VRTU - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Please standby, we are about to begin. Good day, and welcome to the Virtusa Corporation Fiscal Fourth Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Will Maina of ICR. Please go ahead sir.

William Maina

quarter to conference quarter discussing call, results Virtusa's welcome year full our and ended for earnings year XXXX where fourth Leanne Virtusa's XXXX. and fourth fiscal financial March Thanks XX, full and we'll be

which me Executive not are On Kalia, on Canekeratne, provisions Chairman and President this made statements based made and information Chief are call are and the of today statements, Securities the Kris are Executive XXXX. on to Chief historical Safe forward-looking the call of Officer Certain Litigation that with Vice Act Ranjan pursuant Reform Financial Officer. Harbor Private

are During this realize IT synergies the of Virtusa's benefits, Virtusa's business, Virtusa's statements things, expectations other forward-looking call, and realize of clients insight fluctuations. include plans, revenues to net We Virtusa's otherwise. per into defined income, assumptions events data and which the ability we services; non-GAAP non-GAAP to income, a or and We currency of growth and imply of our provide the as to press from currency of forecast we the Other adjusted objectives assessing performance, a by make, neither of these believe or materially and to not of and share, only be disclosed results concerning earnings this intended which investors of as could differ acquisitions; guarantees actual which excluding beyond framework during to, to financial our release business. other no provide circumstances non-GAAP constant in Virtusa's of express performance date result and relating can ability call effect use among contemplated risks provide for management's on information, benefits management's the those how the may place Virtusa's Investor website. to the nor this on financial Relations our are information Existing reliance many are speak hereof. uncertainties, as future operating information, earnings call, cause undertakes update SEC. promises revenue also GAAP today's statements statements variety performed, revenue non-GAAP forward-looking of of undue and or the present subject control, obligation found certain Reconciliations statements, revise a to Virtusa are forward-looking new which whether rate cautioned and the included measures the statements. these which from in of These foreign strategies. prospective operational non-GAAP of adjusted are sheet, page to on or

to and quarter We presentation our of IR cash, website. investments fiscal a data short-term equivalents, note into believe reconciliation cash that also total posted Please earnings a also provide long-term supplemental position results has and we cash insight liquidity. overall present that fourth been our our to

over to For release. regarding these our the turn I'd the faced disclosures Kris. With in by disclosures on Kris? public that, like Virtusa, call additional Virtusa's with earnings and risks filings contained the SEC press and to other see

Kris Canekeratne

for as built our good with year closed continued us and results Will out call. XXXX. conference in organic continue fourth the joining year good to Thanks industry by Thank growth and morning XXXX evidenced We the our full is for above you momentum fiscal fiscal and of fiscal on year everyone. we XXXX expected quarter in outlook

$XXXX XXXX approximately year-over-year. of XX% The million, non-GAAP of revenue of EPS year solid full of up year-over-year non-GAAP growth $XXX.X fourth margin highlighted generated XX%. we EPS Our fourth an quarter total accretion. X.X% continued quarter margin basis results sequentially and We points year-over-year. of and increase $X.XX year-over-year are generated $X.XX XX.X% up of non-GAAP million XX% revenue fiscal accretion revenue and up XXX by and

are the for history. first We crossed in time to billion have our mark $X revenue the annual of proud

points milestone I a digital fiscal a than more every to our like In first this we competitive opportunities more experiences. consummation digital a has single and journey our fronts. front-end are help enthusiastic presence, modernize geographies expand consolidation, store IT us matter opportunity secure. presenting customer And We positioned within digital rationalization. connective and of clients build effective few interfaces our and robotic build And fourth for Virtusa to the to is experiences On proven XXXX combining an minutes cannot without of IT simplifying deep for The our is solid infrastructure our digital propelling simultaneously we customer This existing that so leveraging necessary digital is and that IoT, industry technologies infrastructure and spot. is clear you end continue remain clients It learning, by for well end the about transformation, competencies end facing in growth tests expertise performance through that their it's the and to their with intersect become enthusiastic clients that with and almost sweet fact digital Virtusa, we omnichannel engineering well services backend us. unparalleled tremendous the rely enterprises note far combination base enterprise. beyond artificial cloud industrial and designed reimagine platforming, and through am on. spend is usable, to world powerful digital capacity to transformation discussing requisite in lies between in opportunities That and the of IT new more to even a that why demand and including I'd are year digital By reality largely driven digital these enabling experiences. process combination extremely the touch consulting, our is how and useful, that and We digital and across is digital serve. that our grow. to to While their ahead the strategy, we simplify and simpler, end their Virtusa's demands IT from the client about our entire are developed digital industries possibilities of the assets and revolution. enablers intelligence, that today's automation, foundation machine desirable, the realize digital tissue

