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Sonata Software Ltd. — Investor Presentation 2023
Jul 29, 2023
60845_rns_2023-07-29_4d4a9bbc-12e3-45aa-b60c-692900682561.pdf
Investor Presentation
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29[th] July, 2023
National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Mumbai Kind Attn: Manager, Listing Department Stock Code – SONATSOFTW
BSE Limited P.J. Towers, Dalal Street, Mumbai Kind Attn: Manager, Listing Department Stock Code - 532221
Dear Sir/Madam,
SUB: INVESTORS’ PRESENTATION
Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are enclosing Investors’ Presentation for the quarter ended 30[th] June, 2023.
The above said presentation is also made available on the Company’s website www.sonata-software.com.
Please take the same on record.
Thanking you,
Yours faithfully,
For Sonata Software Limited Mangal Digitally signed by Mangal Krishnarao Krishnarao Kulkarni Date: 2023.07.29 18:16:08 Kulkarni +05'30' Mangal Kulkarni Company Secretary, Compliance Officer and Head Legal
Encl.: As above
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Website: www.sonata-software.com email: [email protected]
Sonata Software Limited - SSL Registered Office: 208, T V Industrial Estate, 2[nd] Floor, S K Ahire Marg, Worli, Mumbai – 400 030 Corporate Office: APS Trust Building, Bull Temple Road, N. R. Colony, Bangalore - 560 004, India Tel: +91 80 6778 1996 | Fax: +91 80 2661 0972 | CIN: L72200MH1994PLC082110
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Investor Presentation
Q1 FY’24
Sonata at a glance
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We are a Modernization and a Digital Engineering company powered by our unique PLATFORMATION™ framework.
The Company
Delivering Outcome-based Modernization Services
35 YEARS IT Solutions Provider
$950+M Revenue
15.3% CAGR across 10 years
Listed (SONATSOFTW) Market Cap $ 1.7B
6500+ Employees Across US, EU, Asia & ANZ Powered by Unified Engineer Program (UEP)
Cloud Data Managed Services Dynamics Automation Digital Contact Center Digital Transformation Using Platformation[TM]
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© Sonata Software Ltd, 2023. Confidential.
Serving our Global clients with right Talent mix (Global & Local Talent)
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APAC
Canada China
Offices : Japan
North America
Toronto Singapore
Europe
Development Center: Richmond Malaysia
Netherlands
Redmond Korea
Denmark
Philippines
Germany
Offices: Thailand
Atlanta, GA Vietnam
Fremont, CA
Bridgewater, NJ Eastern
East Brunswick, NJ Europe
Florida UK (London) &
Indonesia and
Dallas Ireland (Dublin) Phillipines
Minneapolis
Warren, PA
Minnesota
Costa Rica India
Development Centers:
Bangalore (3)
Mexico
Hyderabad (2)
Chennai
Middle East
Offices:
& Africa
Bangalore Australia
Qatar
Chennai Brisbane
Delhi Sydney
Hyderabad Melbourne
Kolkata
Pune
Mumbai
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Development Centers & Sales Offices - 27 Partners - 4
Global Delivery centers recent/InProgress - 6
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© Sonata Software Ltd, 2023. Confidential.
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Key Verticals, Partners, IPs
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Ecosystem:
Industries
Partnerships Tech + Domain
TMT
Innovative IPs
Retail, Travel & Mfg.
