Sonata Software Q1 FY27: AI Business Gains Momentum as Revenue Grows 10.6% YoY
Sonata Software Limited has released its revised investor presentation for the quarter ended June 30, 2026, highlighting continued progress in AI-led services, cloud transformation, large deal wins and its international business.
The company is positioning itself around its strategy of “Engineering the AI Enterprise”, combining AI-powered engineering, AI-ready data, legacy modernisation, autonomous operations and domain-focused business transformation.
For Q1 FY27, consolidated revenue increased 10.6% year-on-year to ₹3,279.1 crore, while international services revenue grew 11% YoY to ₹777.2 crore.
However, profitability remained under pressure, with consolidated EBITDA margin at 5.5% compared with 8.2% in Q4 FY26.
Q1 FY27 Financial Highlights
| Particular | Q1 FY27 | YoY / QoQ |
|---|---|---|
| Consolidated Revenue | ₹3,279.1 crore | +10.6% YoY |
| Consolidated EBITDA* | ₹179.0 crore | — |
| EBITDA Margin* | 5.5% | — |
| Consolidated PAT | ₹108.1 crore | — |
| International Services Revenue | ₹777.2 crore | +11.0% YoY |
| International Services EBITDA* | ₹119.6 crore | — |
| International Services EBITDA Margin* | 15.4% | — |
| International Services PAT | ₹62.2 crore | — |
| Gross Cash & Cash Equivalents | ₹567 crore | — |
| Net Cash Position | ₹67 crore | — |
| Total Employees | 6,293 | — |
*EBITDA before forex and other income, where specified in the presentation.
International Services Revenue Grows 11%
Sonata Software’s international services business remained relatively stable in dollar terms but delivered stronger growth in rupee terms.
International services revenue stood at $82.0 million in Q1 FY27, compared with $81.8 million in Q1 FY26.
In Indian rupee terms, revenue reached ₹777.2 crore, representing 11% YoY growth.
Sequentially, however, revenue declined marginally by 0.3%.
The company’s constant-currency growth was 2.1% YoY and 0.1% QoQ.
International Services Profitability
International services EBITDA before forex and other income stood at ₹119.6 crore, with an EBITDA margin of 15.4%.
PAT stood at ₹62.2 crore, compared with ₹84.2 crore in the previous quarter.
The company reported a return on capital employed of 14.9% and return on net worth of 15.2% during the quarter.
AI Business Shows Strong Momentum
One of the biggest highlights from the investor presentation is the rapid growth in Sonata Software’s AI-led business.
The company reported $21.73 million of AI/AI-led order bookings in Q1 FY27, representing a 27% increase sequentially.
More importantly, the AI-led pipeline reached approximately $340 million, up 21% QoQ.
This indicates that AI is becoming an increasingly important component of Sonata’s sales pipeline and customer engagements.
The company is targeting enterprise transformation through:
- AI-powered engineering
- AI-ready data
- Autonomous operations
- AI-native service delivery
- Legacy modernisation
- Agentic process transformation
- AI-first technology platforms
- Domain-driven customer operations
AI Is Being Linked to Measurable Business Outcomes
Sonata’s presentation highlighted several customer examples where AI has been used to generate measurable operational improvements.
Examples included:
| AI Use Case | Reported Outcome |
| AI-powered customer service operations | 71% faster handling time |
| AI-powered engineering | 50% faster implementation |
| Agentic eTMF validation | 95% less review effort |
| AI-assisted modernisation | 33% faster delivery |
| AI validation | 99%+ accuracy |
| Legacy migration | 20% lower effort |
These examples indicate that Sonata is attempting to move beyond simply selling AI technology and instead link AI implementation to measurable customer outcomes.
Large Deal Pipeline Remains Strong
Sonata Software won one key large deal during Q1 FY27, while maintaining a healthy pipeline of large opportunities.
The key deal involved an AI-led legacy platform modernisation project for a major global beverage company based in the US.
The customer operates across more than 11 countries, with more than 800 locations.
The project includes:
- Legacy platform modernisation
- Digital application modernisation
- AI-led Fabric modernisation
- Data warehousing
- Improved customer insights
- Better institutional customer experience
The company sees large deals as an important growth driver going forward.
Microsoft Partnership Remains a Major Strength
Sonata highlighted its long-standing relationship with Microsoft, describing it as a 30+ year partnership.
The company has more than 3,500 employees working on Microsoft technologies and more than 400 clients globally across the Microsoft ecosystem.
Sonata reported more than $650 million of annual Microsoft-related revenue.
The company also holds multiple Microsoft competencies and specialisations across areas such as Azure, Dynamics 365, data analytics, Teams, Microsoft 365 and cloud transformation.
This ecosystem provides Sonata with an important platform for cross-selling cloud, data, AI and modernisation services.
Cloud Becomes the Largest Service Line
The revenue mix of the international services business shows a significant shift towards cloud.