Our fiscal overall fourth enter pipeline in quarter year-over-year the XXXX. the we by XX% encouraged as fiscal digital seeing grew momentum are are we we year and

base, cloud, expanding a our great front. organically As means. digital to expertise on top of also this and leading based and strategy our internet eTouch analytics, the our data company on has accounts, clients on The by broaden client Silicon areas pleased of presence also strengthened count to recent continue multinational presence through XX which digital as and internet of client. example has to in our in we is digital engineering served marketing, security. focused Valley we we focus new now presence inorganic anchored the capabilities, are eTouch a of existing high with It and service acquisition our district strengthening offerings our expand vertical tech are our one

complimentary successfully this in on the yet acquisition company in realize the synergies is our eTouch is business. and with from welcome I will Accordingly our and in to Virtusa cover eTouch which competency to another would in integrate, Virtusa. integration outperforming of revenue to to call. revealed the Polaris track team experience take capacity like terms more expectations acquire, significant and the of detail XXXX Our also opportunity members prior in EPS Ranjan the later contribution

while achieve our industrial for legacy new As our clients growth help mentioned support technologies transformation to to to them and opportunities enabling across reduction. generate sustainable earlier capabilities overall cost the we their create modernizing simultaneously leading are transformation environment goals, IT both leveraging digital digital new

recently multiple are engagement block this few exploring Bitcoin and high-end chain our new design for existing management our the between how and global for implementation gateway products to Let to is enterprises manufacturer to and in Today In reporting the the selected solution end-to-end by development gateway large systems. payment develop responsible client. to new processes a to one seamless areas across their such platform me integration a payment and that of In from now of technology this will new Virtusa they payment use industries examples. we enabling a highlight case growth. enable client payment open a recent development can accept clients were project

the ever users more services example at building designing and Another the IT infrastructures. connective and by channels. between on through are financial tissue back-end witnessing clients our banking the services industries end and of bringing increasing focus to the front-end role In digital we an

brick transformation new on through reengineering of and only models their is European While services services a existing digital BFS from entire network. delivery of revamp recent the lines, example of digital A to or legacy regard digital focused industry segment and conceiving Virtusa digital our the mortar every who bank only in to selected with ATMs -- first engagement. tier this its modernize is clients customer increasingly of helping top and business

experience. And creating initial machine the efficient, unified services expanding on pilot smart examples position will for added and clients everything engagement many I conclusion telecom the to friendly Virtusa means siloed One our of on phase could increased that strengthen Being resolution position return global partners. IT the we that the around is leadership which clients share our Virtusa business the of of The we enabled developing universal strategy, on share I lines recently of We three is first of a are deliver to leading end-to-end implementation are double-digits. learning us smarter redundant cost transform of their this service countries, effective and We engagements prompted fiscal means proving our infrastructure operating throughout platform conclusion to and devices over support three which performance. Virtusa standardization, applications The have greatly In many to through platform in what to studies revenue in a previously was one engineering globally. the is proposal digital eTouch our ability tickets European ATM the debt we will this fair I they implements customer creating to efficiencies our the with of a technology, be in investment services and in value digital this institution longstanding across margin invited have further to handful the win. driven year toolset. and rapidly participate XX,XXX lead are artificial putting in There to more illustrates achieved enabled go AI with of place experience of and demand including and working believe biggest guidance our be European we level. a across industrial the other for competitors platform of of regardless as intelligence training market. innovative launch target as taking a of at with and is With that in the digital required, effectively business selected every and resolution our all a IT are At expanded back enterprise one revolution. the bank on year vision, strong and has delivering am of growing world our just towards business made industry significant underlying acquisition client when selected in The of adjusted all spotlight digitally and progress channel single and objectives unique market. major delivering just capture Virtusa business. several potentially by of digital some management user and progress breadth XXXX after our validation type recognition And for real based Generation a earnings solid top and fact received per financial across we very our of ability six at IT players results and and the undertake of financial us making We two important interfaces constantly to addressable the digital reason the company complex preferred on to modern five and our pleased our from artificial today strength that consistently every the and chosen our this low against existed than and improving top developments ATM a that ATM the fourth of delivered automatically as can we tier year investment the global focus and build partner a service back to operated scale, and strategic is beyond more platform. acquisition share. intelligence strategy [ph] our looking most an expanding

