Expect FY16 dollar revenue growth over 10-12%: Persistent

IT company Persistent Systems reported a consolidated net profit of Rs 71.84 crore in the second quarter of FY16. Speaking to CNBC-TV18, Anand Deshpande chairman and managing director, Persistent, says the company will improve its margins in the second half of the year with the addition of new accounts and newer lines of business.

Deshpande says the company's acquisition of Ireland based Aepona Holdings will aid its dollar revenue numbers in H2FY16. He expects the company's dollar revenue to grow over 10-12 percent for FY16. Furthermore, Deshpande believes that RGen Solutions will help the company grow its overall Microsoft business. "The contribution of this [RGen] was about 2.8 percent roughly and that was one of the components of this quarter’s number," he adds. Below is the verbatim transcript of Anand Deshpande’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Sonia: This quarter’s performance is it sustainable or was there any element on a one-off? A: This is a very sustainable growth. This quarter was 5.5 percent and the total revenue was USD 82.96 million. We are trying to pervert the business in to an enterprise segment. We had extremely good new customer business during the quarter. One of the acquisitions that we had made in the previous quarter, one that we did for Aepona Holdings actually starts to kick in only in this quarter. So, this numbers should actually be better in the second half of the year.Latha: Dollar revenue growth will be better than 5.50 percent in the coming quarter than what was the contributions of your acquisitions in this quarter and what will it be in the coming quarter?A: This quarter, there is an acquisition that we made which was RGen Solutions. This company is based out of Seattle and works very closely with Microsoft. The contribution of this was about 2.8 percent roughly and that was one of the components of this quarter’s number. However, that is a sustainable number, it just adds on to our Microsoft business and hopefully we will be able to grow our overall Microsoft business because of the aggregation of this company.Sonia: The IP Business continues to struggle. It has declined very sharply this time, more than 7 percent quarter-on-quarter and has been declining in fact for three straight quarters now. In your assessment will IP continue to remain under pressure?A: For one more quarter there will be some pressure, though they may be benefit of the Q4 that has some extra service revenues and maintenance revenues that are targeted at Q4. Q1 we expect the new product to be in the market and that should help in improving new licence revenues for Q4 of our financial year. However, the product is quite robust. We are seeing a very healthy pipeline but since the product is not released new buying has been little standstill for previous quarter.Latha: What about margins? Do you maintain your profit before tax (PBT) margin guidance of FY 18-20 percent and what can we expect on EBITDA margin front? A: We do expect to improve margins over the next two quarters. Overall we are investing quite aggressively as we pervert the business from our traditional 100 percent independent software vendor (ISV) centric business to the enterprises with the enterprise digital transformation number. We have won the largest numbers of accounts this quarter. We were able to open total 91 new accounts this quarter.Overall there is a lot of activity in the new lines of business that we have started. That is going to cost some investments but overall we are quite upbeat about the performance this quarter and trends that we see. The margins numbers will pick up as the improvement on the revenue line starts to happen. Sonia: Your first half if we just assess the situation, the first half of FY16 the dollar revenue growth stands at 8.5 percent. Will growth for FY16 be in high single digits itself or do you see it accelerating to double digits in the second half?A: We do expect to be in the double digits by the end of the year. If you look at it year-on-year this quarter might look bad. However, when you add up for the previous flat quarters that we had during Q3 and Q4 of last year we do look at this year, by the end of the year to see a year-on-year growth to be better than 10-12 percent.