Reselling business in Europe aided Q1 FY19 revenue, however, there was a weakness in the services and digital verticals, said Anand Deshpande, Founder, MD and CEO, Persistent Systems.

"The business contributed $6-7 million to revenues," Deshpande said.

The Pune-based IT firm reported a good set of first-quarter earnings. The company reported a net profit of Rs 87.34 crore for the quarter ended June 30, 2018.

The quarter-on-quarter (Q-o-Q) dollar revenues were up 5.7 percent at $123.6 million against $116.95 million. The domestic revenues were up at Rs 834.28 crore against Rs 752.5 crore Q-o-Q. The services business revenues were down 1.2 percent in the quarter.

Going forward, FY19 revenue growth should be better than FY18, he said, adding that it is too early to give a guidance.

In the second quarter the EBIT margins could be impacted because of wage hikes by around 2 percent, he said.

"But it could be covered over the year because of increased revenues," Deshpande said.

Services business pipeline looks very healthy on back of investments in few products and with some of the healthcare projects should give better revenues in the next two quarters, he added.

Even the outlook for digital continues to be strong, he said, adding that there is a lot of activity around data, digital and Internet of Thing (IoT) sectors.

“Q2 will be stronger than Q1 on all the other parameters as well,” said Deshpande.