XXXX executing another year progress growth leading our targets, made synergies status with integration excellent largest Additionally Polaris at received during solid and saw account global partner fiscal we against institution. financial our global and preferred

see are the is overall can pleased year our about solid, even point strong was we well, any and particularly history. resonates our in we are fiscal you proposition As is while The client a very value performance, future. our with at demand our excited year environment more base XXXX stronger than and

key We how to are positioned about enthusiastic growth intersect drivers. well very is Virtusa

guidance. details on Ranjan. and to the our turn first results and XXXX me fiscal quarter let Now call over year who our provide will Ranjan more

Ranjan Kalia

good and everyone. Thanks to Kris morning

our year and of for fiscal I quarter will Let XX, our was QX increase quarter XXth results provide for our questions. million the me March summarizing fiscal sequentially Revenue in XXXX. for call ahead contributed first the revenue our reported quarter opening year both was in and estimate. then eTouch on which XXXX $XXX.X X.X% of fourth fourth before current fiscal in start currency. full the acquired $X ending currency million X.X by constant million, we March of which and X.X% of an guidance

increased quarter at results. midpoint fourth partially banking of expected eTouch revenue weaker below by million Excluding offset the reflecting guidance our XX XX C&T range our of generated X.X and than was top clients clients and growth XX.X% revenue stronger and revenue in fourth groups. industry We our one results in and non top year-over-year Year-over-year across consolidated all both reported our currency. XX.X% at constant currency quarter sequential

the XX dollars underlies above revenue constant on includes strong $XX.X deferred the million expectation the expense prior and ownership due diluted preferred other organic million $XX.X quarter $X.X of million $X.XX of was $XX.X million income per fourth income a of of million was to above of foreign compares of $X.XX GAAP a experienced and growth in This GAAP was our from ago of expectations. net fourth of fiscal GAAP of and the XX.X% net period. expense. year-over-year GAAP mandatory million tax our midpoint of exchange million the Polaris. year and operating year million $X.X basis. $X.X expense period. net and million, interest loss XX% this of share quarter a convertible share the tax stock quarter dividends increased quarter of of in loss in in which was of in points midpoint also $X.XX $X We income, operating minority share inclusive the basis $X.X recognized quarter to repatriation represents million comprised per net prior up net was We fourth $X.X quarter. Gross in the year-over-year in Fourth slightly our for improvement. the currency income $X.X ago margin was interests

mentioned the exchange not foreign and EPS by impacted items mandatory which in net GAAP our were $X.XX and repatriation earnings QX guidance. unrealized our includes losses prior included tax QX respectively. $X.XX previously Our These

from the quarter the in non-GAAP in margin operating Non-GAAP the to $XX.X non-GAAP XXXX period. consistent is prior with XX.X% year inclusive $X.XX operating million, prior the year increase of earnings quarter from period. operating of of prior up results, share diluted was up and Turning points quarter non-GAAP the $X.XX of fiscal and Fourth was our the period. up line X.X% quarter ago basis an non-GAAP ago prior ago and X.X% in in $X.XX QX acquisition. from XXX with from This midpoint income $X.XX the was the quarter margin our from eTouch per the was fourth expectations. year

our quarter fourth was Our above consolidated non-GAAP expectations. EPS prior

operating million Cash quarter. to the activities cash Turning flow XX, million ending balance inclusive investments. cash and in from equivalents, at was $X.X of fourth cash long-term sheet, short-term $XXX.X and was the XXXX March

quarter XX for the fourth DSO days. Our was

percentage flow trends. line is cash a of QX sequential revenue QX years Our in to as prior decline with

detailed exclude of about across fiscal eTouch. quarter industry sequentially of revenue XX% and groups our follows; XX% of some to revenue. Now I representing discussion all our turn by numbers increased note BFSI as Revenue the fourth was group. revenue performance will I'm that Please year-over-year discuss industry more X.X% to

