Persistent Outperforming By Leaps And Bounds

Persistent Systems announced its Q2FY13 results on October 18, 2012. The company posted robust financials and provided validation of the functionality and progressive contribution of its strategy. Persistent has an IP-led strategy and has been continuingly investing in the areas of cloud, analytics, collaboration and mobility. Capturing on these promising emerging areas has been leading the company to consistent growth and outperformance. Today, the stock prices of Persistent Systems saw a steep intraday upswing reaching a high of Rs.476 a piece, up by 11.31 per cent.

Persistent Systems posted a strong growth of 9.36 per cent in its topline which increased from USD 54.91 million in Q1FY13 to USD 60.05 million in Q2FY13. This represents a growth that has not been seen so far in the results posted by IT companies. The macroeconomic environment has been rather difficult, poising companies with hurdles on the demand front. Its operating profit stood at Rs.70.114 crore, marking a 12.69 per cent sequential growth. This resulted in an increase of 76 basis points in the operating profit margin which came in at 21.45 per cent. The net profit however saw a relatively tepid growth of 7.38 per cent with a net profit of Rs.44.647 crore.

Persistent saw tremendous growth coming in from its telecom vertical with the segment’s share in revenues increasing from 24.2 per cent in Q1FY13 to 28 per cent in Q2FY13. However, most of the growth though was driven by the company’s IP business. IP-led revenues grew at a magnificent 48.5 per cent QoQ.

Persistent also announced the acquisition of US based Doyenz’s rCloud, a cloud platform business continuity solution which provides backup and disaster recovery for physical and virtual servers. This acquisition has been in line with the strategy of the company to grow its IP business. It also strengthens the company’s position in cloud computing and SMB (Small and Medium Business) offerings. The company, has so far, acquired 3 businesses in this financial year highlighting its growth through strategic alliances and inorganic growth.

The SMB social enterprise services saw further strengthening due to expansion that included Salesforce Chatter enablement, collaboration portal development, Radian 6 and Salesforce Site.com implementation.

On the customer front, the company’s clientele stood at 293 in this quarter as compared to the 291 in the previous quarter. Persistent saw good traction in the media/entertainment industry and in the area of big data analytics. The company’s staff utilisation too increased from 74.1 per cent in Q1FY13 to 77.7 per cent in Q2FY13, marking higher operationalisation.

This result has been strong considering strategic alliances, more strategy specific growth, higher operationalisation and robustness in financials. The company has positioned itself well in terms of emerging areas and trends to capture the growth prospects offered. We expect this strategy to work well for the company considering changing trends in the IT sector thus maintaining our positive outlook on the company.