LTIM sees its 1st quarterly revenue dip

LTIMindtree Ltd (LTIM), India’s sixth-largest IT services firm, reported a drop in quarterly revenue for the first time since the company came into existence in November 2022.

Its operating margin, too, fell 50 basis points to 15.7%— down from an initial guidance of 17-18% for FY24, which chief executive Debashis Chatterjee attributed to a decline in revenue from third-party partners.

The software services company’s revenue for the March quarter fell 1.3% sequentially to $1.07 billion, from $1.08 billion in the quarter ended December 2023. The IT company’s full-year revenue came in at $4.29 billion, up 4.4% from $4.11 billion a year ago.

The Mumbai-based IT company posted a net profit of $553.4 million for the financial year ended 31 March, up 1.36% from $545.7 million net profit in FY23. However, the company’s net profit dropped 5.8% sequentially to $132.4 million for the March quarter.

Chief executive Debashis Chatterjee attributed a fall in operating margin to a decline in revenue from third-party partners.

“We had some higher than usual pass-throughs in Q3. The absence of those passthroughs definitely meant that we had a lower revenue coming in Q4,” said Chatterjee in the postearnings press conference.

“The ramp-up of some of the large deals we had closed was slower than what we had expected, so slower ramp-ups also impacted the overall revenue,” he added.

Pass-through revenue refers to revenue generated via third-party partners of service providers, which typically helps companies earn extra revenue at lower cost.

After a quarter of no growth, Chatterjee, who took over the top job in November 2022 after transitioning from the erstwhile Mindtree Limited, expected the June quarter to be one where the company revives growth. LTIMindtree did not give a revenue or margin guidance for the next quarter—or for FY25.

On the revenue front, LTIMindtree’s performance was largely in line with analyst estimates for FY24 and the March quarter. A Bloomberg poll of 38 analysts expected LTIM to end FY24 with a net revenue of $4.27 billion. Its quarterly revenue was in line with expectations of 26 analysts polled by Bloomberg, who expected the company to post a Q4 revenue of $1.07 billion.

A Bloomberg poll of 37 analysts expected the IT major to report a net profit of $559.6 million for FY24, and $138.1 million for the final quarter of the previous fiscal. LTIMindtree missed the latter.

The company’s operating margin dipped to 15.7% for FY24 and 14.7% for Q4, compared with 16.2% for FY23 and 15.4% in the December quarter owing to “macroeconomic conditions.”

LTIMindtree had initially guided for 17-18% operating margin at the start of the year. The company also reports its operating margin in rupee terms.

The software services company’s revenue for the March quarter fell 1.3% sequentially to $1.07 billion