Our X.X% remaining XX.X% at information XX% summarize of BFSI year-over-year fiscal technology M&I results as and like above performance our telecom in sequentially by expectations. was performance for up clients. X.X% our expectations performance clients. and the of C&T fourth our year-over-year revenue. to and one line I compared was was results of at our quarter X.X% below increased driven banking financial driven XXXX up and primarily by growth with in the representing our fiscal compared and our the year XXXX. year-over-year. million basis revenue expectations income XX.X% operating was now tax $XX.X and revenue to representing impact was other X.X% sequentially a of increased compared U.S. consolidated X% revenue. a per to full year was to would $X.XX share Media revenue for to net briefly for prior currency million fiscal On in GAAP of fiscal was year a million for Revenue a basis, $XX.X loss profit the non-GAAP increase compared XXXX. was operating or Non-GAAP EPS $X.XX On year X.X% with fiscal margin XXXX. XX.X% $XX.X $X.XX $XX.X year year-over-year. diluted or XXXX. compared million reforms $X.XX including of constant income an billion, year from was $X.XX $X.XX Communication

of $X.XX. XXXX. the XX, Revenue range million to Non-GAAP I fiscal guidance expected be in XXXX earnings in the ending first share per $XXX.X for the current to the provide million. range of $XXX.X our of our is first diluted and of expected quarter in March to fiscal XXXX quarter first in is to will fiscal year Now be quarter $X.XX

Our average per non-GAAP QX share share anticipates count guidance earnings million. an fiscal XXXX approximately XX.X of

year in per expected of For $X.XX March range XX, ending Non-GAAP approximately fiscal to range be billion. XXXX diluted to earnings be to XXXX $X.XX. $X.XX the billion the share we the of fiscal to in year is revenue expect $X.XX for

of average related guidance $XX an anticipates year of fiscal of and Full charges. expense million. million XX.X $XX.X EPS stock XXXX non-GAAP excludes acquisition million approximately count Our share compensation

assumptions based section of our Relations Investor is GAAP and that sheet be data a set of in Our found our guidance the located non-GAAP current on on website. can

to to to with enterprises spend technologies. digital as continue Next quarters. transformation AI Calendar our disruptive as pipeline monitor to ROI. continues clients agile are Our they impacts consistent their year on prior thus appear year from preliminary help Large digital side expand both expectations. well our machine enhance and to the meantime such learning expected more technologies be to consistent is is close line client prior with increase cost we revenues and the on XXXX in are drive with and budgets as leveraging technologies which competitors Gen Digital

seeing service demand and demand more digital to clients experience. through pivoting for aware platforms. debt as from services clients members transform more the more our RBA, insurance efficiency transformation and digital digital reduction. Financial Banks spend channels. end continue seeing focusing digital see BFS they segment such platforming, based an are services end-to-end IT standpoint, From In companies transformation that technical services to digital are users will we we significant our operational businesses. cloud also our their to increased are For as a their more continue automation, on we clients towards as bringing channels their focus on are to are drive looking

touch segment are to As systems of the In we existing infrastructure customer spending as as a are digital a around strong on customer continues improving and the digitization points. core healthcare support observing of there initiatives all well experience. on transformation result emphasis transforming several enable legacy IT

content seeing XXX targeted data emphasis clients our analytics seeing big maturity, data review. delivery end-to-end investment to spending are modernization, aimed are In personalized more in by an enhancing at on patient for enable platform their media analytics gaining customers. We engagements data and communication and we and increase on

guidance the X% offset in revenue guidance, increase is our seasonal midpoint At sales of the the is of impact margin to marketing uptake QX with expected operating effort quarter grow and usual commensurate fiscal partially sequentially trends approximately eTouch an Our our and will and historical first by spend. full non-GAAP in reflect quarter the onsite acquisition.

