Bengaluru: Persistent Systems reported a 16.1% year-on-year increase in June-quarter revenue to $452.4 million, extending its streak to 25 consecutive quarters of revenue growth, even as margins came under pressure from hiring ahead of large deal ramp-ups. In constant currency terms, revenue grew 4.1% sequentially and 16.5% year-on-year.The company posted an EBIT margin of 16.0%, down from 16.3% in the previous quarter.Persistent also reported quarterly total contract value (TCV) of $1.1 billion, driven by a contract worth more than $650 million with a global technology company. The deal has already begun contributing to revenue, with 75-80% of the ramp-up expected in the current quarter and the balance in the following quarter.“We have been hiring sequentially for several quarters based on the orders we book and anticipate. Hiring is aligned with our deal pipeline and delivery plans rather than being a one-time event,” chief executive Sandeep Kalra said.The company added 1,138 employees during the quarter, taking its total headcount to 28,640, while attrition declined to 12.3% from 13.0% in the previous quarter.Chief financial officer Vinit Teredesai said the decline in profitability should not be viewed as structural. While lower utilisation weighed on EBIT margins, the drop in net profit was primarily due to unrealised foreign exchange losses as the rupee appreciated against the dollar during the quarter.“A significant portion should reverse,” Teredesai said, adding that the company’s hedging strategy had worked as intended by limiting volatility and that much of the accounting impact would unwind as currency movements normalise.Operating cash flow was also affected by delayed customer payments, though Teredesai said the issue was temporary. Most outstanding collections were received within the first two weeks of July, with delays arising largely from documentation requirements and quarter-end payment cycles rather than any deterioration in customer demand.Alongside its quarterly performance, Persistent defended its proposed acquisition of European digital engineering firm Nagarro following investor concerns over the valuation.Kalra described the acquisition as a strategic move aimed at strengthening the company’s geographic reach and industry capabilities rather than an attempt to acquire AI capabilities.Nagarro expands Persistent’s presence in Europe, Middle East and Japan while adding expertise in SAP, manufacturing, automotive, utilities and consumer retail. Persistent, in turn, brings strengths in cloud infrastructure and managed services.“We evaluated multiple AI companies, but many are small, command very high valuations and lack an established customer base. A $50-million AI company today could cost $500-700 million to acquire, and there’s no guarantee the founders or talent will stay,” Kalra said. “Instead, we believe building AI capabilities internally while adding complementary strengths through Nagarro creates far greater long-term value.”
