Exhibit 99.1
Virtusa Announces Fourth Quarter and Fiscal Year 2009 Financial Results
· Full year 2009 revenue of $172.9 million increased 5% year-over-year; 10% in constant currency. Full year 2009 EPS of $0.50.
· Fourth quarter 2009 revenue of $41.4 million decreased 8% year-over year and was flat in constant currency. Fourth quarter EPS of $0.15.
· Cash, cash equivalents, short-term investments and long-term investments of $107.1 million.
Westborough, MA — (May 13, 2009) — 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 financial results for the fourth quarter and fiscal year 2009, ended March 31, 2009.
Fourth Quarter Fiscal 2009 Financial Results
Revenue for the fourth quarter of fiscal 2009 was $41.4 million, a decrease of 8% year-over-year and sequentially. On a constant currency basis (1), fourth quarter revenue was flat year-over-year and decreased 4% sequentially.
Virtusa reported income from operations of $3.9 million for the fourth quarter of fiscal 2009, compared to $5.6 million for the fourth quarter of fiscal 2008 and $5.4 million in the third quarter of fiscal 2009.
Net income for the fourth quarter of fiscal 2009 was $3.6 million, or $0.15 per diluted share, compared to $5.3 million, or $0.21 per diluted share for the fourth quarter of fiscal 2008 and $6.3 million, or $0.27 per diluted share, for the third quarter of fiscal 2009.
The Company ended the fourth quarter of fiscal 2009 with $107.1 million of cash and cash equivalents, short-term investments and long-term investments. The Company generated cash from operations of $10.9 million during the fourth quarter of fiscal 2009. Pursuant to the Company’s share repurchase program, the Company repurchased 259,800 shares for $1.5 million at an average price of $5.77 during the fourth quarter of fiscal 2009.
Full Year Fiscal 2009 Financial Results
For the fiscal year ended March 31, 2009, revenue increased 5%, to $172.9 million, compared to the fiscal year ended March 31, 2008. On a constant currency basis (1), fiscal year 2009 revenue increased 10% year-over-year.
Virtusa reported income from operations of $10.0 million for the fiscal year 2009, compared to $19.4 million for the fiscal year 2008.
Net income for fiscal year 2009 was $12.1 million, or $0.50 per diluted share, compared to $17.8 million, or $0.76 per diluted share, for fiscal year 2008.
Kris Canekeratne, Virtusa’s Chairman and CEO, stated “In the face of a challenging economic environment, we made good progress on our fiscal 2009 goals. We strengthened our client relationships, added a significant number of new clients, and maintained our high levels of client delight.” Mr. Canekeratne continued, “Our value proposition continues to resonate well with clients due to our ability to drive down their costs and improve business outcomes.”
Ranjan Kalia, Chief Financial Officer, said “Our quarterly fiscal year 2009 results demonstrate our focus on improving operational effectiveness as evidenced by increased utilization, enhanced offshore effort mix and ongoing cost efficiencies. We continued to maintain a strong balance sheet and increased our cash position to $107.1 million.” Mr. Kalia continued, “As we look forward to fiscal 2010, we expect our clients’ budgets to remain
under pressure near term, but we will stay focused on operational efficiencies and maintaining profit margins for the full fiscal year.”
Financial Outlook
Virtusa management provided the following current financial guidance:
· First quarter 2010 revenue is expected to be in the range of $36.5 to $37.5 million, with diluted EPS of $0.05 to $0.08.
· Fiscal year 2010 revenue is expected to be in the range of $154.0 to $162.0 million, with diluted EPS of $0.43 to $0.53.
The Company’s first quarter and fiscal year 2010 diluted EPS estimates assume an average share count of approximately 23.6 million and 23.5 million, respectively (assuming no further exercises of stock-based awards and no impact from the share repurchase program) and assumes a stock price of $7.02, which was derived from the average closing price of the Company’s stock over the five trading days ended on May 8, 2009. Deviations from this stock price may cause actual 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, May 13, 2009 at 5:00 pm Eastern time to discuss the Company’s fourth quarter and full year 2009 financial results, current financial guidance and other corporate developments. To access this call, dial 888-801-6498 (domestic) or 913-312-0820 (international). A replay of this conference call will be available through May 20, 2009 at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 4694200. 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.
