Virtusa Announces First Quarter 2017 Consolidated Financial Results

WESTBOROUGH, Mass. - Aug. 10, 2016 - PRLog -- Virtusa Corporation (http://www.virtusa.com/) (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, ⁽¹⁾ 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 ⁽²⁾. 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."

Financial Outlook

Virtusa management provided the following current financial guidance:

• 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.

• 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.

About Virtusa

Virtusa provides end-to-end information technology (IT) services to Global 2000 companies. These services, which include IT consulting, application maintenance, development, systems integration and managed services, leverage a unique Platforming methodology that transforms clients' businesses through IT rationalization. Virtusa helps customers accelerate business outcomes by consolidating, rationalizing, and modernizing their core customer-facing processes into one or more core systems.

Virtusa delivers cost-effective solutions through a global delivery model, applying advanced methods such as Agile and Accelerated Solution Design to ensure that its solutions meet the clients' requirements. As a result, its clients simultaneously reduce their IT operations cost while increasing their ability to meet changing business needs.

On March 3, 2016, Virtusa, through its India subsidiary, acquired an aggregate of approximately 51.7% of the fully diluted outstanding shares of Polaris Consulting & Services, Ltd., from founding shareholders, promoters, and certain other minority stockholders. In April 2016, Virtusa purchased an additional 26% of the fully diluted outstanding shares of Polaris from the company's public shareholders in a mandatory open offer. Polaris is a majority owned subsidiary of Virtusa.

Founded in 1996 and headquartered in Massachusetts, Virtusa has operations in North America, Europe, and Asia.

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