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• International Services Revenue: $84.6 million, 2.3% QoQ growth, 4.6% YoY growth.

• Revenue in Rupee Terms: INR 707.9 crores, 2.9% QoQ growth, 5.7% YoY growth.

• EBITDA Margin (International): 18.2%, down from 18.7% in Q1 FY25.

• International Business PAT: INR 62.2 crores, 4.4% QoQ decline.

• Domestic Business Gross Contribution: INR 70.2 crores, 2.5% QoQ growth, 12.4% YoY growth.

• Domestic Business PAT: INR 44.3 crores, 9.5% QoQ growth.

• Consolidated PAT: INR 106.5 crores, 0.8% QoQ growth, 14.3% YoY decline.

• Consolidated EPS: INR 3.84 per share, up from INR 3.81 last quarter.

• ROCE (Consolidated): 24.7%.

• RONW (Consolidated): 28.4%.

• Order Booking: $104 million, 1.2x book-to-bill ratio for international services.

• Headcount: Increased to 6,908 from 6,619, net addition of 289 employees.

• Utilization Rate: 87%.

• Top 10 Clients Revenue Share: 63%.

• Cash Collection (International Services): $86.7 million.

• Warning! GuruFocus has detected 3 Warning Signs with BOM:532221.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sonata Software Ltd (BOM:532221) reported a 2.3% quarter-on-quarter revenue growth in its international business, aligning with its forecast of 1% to 3% growth.

• The company secured three large deals and six midsized deals in Q2 FY25, expanding its client base and enhancing its revenue potential.

• Sonata Software Ltd (BOM:532221) has made significant progress in its AI initiatives, with $67 million in pipeline opportunities across 110 customers.

• The company's investment in healthcare and banking verticals has paid off, with these sectors now contributing 32% of revenue, up from 13% ten quarters ago.

• Sonata Software Ltd (BOM:532221) has been recognized by Everest Group and HFS for its growth and capabilities, highlighting its competitive position in the market.

Negative Points

• The EBITDA margin for the international business decreased to 18.2% from 18.7% in the previous quarter, partly due to salary increases.

• The domestic business experienced a 21% reduction in revenue, although gross contribution increased, indicating variability in contract sizes.

• There is a delay in deal closures in the retail and manufacturing sectors, impacting growth in these verticals.

• The company has not declared a dividend this quarter, raising concerns among investors about changes in its dividend policy.

• Sonata Software Ltd (BOM:532221) faces ongoing margin pressures due to investments in new capabilities and large deal transitions, which are expected to continue impacting margins until Q1 FY26.