Its margins narrowed sharply to 4.6% for the third quarter as against 6.7% for the July-September quarter of the current financial year, also impacted by 0.70% due to the senior management bonuses.
The Bengaluru-based software provider’s revenue surged 14% year-on-year (YoY) to Rs 2,842.8 crore for the October-December quarter of ongoing fiscal year 2025 from Rs 2,493.4 crore in October to December 2023. On a quarter-on-quarter (QoQ) basis revenue jumped 31% from Rs 2,169.8 crore in the previous quarter.
“What worked is the healthcare and growth from banking and financial services. We saw okay-ish growth in the retail sector. What was working well, but probably is a problem going forward, is the hi-tech sector, where one large client in TMT, we were hoping that that growth will continue, but they gave us some cost pressures and ramp-downs in the back half of the quarter,” said Samir Dhir, chief executive officer and managing director of Sonata Software.
Because of this, Sonata Software has guided to a sequential decline in the next quarter ending March 2025.
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“We think this customer will be back on growth for us in Q1 but the back half of Q3 and full quarter Q4 will see an impact on this customer, which is also the largest customer for Sonata,” Dhir added.Banking, financial services & insurance (BFSI) and healthcare & life sciences verticals which contributed to nearly 39% to its business compensated for the weakness in retail and TMT verticals similar to previous quarter.
In FY24, Sonata Software crossed $1 billion revenue.
Dhir also said the company is in active conversations with over 100 customers on AI. “About 20% of our revenue will come from AI and AI-enabled services in three years’ time,” he said.
On Thursday, the company’s shares ended almost flat, 0.08% higher, at Rs 550.30 per share on the BSE. Sensex closed 0.27% weaker at day’s close. Sonata Software’s earnings were announced after market hours.
