Sonata Software Limited CC-May26.pdf · 2026-05-11
Thank you, Srikar . Good morning, good afternoon, and good evening, everyone. I will provide the key updates on Q4 2026 and the FY 2026 business and financial performance . Starting with international business , during the Q4 , we benefited from few growth drivers. We clocked AI-led order book of $16.9 million in Q4 2026 and for the whole year it was $49 million of order book, AI-led order book and now contributed to around 18% of overall order book. AI-led pipeline is $280 million as on Q4 2026. We are actively pursuing AI opportunities across 100 plus clients, helping them unlock the value through operational efficiency gain, time to market through enhanced velocity and customer experience and transformation of business model. We secured two large deals in Q4 FY2026 of total. For FY2026 , we had total of eight large deals, with a major global Fintech company as a part of program, Sonata will execute their modernization of core banking platform and AI led-implementation to unify their user ’s experience, enable better institutional customer experience and faster outcomes for their clients. With Sonata, the software holding company backed by a PE Firm focused on acquiring and scaling founder owned vertical B2B SaaS companies, this is a multi-year managed services cloud support contract across Java. We added seven new customers in Q4 2026. In FY2026, total 23 new customers have been added. Top 10 clients contributed revenue share of 54%. Number of clients greater than 5 million run rate stood at 12 in Q4 2026. Number of clients greater than 3 million to 5 million revenue stood at 9 in Q4 20 26, up by one number from Q3 2026. Q4 2026 order book stood at $95 million, with book-to-bill ratio of 1.16x. We remain confident that our investment verticals, healthcare, HLS, and Banking Fi nancial services, together, these two verticals now contribute 30% of our total revenue in Q4 2026. Total headcount stood at 6283 in Q4 20 26 against 6404 in Q3 2026, with attrition of 11%. 90% of workforce is AI trained. On-site and offshore revenue mix stood at 32% to 68% in Q4 2026 against Q3 of 37% to 63%. Utilization reported as this quarter is 91.8% in Q4 compared to 90% in Q3 2026. Let us now walk through our financial performance for Q4 and FY2026 for international services. In Q4 2026, USD revenue stood at Rs.82.4 million, flattish quarter-on-quarter. In constant currency terms, it represents a growth of 0.6 % quarter -on-quarter. Rupee revenue stood at Rs.779.2 Crores, growth of 5.5% quarter -on-quarter. EBITDA before other income and forex for Q4 FY2026 improved to 20.2% up 70 basis points from 19.5% in Q3 2026. This EBITDA a ccretion is primarily driven by operational improvements across delivery reflecting better delivery efficiency and cost optimization. Utilization improved to 91.8% up from 90% in Q3 2026. As informed previously, our utilization and head count levels were driven by sustainable productivity improvement and operational efficiency in delivery enabled by AI adoption, differentiated AI solution, agentic implementation across projects. Our offshore revenue mix improved to 68% from 63% in Q3 2026 . We also benefited from pyramid optimization and price increases. For ex fluctuation was beneficial in quarter -on-quarter, and all these levers were partially offset by higher AI led CSP bundle deal cost. EBITDA after other income and forex for Q4 2026 stood at Rs.183.8 Crores, growth of 25.2% quarter-on-quarter and 50.9% year-on-year. In Q4 2026, PAT stood at Rs.84.2 Crores, growth of 40.6% quarter-on-quarter and 35% year-on-year. Reported ROCE and RONW for the quarter stood at 24.5% and 30.3% respectively. International services DSO for Q4 2026 reported at 64 days against 71 days in Q3 20 26. In FY2026 our international services dollar revenue stood at $328.4 million, a degrowth of 2.1% year-on-year. The Rupee revenue stood at Rs. 2,948 Crores, growth of 4.2% year -on-year. EBITDA before other income and forex for FY2026 stood at 18.4%, 1.4% accretion compared to 17% in FY 2025. EBITDA after other income and forex for FY 2026 stood at Rs.607.7 Crores, growth of 18% year -on-year. FY2026 the PAT stood at Rs.292.7 Crores , growth of 18.7% year-on-year. Now let me provide an update on domestic business. Despite headwinds from one large client renewal this year due to direct MS relationship, we continue to make a good progress in financial performance. Revenue for Q4 20 26 stood at Rs. 1759.2 Crores. This may reflect a degrowth of 25% Q-o-Q and 8.3% year -on-year growth. Gross contribution for Q4 2026 stood at Rs.75.3 Crores, degrowth of 1% quarter-on-quarter and degrowth of 3.9% year-on- year. PAT for Q4 2026 stood at Rs. 46.3 Crores, growth of 3.9% quarter -on-quarter and growth of 2.5% year-on-year. DSO for Q4 2026 is 47 days compared to 42 days in Q3 2026. Reported ROCE and RONW for the quarter stood at 43.5% and 39% respectively. Domestic business, revenue for FY2026 stood at Rs. 7772.1 Crores, growth of 5.9% year -on-year. Gross contribution for FY 2026 stood at Rs.288.7 Crores, degrowth of 3.5% year-on-year. PAT for FY2026 stood at Rs.171.7 Crores, degrowth of 3.6% year-on-year. Update on the consolidated business now. For the quarterly update, consolidated revenue for Q4 2026 stood at Rs.2536.2 Crores, degrowth of 17.7% quarter-on-quarter and degrowth of 3.1% year-on-year. PAT for Q4 2026 stood at Rs.130.5 Crores, growth of 25% Q -o-Q and 21.4% year-on-year. Reported ROCE and RONW for the quarter stood at 28.1% and 32.5% respectively. Consolidated revenue for FY2026 stood at Rs.10,701.2 Crores with growth of 5.4% year-on-year. PAT for FY2026 stood at Rs. 464.4 Crores in FY 2026 compared to Rs.424.7 Crores in FY2025. Consolidated EPS reported for FY2026 stood at 16.74 per share against last year 15.3 per share. We have recommended a final dividend of 4.15 per share. Update on cash flow. Cash generation remains strong during the year with a closing cash balance of Rs. 606 Crores and a net cash position positive of Rs. 31 Crores, a significant improvement from Q3 FY2026. To conclude, in a difficult year characterized by macroeconomic challenges and cli ent ramp down, Sonata displayed a resilien t performance by growing PAT 18.7% year-on-year for International and 9.3% for consolidated business for FY2026. We also were able to win and ramp up few large deals during the year , which gave us some tailwinds as we enter the new financial year. Our Q4 20 26 performance continued to reflect disciplined execution and continued progress across our strategic priorities. The benefits from AI-led productivity initiatives are becoming increasingly visible across delivery and enterprise operations concerning our confidence in driving sustainable efficiency over a long- term period. Our endeavor will be to maintain EBITDA at a similar level. While the macro environment continues to remain dynamic and client decision cycles remain elongated, we are encouraged by momentum in our pipeline, especially around digital and AI-led transformative initiative. We remain cautiously optimistic and expect gradual improvement and growth over the medium term. I now hand over to Raj for his commentary on international business.
Raj will you take the call?