About Virtusa Corporation
Virtusa is a global information technology (IT) services company providing IT consulting, technology implementation and application outsourcing services. Using its enhanced global delivery model, innovative platforming approach and industry expertise, Virtusa provides high-value services that enhance clients’ business performance, accelerate time-to-market, increase productivity and improve customer service.
Founded in 1996 and headquartered in Massachusetts, Virtusa has offices in the United States and the United Kingdom, and global delivery centers in India and Sri Lanka.
“Virtusa” is a registered trademark of Virtusa Corporation.
(1) To determine year-over-year constant currency revenue for the Company’s fourth quarter of fiscal 2009, revenue from entities reporting in U.K. pound sterling was converted into U.S. dollars at the average exchange rates in effect for each of the three months ended March 31, 2008, rather than the actual exchange rates in effect during each of the three months ended March 31, 2009. To determine sequential revenue change in constant currency for the Company’s fourth quarter of fiscal 2009, revenue from entities reporting in U.K. pound sterling was converted into U.S. dollars at the average exchange rates in effect for each of the three months ended December 31, 2008, rather than the actual exchange rates in effect during each of the three months period ended March 31, 2009. To determine year-over-year constant currency revenue for the Company’s fiscal year ended March 31, 2009, revenue from entities reporting in U.K. pound sterling was converted into U.S. dollars at the average exchange rates
in effect for each month of the fiscal year ended March 31, 2008, rather than the actual exchange rates in effect for each month of the fiscal year ended March 31, 2009.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial information as defined by Regulation G by the Securities and Exchange Commission. Virtusa presents constant currency revenue 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 above for further detail). While Virtusa’s management believes that these non-GAAP revenue measures are useful in evaluating Virtusa’s revenue, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP.
Forward-Looking Statements
Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, Virtusa’s expectations concerning management’s forecast of financial performance, the acquisition of new clients and growth of business, and management’s plans, objectives, and strategies. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond Virtusa’s control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: Virtusa’s dependence on a limited number of clients as well as clients located principally in the United States and United Kingdom and in concentrated industries; Virtusa’s ability to expand its business or effectively manage growth; restrictions on immigration or changes in immigration laws; the loss of any key member of Virtusa’s senior management team, increasing competition in the IT services outsourcing industry; Virtusa’s ability to hire and retain enough sufficiently trained IT professionals to support its operations; quarterly fluctuations in Virtusa’s earnings; client terminations or contracting delays, or delays in revenue recognition in any reporting period, Virtusa’s ability to attract and retain clients and meet their expectations; Virtusa’s ability to sustain profitability or maintain profitable engagements; Virtusa’s ability to successfully manage its billing and utilization rates and its targeted on-site to offshore delivery mix; technological innovation; Virtusa’s ability to effectively manage its facility, infrastructure and capacity needs; regulatory, legislative and judicial developments in Virtusa’s operations areas; political or economic instability in India or Sri Lanka; any reduction or withdrawal of tax benefits provided to Virtusa by the governments of India and Sri Lanka, or new legislation by such governments which could be harmful to Virtusa; wage inflation and increases in government mandated benefits in India and Sri Lanka; telecommunications or technology disruptions; worldwide economic and business conditions; currency exchange rate fluctuations of the Indian and Sri Lankan rupee, the US dollar and the U.K. pound sterling; and the volatility of the market price of Virtusa’s common stock. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Virtusa undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by Virtusa, see the disclosure contained in Virtusa’s public filings with the Securities and Exchange Commission, including Virtusa’s Annual Report on Form 10-K for the fiscal year ending March 31, 2008, and subsequent Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission.
