Good morning, ladies and gentlemen. Welcome to Alithya's Q1 FY 2023 results conference call. I would now like to turn the meeting over to Rachel Andrews, Vice President of Communications and Marketing at Alithya. Please go ahead, Ms. Andrews.
Thank you very much. Good morning, everyone, and thank you once again for joining us for Alithya ' s Q1 FY 2023 results conference call. The press release and MD&A with complete financial statements and related notes were issued this morning and are now posted on our website. The webcast presentation can also be found on our website in the Investors section. Before we begin, I would like to specify that this conference call is intended for the financial community. Also, please be advised that this call will contain statements that are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. For more information, please refer to the cautionary note in our presentation and to the forward-looking statements and risks and uncertainties section of our MD&A available on our website.
All figures discussed on today's call are in Canadian dollars unless otherwise stated, and we may refer to certain indicators that are non-IFRS measures. Please refer to the cautionary note in our presentation and to the non-IFRS measures section of our MD&A for more details. Presenting this morning are Paul Raymond, Alithya ' s President and Chief Executive Officer, as well as Claude Thibault, our Chief Financial Officer. Now I'm delighted to turn the call over to Paul Raymond.
Merci, Rachel, and good morning, everyone. Thank you all for joining us on the call this morning. I'm pleased to share the details of the beginning of a new FY year. We're kicking off the second year of our three-year strategic plan with continued revenue growth and strong bookings. Alithya continues to carve its position in a competitive landscape and to build upon a reputation for trust and execution excellence. In that regard, I would like to take a moment to put our recent results in the context of our long-term business objectives. In terms of revenues, we continue to pursue sustained organic growth and selective strategic acquisitions in order to reach the CAD 600 million mark. Currently, organic growth and acquisitions of the past year have brought us to the CAD 500 million annual revenue run rate.
For gross margin, we believe our long-term strategies remain appropriate and relevant for gradual improvement. We also intend to leverage our new offshore capabilities and to keep targeting acquisitions with higher gross margin profile. The recent Datum and Vitalyst acquisitions are certainly very good examples of that. For SG&A, we believe that we have now reached a certain critical mass and a stabilization of certain expense categories, including corporate and head office costs. Moving forward, we expect those expenses to grow at a slower pace than our revenues. Hence, we intend to continue our downward trend on SG&A as a percentage of revenues, with some acquisition synergies still to come, including longer-term savings relating to rent.
In a nutshell, that is the step-by-step playbook of how Alithya believes it can realistically achieve its three-year objective of CAD 600 million in revenue with an EBITDA margin of 9%-13%. Before jumping ahead to a review of our operations, let's first take a look at three key highlights of our Q1 performance. First and foremost, Alithya has achieved industry-leading organic growth. Again, our revenues amounted to CAD 127 million in the Q1. That's a 23% increase compared to the same quarter last year. It's also important to note that we are reporting our repeat revenues or revenues from repeat customers for the first time. In the Q1, 85% of our revenues came from clients we also served during the same quarter last year. In other words, that's 85% of repeat revenues.
Second, business continues to be fueled by strong bookings in Canada and in the United States. Despite the global economic context, which I will address in a few minutes, we are encouraged by our funnel, and our bookings remain the best predictor of what's to come. To start our new FY year, our booking reached CAD 145 million, which translated into a book-to-bill ratio of 1.15. It's important to keep in mind that when we remove the recurring revenues from our two large ten-year contracts with Beneva and Québecor, the book-to-bill ratio for the rest of our business would be above 1.3. Third, we achieved sequential growth in terms of gross margins at a % of revenue.
It increased by 40 basis points sequentially to 26.9%, despite company-wide annual salary increases which came into effect at the beginning of the Q1 of this year. Despite unfavorable comparisons to last year's Q1, which included significant PPP loan recognition, we showed sequential growth of our gross margin as we deploy our plan to gradually move away from subcontractors and begin to leverage our new offshore capacity. For Alithya, the future is now, and that extends to all of our practices across all of our geographies. In fact, the quarter was marked by the addition of 15 new clients, which reflects the reputation of trust that Alithya continues to garner. Let's take a more granular look at these geographies.
In the United States, it was a record quarter in terms of bookings, with the addition of some major new logos. A large insurer offering dental coverage to millions of Americans. This new customer signed a contract that could reach $10 million with our Oracle Enterprise Cloud practice. That is a record for Oracle practice, who will accompany them through important stages of their digital transformation processes. Of note, our Oracle and Microsoft practices, including Vitalyst, both in Canada and the United States, now represent over 40% of our total revenues. In Canada, Alithya's business continues to be driven by strong bookings from the public sector as well as new contracts from existing clients. In fact, on July 28, we announced the signing of potentially more than CAD 10 million in service agreements with the Ministère de la Cybersécurité et du Numérique.
