Sonata Software’s share price experienced a significant decline of 14% on April 17, dropping to ₹288 per share. This steep fall comes after the company issued a cautionary statement regarding a projected decrease in revenue for the fourth quarter of the last financial year. In a regulatory filing made on Wednesday, Sonata Software revealed that earnings from its largest client are expected to fall short of previous forecasts for the March quarter.

Revenue Concerns and Client Projections

The company’s announcement indicated that the anticipated revenue figures for Q4 2024-25 would be lower than earlier estimates shared during an analyst call on February 6, 2025. This disappointing news has led to concerns about the company’s international business performance in the upcoming quarter.

Financial Performance Overview

In the previous quarter, Q3 FY25, Sonata Software reported a net profit of ₹105 crore, a notable turnaround from the net loss of ₹46 crore experienced in the same quarter of FY24. During this period, revenue from operations saw an increase, rising to ₹2,843 crore from ₹2,493 crore.

• Revenue Breakdown:
  • Banking, Financial Services, and Insurance (BFSI): 30%
  • Technology, Media, and Telecom (TMT): 29%
  • Retail and Manufacturing: 25%
  • Healthcare and Life Sciences (HLS): 11%
  • Emerging Verticals: 5%

In terms of service offerings, Sonata’s cloud solutions dominated the revenue mix with a 37% share, followed by data services at 26% and Microsoft Dynamics at 24%. Emerging technologies constituted 12%, while other services accounted for 1%.

Geographical Revenue Insights

When analyzing Sonata Software’s international revenue distribution, the United States emerged as the dominant market, contributing a substantial 78%. Meanwhile, Europe and the Rest of the World each accounted for 11%, underlining the company’s strong commitment to its North American operations.

Share Price Decline

The current share price of Sonata Software reflects a dramatic decline of 65% from its peak of ₹870. The stock has faced downward pressure, witnessing a drop in value for 12 out of the last 14 months, including the current month. At this point, the shares are trading at levels not seen since January 2023.

Given these developments, investors are advised to monitor Sonata Software’s performance closely and consider the potential impacts of client revenue fluctuations on future growth. For more details on other companies, check out our coverage on Wipro’s recent performance and Infosys’ upcoming results.