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Tuesday 14 November 2017

International IT Services mitigates Sonata’s contraction

logoI have absolutely no idea why Bangalore-based mid-tier offshore services ‘unusual suspect’ Sonata Software’s domestic revenues fell off a cliff last quarter, as they didn’t explain in their results release. But this did have the happy side effect of improving margins in this product resale and local IT services side of Sonata’s business.

But the jewel-in-waiting in Sonata’s crown is its International IT Services business – or should I say ‘businesses’ – being a rather disjoint band of home-grown services units and various acquisitions, for which FQ2 revenues (to 30th Sept.) grew by over 12% yoy to Rs2.35b (~$36.5m), 11% higher than the prior quarter. EBITDA margins at 22.5% were a tad up yoy and a point down qoq.

Net net, Sonata’s group revenues fell by nearly 15% yoy to Rs4.27b (~$66.4m), one-third lower than the prior quarter. But the margin improvement in the domestic business boosted group EBITDA to 15.5%, almost 4 points up yoy and 5 points up qoq.

In truth I can’t really make much sense of Sonata’s businesses and wonder whether its hopes for becoming a recognised player in the UK market (see Sonata cranks up volume of its offshore serenade) may be, shall we say, ‘highly aspirational’.

Posted by Anthony Miller at '12:18' - Tagged: results   offshore  

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