Persistent Systems Ltd. share price target

management's guidance of loss in IP revenue) for Q4FY2018. Revenue of PSL dropped by 4.6% q-o-q to $117 million in Q4FY2018 due to a $6.8 million (20.6% q-o-q) decline in IP revenue, higher than normal Q4 seasonality. The dip in IP revenue attributed to the 22% q-o-q drop in Alliance business (management noted this as a one-off event). IT services revenue increased by...

IP Pressure As Expected, Margin Ahead Of Estimate As expected, Persistent Systems reported a steep fall in USD revenue in 4QFY18, led by a decline in IP business. Revenue declined 4.6% QoQ to US$117mn, marginally above our estimate. The IP business recorded a 20.6% QoQ revenue decline, with Alliances business the key pressure point, down 21.6% QoQ. This was on account of a steep revenue dip in its largest client (-26% QoQ), as internal issues and restructuring led to a higher-than-expected fall in spend of the client on the business initiatives addressed by Persistent. On the other hand, Accelerite revenue fell 9% QoQ, as Persistent continued to divest non-strategic products. The Digital and Services businesses...

PSYS reported weak revenue (-4.6% QoQ), which was as expected based on the update of IP revenue decline shared by the company toward the end of the quarter. EBITDA margin of 14.8% (-260bp QoQ), however, was above our estimate of 12.7% (-470bp QoQ), as IP decline was ~USD1m lower, headcount declined again and there were some write-backs for bonus provided for in the earlier quarters. The margin beat was offset by lower-than-expected other income, limiting the beat on PAT.

Co-creation business model in digital services will provide a better yield in FY19. Persistent had significant wins in NEURO (continuous risk-based authentication) on the back of its collaboration with USAA. The platform created with Partners HealthCare has already gained acceptance from its first user. The company added 19 new customers (two large customers in the healthcare and financial vertical each) during Q4. The management is looking at the future with optimism on the back of healthy deal pipelines, new customer additions, traction in the European region and reseller agreement with IBM, expansion into new markets and recoup of Alliance revenue . To add that, management noted that its FY2019 revenue growth is expected to exceed NASSCOM's revenue growth guidance (79%) for the industry....

Earnings to pick up in FY2019E: Management is hopeful that its co-creation business model in digital services will drive its revenue growth in FY2019. Further, traction in European region for its digital business, strong deal pipeline and additional revenue (PARX acquisition) will aid growth in FY2019. Management is hopeful for steady growth in both revenue streams (service...

Persistent System (PSL) announced that its IP led revenues will decline by $8 million in Q4FY18E on account of seasonality and the volatile nature of the business. Consequently, we expect overall revenues to decline 5.8% QoQ to $115.4 million (mn) in Q4FY18E while its EBITDA margin may decline 370 bps sequentially to 13.6% given the sharp fall in high margin IP led revenues. Going ahead, PSL expect a strong pipeline of opportunities in FY19E and expects revenues growth to exceed Nasscom guidance. We now incorporate weakness in IP revenues resulting in a...

Persistent (PSYS) delivered a strong performance on all counts. Revenue at USD 122.5 mn (up 3.8% QoQ) was ahead of estimates (AxisCapE/ Cons.: USD 121 mn/ USD 123.4 mn) led by IP (IBM-IoT partnership) and Digital (9.2% QoQ).

US$ revenues grew 3.8% QoQ to $122.5 million (mn), slightly lower than our 5% QoQ growth and $124.1 mn estimate. While IP Led revenues grew a strong 6.8% sequentially at $32.9 mn in a seasonally...

Dec'17 quarter revenue performance was in line with expectation. Alliance revenue increased by 12.5% qoq on the back of seasonal uptick in IBM IoT business while incremental contribution from PARX aided Digital business growth (up 9.2% qoq). Performance of Services and Accelerite business was soft. At 17.4%, EBITDA margin improved by 220bps qoq, aided by operational efficiencies and...

We attended Persistent Systems' (PSL) 8th Investor Day in Pune, where the management showcased its prowess in the architecture of software-driven things in the future by bringing the technologies in data, digital and IoT together. The management shared a deep insight into the latest digital transformation that is likely to disrupt various verticals and domains. The company demonstrated...