margin basis onsite For better the by XXX in of realized effort by of and full midpoint we driven to will SG&A revenue higher and operating pricing. fiscal at XXXX primarily offset our expect expanded year range leverage. by slight be growth guidance margin XX.X%, Investments gross improved slightly points utilization have non-GAAP year-over-year approximately

In top XXXX client EPS non-GAAP top expecting impact inclusive and of based $X.XX of FY across the growth to be XX expect revenue negative are XX% Tax broad of XX groups industry guilty to and we growth Additionally groups all organic basis. we provision related and non both consolidated the Act. on

We client growth be to in expect account our XXXX. fiscal a banking large year

based Our FY and year, visibility XXXX from visibility with the portfolio. that is our of revenue guidance prior come is XXXX consistent Consistent FY pipeline. qualified will anticipates client revenue current backlog and existing with our XX% on our revenue

guided to that in the current It our Our time. tax non-GAAP additional be to the understanding related is Tax our or regulation tax tax for changes received will technical of our likely the rate With fiscal respect tax XXXX. effective Act, guidance reflects expected is XX.X% the act year and be to strategies. rate

these include potential changes. Our not current guidance does

guidance non-GAAP million we delivered million results financial In anticipates our line interest strong current and minority top interest of fiscal and approximately expense. of $X targets. EPS Our meeting year XXXX the $XX.X conclusion

our for than to faster with Looking and industry our growth guidance for non-GAAP by growth above strong earnings consolidated revenue XXXX, driven calls combined growth. services solutions revenue organic demand continued

you plan earnings the shift our the that time X with beginning note call future call PM to our call. Eastern now please Operator, turning may XXXX to session. Before questions fiscal Q&A first over we begin for quarter

Operator

Instructions]. [Operator

Fitzgerald. with question first our take will Joseph Cantor from Foresi We

Michael Reid

is the taking that guidance on margin you Mike expectations longer-term year Reid medium to but our I think? strong We maybe your expansion walk of this see could kind question. you coming for like we the this appreciate through Joe, rate where of us guys, what continue for Hi after

Ranjan Kalia

So, continue we comfortable two double-digits, make low we as Polaris prepared his target to to strong acquisition. in year with XXXX guidance a target. us with in that to that's set Kris comfortable XXXX had mean that had for ourselves well remarks reaching target our after mentioned feel as three as I performance of the continues our for A

right double-digits So now we're in next very two focused on the low reaching that three years. to

Michael Reid

and at more it a little large then a mentioned you that? you give could period, client on banking Got headwind this us detail

Ranjan Kalia

Yes, sure.

projects. spending in year. delayed experienced impacting will slowdown grow expected full boarding be XXXX of the as Mike is in programs A large momentum fiscal that progress we for With start we to some that and we've expect So, QX. seen on we discretionary client client very you will to XXXX. and respect new large know flat strong as our sequentially continue year It

for will a during large expectation see Our is our late pipeline will growth strong be fiscal and large the at that calling we year backlog stage client -- in our grow plant and good XXXX. year full

Michael Reid

alright it, the on that. thanks for detail Got

Operator

from our from question Moshe next Wedbush Securities. take we'll Katri And

Moshe Katri

from thanks, during of of digital fiscal in quarter Thanks. Hey, expecting morning. was eTouch the what contributions revenue What and are good acquisitions terms the we mix XXXX? the then

Kris Canekeratne

eTouch. will Ranjan take the more on I'll revenue and provide first the from around Kris expectations Moshe, part this detail So, that then of is

the that to eTouch we're the So greatly obviously more tech And into our just in look most breadth presence vertical. the to have are not high opportunities the obviously fold. that existing really for with our of of strong lines internet internet that couldn't engineering it pleased to has expecting digital different some our opportunity business We tech redefining our bring an team With with vertical. We fiscal will the foremost excited strengthening all offerings. strengthens first that high of we eTouch in be eTouch and continue internet depth and that said, the like. very digital believe working across high provide moving advanced are businesses across into year internet tech and us companies what

