Persistent Systems cracks over 7% post Q1 earnings; EBIT margin slips 50 bps QoQ

The company reported a 5.6% sequential growth in revenue in US dollar terms at $328.2 million. On a year-on-year (YoY) basis, the figure grew by 16%. Revenue in rupee terms increased 5.7% quarter-on-quarter (QoQ) and 17.9% YoY to ₹ 2,737.17 crore. EBITDA or earnings before interest, taxes, depreciation, and amortisation for the quarter under review came in at ₹455.21 crore, up 0.2% QoQ and 7.6% YoY. Profit after tax (PAT) rose 33.9% YoY to ₹306.42 crore but slipped 2.8% on a QoQ basis.

Commenting on the results, Sandeep Kalra, Chief Executive Officer and Executive Director, said, "“I am pleased to announce our 17th consecutive quarter of revenue growth, underscoring our clients’ sustained trust and confidence in us. Our continued success is driven by resilience, innovation, and a strategic focus on future readiness."

"We have pivoted to an AI-led, platform-driven services approach, deepening our hyperscaler partnerships and developing a suite of innovative solutions. Recognizing our transformative digital solutions, ISG, the leading advisory firm, ranks us as a Leader for Digital Engineering services in the US and Europe 2024, for the second year in a row," the CEO added.

The order booking for the quarter ended on June 30, 2024, was at $462.8 million in total contract value (TCV) and at $337.3 million in annual contract value (ACV) terms.

The major disappointment has been the company's EBIT margin, which decreased by 50 basis points (bps) to 14% from 14.5% in the previous quarter.

Persistent Systems' share price

Shares of the company have given 79% returns in the past one year and a jaw-dropping 1,494% returns in the last five years. In comparison, the Nifty IT index has jumped 25% in the past 12 months and nearly 117% during the five-year period. The benchmark Nifty50 index has gained 25% in the past 12 months and 117% during the last five years.

Earlier this month, the company announced the intent to acquire New Jersey-based Starfish Associates. This strategic acquisition, the press release said, builds on Persistent Systems’ existing engineering capabilities in the Contact Center and Unified Communications space, expanding its strong AI-driven business transformation capabilities and expertise in driving operational excellence. Starfish Associates caters to the world’s largest enterprises including many Fortune 500 companies, the press release said further.