Sonata Software says Q3 loss linked to additional payouts for acquired company
Summary
Mid-tier IT firm Sonata Software, which reported a loss of ₹46.2 crore in the third quarter, said the dip was due to additional payouts made to its acquired company Quant. The company, amid a tough demand environment, is seeing green shoots in its largest vertical high-tech and is expecting the effect of deal ramp-ups to reflect in the first quarter, notes Jagannathan Chakravarthi, CFO of Sonata Software. After 2023, we made an assessment and as per the terms of acquisition, if they overperformed beyond an EBITDA limit, they were entitled to get additional money, which is what they have done by a substantial margin. It is a huge ROI from a CFO perspective.” Encore, acquired over three years ago, surpassed targets with a lucrative 0.6 revenue multiple and 6 times EBITDA. Chakravarthi noted that the company will continue to invest 1-2 per cent of revenue to achieve growth as it sees opportunities in the AI and Microsoft fabric.
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