Ranjan Kalia

the above So, I March was Moshe performance I slightly mentioned original estimates. as mean our

March $X previous If that our see you that you the run eTouch $X forward rate current run estimates believe monthly rate about business. we is million million In we've performance. business. taken primarily But about it's guidance monthly because eTouch our roll slightly will our above of

Moshe Katri

of was digital about kind in right XX%, terms and mix XX% Okay, kind of at level? of to is that the

Ranjan Kalia

one No, always have we Moshe our of digital our talked is that about mix. third

digital the the fact year means XX XXXX had has that a for increased. mix over digital XXXX XXXX full Which digital the our In growth year -- strong us. almost slightly -- for was business for non-digital of

Moshe Katri

and go ahead. Okay -- then sorry

Kris Canekeratne

the that on eTouch contribution digital requirements digital advanced digital across of Ranjan the practitioners came for digital building in is a we just of sorry, am revenue our had the acquisition eTouch starting and approximately programs I in QX, -- increase very said, with has work what XXX% obviously in digital mix eTouch. will as XXXX clients we the include

Moshe Katri

a said pipeline, predominantly color think was is digital, any it and you That's final then the on of it some there application, color Is up XX%. question, that would be lot etc. helpful? outsourcing, just maybe great I Thanks. on consulting,

Ranjan Kalia

So momentum just providing some color the our pipeline. strong. is on very again Once

does close of increased, Also grew to with include XX% XX% Our the year-over-year grew contribution win mean once approximately again sequentially, not are and moving quarters. this forward. itself pipeline time The rates increased. pipeline eTouch prior digital average deal and size and injection consistent rates

is purely basis. an So this on organic

we that work grow overall not for pipeline see digital with and company in very of fiscal regular quality you we our just year above digital growth is XXXX is than work in faster having our the grow accelerating the are the would noticed work, average, continues So, also that momentum pipeline But robust. pleased fiscal grew obviously non-digital and more during the have digital to pipeline, while our said the that the continues even XX% to as pipeline year.

Moshe Katri

guys. Thanks

Operator

next Jain our Puneet question Morgan. take JP we'll with And from

Puneet Jain

thanks questions. Hi, for taking my

so you margins margins, operating like over fiscal to more medium on X.X% five expect the XXXX clarification term four just your So, guidance are mid-teens Do a next in still in years, margins. double-digits? low expectations understand implies

Kris Canekeratne

take three to would agree Well, Puneet you into XXX to XXXX get we reach that from I points ourselves we that which continue FY there with teens. X.X% basis two for that the from years low would the double-digits to continue to thing same you XXX to make forward and target mid XXX to guidance basis us if would us points roll get call the for there in which

Puneet Jain

Got it, it, on at but you also European year? of grow services prepared average bank expectations and one it services banking your in financial one an remarks at opportunities in little got organic bank account, the in QX at about above can of preferred talked obviously financial being below second overall vendors rate large your basis on bit came this

Ranjan Kalia

that add try and me a let Puneet into cash let them but So and is one. there by questions few me in one rolled them out one answer

be the growth enabler an that we company. for expect industry will as So a do segment BFS

We momentum have across strong very BFS.

Having across a BFS. at I mentioned we that we expect the are that will seeing in strong very of across of initial too said be As fiscal slowdown segment, BFS one large our during geographies very account despite year growth XXXX. BFS the clients momentum client operation that all in

our as We greatly very was global partners are been our with unique pleased capabilities valid top etched top made team in more that a competition the and out another selected fact pursued that we of as have for Polaris financial a and addressable in five six large many were outstanding class institution, be we established global global of very, of the financial because compelling value being best this This expanding competing preferred possible largely partner institution that large share very one consistent, proposition at preferred and world. couldn't expanded and extremely incumbent for the institution. formidable some financial pleased, acquisition, execution, digital result six a very

of our large on part Just this, to on division their build differentiation. a based was

capabilities for and and our rationalize, modernize, transformation. arbitrage digital legacy software where the and connective tissue system simplify, engineering, Specifically proven digital end-to-end consolidate in we build IT strength

requirement during would and this the we the across our our all have came selected and to across across opportunity value have be greatly wallet were think spend expand we institution. enterprise enterprise I digital that As a of basically very out and in now we now clear belief part that that beneficial the proposition unique large and IT our been loud selection the at process share and greatly resolute

