Birlasoft Sees Revenue Dip In Q1; Management Flags Challenging Market Conditions

Birlasoft experienced a revenue decline for the first quarter of FY25, pointing to the ongoing challenges in the operating environment and tightened discretionary spending by customers. 

The company’s US Dollar revenue stood at USD 159.1 million, a 2.9 per cent drop compared to the previous quarter. In constant currency terms, the decline was 2.7 per cent quarter-on-quarter (QoQ). In rupee terms, revenue amounted to Rs 1,327.4 crore, a decrease of 2.6 per cent from the March quarter.

The earnings before interest and tax (EBIT) for the quarter fell by 13 per cent sequentially to Rs 174.5 crore, while the EBIT margin narrowed by 140 basis points to 13.2 per cent from 14.7 per cent in the previous quarter. Despite the revenue decline, Birlasoft saw a year-on-year (YoY) revenue growth of 5.1 per cent, reaching Rs 1327.4 crore. 

The company’s profit after tax (PAT) for the quarter grew by 9.2 per cent YoY to Rs 150.2 crore. Cash and cash equivalents increased by 46 per cent YoY to Rs 1914.3 crore, supported by strong quarterly collections.

The company experienced a reduction in its client base, losing one client during the quarter and bringing the total number of active clients down to 258. This is a continued trend of client losses over the past seven quarters, with the number of active clients down by 27 compared to the same quarter last year. However, the contribution of the top five clients to the overall topline increased to 36.2 per cent, up from 35.4 per cent in the March quarter and 33.3 per cent a year ago.

Birlasoft’s deal wins for the quarter totaled USD 160 million, with new deal wins at USD 94 million, representing a five-quarter low. Nevertheless, this was a 10 per cent increase in deal wins YoY. The company’s workforce strength rose to 12,865 as of 30 June 2024 and the attrition rate improved QoQ to 11.6 per cent.

In a statement, Angan Guha, Chief Executive Officer and Managing Director, Birlasoft, said, “Our performance during the quarter under review reflects a challenging operating environment and tightened discretionary spends by customers. In that backdrop, I am pleased to note that our Infra and ROW businesses, both historically smaller contributors to our revenue, have done particularly well on the back of our efforts to enhance our capabilities and footprint there. 

“Our deal wins during the quarter are also up 10 per cent year on year at USD 160 Mn. We continue to invest in our business across our verticals and service lines to strengthen our position as a domain and emerging tech capabilities-led player,” he added.