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Revenue
₹2,536.2 Cr
verified against source
Revenue YoY
-3.1%
reported change
EBITDA
₹130.5 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Sonata Software reported Q4 FY26 consolidated revenue of ₹2,536.2 crore, down 3.1% YoY, impacted by domestic headwinds from a large client moving to direct billing. International services revenue grew 6% QoQ in constant currency to $82.4 million, with EBITDA margin expanding 70 bps QoQ to 20.2% driven by AI-led productivity gains and utilization of 91.8%. PAT for international services grew 40.6% QoQ to ₹84.2 crore. The company won two large deals in Q4, including a core banking modernization with a global fintech. AI pipeline reached $280 million, contributing 18% of total order book. Management remains cautiously optimistic on gradual growth improvement, but macro uncertainty and elongated client decision cycles persist. Key risk: sustainability of TMT vertical upturn and potential further contraction in BFSI clients.
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Guidance to track
- Management expects to maintain current EBITDA margin (~20.2%) in the near term, with potential investments for growth.
- After covering the loss from a large client moving to direct billing, domestic business is expected to resume historical growth rates within one to two quarters.
- Management remains cautiously optimistic on growth, expecting gradual improvement driven by AI and digital transformation initiatives.
Risks flagged
- Management noted that client decision cycles remain elongated due to macroeconomic challenges, which could delay deal closures and revenue conversion.
- Despite a large deal win, management acknowledged that some large BFSI clients may continue to contract spending, impacting growth.
- Management expressed caution on the recent upturn in the TMT vertical, noting that it may not be sustainable and needs to be monitored.
- New customer wins in domestic business may initially come at low or zero margins, though management believes this is manageable through mix and upselling.
Key quotes
- Our point of view is that all organizations will reimagine how they operate, how they use technology with AI, right? And the need to adapt and evolve will be faster than before.
- We are not anticipating to lose any further customers to direct billing... we worked with Microsoft and customers and jointly made sure that those customers finally signed through a partner route through us.
- Our endeavor is to maintain the EBITDA at 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 transformation initiatives.
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