Sonata Software (SONATSOFTW) Q3 24/25 earnings summary

Executive summary

• Achieved consolidated revenue of $336.8M (₹2,842.8 crores) in Q3 FY25, up 31% QoQ and 14% YoY, with international services growing 4.4% QoQ in constant currency and domestic business up 44% QoQ.

• Won two major deals in Q3 FY25, including a Finland-based mining tech leader, a transportation tech client, and a multi-million-dollar Microsoft Fabric contract, leveraging AI and modernization capabilities.

• AI-enabled services expected to contribute 20% of revenue in three years; 58M pipeline across 100+ clients, with 87% of workforce GenAI trained.

• Recognized as a disruptor in industry assessments, launched an AI Center of Excellence in Melbourne, and completed mergers of UK and US subsidiaries.

• Targeting $1.5B revenue run rate by FY27 and international EBITDA in the low 20s.

Financial highlights

• International services revenue at $87M (₹731.7 crores), up 2.8%-3% QoQ (4.4% in constant currency); rupee revenue at INR 731.7 crore, up 3.4% QoQ.

• Consolidated EBITDA for Q3 FY25 was ₹163.6 crores, down 7.8% QoQ; international services EBITDA margin at 14.6%, down from 18.2% QoQ.

• PAT for Q3 FY25 was ₹105 crores, down 1.4% QoQ; international services PAT at INR 56.9 crore.

• Domestic business revenue at INR 2,111.1 crore, up 44% QoQ and 17% YoY; gross contribution up 16.7% QoQ.

• Cash and equivalents increased to INR 672 crore; net cash at INR 115 crore.

Outlook and guidance

• Q4 expected to see 2.5%-3.5% degrowth in international IT services due to client ramp-down and Quant Systems seasonality.

• Margins expected to recover in Q4 as one-time costs subside, with a return to high-teens EBITDA anticipated.

• Management remains optimistic about long-term growth, targeting $1.5B revenue by FY27 and 12% YoY domestic growth.