Projects to be implemented over the next three years. Those projects will encompass Alithya's specializations across multiple domains and will involve more than 140 Alithya experts in application development and security, just to name a few areas. Our gross margins continue to improve as we convert some contractors into regular employees. That is a gradual process that takes time, but a continuous step in our commitment to accompanying our clients on their digital transformation journeys. In France, our operations experienced a very good quarter, and we are particularly pleased with the fact that this was achieved through 100% organic growth in European market. While talent attraction retention continued to be a major challenge in our industry, Alithya has demonstrated, excuse me, its ability to respond to those challenges.
In 1992, 30 years ago, Alithya started out with 11 professionals and one bold vision: to become the trusted advisor to our clients. It was a tall order back then, but since that initial creation phase, Alithya has advanced from one strategic chapter to the next, threading carefully but confidently through periods of diversification and growth and picking up speed as we went. A path culminating in this latest phase of consolidation. With numerous acquisitions along our road, Alithya has now reached a critical mass with 3,900 highly skilled professionals. That means that 2,300 professionals have joined our rank in the past four years since going public in November 2018. In the past year alone, 400 team members have joined our growing professional family, which now has a footprint on five continents.
Now let's take a closer look at our newly formed offshore delivery teams. First, we are very pleased with the growth potential and margin improvement that come from our offshore operations. Our first such center was opened in Morocco this past year and now counts over 40 professionals. The closing of the Datum acquisition on July 1, a leader in IT services for insurers and other regulated entities such as governments, will grow our workforce by 120 professionals, excluding the 30 Datum individuals who are based in the United States. Alithya now has global teams of professionals in Canada, the United States, and Europe, who are supported by delivery teams in Morocco, Spain, Eastern Europe, and India. We expect to accelerate the growth of our offshore activities in order to better support our clients in the future and to improve our efficiency.
This brings me to reiterate that we continue to embrace our clearly articulated plan, which focuses on serving our current and future customer base in Canada, the U.S., and Europe. Our acquisitions continue to complement our strong organic growth. In acquiring U.S.-based Datum, Alithya continues its steady penetration of the fast-growing Insurtech market and adds a client base that includes six of the top 10 health insurers in the United States, as well as a suite of proprietary product and cloud-based SaaS offerings. The response from our customers in the insurance market in Canada and the United States have been enthusiastic, and we have already begun offering Datum's data capture services to our legacy customers. Additionally, our FY 2022 acquisition of Vitalyst and its proprietary learning platform generated a CAD 8.4 million revenue contribution over the quarter.
Vitalyst's platform allows Alithya to assist customers with ongoing training and change management in their adoption of new technologies. That complementary expertise now extends to our service offering to the complete life cycle of the technology solutions that we deliver. As Microsoft continues to expand the offering of its new Viva suite for Office 365, Vitalyst's collaborative tools positions Alithya to accompany adopters of the platform as they accelerate their digital transformation projects. Currently, 25% of Fortune 500 companies are using Viva. Alithya is leveraging the recently acquired Vitalyst technologies to build a brand-new employee experience suite that we foresee as a high-growth opportunity for us. Those are both good examples of the leverage that we get from our long-term, disciplined approach to quality acquisitions.
As we continue to forge ahead with an agile and innovative plan, our efforts have been validated by several exclusive industry accolades that remind us that we are on the right path. In the past few months, out of thousands of potential candidates, Alithya was awarded the Microsoft Partner of the Year honors in two separate categories. Alithya also received an Impact Award in Canada, recognizing Microsoft partners who demonstrated excellence in Microsoft Dynamics 365. We also received accolade as an Oracle Partner of the Year finalist during the Oracle Change Agent Awards. Lastly, we received two OCTAS Awards, which is a prestigious contest in Canada. We won an award for an automation project that we delivered for National Bank of Canada's sixth-largest bank, and another award for the BénéClic app for Sainte-Justine Children's Hospital to help sick kids and their families. Now back to our strategic plan.
