More Stories

Informist, Wednesday, Jan. 22, 2025

 

--Persistent Systems: Revenue saw 100 bps impact due to furloughs in Oct-Dec 

--CONTEXT: Comments by Persistent Systems mgmt at post-earnings analyst call 

--Persistent Systems: Margin saw 60 bps impact due to furloughs in Oct-Dec 

--Persistent Systems: Strong dollar led to margin tailwind of 50 bps Oct-Dec 

--Persistent Systems: Oct-Dec forex gain of $144.7 mln vs $106 mln Jul-Sept 

--Persistent Systems: Working on many levers to optimise cost

 

By Arya S. Biju

 

MUMBAI – After setting a target of achieving $2 billion annual revenue by 2026-27 (Apr-Mar), Persistent Systems Ltd. is now focusing on revenue of $5 billion by FY31, Sandeep Kalra, chief executive officer of the company, said during the company's post-earnings conference call on Wednesday. The company's revenue for FY24 was $1.19 billion.

 

Kalra is confident of achieving the revenue target for FY27. Persistent Systems will focus on categorising its three core verticals into sub-verticals, doubling down on its top 100 customers, which contribute around 80% to its revenue, and enhancing global capability centres to support FY31 revenue ambitions, Kalra said during the conference call.

 

For the December quarter, furloughs impacted the top line of the information technology company by around 100 basis points and the margins by around 60 bps, Chief Financial Officer Vinit Teredesai said. The company's margin for the quarter was also impacted by lower earnout credit compared to the previous quarter, which resulted in an impact of 100 bps on the margin, Teredesai added.   

 

The company's recent acquisitions of Starfish Associates, Arrka, and SoHo Dragon Solutions India together contributed around 35 bps to its revenue growth in the December quarter, Teredesai said.

 

Improvement in utilisation and rationalisation of contractor costs, coupled with operational initiatives led to a 140-basis-point improvement in Persistent Systems' operating margin for the December quarter, the company said. Further, lower resale revenue and improved pricing supported the margins by 40 bps. Persistent Systems reported earnings before interest and tax margin of 14.9% for the quarter, up from 14.00% reported in the previous two quarters. 

 

The company made a foreign exchange gain of $144.7 million in the quarter, up from $106 million in the September quarter. A stronger US dollar led to a cross-currency tailwind of 50 bps in the quarter, the management said.

 

Going forward, the company plans to work on multiple levers for cost optimisation. The company said it is working with multiple customers in terms of pricing, and is trying to get more non-linear revenue. Persistent Systems also aims to decouple headcount growth from revenue growth in the coming quarters, driving more revenue and profit per employee over the coming years, Kalra said. "This is going to be a multi-quarter, multi-year journey, and it will also need a certain amount of investment to be done," Kalra said.   

 

On deals wins, the company said it is comfortable with the current total contract value and annual contract value. The company reported a healthy order book for the December quarter, with a total contract value of $594.1 million and an annual contract value of $428.3 million. The company also said it has an increasing backlog of deals over the period. 

 

Persistent Systems announced its Oct-Dec earnings post market hours on Wednesday. It reported better-than-expected earnings with a consolidated net profit of INR 3.73 billion, up 14.8% on quarter, and consolidated revenue from operations of INR 30.62 billion, up 5.7% on quarter. On Wednesday, shares of the company closed at INR 5,685.15 on the National Stock Exchange, down 3.6%.  End

 

US$1 = INR 86.32

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.