Sonata Software (SONATSOFTW) Q1 25/26 earnings summary

Executive summary

• Consolidated revenue reached ₹2,965.2 crore in Q1 FY26, up 13.3% QoQ and 17.3% YoY, with PAT rising 1.7% QoQ to ₹109.3 crore; three large deals secured, including a $73M AI-led digital modernization deal, and seven new enterprise clients added.

• Strategic focus on modernization engineering, AI-driven solutions, and platformization across healthcare, BFSI, retail, manufacturing, and TMT, with operations in five key geographies.

• Launched AgentBridge, an enterprise-grade agentic AI workflow platform, and expanded AI partnerships with Wharton and IISc.

• AI-enabled services expected to contribute 20% of revenue in three years; 93.5% of workforce trained on AI.

• Interim dividend of ₹1.25/share declared for FY26, with record date set for August 8, 2025.

Financial highlights

• International services revenue at $81.8M, up 0.6% QoQ, down 1.1% YoY; constant currency decline of 0.9% QoQ and 2.4% YoY.

• Domestic business revenue at ₹2,274.7 crore, up 18.6% QoQ and 23% YoY; cloud contributed 88% of domestic revenue.

• Consolidated EBITDA at ₹159.6 crore, down 7.6% QoQ; consolidated PAT at ₹109.3 crore, up 1.7% QoQ and 3.5% YoY.

• EPS increased to ₹3.94 for Q1 FY26.

• Cash and equivalents at ₹600 crore, with net cash negative due to Quant earn-out and loan repayment.

Outlook and guidance

• No concrete forward guidance; focus on achieving top quartile growth among mid-tier peers and scaling cloud/data services, now 59% of revenue.

• Management expects positive growth for the year, supported by order book momentum and large deal pipeline, but acknowledges ongoing uncertainties.

• Margins targeted to approach 20% by year-end, driven by large deal ramp-up, improved utilization, and cost management.

• Continued investments in AI, cloud, and verticalization strategies, with strong Microsoft partnership and new AI initiatives.