Virtusa's Q4 revenue of $45.0mn increased 28% YoY

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Virtusa Corporation (NASDAQ: VRTU), 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 its financial results for the fourth quarter and full fiscal year ended March 31, 2008.

 

Fourth Quarter Fiscal 2008 Financial Results

 

For the fourth quarter of fiscal 2008, Virtusa's revenue increased 28% year-over-year and 6% sequentially, to $45.0 million.

 

Virtusa reported income from operations of $5.6 million, or 12.5% of revenue, for the fourth quarter of fiscal 2008.  This represents an increase of 38% compared to $4.1 million for the fourth quarter of fiscal 2007. 

 

Net income for the fourth quarter of fiscal 2008 was $5.3 million, or $0.21 per diluted share, compared to $3.6 million, or $0.19 per diluted share, for the fourth quarter of fiscal 2007.  Earnings per share for the fourth quarter of fiscal 2008 reflects a 30% year-over-year increase in diluted shares outstanding primarily due to the successful completion of the Company's initial public offering.        

 

Full Year Fiscal 2008 Financial Results

 

For the full year fiscal 2008, Virtusa's revenue increased 33% year-over-year, to $165.2 million.

 

Virtusa reported income from operations of $19.4 million, or 11.7% of revenue, for the fiscal year 2008.  This represents an increase of 37% compared to $14.2 million for the fiscal year 2007. 

 

Net income for fiscal year 2008 was $17.8 million, or $0.76 per diluted share, compared to $19.0 million, or $1.03 per diluted share, for fiscal year 2007.  The year-over-year decrease in net income of $1.2 million is primarily due to a one-time income tax benefit of $5.0 million in the prior year caused by the release of the Company's deferred tax asset valuation allowance. Earnings per share for the fiscal year 2008 reflects the lack of the one-time income tax benefit and a 27% year-over-year increase in diluted shares outstanding primarily due to the successful completion of the Company's initial public offering.        

 

The Company ended fiscal year 2008 with $99.0 million of cash and cash equivalents, short-term investments and long-term investments. 

 

Kris Canekeratne, Virtusa's Chairman and CEO stated, "This quarter capped off an exciting and successful year for Virtusa, highlighted by the completion of our IPO in August, the signing of a strategic relationship with British Telecom and very strong top and bottom line growth."  Canekeratne continued, "In the fourth quarter we added a record number of new clients.  This is a significant validation of the value we bring to our clients even in a challenging economic environment."

 

"Our success in fiscal year 2008 reinforces our strategic commitment to investing for long-term sustainable top line growth while expanding margins over time," said Tom Holler, Chief Financial Officer. "As we look forward to fiscal year 2009, our guidance considers the positive underlying momentum of our business as well as uncertain economic conditions."

 

Financial Outlook

 

Virtusa management provided the following current financial guidance:

 

• First quarter 2009 revenue is expected to be in the range of $45 to $46 million, with diluted EPS of $0.13 to $0.16.  
• Fiscal year 2009 revenue is expected to be in the range of $196 to $203 million, with diluted EPS of $0.70 to $0.79.  

The Company's first quarter and fiscal year 2009 diluted EPS estimates assume an average diluted share count of approximately 24.8 million and 24.9 million, respectively, (assuming no further exercises of stock-based awards) and a stock price of $11.40, which was derived from the average closing price of our stock over the five trading days ended on May 16, 2008.  Deviations from this stock price will cause actual EPS to vary based on share dilution from Virtusa's stock options and stock appreciation rights. The first quarter and fiscal year 2009 average diluted share counts are higher year-over-year by approximately 23% and 7%, respectively, primarily due to our IPO in August 2007. 

 

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