Sonata Software Share Price Logs Steepest Single-Day Fall in 2 Months: What Triggered the Slide?

Summary: Sonata Software share price tumbled on Thursday after the company revised its Q4 FY25 revenue outlook, citing lower-than-expected earnings from its largest client. The update dampened sentiment as it contradicted earlier guidance from the Q3FY25 concall, where management had projected a recovery in the upcoming quarter.

In the early hours of Thursday, April17, share price of Sonata Software declined as much as 14% on intraday basis, marking a low of ₹288 on the NSE. The sharp fall came after the company disclosed that revenue from its largest client in Q4FY25 will be lower than previously anticipated during the Analyst/Investor call held on February 6, 2025, impacting its international business performance.

This update further dampened sentiment, especially since in its earlier guidance during the Q3FY25 concall, management had indicated a revenue degrowth of 2.5% to 3.5%—attributing it to a one-time client impact and seasonal factors—and had expressed confidence in a bounce-back in the following quarter. However, the company has now revised its stance, stating that revenue from its largest client in Q4 FY25 is likely to be lower than anticipated.

As per the Q3FY25 earnings, the company derived 25% of its revenue from international services. Within the international segment, the top 10 customers accounted for 66% of the total revenue. The company had 12 clients contributing over $5 million each, with 78% in the United States alone. 

For the same period, the international services reported revenue of $87 million, reflecting a year-on-year growth of 3.9%. However, the international services profit after tax (PAT) declined by about 34% during the quarter to $6.7 million, and the EBITDA margin dropped to 14.6% from 22.6% in Q3FY24.

At 10:45 AM, shares of Sonata Software were trading at ₹311.75, down by 6.95%. The stock had recovered from the intraday lows logged earlier in the trading session. On a year-to-date (YTD) basis, Sonata Software’s share price is down by 45.5%, and in the past 12 months, the stock declined by 55.60%.