Earnings Call Transcript. Click PDF to see full.
Introductory remarks:
Q3 revenue was US$129.43 million, that is a 3.1% growth QoQ, 7.1% growth YoY.
Margins: EBITDA stands at 13.3% while EBIT stands at 8.7%, PAT is at 9.5%.
We enjoyed a pure organic growth across the board. This quarter we added 53 new accounts to Persistent’s customer list and it was highlighted by multiple marquee wins. A leading private bank in Asia Pacific employed us and enjoyed us to help build a digital bank with them. Another leading bank in the United States brought us in for our expertise around AI and Machine Learning to create a chat bot experience of personalization. The largest aircraft manufacturer in the world enjoyed our business around industrial sector and added Persistent to assist the certified vendors.
A global pharma company created a roadmap for how they are going to enjoy rationalizing all their applications and moving to digital persona and how they see the world and their future structures as an IT organization. The drop in our largest customers’ revenue impacted our EBIT. We are cognizant of it, and we have a focused plan to get it back to where it was. We likewise had expense due to important events such as attending conferences like Dreamforce, which is the largest Salesforce Conference in the world and AWS re:Invent, which is a similar extremely large conference for the Amazon ecosystem. We invested more heavily in those conferences than we have in the past, and that is a single large quarterly expense as well which is yielding results in terms of opportunity, Persistent Systems Limited January 30, 2020 Page 3 of 19 pipeline growth and conversion as we continue to expand organically the Persistent logo out into new accounts. From a Unit Overview, in the Technology Services unit, it grew 6.4% QoQ. Sandeep Kalra is with us and he will provide details on the growth of that.
The Alliance business had a degrowth of 2%. I will now cover the Alliance business and talk in detail about that. We had a leadership change in our Alliance unit. We had to part ways with Mark Simpson, who was the President of the Alliance unit. Jiani Zhang assumes the role of Acting President of the Alliance business. Jiani joined Persistent in 2019 as our General Manager of Industrial Sector. Prior to joining Persistent, Jiani worked in the roles of engineering, software product management and marketing at both AMD and later IBM. Jiani’s formal education includes an MBA from UCLA and a Bachelor of Science from the University of California in Electrical Engineering, Computer Science.
Our strategy to balance the variation in the largest client revenue is yielding results. We continue as we have talked about in previous quarters to grow our industrial sector business overall, growing that business 19% QoQ. However, industrial sector revenue is approximately a quarter of size of our total Alliance unit revenue and so making a meaningful impact against shifts in net Alliance revenue is still in front of us while we continue to enjoy growth in industrial sector.
