KPIT Q2 y-o-y revenue drops 2.2% $176 mn

Bengaluru: KPIT Technologies reported dollar revenue of $176.8 million for the September quarter, flat sequentially and down 2.2% year on year, as a decline in business from its two largest clients weighed on performance. Revenue from these accounts fell about 13% over the year.In constant currency, revenue grew 0.5% sequentially and 0.2% year on year.EBIT margin improved 40 basis points sequentially to 12.7% from 12.3% in the June quarter. However, it remained below the year-ago level of 16.4%.KPIT also reported a forex loss of Rs 17.1 crore and a share of loss of Rs 15.6 crore from Qorix, both of which management expects to ease from the December quarter. Qorix was founded in 2023 as a joint initiative between KPIT Technologies and the ZF Group to address the growing complexity of automotive software.The company secured new engagements with a total contract value (TCV) of $213 million during the quarter. The wins included a leading American carmaker, two European carmakers, a leading Asian car manufacturer and an American commercial vehicle maker. The projects span powertrain, connected technologies, middleware, autonomous systems, cybersecurity, electric powertrain and aftersales.KPIT ended the quarter with 12,347 employees, an increase of 44 sequentially but a decline of 532 from a year earlier.Geographically, US revenue rose 15.7% sequentially to $62.4 million, while revenue from the SIMA region increased 27.6%. Europe revenue fell 15.2% to $74.5 million.Co-founder and joint managing director Sachin Tikekar said the company was focused on building a more diversified and resilient growth engine. He expects the decline in business from the two large accounts to bottom out over the next couple of quarters.European OEMs continue to face tremendous pressure, with sales continuing to decline and margins under pressure. They are pursuing significant cost-cutting initiatives, and we believe this will continue for a few more quarters. This is primarily due to the competition they face in China, as well as competition from Chinese players in the rest of the world, particularly Europe, Southeast Asia and the Middle East.American OEMs are somewhat protected because a bulk of their revenue comes from the Americas. They continue to be in a relatively better position than their European counterparts. The situation is similar for Japanese OEMs, given that America and Japan are their two largest markets.Year-on-year declines are highest for European OEMs. There are declines among Japanese, Korean and American OEMs as well, but they are not comparable to what European players are experiencing.You use AI every day. Now get your AI Quotient. Take the AIQ test.