Challenge to boost IP revenue; EBITDA up 0.8%: Persistant

Persistent Systems ' dollar-revenue for the quarter stood at USD 62.11 million, up 2.2 percent (QoQ). Fourth-quarter EBITDA stood at Rs 83.07 crore, up 0.8 percent (QoQ). Persistent's IP-led business grew 124 percent annually, but  fell short sequentially. "I do not see an increase in EBITDA margins going ahead. The challenge of boosting revenue from IP remains," Anand Deshpande, CMD, Persistent Systems told CNBC-TV18.

Below is the edited transcript of the interview on CNBC-TV18

Q: What contributed to the 2.2-percent increase in dollar-revenues?

A: The overall contribution of IP this year was 17.2 percent, up 124 percent as compared to last year. On a quarter-on-quarter basis, revenues from IP were less than last quarter. However, this volatility is quite typical of revenues from IP. Overall, the product and services business grew by nearly 3 percent. Revenues did not accrue from the HPCA acquisitions in this quarter and will start to come in only in the next quarter. So there is. The revenue from Novaquest was about USD 1.8 million.

Q: What are your EBITDA margins for Q4 as well as for FY13?

A: The EBITDA margin for the year for Q4 was 25 percent and the total EBITDA for the quarter was Rs 83 crore and for the year overall, the profit-after-tax (PAT) was Rs 187 crore with an EBITDA of Rs 335 crore and an EBITDA margin of 26.1 percent. This is about 2.5 percent more than last year's EBITDA margins of  23.4 percent. So the EBITDA margin has improved on a year-on-year basis.

Q: Will FY14 be better than FY13? Will you be able to beat NASSCOM's guidance?

A: Overall, we are very optimistic about our opportunities for next year and are quite confident about revenues from IP for which we have acquired both HPCA and Novaquest panning out to get much better revenues.

The Doyenz results should also look better next year. There is also excellent traction on big data, analytics and cloud computing that will improve the top-line and margins per se. But the challenge of making several investments to boost IP related revenue remains. So I think we will be able to maintain margins for next year though we are not projecting any such increase in margins.

Q: What will be the kind of investments you will make in the IP space?

A: With the acquisition of Doyenz, we plan to look at virtualisation and backup NDR. The acquisition in partnership with HP revolves around new devices such as mobile BYODs and other areas. The product segment needs to be upgraded a bit will require upfront investment in engineering resources. We will be able to manage those investments as part of profit margins this year as part of our ongoing expenses.

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