Sonata Software (SONATSOFTW) Q1 25/26 earnings summary

Executive summary

• Strategic focus on modernization engineering, AI-driven solutions, and platformization across four verticals and five geographies, with Cloud & Data now representing 59% of revenue, up from 50% three years ago.

• Three large deals secured in Q1 FY26, including major contracts in technology outsourcing, cloud/data transformation, and a $73M AI-led digital modernization deal; seven new enterprise clients added.

• Healthcare, life sciences, and BFSI verticals now contribute over 30% of total revenue, up from 13% three years ago; HLS+BFSI scaled from 9% to 34% over three years.

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

• Recognized among the fastest-growing service providers and as a most preferred workplace for 2025-26.

Financial highlights

• Consolidated Q1 FY26 revenue at ₹2,965.2 crore, up 13.3% QoQ and 17.3% YoY; PAT at ₹109.3 crore, up 1.7% QoQ.

• International services revenue at $81.8M, up 0.6% QoQ; EBITDA margin at 16.6%; PAT margin at 9.9%.

• Domestic business revenue at ₹2,274.7 crore, up 18.6% QoQ and 23% YoY; EBITDA down 22.1% QoQ.

• EPS per share at ₹3.94, up 1.8% QoQ; cash and equivalents at ₹600 crore; net cash balance negative ₹62.5 crore due to Quant earn-out and loan repayment.

• Interim dividend of ₹1.25/share declared for FY26.

Outlook and guidance

• No concrete forward guidance; focus remains on achieving top-quartile growth among mid-tier peers, with management confident in long-term growth supported by order book momentum and large deal wins.

• Margin target remains close to 20% by year-end, driven by deal ramp-ups, utilization, and mix improvements.

• Continued investments in cloud, AI, and data modernization, with strategic bets on verticalization and global brand evolution.