Sonata Software (SONATSOFTW) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 saw a return to growth, with consolidated revenue reaching ₹2,527.4 crore, up 15.3% QoQ and 25% YoY, and international services revenue at $82.7 million (₹687.8 crore), up 1.3% QoQ and 6.9% YoY.

• Three significant large deals were won in healthcare, manufacturing, and BFSI, including a landmark seven-year healthcare contract in the US.

• EBITDA margin improved to 18.7% for international services, with consolidated EBITDA at ₹176.2 crore, up 22.2% QoQ.

• PAT for Q1 FY25 was ₹110.4 crore, down 4.3% QoQ and 12% YoY, with consolidated EPS at ₹3.81 per share.

• The company continues to invest in AI, cloud, and data, with over 50% of the pipeline in these areas and a $65 million AI pipeline across 110 clients.

Financial highlights

• International services revenue for Q1 FY25 was $82.7 million (₹687.8 crore), up 1.3% QoQ and 6.9% YoY; rupee revenue was INR 688 crore.

• Domestic business revenue reached ₹1,849.4 crore, up 22.1% QoQ and 33% YoY.

• Consolidated revenue for Q1 was ₹2,527.4 crore, up 15.3% QoQ and 25% YoY.

• EBITDA before other income and forex for international services was 18.7%, up from 17.3% in Q4.

• Consolidated EPS for Q1 was ₹3.81 per share; PAT was ₹110.4 crore, down 4.3% QoQ.

Outlook and guidance

• The $1.5 billion revenue target for international business is delayed by 2-4 quarters due to macroeconomic headwinds and deal decision delays.

• Growth is expected to accelerate in H2 FY25, led by high tech and banking, while retail and manufacturing remain soft.

• Management remains optimistic about long-term growth, citing strong deal wins and a healthy pipeline in modernization and digital transformation.