- First quarter fiscal 2017 revenue of $205.5 million increased 19.6% sequentially and 52.4% year-over-year.
- First quarter fiscal 2017 diluted EPS on a GAAP basis was $(0.21), and $0.18 on a Non-GAAP basis.
- Integration of Polaris Consulting Services, Ltd. remains on track.
Westborough, MA – ( O9 Aug, 2016) invalid link: https://www.virtusa.com/ Virtusa Corporation (NASDAQ GS: VRTU),a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to transform the customer experience, today reported consolidated financial results for the first quarter fiscal 2017, ended June 30, 2016.
First Quarter Fiscal 2017 Consolidated Financial Results
Revenue for the first quarter of fiscal 2017 was $205.5 million, an increase of 19.6% sequentially and 52.4% year-over-year. On a constant currency basis,first quarter revenue increased 19.5% sequentially and 53.5% year-over-year.
Virtusa reported GAAP loss from operations of $1.8 million for the first quarter of fiscal 2017, compared to income from operations of $5.5 million for the fourth quarter of fiscal 2016 and income from operations of $12.4 million for the first quarter of fiscal 2016.
On a GAAP basis, net loss for the first quarter of fiscal 2017 was $6.3 million, or $(0.21) per diluted share, compared to net income of $12.3 million, or $0.41 per diluted share, for the fourth quarter of fiscal 2016, and net income of $10.1 million, or $0.34 per diluted share, for the first quarter of fiscal 2016.
Non GAAP Results
Non-GAAP income from operations, which excludes stock-based compensation expense and acquisition related charges, was $7.7 million for the first quarter of fiscal 2017, compared to $21.8 million for the fourth quarter of fiscal 2016, and compared to $18.2 million for the first quarter of fiscal 2016.
Non-GAAP net income, which excludes stock-based compensation expense, acquisition related charges, and foreign currency transaction gains and losses, each net of tax, for the first quarter of fiscal 2017 was $5.3 million, or $0.18 per diluted share, compared to $16.6 million, or $0.55 per diluted share, for the fourth quarter of fiscal 2016, and compared to $14.4 million, or $0.48 per diluted share, for the first quarter of fiscal 2016.
Balance Sheet and Cash Flow
The Company ended the first quarter of fiscal 2017 with $207.9 million of cash, cash equivalents, and short-term and long-term investments Cash used for operations was $17.1 million for the first quarter of fiscal 2017.
Kris Canekeratne, Virtusa's Chairman and CEO, stated, "Our first quarter results reflect consistent, solid execution by the entire VirtusaPolaris team. While our business is facing headwinds arising from macro-economic uncertainty, the fundamental long-term drivers of our growth are strong, giving us confidence in our outlook for the remainder of fiscal 2017 and beyond. Finally, I am extremely pleased with the strong progress we have made on integrating Polaris and the opportunity we have to provide highly differentiated service and solutions to our clients."
Ranjan Kalia, Chief Financial Officer, said, "First quarter results were in line with our expectations as the combined company executed against our Q1 plan. Our revised fiscal 2017 guidance reflects isolated delays in decision making and new project starts across our Insurance, Telecom and Banking clients, as well as increased currency headwinds from a weaker British Pound."
Virtusa management provided the following current financial guidance:
1)Second quarter fiscal 2017 revenue is expected to be in the range of $206.5 to $211.5 million. Non-GAAP diluted EPS is expected to be in the range of $0.26 to $0.30. GAAP diluted EPS is expected to be in the range of $0.01 to $0.05.
2)Fiscal year 2017 revenue is expected to be in the range of $850 to $870 million. Non-GAAP diluted EPS is expected to be in the range of $1.58 to $1.72. GAAP diluted EPS is expected to be in the range of $0.61 to $0.75.
The Company's second quarter and fiscal year 2017 diluted EPS estimates an average share count of approximately 30.1 million and 30.2 million, respectively, (assuming no further exercises of stock-based awards) and assumes a stock price of $27.11, which was derived from the average closing price of the Company's stock over the five trading days ended on August 4, 2016. Deviations from this stock price may cause actual diluted EPS to vary based on share dilution from Virtusa's stock options and stock appreciation rights.
Conference Call and Webcast
Virtusa will host a conference call today, August 9, 2016 at 8:00 a.m. Eastern Time to discuss the Company's first quarter fiscal 2017 financial results, current financial guidance, and other corporate developments. To access this call, please dial 888-297-0357 (domestic) or 719-325-2214 (international). The passcode is 4960638. A replay of this conference call will be available through August 16, 2016 at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 4960638. A live webcast of this conference call will be available on the Investors page of the Company's website www.virtusa.com and a replay will be archived on the website as well.
Non-GAAP Financial Information
This press release includes certain Non-GAAP financial metrics as defined by Regulation G by the Securities and Exchange Commission. These Non-GAAP financial metrics are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial metrics calculated in accordance with GAAP, and may be different from Non-GAAP metrics used by other companies. In addition, these Non-GAAP metrics should be read in conjunction with Virtusa's financial statements prepared in accordance with GAAP.
Virtusa believes the following financial metrics will provide additional insights to measure the operational performance of the business.
Virtusa presents constant currency revenue growth rates to provide insights into, and a framework for assessing, how Virtusa's revenue performed excluding the effect of foreign currency rate fluctuations (see footnote 1).
Virtusa presents a reconciliation of its cash, cash equivalents, short term and long term investments which Virtusa believes provides insight into its cash position and overall liquidity (see footnote 2).
Virtusa also presents the following consolidated statement of income metrics that exclude acquisition-related charges, stock-based compensation expense and foreign currency transaction gains and losses to provide further insights into the comparison of Virtusa's operating results among the periods:
Non-GAAP income from operations: income (loss) from operations, as reported on Virtusa's consolidated statements of income (loss), excluding stock-based compensation expense and acquisition-related charges.
Non-GAAP operating margin: Non-GAAP income from operations as a percentage of reported revenues.
Non-GAAP net income: net income (loss), as reported on Virtusa's consolidated statements of income (loss), excluding the tax adjusted impact of the following, stock-based compensation, acquisition-related charges and foreign currency transaction gains and losses.
Non-GAAP diluted earnings per share: diluted earnings (loss) per share, as reported on Virtusa's consolidated statements of income (loss), excluding tax adjusted per share impact of the following, stock-based compensation, acquisition-related charges and foreign currency transaction gains and losses.
The following table presents a reconciliation of each Non-GAAP financial metric to the most comparable GAAP metric: