Persistent net dips 10% as tie-up with IBM Watson crawls

Mid-sized IT player Persistent Systems today reported a 10 per cent decline in its March quarter net at Rs 72.8 crore due to an expected dip in revenue from its alliance with IBM.
The Pune-based company's post tax profit for the full fiscal 2017 came in flat at Rs 301.4 crore, while revenue grew 7.4 per cent to Rs 727.1 crore for the quarter and 24.5 per cent to Rs 2,878.4 crore for the full year.
Chairman and managing director Anand Deshpande said the quarterly profit was impacted by a USD 3-million dip in revenue from its alliance with IBM Watson, but was quick to add that this was expected.

He said the firm is meeting the guidance on all the parameters including reducing reliance on the legacy services business whose contribution has fallen below 50 per cent of the overall revenues and also margins at 16.2 per cent.
Revenue from the alliance with IBM Watson, where the company has made sizeable investments, grows higher in even quarters and dip during the odd quarters, he said.
Adverse currency movements also impacted the bottomline by Rs 17 crore, and so did a Rs 11.4 crore payout on account of an one-time legal settlement in the US, he said.

Digital revenue grew 11 per cent on a sequential basis and 66 per cent annually for the reporting quarter, he said.

The company is placed at a very nice spot for the future and is targeting a double digit revenue growth and a wider pretax margin for the next fiscal.
The company has given 350 offers to freshers who are expected to join from June, Deshpande said, adding it will hire 600-800 people on a net basis in the current fiscal year.
On increments, he said Persistent will wait for competition to move first and announce the revisions only after June, Deshpande said, adding it will vary as per merit and can be between low single-digits and double digits.
The attrition for fiscal 2017 was 15.7 per cent and he said, adding there has not been a spurt in involuntary attrition. Persistent scrip closed 0.66 per cent up at Rs 567.80 a piece on the BSE, as against 0.97 per cent gains in the benchmark Sensex.