LISA Chatbot
AI)
BFSI
Workbox.io
Lightning Build
Healthcare and Life
Sciences
Emerging
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LISA Chatbot (Conversational AI) Workbox.io (Archival) Lightning Build
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Sustainability Target: Carbon Neutrality by 2030 Single Use Plastic Free certified by FY 24 Aim for 100% Tier 1 suppliers on ESG compliance and training by FY 24
UNGC Signatory by FY2024 SbTi Commitment by FY4
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Our Objective and Goal
Objective:
Be the fastest-growing Modernization Engineering company, powered by its unique Platformation[TM] framework
Goal:
Revenue of $ 1.5B by FY 26 end @ EBITDA of early 20’s
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Our Performance Vision For Sonata
Revenue Growth (In $M)
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~$1.5B
+$580M
$0.92B
FY23 3-4 Years
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Harvest Invest
Diversify
SCALE – Key Drivers
Microsoft sell-to; Dynamics Sustain SITL momentum Retail, Manufacturing, Travel and TMT Sales, Large deals, BFSI, Healthcare Life Sciences and technical capabilities
Clients : Build multiple large accounts. Brand : Global brand in Modernization
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In Q1 we crossed $300M annual run rate for the International Business
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Intl. Services $M
77.3
80
65.8
60.5
55.7 56.8 57.8
53.4
60 49.4
40
20
0
Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24
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SITL GC INR Crs
70 61.8
56.7 58.1
53.6
60 50.8
47.4
45.1
50 39.9
40
30
20
10
0
Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24
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Stock Return of 99% for our Shareholders over the past 1 year
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500%
450%
400%
350%
300%
250%
206%
200%
150% 180%
100%
50%
0%
01-Jul-18 01-Jan-19 01-Jul-19 01-Jan-20 01-Jul-20 01-Jan-21 01-Jul-21 01-Jan-22 01-Jul-22 01-Jan-23 01-Jul-23
Sonata Soft Nifty IT Nifty50
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439%
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| Total Return to | Share Holders | |||
|---|---|---|---|---|
| 1 Yr | 5 Yrs | |||
| Stock Price Return %** | 99% | 339% | ||
| Dividend Yield# % | 2% | 6% | ||
| * Till June 30, 2023 |
| Market Data | |||
|---|---|---|---|
| NSE Symbol | SONATSOFTW | ||
| Market Cap** | $ 1.7B | ||
| 1 USD = INR 82.04 * as on 30th June 23 |
# Annualized |
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Big moves are being enabled by firm incremental steps
Large Deals
M&A - Quant
BFSI & HLS 5 Geo launched NA, UK, Nordics, India, Australia Modernization Partners Focused GTMs ecosystem RMD/TMT 10 Mega Radiation Accounts
RMD – Retail, Manufacturing & Distribution TMT – Tech, Media & Telecom BFSI – Banking, Financial Services & Insurance HLS – Healthcare and Life Sciences
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What’s working well for us…
Large deals Wins 7 large deals in flight
Quant accelerated synergy growth.
– Modernization Cloud & Data pipeline is 40%
New invest verticals growing (HLS, BFSI). Partnerships (MS, AWS)
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– SITL steady GC growth
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Large Deal Win#1 - ERP transformation by implementing MS Dynamics 365
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Client Overview
The Client provides advanced and high-quality belting solutions for 20 different industries including global logistics, food production, fitness equipment, household appliances and energy production.
Areas in Scope
Industry Manufacturing Revenue Client Overview $1.4 B Locations >40
This cover ERP transformation by implementing MS Dynamics 365 across all the lines of business in 49 legal entities
Finance
Supply Chain Management Production Integration with 30+ distinct systems Application Support
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Large Deals Win #2 - Build and Maintain Digital Hub to enhance customer experience and improve operational efficiency
Client Overview
The client, Europe’s largest multinational leisure, travel, and tourism company, operates over 150 aircraft, 16 cruise ships, and 381 hotels.
Areas in Scope
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Industry
Travel
Client Revenue
Overview $18.5 B
LOB
6
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Build and Maintain digital hub for client to enhance customer experience and improve operational efficiency.
Cloud and Data Modernisation
Application Modernisation
Strategy definition and implementation of transformation programs
E2E Delivery of business as usual
Innovation through Sonata’s Solution and Innovation hubs
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…Aligned with our Partners to drive our Joint GTM Strategy
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Cloud Apps Microsoft Service Experience Hyper
Data & Analytics Managed Services
Modernization Business Apps Transformation Automation
MSFT Market Place
Partners
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Microsoft Relationship – Jointly driving Customer Success
Sonata is now a Microsoft Cloud Solutions Partner
400+ Clients 30+ Years Across The Globe Microsoft Partnership USA, Europe, Asia, India, Australia, Middle East
$650+ Million Per Annum Revenue To Microsoft
Microsoft Cloud Solution Partner - Azure Expert MSP Competencies.
Joint Execution
2500+ Team On Microsoft Technologies
Microsoft Fasttrack, Global Delivery, Microsoft Consulting Services
10 Advanced Specialization in Dynamics 365, Data Analytics, Teams, CAF, M365, Azure
Catalyst Led
Industry Digital Transformation Retail, CPG, Manufacturing, Telecom, Healthcare, Hi-tech, BFSI
Industry Clouds Go To Market Healthcare, Retail, Sustainability, Manufacturing
Sales Process
Industry Point Of View, Business Value Assessment, Envisioning Workshops, Design Thinking
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Partner for RPA Partner for
Migration 100 Microsoft Fabric
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Winner Winner GTM with MS for D365 Launch Partner for “Technology Partner “Microsoft US Eagle Modernization, SFDC Migration, Microsoft Fabric of the Year - BizApps” Award” RPA Migration, Fabric, Gen AI & - 2021 For new D365 customers Contact Center Migrations
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What are the key bets we are making for the future?
