AI Order Book Contribution
18%
+18pp YoY
AI-related orders now constitute 18% of total order book, up from negligible levels last year.
SONATASOFTWARE
Information Technology
2026-04-??
Sonata Software Limited — Q4 FY26
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.
✓ Verified against BSE filing
2-Min Summary
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.
Key Numbers
Large Deal Pipeline Count
11
-17 QoQ
Large deal pipeline dropped to 11 from ~28-32 in prior quarters due to conversion of two deals in Q4.
Utilization Rate
91.8%
+180bps QoQ
Utilization improved to 91.8% from 90% in Q3, driven by AI-enabled delivery efficiencies.
Onsite-Offshore Revenue Mix
32:68
+5pp offshore QoQ
Offshore revenue mix improved to 68% from 63% in Q3, aiding margin expansion.
Management Guidance
International services EBITDA margin to remain at similar levels
Management expects to maintain current EBITDA margin (~20.2%) in the near term, with potential investments for growth.
marginsDomestic business to return to growth trajectory in FY27
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.
growthAI pipeline to drive gradual improvement in growth over medium term
Management remains cautiously optimistic on growth, expecting gradual improvement driven by AI and digital transformation initiatives.
growthKey Risks
Sustained macro uncertainty and elongated client decision cycles
Management noted that client decision cycles remain elongated due to macroeconomic challenges, which could delay deal closures and revenue conversion.
high · management_commentaryPotential further contraction in BFSI vertical
Despite a large deal win, management acknowledged that some large BFSI clients may continue to contract spending, impacting growth.
medium · analyst_questionSustainability of TMT vertical upturn
Management expressed caution on the recent upturn in the TMT vertical, noting that it may not be sustainable and needs to be monitored.
medium · analyst_questionDomestic business margin pressure from new customer acquisitions
New customer wins in domestic business may initially come at low or zero margins, though management believes this is manageable through mix and upselling.
low · analyst_questionNotable 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.