Sonata Software , a global IT services and solutions company, has reported a mixed performance for the first quarter of fiscal year 2026, navigating through both tailwinds and headwinds in the market.

Revenue Growth and Large Deals

The company's international services revenue grew marginally by 0.60% quarter-on-quarter to $81.80 million in Q1 FY26, while experiencing a slight decline of 1.10% year-on-year. Despite the challenging environment, Sonata Software secured three large deals during the quarter, with total order bookings of $105.00 million, achieving a book-to-bill ratio of 1.28.

Sector Performance

The company saw varied performance across its key verticals:

• Healthcare and Life Sciences (HLS): This sector, along with Banking, Financial Services, and Insurance (BFSI), now contributes over 30% of total revenue, up from 13% three years ago, indicating strong growth in these areas.

• Technology, Media, and Telecom (TMT): The TMT vertical showed resilience, benefiting from the ramp-up of a large deal announced in April.

• Retail and Manufacturing: This sector continues to face headwinds, particularly due to global tariff uncertainties.

AI and Digital Transformation

Sonata Software is positioning itself strongly in the AI space:

• The company expects AI-enabled services to contribute 20% of its revenue over the next 3 years.
• The AI pipeline has reached $46.00 million, showcasing growing demand for AI solutions.
• Sonata has launched AgentBridge, making it one of the first mid-tier firms with enterprise-grade agentic AI workflows.

Client Base and New Logos

The company added 7 new enterprise customers during the quarter and now has 7 clients with more than $10.00 million in annual run rate. The number of clients with over $5.00 million run rate increased to 13 in Q1 FY26 from 11 in the previous quarter.

Financial Highlights

• EBITDA improved marginally to 16.60% from 16.50% in the previous quarter.
• The company declared its first interim dividend of INR 1.25 per share and plans to pay quarterly interim dividends going forward.
• Consolidated revenue stood at INR 2,965.20 crores, showing a growth of 13.30% quarter-on-quarter and 17.30% year-on-year.

Challenges and Outlook

Sonata Software faces some challenges, including:

• Global softness in the Retail Manufacturing sector.
• Budget pressures from two large clients in the BFSI and High-Tech sectors.
• Potential risks in the domestic SITL business due to partners considering direct engagement models.

Despite these challenges, the company remains optimistic about its long-term strategy, focusing on becoming a differentiated modernization engineering firm powered by AI and modern technologies.

Samir Dhir, Managing Director and CEO of Sonata Software, commented on the results, saying, "We remain confident in our long-term strategy and committed to drive sustainable growth and shareholder value. Our focus on large deals, strategic verticals, and AI-led transformation is helping us navigate through the current market challenges."

As Sonata Software continues to adapt to the evolving market conditions, it maintains its vision of being in the top quartile of growth companies in the mid-tier IT services segment.

Sonata Software , a leading modernization engineering company, has reported steady growth in its Q1 financial results, along with significant deal wins and strategic initiatives in AI-led modernization.

Financial Highlights

Sonata Software's consolidated Profit After Tax (PAT) grew by 1.7% quarter-on-quarter (QoQ) to ₹109.30 crores. The company's consolidated revenue stood at ₹2,965.20 crores, marking a 13.3% increase QoQ.

Key financial metrics for Q1 include:

Strategic Developments

Sonata Software has secured $456 million in deal wins as part of its AI-led modernization strategy. The company reported winning three large deals during Q1, including two in the Banking, Financial Services, and Insurance (BFSI) sector and one in the Technology, Media, and Telecom (TMT) sector.

AI and Cloud Initiatives

The company has launched AgentBridge, a new AI-powered platform, and formed a strategic alliance with Microsoft. Sonata's AI pipeline currently stands at $46 million, with an additional $39 million pipeline for Microsoft Fabric projects.

Segment Performance

International IT Services

• Revenue in USD terms grew by 0.6% QoQ to $81.80 million
• EBITDA margin improved by 0.1 basis points QoQ to 16.6%
• Added 7 new customers, including a $73 million AI-led Digital Modernization Deal with a leading US TMT company

Domestic Products & Services

• Revenue grew by 18.6% QoQ to ₹2,274.70 crores
• Gross contribution declined by 12.6% QoQ to ₹68.50 crores

Management Commentary

Mr. Samir Dhir, MD & CEO of Sonata Software, stated, "International IT Services Q1 marked steady progress with revenue growth of 0.6% QoQ. We secured three large deals - two in BFSI and one in TMT - underscoring our focus on large deals and execution strength. Our focused investments in Healthcare and BFSI have scaled from 13% to 32% of revenue over three years, validating our diversification strategy."

Mr. Sujit Mohanty, MD & CEO of Sonata Information Technology Limited, added, "We gained new clients in cloud and data protection services. Our continued investments and partnerships with leading cloud providers position us well to grow revenue from cloud-managed services in the coming quarters."

Dividend Announcement

The Board of Directors has declared an interim dividend of ₹1.25 per equity share (125% on par value of ₹1).

Sonata Software continues to focus on scalable growth through BFSI, cloud and data services, and global enterprise transformation initiatives. With its strong deal pipeline and strategic investments in AI and cloud technologies, the company is well-positioned for future growth in the rapidly evolving IT services landscape.