#India #Bengaluru #Sonata Software #Modernization Engineering

Sonata Software Reports Robust Growth in Q3'25

Sonata Software, a prominent player in Modernization Engineering, recently announced its financial results for the quarter ending December 31, 2024, revealing a noteworthy 4.4% growth in its international services revenue. This growth comes despite some challenges faced in the international arena, predominantly characterized by a drop in EBITDA due to one-off costs.

Financial Performance Breakdown

In the latest quarter, Sonata's revenue from international IT services reached ₹731.7 crores, exhibiting a 3.4% increase compared to the previous quarter, while the revenue in USD terms saw a 2.8% rise. Although there was a slight decrease in EBITDA, indicating a need for strategic adjustments, the overall financial health remains robust. The domestic segment of the business experienced substantial growth, achieving a stunning 44% increase in revenue, contributing to a gross profit of ₹81.9 crores, reflecting a 16.7% uplift from the previous quarter.

Insights from Management

Mr. Samir Dhir, the Managing Director and CEO of Sonata Software, commented on the results: "Our international operations delivered a commendable growth rate despite facing several challenges due to elevated one-time costs. The launch of our groundbreaking multi-million dollar deal focusing on Microsoft Fabric and Gen AI modernization further amplifies our optimism."

In addition, Mr. Sujit Mohanty, MD & CEO of Sonata Information Technology Limited, emphasized the success achieved in domestic operations, noting significant wins from new corporate clients and sectors such as defense during the quarter. Moreover, the renewal of key contracts in Software and Hyperscaler business underlines the company's strengthening position in the market.

Performance Highlights

• - International IT Services:

- Revenue: ₹731.7 crores with a QoQ growth of 3.4%.
- EBITDA decreased by 16.9%, indicating areas for improvement.
- Positioned to add eleven new customers, demonstrating robust demand.

• - Domestic Products & Services:

- Recorded a gross contribution of ₹81.9 crores, showing a strong 16.7% quarterly growth.
- PAT (Profit After Tax) of ₹48.1 crores with an 8.5% increment, showcasing stability and growth potential.
- ROCE (Return on Capital Employed) reached 48.5%, reflecting effective financial strategies.

The consolidated financial results show an overall Revenue of ₹2,842.8 crores, a 31% increase from the previous quarter, with a Gross Profit margin indicating solid profitability despite minor setbacks.

Looking Forward

As Sonata Software navigates through these tumultuous waters, the leadership team remains committed to enhancing their offerings in Modernization Engineering. The juxtaposition of technology adoption trends they observe in the market, where clients simultaneously aim for cost conservation while also striving for modernization, presents a unique opportunity. Sonata's progressive strategy, powered by their innovative Lightening products and the 16-step Platformation™ playbook, positions them uniquely to cater to these dual demands. With a strong foothold in key global markets like the US and Europe, the company aims to elevate its presence and impact across various sectors.

The rising interest in technology modernization, particularly in the domains of Generative AI and Microsoft Fabric, is indicative of future growth pathways for Sonata Software. The combination of their strategic initiatives and market focus suggests a bright forward-looking trajectory for the organization, despite recent challenges.

For more information about Sonata Software and to stay abreast of their latest developments, visit their website: Sonata Software.