Virtusa off to a good start in FY12

Virtusa Corporation, a global IT services company that offers a broad spectrum of business consulting and outsourcing services, yesterday reported consolidated financial results for the first quarter fiscal year 2012, ended 30 June 2011.

Revenue for the first quarter of fiscal 2012 was $ 61.0 million, an increase of 5% sequentially and 19% year-over-year. On a constant currency basis, first quarter revenue increased 4% sequentially and 17% year-over-year.

Virtusa reported income from operations of $4.8 million for the first quarter of fiscal 2012, compared to $ 5.7 million for the fourth quarter of fiscal 2011 and compared to $ 3.1 million for the first quarter of fiscal 2011.  

First quarter of fiscal 2012 operating income included transaction related expenses of approximately $ 375,000 for the acquisition of ALaS Consulting LLC completed on 1 July 2011.

Net income for the first quarter of fiscal 2012 was $ 4.0 million, or $ 0.16 per diluted share, compared to $ 5.2 million, or $ 0.21 per diluted share, for the fourth quarter of fiscal 2011, and compared to $ 3.1 million, or $ 0.13 per diluted share, for the first quarter of fiscal 2011.  Net income for the first quarter of fiscal 2012 included $ 0.2 million of foreign currency transaction losses.

The company ended the first quarter of fiscal 2012 with $ 105.0 million of cash, cash equivalents, and short-term and long-term investments. The company had a use of cash from operations of $ 2.4 million during the first quarter of fiscal 2012.  

Virtusa’s Chairman and CEO Kris Canekeratne stated: “We are pleased with our first quarter performance. During the quarter, we made good progress against our strategic goals, including expanding our presence within our existing client base.   This is a direct result of our outstanding track-record of service and the investments we have made in strengthening our solutions capabilities, consulting expertise and industry knowledge. Additionally, we are very enthusiastic about the ALaS acquisition, which provides us with complementary capital markets skills and strengthens our financial services offerings.”

Chief Financial Officer Ranjan Kalia said: “We are off to a solid start to fiscal 2012 with our first quarter revenue and operating profit growing double digits year-over-year.”

Kalia added: “We believe that the ongoing strength in our business, combined with the acquisition of ALaS, will enable us to continue our growth momentum and position us to further realise ongoing operating efficiencies as our business scales.”

Virtusa management provided the following current financial guidance, inclusive of the acquisition of ALaS Consulting LLC:

Second quarter fiscal 2012 revenue is expected to be in the range of $70.2 to $72.7 million, with diluted EPS of $0.16 to $0.20.

Fiscal year 2012 revenue is expected to be in the range of $280.0 to $292.0 million, with diluted EPS of $0.79 to $0.95.

The company’s second quarter and fiscal year 2012 diluted EPS estimates assume an average share count of approximately 25.5 million and 25.6 million respectively,  (assuming no further exercises of stock-based awards) and assume a stock price of $ 20.30, which was derived from the average closing price of the company’s stock over the five trading days ended on 29 July 2011.   Deviations from this stock price may cause actual EPS to vary based on share dilution from Virtusa’s stock options and stock appreciation rights.  

Virtusa provides end-to-end information technology services to Global 2000 companies.   These services, which include IT consulting, application maintenance, development, systems integration and managed services, leverage a unique Platforming methodology that transforms clients’ businesses through IT rationalisation.

Virtusa helps customers accelerate business outcomes by consolidating, rationalising and modernising their core customer facing processes into one or more core systems. Founded in 1996 and headquartered in Massachusetts, Virtusa has operations in North America, Europe and Asia.