Nov 22, 2016 (LBO) - Virtusa Corporation, a global business consulting and IT outsourcing company, with Sri Lankan founders, reported revenue for the second quarter of 210.1 million dollars, up 46.9 percent year-over-year.
Net income for the second quarter was 3.2 million dollars, compared to a net loss of 6.3 million dollars for the first quarter of fiscal 2017. Net income in the second quarter of fiscal 2016 was 11.1 million dollars.
The statement on earnings is below:
- Second quarter fiscal 2017revenue of $210.1 million increased 2.2% sequentially and 46.9% year-over-year.
- Second quarter fiscal 2017 diluted EPS on a GAAP basis was $0.11, and $0.27 on a Non-GAAP basis.
- Commenced work with 12 new clients in the fiscal second quarter.
- Promotes Samir Dhir to President, Banking and Financial Services.
- Reconfirms midpoint of prior revenue guidance and updates non-GAAP EPS range to $1.26 to $1.34 for fiscal 2017.
Westborough, MA –Virtusa Corporation(NASDAQ GS: VRTU), a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to transform the customer experience, reported consolidated financial results for the secondquarterfiscal 2017, ended September 30, 2016.
Second Quarter Fiscal 2017 Consolidated Financial Results
Revenue for the second quarter of fiscal 2017 was $210.1 million, an increase of 2.2% sequentially and 46.9% year-over-year. On a constant currency basis,
(1)second quarter revenue increased 3.2% sequentially and 49.4% year-over-year.
Virtusa reportedGAAP income from operations of $3.5million for the second quarter of fiscal 2017, compared toloss from operations of$1.8 million for the first quarter of fiscal 2017 and income from operations of $13.3 million for the second quarter of fiscal 2016.
On a GAAP basis, net income for the second quarter of fiscal 2017 was $3.2million, or $0.11per diluted share, compared to net loss of $6.3 million, or $(0.21)per diluted share, for the first quarter of fiscal 2017, and net income of $11.1 million, or $0.37per diluted share, for the second quarter of fiscal 2016.
Balance Sheet and Cash Flow
The Company ended the second quarter of fiscal 2017 with $227.3million of cash, cash equivalents, and short-term and long-term investments
(2). Cash flowfromoperations was $25.2million for the second quarter of fiscal 2017.
Management Commentary
Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “We are pleased with our second quarter results, which include strong growth in our BFSI and M&I industry groups. While market conditions remain challenging, we continue to see healthy demand for our solutions.This is reflected in our pipeline, which is expanding across all verticals and solution areas.”
Ranjan Kalia, Chief Financial Officer, said, “During the second quarter, we delivered revenue above the mid-point of our guidance range and reported solid sequential improvement in our DSO which helped drive strong cash flow in the quarter. The midpoint of our fiscal year 2017 revenue guidance remains unchanged despite higher than expected foreign currency headwinds and third quarter furloughs. Our revised EPS guidance reflects the impact of higher onsite effort and contractor resourcingrelated todigital transformation programs, as well as currency headwinds.”
Organizational Changes
Virtusa announced today that Samir Dhir, Chief Delivery Officer and Head of India Operations, has been appointed President of Banking and Financial Services (BFS), effective immediately. Mr. Dhir replaces Jitin Goyal who resigned to pursue other interests.
Commenting on the appointment, Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “I would like to congratulate Samir on his appointment to President of Banking and Financial Services. Since the announcement of our acquisition, Samir has played a key role in the successful integration of Polaris and took overall responsibility for our largest banking client. I am confident that Samir and the BFS leadership team will continue to build on our strongplatform and enable us to further capitalize on the significant digital transformation opportunity. I would also like to thank Jitin for his many contributions including the successful integration ofPolaris into Virtusa.We wish Jitin the very best.”
Mr. Dhir is a 23 year veteran of the IT Services industry. Since joining Virtusa in 2010 he has served as Chief Delivery Officer and Head of India Operations, responsible for global delivery across all operating geographies. During his tenure, Dhir has built strong executive relationships with the firm’s largest clients, including Citigroup and British Telecommunications plc.He is also a key member of NASSCOM's IT Services Council which has been initiated to sustain and grow global leadership in IT. Prior to Virtusa, Dhir worked for Wipro Technologies where he managed a large delivery organization for technology, media, transportation and services business, handled the company’s SAP Practice and ran the managed services business. Prior to Wipro he held leadership positions with Avaya and Lucent Technologies in the UK.
Financial Outlook
Virtusa management provided the following current financial guidance:
- Third quarter fiscal 2017 revenue is expected to be in the range of $214.5 to $219.5 million. Non-GAAP diluted EPS is expected to be in the range of $0.34to $0.38.GAAP diluted EPS is expected to be in the range of $0.17 to $0.21.
- Fiscal year 2017 revenue is expected to be in the range of $854to $866million. Non-GAAP diluted EPS is expected to be in the range of $1.26 to $1.34.GAAP diluted EPS is expected to be in the range of $0.40to $0.48.
- Virtusa anticipates a restructuring charge in the in the second half of fiscal 2017 of approximately $1.5 to $2.0 million related to certain expense savings initiatives. This charge is not reflected in the current GAAP EPS guidance as the timing of this restructuring will impact the amount incurred in the third and fourth quarters. Additionally, this charge will not impact reported non-GAAP EPS.
The Company’s third quarter and fiscal year 2017 diluted EPS estimates an average share count of approximately 30.1million and 30.2million, respectively, (assuming no further exercises of stock-based awards) and assumes a stock price of $18.98, which was derived from the average closing price of the Company’s stock over the five trading days ended on November4, 2016. Deviations from this stock price may cause actual diluted EPS to vary based on share dilution from Virtusa’s stock options and stock appreciation rights.