Cloud accounted for 62% of international services revenue in Q1 FY27, up from 53% in Q4 FY26.
The movement in service-line mix was:
| Service Line | Q1 FY27 | Q4 FY26 |
| Cloud | 62% | 53% |
| Dynamics | 21% | 22% |
| Data | 11% | 15% |
| Emerging | 3% | 3% |
| Others | 3% | 7% |
The sharp increase in cloud’s contribution is an important development as enterprises continue to modernise their technology infrastructure and adopt AI-ready cloud platforms.
Revenue Mix Across Industries
Sonata’s international services business remains diversified across several industry verticals.
In Q1 FY27:
- Technology, Media & Telecom (TMT): 34%
- Retail & Manufacturing: 32%
- Healthcare & Life Sciences: 15%
- BFSI: 16%
- Others: 3%
BFSI increased its contribution from 13% in Q4 FY26 to 16%, while TMT declined from 36% to 34%.
US Continues to Dominate Revenue
The United States remains Sonata Software’s largest geographic market.
Revenue contribution in Q1 FY27 was:
| Geography | Revenue Contribution |
| USA | 71% |
| Europe | 23% |
| Rest of World | 6% |
The high exposure to the US provides access to a large technology market but also means the company’s international business remains sensitive to spending trends among American enterprises.
Customer Concentration Improves
Another positive development was a reduction in revenue concentration among the company’s largest customers.
Revenue from the top 10 customers declined to 51% in Q1 FY27 from 54% in Q4 FY26.
Revenue from the top 20 customers was approximately 70%.
Sonata added seven new customers during the quarter.
The company had:
- 12 customers generating more than $5 million
- 9 customers generating $3–5 million
- 32 customers generating $1–3 million
The company’s book-to-bill ratio stood at 1.18x, indicating that order intake continued to exceed revenue recognised during the period.
Utilisation and Attrition
International services utilisation stood at 88.5% in Q1 FY27, down from 91.8% in Q4 FY26.
LTM attrition increased to 13%, compared with 11% in the previous quarter.
The company’s international services headcount stood at 5,795 employees, including:
- 5,409 delivery employees
- 104 sales and marketing employees
- 282 general and administrative employees
The onsite/offshore revenue mix further shifted towards offshore delivery, reaching 30:70 compared with 32:68 in Q4 FY26.
Domestic Business Delivers Strong Sequential Growth
Sonata’s domestic business recorded significant sequential growth during Q1 FY27.
Revenue increased to ₹2,505.6 crore, representing:
- 42.4% QoQ growth
- 10.1% YoY growth
Gross contribution increased 4.2% QoQ to ₹78.5 crore.
EBITDA before forex and other income stood at ₹59.3 crore, while PAT reached ₹45.9 crore.
The domestic business remains heavily cloud-oriented, with approximately 89.7% of revenue coming from cloud.
Approximately 80% of domestic revenue was annuity-based in Q1 FY27.
Consolidated Revenue Crosses ₹3,279 Crore
Combining the international services and domestic businesses, Sonata Software reported consolidated revenue of ₹3,279.1 crore in Q1 FY27.
Revenue grew 29.3% sequentially and 10.6% year-on-year.
However, profitability was lower than the previous quarter.
| Consolidated Metric | Q4 FY26 | Q1 FY27 |
| Revenue | ₹2,536.2 crore | ₹3,279.1 crore |
| EBITDA before Forex & OI | ₹208.7 crore | ₹179.0 crore |
| EBITDA Margin | 8.2% | 5.5% |
| PAT | ₹130.5 crore | ₹108.1 crore |
| PAT Margin | 5.1% | 3.3% |
| Gross Cash | ₹606.0 crore | ₹567.0 crore |
| Net Cash | ₹30.7 crore | ₹67.0 crore |
The company ended the quarter with ₹567 crore of gross cash and cash equivalents and a net cash position of ₹67 crore.
Employee Strength at 6,293
Sonata Software’s total employee strength stood at 6,293 at the end of Q1 FY27.
The workforce included:
- 5,779 delivery employees
- 228 sales and marketing employees
- 286 general and administrative employees
The company has been managing its workforce carefully while investing in AI capabilities and maintaining its delivery infrastructure.
Interim Dividend of 125%
Sonata Software also declared an interim dividend of 125% per share.
The company highlighted its continued focus on capital returns while maintaining investment in growth areas such as AI, cloud, data and modernisation.
What Investors Should Watch
Sonata Software enters FY27 with several potential growth drivers, particularly around AI and cloud transformation.
Investors should monitor:
- Growth in AI-led order bookings
- Conversion of the $340 million AI pipeline
- Large deal wins and execution
- Cloud revenue growth
- International services growth in constant currency
- Recovery in international services profitability
- Employee utilisation and attrition
- Book-to-bill ratio
- Customer concentration
- Domestic business performance
- Cash generation and capital allocation