Home / Front Page/ Virtusa to achieve $ 1 b plus revenue milestone in FY18

Virtusa to achieve $ 1 b plus revenue milestone in FY18

Comments / {{hitsCtrl.values.hits}} Views / Wednesday, 14 February 2018 00:10


  • Global business consulting and IT outsourcing specialist enjoying above industry average growth
  • $ 1 b revenue forecast comes faster than expected; Lankan operations employ 3,000 software engineers
  • Digital transformation needs harnessing advanced technologies driving growth 
  • Virtusa excels in ‘engineering arbitrage’ solutions as alternative to mere ‘cost arbitrage’ option
  • Garners bigger engagement with existing customers and new client wins
  • Raises its biggest ever syndicated five-year loan worth $ 450 million
  • Says $ 470 m Polaris acquisition as the best in its industry segment

By Nisthar Cassim

Global business consulting and IT outsourcing specialist Virtusa’s revenue in the fiscal year 2018 is expected to top the $ 1 billion milestone, an achievement coming slightly earlier than anticipated.

“We are forecasting fiscal year 2018 revenue to be in the range of $1,013.3-$1,019.3 million. The $ 1 billion forecast is coming faster than we expected,” Virtusa Chairman and CEO Dr. Kris Canekeratne told journalists in Colombo. 

At the beginning of FY18, the revenue projection for the full year was $ 935 million. 

Last week Virtusa, which employs around 3,000 software engineers in Sri Lanka, reported revenue of $ 263.8 million for the third quarter of FY18, up 6.3% sequentially and 21.5% year-over-year. Fourth quarter revenue is expected to be in the range of $ 274-$280 million.

“We are very pleased with our results,” Kris said, adding that Virtusa’s growth was nearly three times that of its peers. The US and the Americas account for 65% of its business was followed by 25% UK/Europe. Employing around 20,000 people, Virtusa’s biggest business segment is Banking, Financial Services and Insurance, which grew by 7.5% and Kris described BFSI as a “growth enabler” for the company. The communication and technology business segment grew by 5% and the media and information segment was flat. 

“Our top 10 clients (largest is Citi accounting for around 20% of revenue) have enabled growth for us as more firms pursued digital transformation. Virtusa also works with 12 of the world’s top 18 banks.

“We have reduced our client’s cost of operation via Virtusa’s tried and proven capability known as ‘engineering arbitrage’ which helps clients to reduce effort, rationalise and consolidate and eliminate systems and reduce cost,” explained Kris. 

“To create a great digital presence firms must be able to seamlessly interface with their underlying systems. A large volume of work Virtusa does is specifically around creating the middle-ware or what we call ‘connective-tissue’ between the digital consumer experience requirements of our clients and the underlying systems that support the consumers. We have a very significant area of expertise at Virtusa for digital transformation, to reimagine their digital storefronts or reduce the cost of operations,” he added.

“What we realised is that Virtusa’s positioning across the industries we focus on both in terms of digital work and our engineering arbitrage i.e. reduce the effort, work and systems as opposed to simply applying cost arbitrage or reduce cost,resonated particularly well among our clients. That led to bigger engagement with existing clients and new client wins. We also do a lot of work with advanced technologies such as Blockchain, Artificial Intelligence, machine learning, big data, micro services architectures. That (advanced technologies) is significantly growing. These factors are the reasons why our performance has been robust,” he said.

What is impressive about Virtusa is the growth so far this year has been organic. Two years ago it acquired Polaris Consulting and Services Ltd. for $ 470 million (inclusive of $ 100 million in cash inPolaris) and in the third quarter it has successfully completed the delisting of the latter from the Indian stock exchange. Kris described it as the “most successful” acquisition in their industry segment. By the first full year of its acquisition, Polaris’ BFSI business, which accounted for 90% of its revenue and had remained flat for three years preceding the takeover, has grown by 30%. The acquisition was a win-win, according to Kris, as Polaris was specialising in core-banking and investment banking solutions whilst Virtusa’s expertise was in the consumer and digital banking spheres. 

Partly to finance the delisting expenses and related costs, Virtusa has also recently raised its biggest ever syndicated five-year loan worth $ 450 million. The issue, jointly led by JP Morgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, had been oversubscribed by 1.6 times. The facility replaced Virtusa’s existing $300 million credit agreement. 

The new credit agreement provides for a $200 million revolving credit facility, a $180 million term loan facility and a $70 million delayed-draw term loan. Virtusa drew down $180 million on the new term loan and $55 million on the new revolving credit facility to repay in full the prior credit facility and fund the Polaris delisting transaction, including transaction-related fees and expenses.

As per its results, Virtusa reported GAAP income from operations of $13.7 million for the third quarter of fiscal 2018, compared to $10.3 million for the second quarter of fiscal 2018 and $6.5 million for the third quarter of fiscal 2017.Non-GAAP income from operations, which excludes stock-based compensation expense, restructuring charges and acquisition related charges, was $26 million for the third quarter of fiscal 2018, compared to $19.8 million for the second quarter of fiscal 2018 and $16.3 million for the third quarter of fiscal 2017.

The company ended the third quarter of fiscal 2018 with $303.9 million of cash, cash equivalents and short-term and long-term investments


Share This Article


1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.


Today's Columnists

More of the same

Tuesday, 20 February 2018

Those of you who’ve read what I have written over the years could, justifiably, experience a sense of déjà vu as you read what follows. That said, I will make no apology for the burden of this piece because it will, again, state the eternal verit

Looking beyond the current political gridlock: Future of Tamil nationalist politics

Tuesday, 20 February 2018

The landslide victory of the Sri Lanka Podujana Peramuna (SLPP) in the recently concluded local government (LG) elections naturally attracted much attention to assessing the future trajectory of the domestic political landscape. The heavy focus on th

Liberal democracy is dead. Long live liberal democracy.

Tuesday, 20 February 2018

Liberal democracy as propounded and practiced by the UNP is dead. Beating up the statistics of the recent local election will not bring it back, but the UNP still remains the best vehicle for reviving liberal democratic ideals. Pohottuwa or the Sri L

Navigating a nuclearised Asia for smaller states: Reviving Sri Lanka’s commitments to disarmament

Tuesday, 20 February 2018

Throughout its diplomatic history, Sri Lanka has maintained a strong anti-nuclear stance. Given the perceived need to avoid antagonising nuclear powers in the region, Sri Lanka has communicated this stance as a general normative and ethical position,

Columnists More