• Event Type: Quarterly earnings conference call for Q2 FY2027 ended September 30, 2026, including management presentation and Q&A session.
  • Date and Time: The call was held on November 6, 2026. Specific time and time zone were not disclosed in the transcript.
  • Purpose: Discussion of Q2 FY2027 financial results, business performance updates, and strategic direction focusing on AI-native transformation.
  • Management Participants:
  • Mr. Rajsekhar Datta Roy – Chief Executive Officer of International Services
  • Mr. Sujit Mohanty – Chief Executive Officer of Domestic Business
  • Mr. Jagannathan C.N. – Chief Financial Officer
  • Extended leadership team was also present
  • Compliance: The moderator noted that management may make forward-looking statements involving risks and assumptions, and advised participants to exercise discretion while making investment decisions. No specific UPSI disclaimer was explicitly stated.

Financial Highlights and Business Updates

International Services Performance:

  • Rupee revenue: ₹797.9 Crores (2.7% QoQ growth, 9.3% YoY growth)
  • USD revenue: $82.8 million (1% QoQ growth, 0.9% YoY growth)
  • Constant currency growth: 1.2% QoQ, 1.3% YoY
  • EBITDA margin: 15.5% (improved from 15.4% in Q1 FY27)
  • PAT: ₹69.1 Crores (11.1% QoQ growth)
  • Order book: ₹98.5 million with book-to-bill ratio of 1.18x
  • AI-led order book: ₹24.2 million (25% of total order book)
  • AI-led pipeline: ₹358 million
  • Headcount: 6,214 with attrition at 10%
  • Utilization: 90.5% (improved from 88.5% in Q1 FY27)
  • Onsite-offshore mix: 30:70
  • DSO: 52 days (improved from 60 days due to advanced collections)

Domestic Business Performance:

  • Revenue: ₹1,655.6 Crores (19% YoY growth, but 33.9% QoQ decline)
  • Gross contribution: ₹82 Crores (4.5% QoQ growth, 19.3% YoY growth)
  • PAT: ₹47.3 Crores (3.1% QoQ growth, 12.2% YoY growth)
  • DSO: 47 days (improved from 65 days in Q1 FY27)

Consolidated Performance:

  • Revenue: ₹2,445.2 Crores (15.4% YoY growth)
  • PAT: ₹116.4 Crores (7.7% QoQ growth)
  • ROCE: 25.8%
  • RONW: 23.3%
  • EPS: ₹4.2 per share (vs. ₹3.9 in Q2 FY26)
  • Cash balance: ₹426.3 Crores

Strategic Business Updates:

  • AI Strategy Progress: Company is transitioning to AI-native engineering organization with six horizontal offerings
  • Three key offerings (legacy modernization, AI-powered engineering, AI-ready data) contribute 61% of additional pipeline
  • Enhanced Harmoni.ai offerings including migration studio and AgentBridge for process transformation
  • Partnership Developments:
  • Strengthened Microsoft partnership (Sell-To and Sell-With), achieved Co-pilot dev partner, Frontier partner, and Inner Circle status
  • Signed 5-year strategic collaboration agreement with Amazon Web Services for cloud adoption in India
  • Signed 3-year joint GTM initiative with Google India for Gemini enterprise
  • New Wins: Four key new wins including one large deal in cloud modernization for US food service equipment provider
  • Vertical Focus: Progress in mortgage & lending, Pharma & Medtech, and agri sub-verticals

Margin Analysis:

  • Q2 EBITDA impacted by:
  • One-time severance cost (50bps impact)
  • Proof-of-concept investments (100bps impact)
  • Salary increments for junior management (60% of workforce)
  • Improvement drivers: utilization improvement, operational efficiencies, pyramid improvement, fixed price optimization, SG&A savings
  • Management maintains aspiration for 18-20% EBITDA margins

Outlook and Guidance:

  • Expect positive growth momentum despite Q3 headwinds in isolated verticals (BFSI and TMT)
  • Top 10 clients contributed 51% of revenue in Q2, expected to remain accretive
  • Domestic business shows recovery signs with new partnerships driving medium-term growth
  • International services showing early growth signs after multiple quarters of headwinds

Additional Notes

  • The transcript was submitted to exchanges pursuant to Regulation 46(2)(oa) of SEBI Listing Regulations
  • The document is available on company website at https://www.sonata-software.com/about-us/investor-relations
  • No financial presentation deck or additional materials were referenced in the transcript
  • The call included detailed Q&A session with analysts from Emkay Global, HDFC Securities, and Systematix