Birlasoft Reports Q1 Revenue Dip, Eyes Sequential Growth Amid Market Challenges
Birlasoft Limited experienced a 1% sequential decline in Q1 revenue, reaching $150.70 million. The EBITDA margin was 12.40%, and total contract value of deal wins was $141.00 million. Three out of four verticals showed growth, with Manufacturing declining by 4%. The Digital & Data business grew by 2.60%, while ERP and Infrastructure businesses declined. The company expects sequential growth in Q2 but anticipates challenging market conditions throughout the year. Birlasoft is focusing on mining existing accounts, adding new logos, and revitalizing its ERP business. CFO Kamini Shah is departing, with Chandrasekar Thyagarajan taking over on August 8.
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Birlasoft Limited , a global enterprise digital and IT services company, reported a 1% sequential decline in revenue for the first quarter, as the company navigates through challenging market conditions and client-specific headwinds.
Performance Highlights
- Revenue stood at $150.70 million, down 1% quarter-on-quarter in dollar terms.
- EBITDA margin came in at 12.40% for the quarter.
- Total contract value (TCV) of deal wins reached $141.00 million, with over half comprising new deals.
- Cash and cash equivalents increased to $266.60 million, up 16% year-on-year.
Segment Performance
Three out of Birlasoft's four verticals showed growth:
- BFSI (Banking, Financial Services, and Insurance): Marginal growth
- Life Sciences & Services: 1.40% quarter-on-quarter growth
- Energy & Utilities: 1.90% quarter-on-quarter growth
However, the Manufacturing vertical, which is the company's largest, declined by 4% due to project completions, ramp-downs, and client insourcing.
Service Line Performance
- Digital & Data business: 2.60% quarter-on-quarter growth
- ERP (Enterprise Resource Planning) business: Declined, reflecting its correlation with the Manufacturing vertical
- Infrastructure business: Witnessed a decline due to project completion
Management Commentary
Angan Guha, CEO and Managing Director of Birlasoft, stated, "While we are still navigating through the challenging demand environment, I believe our ongoing efforts to drive operational efficiencies, generate healthy cash flows, and invest prudently in the business positions us well to benefit from a recovery in demand as and when that happens."
Guha also highlighted the company's focus on building pipeline and delivering a strong order book, aiming for sequential growth in the coming quarters.
Financial Outlook
- The company expects sequential growth in Q2.
- Management anticipates challenging market conditions to continue affecting performance throughout the year.
- The effective tax rate increased to 35.90% from historical levels of 25-26% due to provisions for higher tax, expected to normalize in the following fiscal year.
Strategic Initiatives
Birlasoft is focusing on:
- Mining existing top 40 accounts
- Adding new logos to diversify the client base
- Working with partners like SAP and Oracle to revitalize the ERP business
Leadership Changes
- CFO Kamini Shah announced her departure for personal reasons.
- Chandrasekar Thyagarajan will take over as the new CFO, effective August 8.
Future Outlook
Despite current challenges, Birlasoft remains committed to its long-term growth strategy. The company is investing in emerging technologies, with recent wins in GenAI and Agentic AI solutions demonstrating its enhanced capabilities in these areas.
As Birlasoft navigates through the current market uncertainties, it maintains a focus on operational efficiency, cash flow generation, and strategic investments to position itself for future growth opportunities.
Historical Stock Returns for Birlasoft
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.44% | -3.35% | -11.81% | -24.35% | -34.78% | +142.94% |
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