Virtusa announces 3Q financial results

Virtusa Corporation, a global Information Technology (IT) services company that provides IT consulting, technology implementation and application outsourcing services through an enhanced global delivery model, today reported financial results for the third quarter fiscal year 2011, ended 31 December 2010.

Revenue for the third quarter of fiscal 2011 was $55.6 million, an increase of 33% year-over-year and 6% sequentially. On a constant currency basis, third quarter fiscal 2011 revenue increased 34% year-over-year and 5% sequentially.

Virtusa reported income from operations of $5.0 million for the third quarter of fiscal 2011, an increase compared to $3.4 million for the third quarter of fiscal 2010, and an increase compared to $4.0 million for the second quarter of fiscal 2011.

Net income for the third quarter of fiscal 2011 increased to $4.2 million, or $0.17 per diluted share, compared to $2.9 million, or $0.12 per diluted share, for the third quarter of fiscal 2010, and $3.7 million, or $0.15 per diluted share, for the second quarter of fiscal 2011. Net income for the third quarter of fiscal 2011 included $0.5 million of foreign currency transaction losses.

Virtusa ended the third quarter of fiscal 2011 with $103.3 million of cash, cash equivalents, short-term investments and long-term investments. The company generated cash from operations of $8.8 million during the third quarter of fiscal 2011.

Kris Canekeratne, Virtusa’s Chairman and CEO, stated: “We are pleased with third quarter performance which was driven by broad based growth. We are enthusiastic about the increasing investment in areas such as cloud, social and mobile computing. This is necessitating programs to rationalise IT applications, accelerate time to market and improve the consumer experience. Our expertise positions us well to partner with our clients and lead them through this transformation.”

Ranjan Kalia, Chief Financial Officer, said: “We are pleased with our revenue growth and our ability to further optimise our operations, resulting in operating margin expansion both sequentially and year-over-year. Our current guidance calls for another quarter of strong sequential revenue increase and robust full fiscal year 2011 growth.”

Virtusa management provided the following current financial guidance:

Fourth quarter fiscal 2011 revenue is expected to be in the range of $57.3 to $59.3 million, with diluted EPS of $0.19 to $0.23.

Fiscal year 2011 revenue is expected to be in the range of $217 to $219 million, with diluted EPS of $0.64 to $0.68.

The company’s fourth quarter and fiscal year 2011 diluted EPS estimates assume an average share count of approximately 25.1 million and 24.7 million, respectively (assuming no further exercises of stock-based awards), and assume a stock price of $17.12 per share, which was derived from the average closing price of the company’s stock over the five trading days ended on 25 January 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.