Virtusa Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
| | March 31, 2009 | | March 31, 2008 | |
Assets: | | | | | |
Cash and cash equivalents | | $ | 55,698 | | $ | 41,047 | |
Short-term investments | | 23,333 | | 40,816 | |
Accounts receivable, net | | 28,244 | | 34,716 | |
Unbilled accounts receivable | | 4,005 | | 4,233 | |
Prepaid expenses | | 5,050 | | 4,025 | |
Deferred income taxes | | 4,139 | | 901 | |
Other current assets | | 5,668 | | 6,349 | |
Total current assets | | 126,137 | | 132,087 | |
| | | | | |
Property and equipment, net | | 19,680 | | 16,833 | |
Long-term investments | | 28,054 | | 17,091 | |
Restricted cash | | 3,489 | | 4,361 | |
Deferred income taxes | | 5,040 | | 4,429 | |
Other long-term assets | | 4,623 | | 5,969 | |
Total assets | | $ | 187,023 | | $ | 180,770 | |
| | | | | |
Liabilities: | | | | | |
Accounts payable | | $ | 5,499 | | $ | 3,726 | |
Accrued employee compensation and benefits | | 9,520 | | 10,424 | |
Accrued expenses - other | | 15,128 | | 8,375 | |
Deferred revenue | | 1,016 | | 351 | |
Income taxes payable | | 151 | | 403 | |
Total current liabilities | | 31,314 | | 23,279 | |
Long-term liabilities | | 3,123 | | 1,657 | |
Total liabilities | | 34,437 | | 24,936 | |
| | | | | |
Stockholders’ equity | | 152,586 | | 155,834 | |
Total liabilities and stockholders’ equity | | $ | 187,023 | | $ | 180,770 | |
Virtusa Corporation and Subsidiaries
Consolidated Statements of Income
(In thousands except per share amounts, unaudited)
| | Three Months Ended | | Year Ended | |
| | March 31, | | March 31, | |
| | 2009 | | 2008 | | 2009 | | 2008 | |
| | | | | | | | | |
Revenue | | $ | 41,437 | | $ | 45,040 | | $ | 172,942 | | $ | 165,198 | |
Costs of revenue | | 23,402 | | 24,904 | | 105,100 | | 92,847 | |
Gross profit | | 18,035 | | 20,136 | | 67,842 | | 72,351 | |
Total operating expenses | | 14,132 | | 14,521 | | 57,864 | | 52,972 | |
| | | | | | | | | |
Income from operations | | 3,903 | | 5,615 | | 9,978 | | 19,379 | |
| | | | | | | | | |
Other income (expense) | | | | | | | | | |
Interest income, net | | 559 | | 1,271 | | 2,643 | | 3,917 | |
Foreign currency transaction gains (losses) | | (172 | ) | (173 | ) | 293 | | (732 | ) |
Other, net | | (110 | ) | 65 | | (48 | ) | 64 | |
Total other income | | 277 | | 1,163 | | 2,888 | | 3,249 | |
| | | | | | | | | |
Income before income tax expense | | 4,180 | | 6,778 | | 12,866 | | 22,628 | |
Income tax expense | | 562 | | 1,519 | | 809 | | 4,857 | |
| | | | | | | | | |
Net income | | $ | 3,618 | | $ | 5,259 | | $ | 12,057 | | $ | 17,771 | |
| | | | | | | | | |
Net income per share of common stock: | | | | | | | | | |
Basic | | $ | 0.16 | | $ | 0.23 | | $ | 0.53 | | $ | 0.83 | |
Diluted | | $ | 0.15 | | $ | 0.21 | | $ | 0.50 | | $ | 0.76 | |
Weighted average number of common shares outstanding | | | | | | | | | |
Basic | | 22,494,944 | | 22,932,631 | | 22,763,759 | | 21,368,470 | |
Diluted | | 23,605,593 | | 24,773,046 | | 24,136,716 | | 23,282,663 | |
Media Contact: |
Susan Hartzell |
ICR |
susan.hartzell@icrinc.com, 203-682-8238 |
|
Investor Contact: |
Staci Strauss Mortenson or Kori Doherty |
ICR |
staci.mortenson@icrinc.com, 203-682-8273 |
kori.doherty@icrinc.com, 617-956-6730 |
