Virtusa crosses $ 1 billion revenue milestone in FY18

Virtusa Corporation, a global provider of digital engineering and IT outsourcing services that accelerate business outcomes for its clients, reported consolidated financial results for the fourth quarter and fiscal year ended 31 March 2018.

Revenue for the fourth quarter of fiscal 2018 was $ 281.3 million, an increase of 6.6% sequentially and 24.5% year-over-year. On a constant currency basis, fourth quarter revenue increased 5.7% sequentially and 21.7% year-over-year.  Virtusa’s previously announced acquisition of eTouch, which closed on 12 March 2018, contributed approximately $ 5.7 million of revenue to the fiscal fourth quarter. 

Virtusa reported GAAP income from operations of $ 16.4 million for the fourth quarter of fiscal 2018, an increase from $ 13.7 million for the third quarter of fiscal 2018 and $ 10.2 million for the fourth quarter of fiscal 2017.

GAAP net income available to common shareholders for the fourth quarter of fiscal 2018 was $ 1.8 million, or $ 0.06 per diluted share, compared to net loss of ($ 11.1) million, or ($ 0.38) per diluted share, for the third quarter of fiscal 2018, and net income of $ 10.5 million, or $ 0.34 per diluted share, for the fourth quarter of fiscal 2017. Fourth quarter fiscal 2018 GAAP net income includes $ 4.6 million of net unrealised foreign exchange losses and $ 3.2 million of mandatory repatriation tax due to increased ownership in Polaris, which were not included in Virtusa’s prior guidance.  

For the fiscal year ended 31 March 2018, revenue was $ 1,020.7 million, an increase of 18.9% compared to $ 858.7 million for the fiscal year ended 31 March, 2017. On a constant currency basis, revenue increased 18.2% year-over-year. Virtusa reported GAAP income from operations of $ 46.4 million for fiscal year 2018, an increase from $ 18.4 million for fiscal year 2017.  GAAP net loss available to common shareholders was $ 2.7 million for fiscal year 2018, or a loss of $ 0.09 per diluted share, compared to net income of $ 11.9 million, or $ 0.39 per diluted share for fiscal year 2017. Virtusa’s fiscal year 2018 GAAP net loss includes a tax expense of $ 22.7 million, or $ 0.77 per diluted share, related to the Tax Cuts and Jobs Act (the Tax Act) enacted in December 2017. 

The company ended fiscal year 2018 with $ 244.9 million of cash, cash equivalents, and short-term and long-term investments. Cash flow from operations was $ 8.5 million for the fourth quarter and $ 62.7 million for fiscal year 2018.

Virtusa’s Chairman and CEO Kris Canekeratne stated: “We are pleased with our strong fiscal 2018 financial results, increasing our top-line by 19% and ending the year in excess of $ 1 billion of revenue for the first time in our company’s history. Our continued above-industry growth is a testament to the success of our strategy.  As we look to fiscal 2019 and beyond, we believe Virtusa is in a position of strength, given our ability to help transform our clients’ businesses at every level through end-to-end digital transformation and IT platform rationalisation and modernisation, driving significant ROI for our clients.”

Chief Financial Officer Ranjan Kalia said: “We delivered strong fiscal year 2018financial results highlighted by approximately 19% revenue growth, 200 basis points of non-GAAP operating margin accretion, and 30% non-GAAP earnings per share growth. Our fourth quarter revenue was modestly below the midpoint of our guidance range, and our non-GAAP EPS was above the midpoint driven by slightly better than expected eTouch contribution. Looking to fiscal 2019, our current guidance calls for continued above-industry organic revenue growth, coupled with earnings growing faster than consolidated revenue growth.”  Virtusa management provided the following current financial guidance:

• First quarter fiscal 2019 revenue is expected to be in the range of $ 293.5 to $ 301.5 million. GAAP diluted EPS is expected to be in the range of $ 0.09 to $ 0.13. Non-GAAP diluted EPS is expected to be in the range of $ 0.45 to $ 0.51.

• Fiscal year 2019 revenue is expected to be in the range of $ 1,230 to $ 1,270million. GAAP diluted EPS is expected to be in the range of $ 0.50 to $ 0.66. Non-GAAP diluted EPS is expected to be in the range of $ 2.08 to $ 2.32.