Press Release (ePRNews.com) - WESTBOROUGH, Mass. - Feb 09, 2017 - Virtusa Corporation (NASDAQ GS: VRTU), a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to enhance business performance, accelerate time-to-market, increase productivity and improve customer experience, today reported consolidated financial results for the third quarter of fiscal 2017, ended December 31, 2016.
Third Quarter Fiscal 2017 Consolidated Financial Results
Revenue for the third quarter of fiscal 2017 was $217.2 million, an increase of 3.4% sequentially and 44.2% year-over-year. On a constant currency basis, (1) third quarter revenue increased 4.2% sequentially and 48.6% year-over-year.
Virtusa reported GAAP income from operations of $6.5 million for the third quarter of fiscal 2017, compared to $3.5 million for the second quarter of fiscal 2017 and $14.1 million for the third quarter of fiscal 2016. Third quarter fiscal 2017 GAAP income from operations includes $1.9 million of restructuring charges related to certain cost savings initiatives.
On a GAAP basis, net income for the third quarter of fiscal 2017 was $4.4 million, or $0.15 per diluted share, compared to $3.2 million, or $0.11 per diluted share, for the second quarter of fiscal 2017, and $11.3 million, or $0.38 per diluted share, for the third quarter of fiscal 2016. Third quarter fiscal 2017 GAAP net income includes the impact of the aforementioned restructuring charges related to certain cost savings initiatives, net of tax.
Non GAAP Results:
Non-GAAP income from operations, which excludes stock-based compensation expense, restructuring charges and acquisition related charges, was $16.3 million for the third quarter of fiscal 2017, compared to $12.9 million for the second quarter of fiscal 2017, and compared to $20.7 million for the third quarter of fiscal 2016.
Non-GAAP net income, which excludes stock-based compensation expense, restructuring charges, acquisition related charges, and foreign currency transaction gains and losses, each net of tax, for the third quarter of fiscal 2017, was $11.0 million, or $0.37 per diluted share, compared to $8.4 million, or $0.27 per diluted share, for the second quarter of fiscal 2017, and compared to $15.9 million, or $0.54 per diluted share, for the third quarter of fiscal 2016.
Balance Sheet and Cash Flow
The Company ended the third quarter of fiscal 2017 with $237.2 million of cash, cash equivalents, and short-term and long-term investments (2). Cash flow from operations was $13.5 million for the third quarter of fiscal 2017.
Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “We are pleased with our third quarter results. We see continuing client demand across our industry groups and geographies for our Digital Transformation and Innovation and Operational Excellence solutions. Our differentiated solution strategy and deep domain expertise are enabling us to win in the market, and position us well for sustained growth.”
Ranjan Kalia, Chief Financial Officer, said, “During the third quarter, we delivered solid revenue growth across all industry groups and geographies. We expect this trend will continue into the fourth quarter, leading to our fourth quarter sequential revenue growth guidance of 4% at the midpoint. In addition, our Q4 fiscal 2017 guidance calls for strong non-GAAP operating margin accretion driven by top-line growth and SG&A leverage. The midpoint of our fiscal 2017 non-GAAP EPS guidance is reduced by $0.04 primarily due to a change in our effective tax rate assumption.”
Virtusa provides end-to-end information technology (IT) 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 rationalization. Virtusa helps customers accelerate business outcomes by consolidating, rationalizing, and modernizing their core customer-facing processes into one or more core systems.
Virtusa delivers cost-effective solutions through a global delivery model, applying advanced methods such as Agile and Accelerated Solution Design to ensure that its solutions meet the clients’ requirements. As a result, its clients simultaneously reduce their IT operations cost while increasing their ability to meet changing business needs.
On March 3, 2016, Virtusa, through its India subsidiary, acquired an aggregate of approximately 51.7% of the fully diluted outstanding shares of Polaris Consulting & Services, Ltd., from founding shareholders, promoters, and certain other minority stockholders. In April 2016, Virtusa purchased an additional 26% of the fully diluted outstanding shares of Polaris from the company’s public shareholders in a mandatory open offer. In December 2016, to comply with applicable India rules on takeovers, Virtusa sold 3.71% of its shares of Polaris common stock through a public offering, and its ownership interest decreased from 78.6% to 74.9% of Polaris’ basic shares of common stock outstanding. Polaris is a majority owned subsidiary of Virtusa.
Founded in 1996 and headquartered in Massachusetts, Virtusa has operations in North America, Europe, and Asia.
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