Sonata Software (SONATSOFTW) Q4 FY24 Earnings Call Highlights
Financial Performance:
- International Services:
- QoQ revenue decline of 2.4% (2.2% in constant currency).
- YoY revenue growth of 24.1% (24.3% in constant currency).
- Strong EBITDA performance.
- PAT decline QoQ, but growth YoY.
- Stable DSO at 45 days.
- Domestic Business:
- Strong YoY gross contribution growth.
- PAT growth QoQ and YoY.
- Overall:
- FY24 saw a robust 34.3% YoY revenue growth.
Operational Performance:
- Large Deals:
- Success with 14 large deals in FY24.
- Delay in healthcare sector deal, but active and expected to pick up.
- Healthy large deal pipeline with significant Fortune 500 presence.
- New Logo Wins:
- 45 new logos added, including Fortune 500 companies in Q4.
- Strategic Bets:
- Progress in Microsoft Fabric and AI & GenAI initiatives.
- Client Concentration:
- Focus on expanding client base, particularly in higher revenue segment.
- Headcount & Utilization:
- Slight decline in headcount, but improved utilization.
- Vertical Performance:
- Expectation of growth in Hi-Tech and Healthcare sectors.
Future Outlook:
- Expectation of near-term flat to slightly positive growth, with acceleration in second half of FY25.
- Confidence in medium and long-term growth driven by large deal pipeline and strategic investments.
- No immediate M&A plans, but open to opportunities next year.
Concerns:
- Lengthening deal closure cycles causing revenue recognition uncertainty.
- Margin pressure due to investments and onsite-offshore mix shift.
- Muted growth expected in BFSI and Retail sectors.
Other Important Points:
- Commitment to Responsible AI offering and employee training.
- Recognition as fastest growing IT service provider by HFS Research.
- Continued investment in people and diversity initiatives.
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