ESDS Software Solutions shares will react to their September quarter results on Tuesday, November 3. The company reported a 40.7% jump in net profit to ₹31.1 crore. While customer numbers fell, revenue grew 47.5% year-on-year. Investors now look toward the massive Sharon AI factory project starting in December.

Shares of ESDS Software Solutions Ltd. will be reacting to their September quarter results on Tuesday, November 3. The numbers were reported after market hours on Monday.

During the September quarter, ESDS reported revenue growth of 47.5% on a year-on-year basis, taking the growth number for the first half of this financial year to 24.6%. On a sequential basis, the revenue figure of ₹138.3 crore was 3.5% higher than the ₹133.7 crore reported during the June quarter.

EBITDA margin during the quarter remained flat at 41.8% when compared to the June quarter. However, when compared to the year-ago period, it shows a significant contraction from the 52% reported. The management attributed the decline in margins from last year to front loading of capacity investments. Other expenses nearly tripled from last year, increasing by 182% to ₹50.8 crore.

Net profit for the period grew by 40.7% from last year to ₹31.1 crore from ₹22.1 crore. On a sequential basis, the bottomline figure went up by 6.2%.

Within ESDS' various segments, the IaaS vertical reported revenue of ₹65.6 crore, down from ₹68.4 crore reported earlier. Cloud services revenue dropped to ₹49.3 crore from ₹54.4 crore in the previous quarter. The IaaS segment contributed to 47.4% of the company's topline from 51.1% in the previous quarter.

Customers saw a decline during the quarter to 1,709 from 2,216 in June, but the average revenue per customer increased to ₹32 lakh from ₹24 lakh in the previous quarter, thereby increasing the revenue retention to 89.7% from 86.68% last quarter. New customers contributed to 19.1% of the overall topline from 12.5% in the previous quarter.

The Next Big Trigger for ESDS Software

The management of ESDS has highlighted that its 8,200-GPU AI factory in Sydney, for Sharon AI, which is a $1.25 billion contract over a five-year period, is set to go live in December. That is a pushback of one month, as the management had earlier guided for a November timeline.

The deal is likely to bring about ₹288 crore worth of revenue and profit worth ₹50 crore to ₹60 crore every month. This translates into roughly twice of what the entire company earned during the September quarter.

One of ESDS' subsidiaries has already received a ₹1,176.6 crore upfront payment from an overseas customer for a GPUaaS project.

Shares of ESDS Software Solutions ended over 2.5% lower on Monday at ₹1,130. The stock is down 17% in the last one month. Shares have declined for five days in a row and have gained only once in the last 12 sessions. From its post-listing high of ₹1,859, the stock is down nearly 40%.