Sonata Software reported a consolidated net profit of ₹1,081 crore for the quarter ended June 30, 2026, marking a marginal decline of 1.1% from ₹1,093 crore in the corresponding quarter of FY25. Despite the dip in bottom-line figures, the company’s revenue from operations grew by 10.6% year-on-year to ₹32,791 crore, up from ₹29,651 crore in Q1FY25. The Board of Directors also approved an interim dividend of ₹1.25 per equity share, representing a 125% payout on the par value of ₹1.

The financial results were reviewed by the Audit Committee and approved by the Board at its meeting held on August 06, 2026, in compliance with Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The standalone net profit stood at ₹411 crore, compared to ₹226 crore in the prior year period, while standalone revenue increased significantly to ₹4,438 crore from ₹2,785 crore.

Financial Performance Overview

On a standalone basis, the company recorded a profit before tax of ₹550 crore, compared to ₹365 crore in the previous year. The total comprehensive income attributable to owners of the parent rose sharply to ₹1,601 crore on a consolidated basis, up from ₹1,134 crore in Q1FY25, indicating improved overall value creation despite the slight dip in net profit.

Key Developments and Exceptional Items

The filing highlighted two significant exceptional items that impacted the previous year’s comparatives. In March 2026, Sonata Software North America Inc., a wholly owned subsidiary, initiated proceedings against a customer, leading to an allowance for expected credit losses of ₹969 crore (USD 10.64 million) on outstanding receivables. This was disclosed as an exceptional item for the quarter and year ended March 31, 2026.

Additionally, the company finalized payout terms for contingent consideration related to the acquisition of Sonata Software Solutions North America, Inc. (formerly Quant Systems Inc.). An amount of ₹653 crore (USD 6.89 million), previously considered payable, was concluded as not payable and disclosed as an exceptional item for the quarter and year ended March 31, 2026.

Leadership Changes

Mr. Samir Dhir resigned from the position of Executive Director upon the expiration of his term on May 08, 2026. The Board appointed Mr. Rajsekhar Datta Roy as the Chief Executive Officer effective May 09, 2026. Management stated it is actively monitoring the legal matter with the customer in consultation with legal advisors to protect the Group’s interests.

Sonata Software reported consolidated revenue of ₹3,279.1 crore for the quarter ended June 30, 2026 (Q1FY27), marking a 10.6% year-on-year increase from ₹2,965.2 crore in Q1FY26. Despite top-line growth, consolidated net profit after tax (PAT) contracted by 1.1% to ₹108.1 crore, primarily impacted by foreign exchange losses of ₹7.4 crore compared to a gain of ₹28 crore in the prior year period. The Board of Directors declared an interim dividend of ₹1.25 per equity share, payable on or after August 24, 2026, with a record date of August 14, 2026. This performance reflects the company’s strategic pivot toward "Engineering the AI Enterprise," with cloud and data pipelines now constituting 51% of the total addressable market focus.

The results were reviewed under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, by statutory auditors B S R & Co. LLP, who issued an unmodified review opinion. Sonata Software also released its revised Investor Presentation pursuant to Regulation 30 of the same regulations, highlighting key operational metrics and strategic partnerships. The company emphasized its deepening alliances with global technology ecosystems, including Microsoft, AWS, and Google, while securing a significant deal for AI-led legacy platform modernization with a major US-based global beverage player.

Segment Performance

Revenue growth was broad-based across segments. International IT Services revenue rose 11.0% YoY to ₹777.2 crore, while Domestic Products & Services grew 10.2% YoY to ₹2,505.6 crore. Consolidated EBITDA before foreign exchange and other income grew 12.1% YoY to ₹179.0 crore, demonstrating operational leverage. However, the consolidated EBITDA margin narrowed to 5.21% from 5.38% in Q1FY26.

Note: EBITDA is before other income, forex, and exceptional items. EBITDA margin is on a consolidated basis.

What the Numbers Show

A critical observation from the Q1FY27 results is the divergence between operational EBITDA growth and net profit performance. While consolidated EBITDA grew 12.1% YoY to ₹179.0 crore, the EBITDA margin contracted to 5.21%, indicating that revenue scaling has not fully offset cost pressures. Net profit declined by 1.1%, largely attributable to foreign exchange movements—the current quarter included a forex loss of ₹7.4 crore, compared to a forex gain of ₹28 crore in Q1FY26. Furthermore, the Domestic segment demonstrated superior margin expansion, with EBITDA growing 34.9% YoY, outpacing its 10.2% revenue growth, suggesting improved cost efficiency or mix shift in the domestic business unit.

Operational Highlights

• International Business: Revenue in constant currency terms grew 2.1% YoY. Days Sales Outstanding (DSO) improved to 60 days from 62 days in Q1FY26. Return on Capital Employed (ROCE) stood at 14.9%. Seven new customers were added during the quarter. The onsite/offshore revenue mix shifted to 30:70, reflecting a continued move towards offshore delivery models.
• Domestic Business: Gross contribution grew 14.5% YoY to ₹78.5 crore. ROCE surged significantly to 57.7% from 33.6% in Q1FY26, reflecting high capital efficiency in this segment. DSO remained stable at 65 days. Cloud revenue constituted approximately 89.7% of domestic revenue, with annuity-based revenue at 80.0%.
• Balance Sheet: Cash and cash equivalents (gross) stood at ₹567.0 crore, with net cash at ₹67.0 crore. No exceptional items were recorded in the current quarter, unlike the prior year which included impairment losses and labour code impacts.

The company continues to monitor the finalization of Central and State Rules regarding the new Labour Codes notified in November 2025. Sonata Software’s AI-led order book grew 27% quarter-on-quarter to $21.73 million, and the AI-led pipeline expanded by 21% to $340 million.