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1 2 3
Microsoft Fabric:
AI & Gen AI Modernization
Overcoming Data Silos
and Dark Data
Continued focus
Verticalization Focused GTM Large Deals 10 Mega accounts
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Sonata is the only Indian SI launch partner for MS Fabric
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Sonata Advantage
-
1) Early Mover with Microsoft.
-
2) Implemented the solution within Sonata for trial/testing.
-
3) Strong relationships with CVP, Data @ Microsoft
Prelaunch product right now. Formal launch in Nov’ 2023
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40+ customers in 6-7 weeks
300 Engineers
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Sonata’s Responsible-first AI offering for Enterprise scale – Harmoni.AI
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17 Use Harmoni.AI Platform
Cases built for Responsible AI
03 04
Active Offerings and
Conversations 02 05 methodology
at 16 accounts Harmoni.AI published
All functions
01 06
Core team built;
identifying &
training created
implementing Gen AI
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-
‘ Responsible by design’ approach. Initial use cases:
-
Process (regulatory, clinical trials)
-
• Contact Center – cross-sell and upsell
-
• Productivity of engineer, support teams
Reaching ~ $ 60B TAM
Gen AI is expected to achieve ~ 30% share of overall AI market by 2025
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Success Stories (1/2)… Leveraging cutting edge LLMs
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Client Overview
Industry Technology
Revenue > $190 B
Fortune 25
Employees > 220,000
The Pressure Points
-
Accelerate the ability to bring new products and features to the market
-
High quality - Right first time in a complex engineering ecosystem
Solutions
- EPICS (Engineering Pipeline Infrastructure and Cloud Services) BOT helps Client Dataverse Engineering teams to get info on several technical topics like how to access or provision VMs.
Results
-
Integrate BOT with Azure OpenAI.
-
A centralized index of around 14000 wiki articles is being created using Azure Cognitive Search
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Success Stories (2/2)… Unique Customer Identification using AI/ML
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Client Overview
Industry Fintech
Revenue $5.5 B
Fortune 500
Presence +180
The Pressure Points
-
Limited ability to recognise customers – fragmented data across channels
-
Risk and Compliance decisioning not optimized due to lack of single customer view
-
Increasing cost of verification due to volume of transaction and duplication
Solutions
-
Developed modern using AI/ML - to create One consistent customer profile and customer identification process f
-
Developed master platform - stores and manages all customer records, profile data, and IDs across the enterprise
-
Integrating business and transactional systems with Master Party to create a customer 360 view across the enterprise
Results
-
50% reduction in customer complaints
-
75% decrease in transaction time that required KYC and AML checks
-
100% Infrastructure availability and on AWS cloud platform
-
Identified and merged close to 15% (around 200 million) of customer profiles
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Key Recognitions!
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Key Partnerships unlocked !
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People – Strength Of Sonata
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Financial Management
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1 2 3 4 High Revenue growth Strong Cash Position Superlative returns for Sound Capital with Industry Leading & Balance Sheet Shareholders Allocation margins Focus on high revenue Very strong positive Industry leading Sound capital rate realization and cash generation and ROCE and ROE & allocation high margins business cash position Bonus share issue EPS : ₹33# / Liquidity of ~ ROCE > ~35%# Dividend : Share ₹800+Crs ₹15.75 / share
Trailing 12 months
*Bonus issue 1:3, record date - Sep 10, 2022
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Consistent Growth over last 10 years
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Consolidated Revenue & profitability ($Mn)
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Revenue EBITDA PAT
926 75 56
51
66
745
50 53 51 37 39
570
33
528
30
37
436
354 381 27 29 29 21 23 23
254 270 288
17 13
FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23
CAGR 15% CAGR 18% CAGR 18%
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Predictable and resilient growth trajectory
*Before OI and FX
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Financial Performance of International Services – Q1 FY24
30.0%
Industry leading QoQ growth in Revenue and EBIDTA; Process improvements result in Collection rigour $20.0
25.0%
$90.0 21.1%
$80.0 $65.8 $77.3 17.5% QoQ $15.0 24.4% 20.7% 20.0%21.1% QoQ
$70.0 36.1% YoY 22.1% YoY
$56.8
$60.0
15.0%
$50.0 $10.0 17.4% 14.0% 12.6%
$40.0 Constant Currency $16.3 5.7% QoQ
10.0%
$13.9 $13.6
$30.0 1.2 17.4% QoQ $5.0 $9.9 $9.2 $9.7 -1.4% YoY
$20.0 36.4% YoY 5.0%
$10.0
$- $- 0.0%
Q1 FY23 Q4 FY23 Q1 FY24
Q1 FY23 Q4 FY23 Q1 FY24
Revenue Book to Bill
EBITDA excl OI & Fx PAT
39.2%
38.2% 34.9% without 50 49
Acq. Loan
36.1%
48
38.3% 34.4%
37.6% 46 46
46 45
33.6% 34.3% 32.5% 44
31.5%
42 41
40
38
36
FY 20 FY 21 FY 22 FY 23 Q1 24 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24
ROCE RONW
Trailing 12 months
26 © Sonata Software Ltd, 2023. Confidential.