Following a period of sustained growth, we began FY 2023 with a focus on rationalization. We implemented processes targeting company-wide SG&A optimization in line with our 2021- 2024 strategic objectives. This is especially timely as everyone is monitoring the global economic situation very closely. While the effects of world events are significant and far-reaching, Alithya strive to build a business that is as recession-resistant as possible. Typically, during periods of recession, companies tend to look for efficiencies through automation and migration to lower-cost cloud solution. That is where we excel at helping our clients. Additionally, with no major infrastructure investments on the way at Alithya, with cost reduction initiatives in progress, and with a favorable debt situation, we believe that we are well-positioned in business and financial terms as we look ahead with optimism to the rest of our FY year and to the achievement of our 2024 objectives.
I will now pass it over to Claude for more financial metrics. Claude?
Thank you, Paul. Bonjour. Good morning. Please turn to Slide 11 for our Q1 highlights. Revenues for the quarter increased 23.2% or by CAD 23.9 million, for a total of CAD 126.8 million. Excluding the impact of the Vitalyst acquisition, which occurred on February 1, 2022, true organic growth was approximately 15%. In other words, we experienced strong, sustained organic growth once again. In Canada, revenues increased by 13.3% to CAD 78.2 million, all due to organic growth in all areas of our operations, including continued growth from the two long-term contracts signed concurrently with our acquisition in April 2021.
In the United States, revenues increased 44.3% to CAD 44.6 million due to a combination of a few factors, including the Vitalyst acquisition, which contributed CAD 8.4 million, strong organic growth of approximately 12% in constant currency, and a favorable U.S. dollar exchange rate impact of CAD 1.7 million. Our international operations reported a strong quarter in terms of revenues, increasing 32.7% to CAD 3.9 million from CAD 3 million for the same quarter last year. Now let's look at gross margins, which increased by CAD 5.8 million or 20.2% to CAD 34.1 million in Q1. As a percentage of revenues, the Q1 consolidated gross margin was at 26.9%.
That is down from 27.5% for the same quarter last year. Last year had been positively and significantly impacted by COVID-19 subsidies, as I will explain in a second. On a sequential basis, comparing Q1 to Q4 of last year, we are showing an increase from 25.9% in Q4 to, again, 26.9% in Q1. The sequential increase occurred despite our annual salary increases, which, as usual, came into effect at the beginning of the Q1, as Paul mentioned. Gross margin as a percentage of revenues increased in Canada and internationally, but decreased in the United States. The decline in gross margin percentage in the U.S. comes mainly from the U.S. COVID-19 subsidy, which had been recorded to cost of revenues last year in the amount of $4.6 million.
The decline in gross margin percentage is also explained by both annual salary increases taking effect in Q1 and general market pressures on salary costs, and finally, by decreased utilization rates in certain areas of the business due to delays in the timing of new project starts. The decrease in the U.S., however, was partially offset by the positive margin impact from the Vitalyst acquisition, which carries higher historical margins and had a very good quarter. SG&A expenses in Q1 totaled CAD 28.9 million, an increase of CAD 6.2 million or 27.2%.
The increase was primarily due to CAD 2.6 million in expenses related to Vitalyst, the wage subsidies that had been recorded against SG&A in the Q1 of last year, some increases towards pre-COVID-19 spending levels in certain areas, as well as salary increases, which again came into effect at the beginning of the Q1. Partially offsetting these elements, as discussed back in June during our Q4 disclosure, we have some reductions stemming from certain initiatives underway in order to pursue our target of SG&A eventually falling to 20% of revenues. We expect to benefit from these initiatives gradually over the course of the coming quarters. Overall, our Q1 adjusted EBITDA totaled CAD 6.2 million, a decrease of CAD 800,000 compared to the same quarter last year.
However, excluding the impact of the forgiveness of CAD 5.9 million in PPP loans recorded in the Q1 of last year, adjusted EBITDA would have amounted to CAD 1.1 million, therefore translating into a notable profitability increase year-over-year. I'd like to remind you that Datum's financial performance was not included in our Q1 disclosure since closing took place on July 1. However, as mentioned at the time of acquisition, for the 12-month period ended December 31, 2021, Datum generated revenues of approximately CAD 23 million and adjusted EBITDA of approximately CAD 7.6 million.
As in previous quarters, while we are reporting an accounting net loss of CAD 4.2 million. I would draw your attention to non-recurring expenses of CAD 1.9 million in the quarter, as well as non-cash depreciation and amortization totaling CAD 6.3 million, resulting in a positive number overall. Looking at long-term trends on Slide 12, we can see the impact of our acquisitions and more importantly of our strong organic growth of the past several quarters. Regarding gross margin, we see a similar trend in dollars, but recent challenges in percentages, as mentioned earlier, with some small recovery. We believe most of these factors are largely cyclical and are subject to some natural recovery over time.
