Sonata Software has nine mid and small sized transformative deals in the GenAI and AI space, CFO Jagannathan Chakravarthi Narasimhan, told FE. However, large AI deals may take an additional three to four quarters to materialise. This delay is attributed to customers’ cautious approach as they navigate the rapidly evolving technology landscape, he added.
“Large deals will take a little while, maybe another three, four quarters as customers wait and watch sometimes. They want to try a technology because it can be beneficial,” Narasimhan said.
The mid-tier IT company reported a 15% sequential increase in revenue from operations for the quarter ended June, reaching Rs 2,527.43 crore. Despite this robust growth in revenue, the company’s net profit saw a slight decline, dropping to Rs 105.63 crore from Rs 110.4 crore in the previous quarter, primarily due an increase in the tax and interest rates, Narasimhan said.
The company said its total deal pipeline now consists of 47% of large deals, while 37% of it are with Fortune 500 clients, however, there is still a notable delay in the deal closure time, Narasimhan said.
Discussing the performance of the company’s newly acquired company, Quant Systems, Narasimhan said, “There was a challenge with Quant system in the first quarter because of seasonal impact they had and one of the largest BFSI customer had some softness. But, they are back in the growth track, and maybe by Q3, will reflect real growth”.
The Bengaluru-based IT services midcap company acquired Quant Systems, a Texas-based IT solutions and software company, for $65 million in 2023.
Further, diving on to the sector-wise performance of the company, Narasimhan, said hi-tech, healthcare and BFSI are doing really well.
Regarding hiring and employee management, Narasimhan said the company will continue to do lateral additions based on skill set requirements and plan to hire about 650 freshers in the financial year 2025 from campuses and will offer a wage increase to junior level professionals in the next quarter.
Narasimhan expressed cautious optimism for the rest of FY25. “We will be better than the industry this year. The reason is there are a lot of uncertainties still. So, what I can say is the momentum is slightly better. We expect that once the Fed rate and other uncertainties come down, we can expect something better improvement in the system”.