Revenue in $ Mn
EBITDA & PAT in $ Mn
DSO
Return on Capital
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International Business: Revenue Drivers
Profile of Customer improving, with higher share from our focussed market -US
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20
11
8
15
5
7
12
10
5
2 43 45
31
Q2 23 Q3 23 Q4 23 Q1 24
Q1 23 Q4 23 Q1 24
1-3 Mn 3-5 Mn 5+ Mn
72%
69%
66%
62%
58% 20%
54% 22% 28%
16%
21%
20%
64%
57%
52%
Q1 23 Q4 23 Q1 24 Q1 23 Q4 23 Q1 24
USA Europe Rest of World
Top 10 Customer Top 20 Customer
Q4 23 is for 21 days while Q1 24 is for full quarter of Quant Revenue
New Customers added
No. of $ Million Customers
Client Concentration Revenue by Geography
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International Business: Operational Performance Performance has been based on significant scale up of Team Sonata
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86.4%
82.0% 82.7%
Q1 23 Q4 23 Q1 24
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Utilization
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6,500
6,267
6,055 4% QoQ
361
6,000
323 37% YoY
109
104
5,500
5,000 4,569
267
5,797
4,500 99 5,628
4,000 4,470
3,500
Q1 23 Q4 23 Q1 24
Delivery S&M G&A Total
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Headcount by Function
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International Business: Revenue by Verticals Mix Invest verticals: Healthcare & BFSI have grown according to our strategy
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FY 23 Q1 FY 24
Healthcare Healthcare
11% 14%
BFSI
8%
BFSI
TMT TMT
18%
Emerging 33% 26%
9%
Revenue Revenue
Share Share
Emerging
6%
Retail and Manufacturing 39% Retail and Manufacturing 37%
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International Business: Revenue by Top GTMs
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Significant growth in Cloud and Data as revenue increase by more than 50%
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FY 23 Q1 FY 24
Others Emerging Tech Others Emerging Tech
2% 13% 6% 10%
Cloud Cloud
36% 38%
Revenue Revenue
Share Share
Dynamics Data Dynamics
Data
37% 12% 26%
20%
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Domestic Business: Delivering consistently strong Growth with Industry EBITDA 28.2% YoY leading ROCE
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EBITDA 28.2% YoY
Cloud ~78.8%
GC 21.8% YoY 1.00
3.6% YoY Annuity ~75.9% 62 0.92
58
56 0.90
54
1,392 51 0.80
0.78
44 0.80
1,350
1,343
0.70
0.60
0.50
0.40
0.30
Q1 23 Q4 23 Q1 24 Q1 23 Q4 23 Q1 24 Q1 23 Q4 23 Q1 24
EBITDA GC
399
38 38
37
36
47.2% 35
372 374
44.6%
35.5%
32.2%
28.2%
FY 20 FY 21 FY 22 FY 23 Q1 FY 24 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24
Q1 23 Q4 23 Q1 24
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Contribution
Revenue (INR crs)
Net working Capital ÷ Gross
Gross Contribution & EBITDA (INR crs)
ROCE DSO
Head Count
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SONATA SOFTWARE
The fastest growing firm in IT Services in the next 3-4 years
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© Sonata Software Ltd, 2023. Confidential.
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