We also aim to reverse the trend with a number of targeted initiatives focusing on labor mix and costs, including our new offshore capabilities that Paul addressed a few minutes ago, improvement in utilization , selling price adjustments, and a focus on future growth in higher- margin segments. Our long-term adjusted EBITDA trend reflects our growth, but also our recent gross margin challenges, as well as some increases in SG&A, some from acquisitions, despite their targeted decrease as a percentage of revenues. With sustained organic and acquisition growth, some long-term initiatives to generate higher gross margins and a continued gradual decrease of SG&A as a percentage of revenues, we believe we are well on our way to achieving our three-year financial objectives by 2024. Now turning to liquidity and financial position on Slide 14.
We can see a notable increase of net debt and of our net debt to trailing twelve-month adjusted EBITDA multiple. The increase in net debt from March to June comes mainly from CAD 11.4 million of cash used in operating activities during the quarter, including negative working capital variations of CAD 13.8 million, coming mainly from a cyclical increase in unbilled revenues. In other words, excluding the cyclical working capital variations, our P&L generated CAD 2.4 million of positive cash flow. Our net debt to trailing twelve-month adjusted EBITDA multiple has also been increasing over the past couple quarters. It must be noted that our reported trailing twelve months adjusted EBITDA of CAD 22 million does not include a full- year impact of our two recent and profitable acquisitions.
As a reminder, and as already disclosed at the time of acquisition, Vitalyst was historically generating CAD 12.9 million of adjusted EBITDA annually, of which we are only accounting for five months in our Q1 TTM multiple. Also, Datum was historically generating CAD 7.6 million of adjusted EBITDA annually, and we are not yet reporting any of it as of June 30, 2022. While the debt drawdown in preparation for the July 1 close already appears on our balance sheet. Moreover, the financing structure of the Datum acquisition includes share issuances and earn-out payments, which will not impact leverage. As the profitability from our two recent acquisitions hits our full reporting cycle and with continued positive cash flow expected from existing operations, this points to a decrease of our net debt to trailing twelve-month adjusted EBITDA multiple.
Despite the apparent trend shown on Slide 14, we still believe that our capital structure is moderately leveraged. Now back to you, Paul.
Thank you, Claude. To recap the three takeaways for this quarter. First, record quarterly revenues, an annual run rate over half a billion CAD, growth in all geographies and with 85% derived from repeat business. Second, a very strong book-to-bill ratio and industry-leading growth. Finally, sequential growth in gross margin as a percentage of revenues and initiatives to further expand margins by leveraging our expanding global capabilities. We will now take questions. Julie?
Thank you. At this time, I would like to remind everyone, in order to ask a question, press star one on your telephone keypad. To withdraw your question, press star one again. Thank you. Your first question comes from Amr Ezzat from Echelon Wealth Partners. Please go ahead.
Good morning. It's Michael Vaccarino here on behalf of Amr. Just a couple of questions. First on the margin side, you mentioned in your prepared remarks that some of the margin pressure was on increased salaries and compensation. Just wanted to make sure I heard correctly. Is the entirety of those increases already reflected in this quarter? Or should we expect incremental increases in the next couple of quarters?
Thanks for the question, Michael. Yes. It's already reflected in there. Basically the company does annual increases on April first, so the first day of our Q1 for the whole company in every geography. It's already included in our Q1 numbers. Despite that increase, we still showed sequential growth in the gross margin, which is very good.
Great. Thanks for clarifying that. A question on capital structure and M&A. In your prepared remarks you mentioned you were comfortable with the debt level. Should we be expecting continued M&A or a shift to deleveraging after having completed a few acquisitions recently?
Yeah, thanks. Great question. We if you look at the acquisitions we've done in the past, including the last two, they've actually reduced our EBITDA to debt ratio because of the high multiples and the high EBITDA ratios of those companies as a percentage. So the focus is on deleveraging. We believe we're gonna be deleveraging quite rapidly, but we're always open to opportunities, good opportunities.
Great. Thanks. I'll pass the line.
Thank you.
Again, to ask a question, press star one on your telephone keypad. There are no further questions at this time. I will turn the call back over to Paul Raymond for closing remarks.
Thank you, Julie. Thank you all again for participating today. I would also like to remind all of our shareholders that our annual general meeting will be held as a virtual meeting on Wednesday, September 14. To access the circular, you can visit the investor section on the Alithya website. I would also like to take this opportunity to thank all of our clients for the trust that they place in us and to thank our passionate professionals who deliver high quality services and advice to those clients every day. Have a great day.
This concludes today's conference call. You may now disconnect.