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Persistent eyes $1 billion in organic revenue

Persistent Systems completed two acquisitions during the quarter— Software Corporation International (SCI) which has an expertise in payment solutions domain, and Shree Partners, a digital transformation company.Premium
Persistent Systems completed two acquisitions during the quarter— Software Corporation International (SCI) which has an expertise in payment solutions domain, and Shree Partners, a digital transformation company.

To ensure margin growth, the company will convert one large five-year contract from the revenue-sharing model to service contract on account of lower-than-expected revenue for a particular product

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MUMBAI : The management of Persistent Systems Ltd is seeking to generate annual organic revenue of $1 billion over 6-8 quarters, ICICI Securities Ltd said in a note.

The company’s management expects the growth momentum in its services business to continue, while the intellectual property (IP) business will witness a marginal growth in the near term, and a gradual decline in the long term.

To ensure margin growth, the company will convert one large five-year contract from the revenue-sharing model to service contract on account of lower-than-expected revenue for a particular product.

This will help raise margins to the company level for that project.

Besides, the firm will launch a pyramid rationalization process for 2,500 fresh hires for the next one year, and seeks to improve utilization by up to 83-84% and increase prices.

In the September quarter, Persistent Systems also launched an inclusive employee stock ownership plan (Esop) for 80% of its global workforce, which is expected to have an impact of 70-80 basis points on its margins for the short term, but will largely be offset over time.

Persistent Systems, which is headquartered in Pune, acquired two payments solutions companies—Software Corporation International, and Shree Partners, a digital transformation company— during the quarter.

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