• Margin contraction drivers: EBITDA margins declined primarily due to the absence of a previous quarter one-time compensation benefit, a delayed ramp-up on a large deal, and over a percentage point spent on AI investments. Profit after tax was further impacted by unfavorable foreign exchange movements compared to previous gains.
• AI investment strategy: Sonata Software is embedding AI across all its go-to-market offerings, supported by guidance from a global consulting firm and the hiring of a Chief AI Officer. Management expects these strategic investments to continue for a couple more quarters and translate into revenue momentum by next year.
• Deal ramp-up and pipeline: The delayed large deal ramp-up pushed from late June is expected to be caught up in Q2, though market closure cycles for large deals still take 6 to 9 months. The overall order book remains steady in the range of 1.18 to 1.24, with strong expansion in the AI-related deal pipeline.