Q1 2025 Sonata Software Ltd Earnings Call Transcript
Key Points
- Sonata Software Ltd (BOM:532221) reported a 1.3% quarter-on-quarter growth in International Services business revenue for Q1 FY25.
- The company secured three significant large deals in Q1 FY25, including a US-based healthcare provider, an Australian manufacturing client, and a top US financial corporation.
- Sonata Software Ltd (BOM:532221) has a strong pipeline with 47% of active deals coming from high-value opportunities across its four verticals and geographies.
- The company has made significant progress in AI services, with a $65 million pipeline across 110 clients and new wins contributing to an order book of about $1 million in the most recent quarter.
- Sonata Software Ltd (BOM:532221) has been recognized as one of the top 3 fastest-growing Indian brands in the Brand Finance India 100 2024, with an 83% increase in brand value.
- The company expects a delay of two to four quarters in achieving its $1.5 billion revenue target for the international business due to macroeconomic slowdown.
- The large healthcare deal won in Q1 FY25 will have a short-term margin impact for the next two to four quarters as the company completes the transition and makes upfront AI investments.
- Decision delays and project completions in the UK, Europe, and retail manufacturing sectors are expected to cause a slowdown in these areas in the upcoming quarters.
- The EBITDA margin for the International Services business saw a decline from 24% in Q4 FY24 to 18.3% in Q1 FY25, impacted by increased borrowings and transition costs.
- The company faces headwinds due to salary increases planned for Q2 and Q3, which may further impact profitability in the short term.
Ladies and gentlemen, good day, and welcome to Sonata Software Limited Q1 FY25 results update conference call. (Operator Instruction) Please note that this conference is being recorded.
I now hand the conference over to Mr. Samir Dhir, MD and CEO, Sonata Software Limited.
Thank you, and over to you, sir.
Thank you, moderator. Welcome to this conference. We will discuss our strategy, the progress we have made in the recent quarters, our strategic plan and the financial results for the quarter Q1 FY25 that just ended on 30th of June 2024. I thank you for joining us today. We appreciate your valuable time and support. It is my pleasure to share our progress regarding our vision and growth trajectory for Sonata despite the macroeconomic challenges, geopolitical issues and slowdown of tech spending and decision delays across some of our verticals. Let me cover an update on our strategic goals, first, and then I'll cover the progress we made in Q1 FY25.
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