Virtusa Announces Second Quarter 2018 Consolidated Financial Results

Kris-Canekeratne-virtusa

(PRESS RELEASE)
· Second quarter fiscal 2018 revenue of $248.2 million increased 9.2% sequentially and 18.1% year-over-year.
· Second quarter fiscal 2018 GAAP operating income of $10.3 million, up 69% sequentially, and non-GAAP operating income of $19.8 million, up 48% sequentially.
· Second quarter fiscal 2018 GAAP diluted EPS was $0.12, up 20% sequentially and 9% year-over-year. Non-GAAP diluted EPS was $0.35, up 40% sequentially and 30% year-over-year.
· Generated $28.8 million of cash from operating activities during the second quarter of fiscal 2018, representing 11.6% of revenue.
· Commenced delisting process for Polaris Consulting & Services, Ltd.

Westborough, MA – Virtusa Corporation (NASDAQ GS: VRTU), a global business consulting and IT outsourcing company that accelerates business outcomes for its clients, reported consolidated financial results for the second quarter fiscal 2018, ended September 30, 2017.

Second Quarter Fiscal 2018 Consolidated Financial Results

Revenue for the second quarter of fiscal 2018 was $248.2 million, an increase of 9.2% sequentially and 18.1% year-over-year. On a constant currency basis, (1) second quarter revenue increased 8.6% sequentially and 17.9% year-over-year.

Virtusa reported GAAP income from operations of $10.3 million for the second quarter of fiscal 2018, compared to $6.1 million for the first quarter of fiscal 2018 and $3.5 million for the second quarter of fiscal 2017.

GAAP net income available to common shareholders for the second quarter of fiscal 2018 was $3.7 million, or $0.12 per diluted share, compared to $3.0 million, or $0.10 per diluted share, for the first quarter of fiscal 2018, and $3.2 million, or $0.11 per diluted share, for the second quarter of fiscal 2017.

Balance Sheet and Cash Flow

The Company ended the second quarter of fiscal 2018 with $254.0 million of cash, cash equivalents, and short-term and long-term investments (2). Cash flow from operations was $28.8 million for the second quarter of fiscal 2018.

Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “Our strategy to expand our addressable market by investing in industry leading digital engineering services, operational excellence, and industry solutions is playing out well for us. We delivered market-leading sequential revenue growth and we are raising our full fiscal year guidance. The number of leading enterprises that rely on Virtusa for their most strategic end-to-end digital and transformational programs continues to grow. This gives us confidence in our growth strategy and long-term prospects.”

Ranjan Kalia, Chief Financial Officer, said, “During the second quarter, we delivered strong sequential revenue growth that exceeded the high end of our prior guidance. We generated double-digit sequential and year-over-year operating income growth and strong sequential margin accretion. In addition, EPS growth was faster than revenue growth. Our second quarter momentum is expected to continue for the remainder of the fiscal year allowing us to raise our full fiscal year guidance.”

Financial Outlook

Virtusa management provided the following current financial guidance:
Third quarter fiscal 2018 revenue is expected to be in the range of $256.0 to $262.0 million. GAAP diluted EPS is expected to be in the range of $0.21 to $0.27. Non-GAAP diluted EPS is expected to be in the range of $0.41 to $0.47.

Fiscal year 2018 revenue is expected to be in the range of $998.0 to $1,011.0 million. GAAP diluted EPS is expected to be in the range of $0.73 to $0.85. Non-GAAP diluted EPS is expected to be in the range of $1.50 to $1.62.
· Virtusa anticipates a total restructuring charge of $0.7 million in the second half of fiscal year 2018 related to resource optimization initiatives. This charge is reflected in the full year GAAP EPS guidance, and not included in non-GAAP EPS guidance.
· Guidance does not include the impact of the previously announced proposed offer to delist Polaris Consulting & Services, Ltd. from all stock exchanges on which Polaris’ ordinary shares are listed.

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