segments.

However, Aeries' smaller scale and ongoing transformation are reflected in its profitability metrics. Its TTM Gross Profit Margin of 23.82% and Net Profit Margin of -28.08% significantly trail those of Accenture (33% and 11% respectively), IBM (57% and 10%), Cognizant (34% and 11%), and Infosys (30% and 16%). This disparity underscores the need for Aeries to improve operational efficiency and leverage its growth into stronger bottom-line performance. The company's P/S ratio of 0.62 also stands notably lower than its peers (ACN: 3.31, IBM: 3.28, CTSH: 1.93, INFY: 3.85), potentially indicating market skepticism regarding its future profitability or current financial health.

Aeries' strategic response to this competitive environment includes a "dual shoring" strategy, combining near-shoring capabilities in locations like Mexico with established centers of excellence in India. This approach provides 24/7 coverage for North American clients while maintaining cost efficiencies. The company is also transitioning from a growth model heavily reliant on "network effect" referrals to a more structured sales and marketing effort, focusing on accelerating private equity relationships and targeting mid-sized U.S. companies as a disruptive force.

Financial Performance and Operational Realignment

Fiscal year 2025 marked a pivotal period for Aeries, characterized by strategic realignment and efforts to address legacy financial challenges. Total consolidated revenue for the year ended March 31, 2025, was $70.2 million, a slight decrease from $72.5 million in the prior year. This anticipated decline was primarily due to the company's intentional exit from lower-value, non-core Middle East consulting markets, which resulted in a $21.3 million decrease from consulting project closures and client ramp-downs.

Despite this, Aeries demonstrated robust performance in its core market. North American revenue, excluding the discontinued Middle East operations, grew a strong 15% year-over-year, from $57 million in FY2024 to $65.5 million in FY2025. North America now accounts for over 93% of the company's total revenue base, highlighting the success of its focused strategy.

Profitability metrics in FY2025 reflected the ongoing transition and one-time impacts. The gross profit margin decreased from 30% in FY2024 to 24% in FY2025, primarily due to a shift away from certain higher-margin project-based consulting. However, earlier in Q3 FY2024, the gross profit margin had significantly improved to 32% (from 18% in Q3 FY2023), driven by a favorable shift in revenue mix towards higher-margin digital transformation, AI, and analytics services. This indicates the potential for margin expansion as the company's strategic focus deepens.

Operating expenses, particularly Selling, General, and Administrative (SG&A) expenses, saw a substantial increase to $45.5 million in FY2025 from $18.7 million in FY2024. This surge was largely attributable to one-time items, including an $11.1 million increase in stock-based compensation, $9.1 million in incremental bad debts, and a $1.7 million impairment loss on software and computer equipment. The company also recognized a $9.5 million write-off of receivables in FY2025, leading to a heightened allowance for doubtful accounts of $3.6 million, particularly in newly entered markets. Management anticipates significantly lower stock-based compensation and a leaner cost structure in FY2026, as these one-time issues are now considered "fully behind us."

Liquidity, Risks, and Outlook

Aeries Technology faces significant liquidity challenges, as explicitly stated in its recent filings. The company has identified conditions that raise substantial doubt about its ability to continue as a going concern for at least the next 12 months. As of March 31, 2025, Aeries reported a net loss of $21.6 million for the year and a working capital deficit of $11.1 million. A critical factor contributing to this uncertainty is a remaining $5.034 million liability under Forward Purchase Agreements (FPAs), which may require cash settlement. The company has stated it does not currently possess sufficient cash from operations or reserves to meet this obligation. Furthermore, the non-renewal of a significant customer contract is expected to result in an annual revenue loss of approximately $11.5 million, partially offset by a one-time buyout payment of $3 million.

To mitigate these risks, management is pursuing a multi-pronged plan. This includes raising additional funds through existing or new credit facilities, issuing equity or equity-linked capital, restructuring current liabilities into equity or long-term obligations, and further reducing non-core expenses with a renewed focus on organic growth in North America. The company ended FY2025 with $2.76 million in cash and cash equivalents and $1.1 million in long-term debt. A positive development occurred in July 2025 when Aeries regained compliance with Nasdaq's minimum bid price requirement, removing a significant overhang.

Looking ahead, Aeries is reaffirming its guidance for fiscal year 2026, projecting revenues between $74 million and $80 million and adjusted EBITDA between $6 million and $8 million. This outlook is predicated on the company's strengthened focus on the North American market, the maturation of its GCC model, and the increasing demand for digital transformation services among private equity-backed companies. Management is confident in this outlook, citing strong client traction, deepening partnerships with existing clients, an expanding private equity network (bolstered by the recent appointment of a Chief Growth and Strategy Officer), a lean and proven cost structure, and the accelerating pace of AI-led transformation within client environments. Starting FY2026, Aeries will transition to reporting adjusted EBITDA as its primary non-GAAP metric, signaling the completion of its strategic realignment and the resolution of non-core business issues.

Conclusion

Aeries Technology stands at a critical juncture, having undergone a significant strategic transformation to sharpen its focus on high-value, AI-driven Global Capability Centers for private equity-backed companies in North America. The company's ability to exceed its core adjusted EBITDA guidance in FY2025 and achieve robust 15% growth in its core North American market validates this strategic pivot. Its differentiated AI-centered GCC framework, offering tangible operational and cost benefits, positions it favorably against broader competitors, allowing it to capture market share in its specialized niche.

While Aeries faces substantial financial hurdles, including a working capital deficit and FPA liabilities that raise "going concern" questions, management has articulated clear mitigation strategies and is actively pursuing solutions. The reaffirmed FY2026 guidance, underpinned by strong client relationships, a refined operating model, and accelerating AI adoption, suggests a path towards profitable growth. For investors, Aeries represents a compelling, albeit higher-risk, opportunity to participate in a specialized player leveraging technological leadership and a focused market strategy to drive value creation in the evolving digital transformation landscape.