So occurring global we partnership our and are large who about realizing strengthen opportunity other situation enterprises are very it that and obviously across we excited the and the believe end-to-end same supporting, many modernizing, significant transformation initiative. is to be enhancing, whether to environments be around digital brings that strengths whether their transformation Virtusa support differentiation around it rationalizing cloud or legacy the digital

Kris Canekeratne

we based the actually received vendor work doing that Puneet, So several one based is status been we have so bank large with U.S. for that a key preferred bank, U.S. years.

reason only because the primarily goes that's at In in eTouch all as well look are pieces is than the and communication you business. expected organic grow And the into banking terms of if mentioning growth two those our the technology the I'm vertical. faster to as of organic BFSI

an significantly basis just industry look that you at well. organic faster and faster banking the doing is growing banking is of our organic it growing our if than means on So, is which performance

Puneet Jain

thank Great, you.

Operator

And take Bryan Bergin next from we'll with Cowen. question our

Bryan Bergin

additions you overlap the the you. and give the of scale ask you concentration Virtusa Hi a sense then between wanted large of out? organic I us guys, and on that to over client have call eTouch thank eTouch, client came any that meaningful to can

Kris Canekeratne

expect company engineering. that this for in the this small Two, the from across Valley vertical the from provides clients units top eTouch to basically versa tech in. that basically eTouch. revenue of client tech Coast Across with the expertise now and client rate client and very or These gives They client the would of it the tech high on lot contribution take to providers Internet the us and industries actually the the and we works of will the high of of and of concentration it it strengths we all base Internet very some stemming the vertical States, the digital rest significant bring and West eTouch digital to and have world. of and industries vice we One, the that that Internet combination innovation case center operate they our from Coast, rest across our full know engineering or And concentration. can can Silicon three, meaningful in foothold have high we multiple have capabilities we client. fairly to the that get of acquiring our on strong specifically believe you tier expands Internet clock multifold. pace any of beach benefits the in we acquisition definitely all that are to supports West as vertical. of leading And a is believe of us the that are In head client that obviously across we the a speed operating of in perspective we the was So, one percentage tech considered advanced are percentage United mid-size would the an the noteworthy knowledge as innovation vertical. high these and you the the

So are of synergies significant and the that believe Virtusa. acquisition we there to see eTouch

Ranjan Kalia

that being similar this it part had the as will and in excitement Bryan it remarks XX% Kris not we large acquisition prepared but our a I for I is excitement his is us And Polaris client the mean XX of their client. does top Citi mentioned to the after customer. mean not form very -- portfolio

our our different here. performance Citi made over at really and a very for growth no aspirations are company the aspirations Our Citi and strong driver

Bryan Bergin

you. go sense, reduction I cash can balance you through makes give that us how just flow, as think walk allocation, debt XXXX, on during mean of thank fiscal year? should And kind a we about if you of capital Okay, the

Ranjan Kalia

I the comfortable that still have back in generate cash mean we debt continue needs invest we feel continue would of to business. to into meeting and and very terms

to cash back the in from non-GAAP investing to quarter. be lower some integration. QX Historically had strong EPS Usually a open is may also tuck that it very, because it's and be FY increases is us. -- the in in of on focus for back short-term sure XXXX are being primarily from that's should will we will and being said been business basis. March the make ops. the going our QX operations DSO although a continued But in accretive acquisitions mean I flow very in we on But eTouch You which to remember terms of flow be cash

acquisition just historically deep the we very do now. always we we once integration right mode and go -- seen you've we into an where As that's are

Bryan Bergin

Okay, you. thank

Operator

And we'll take Atkins our SunTrust. Frank next question with from

Frank Atkins

what to very Thanks a for of I business Can and questions. you my as on and utilization. people attracting attrition taking little doing the well wanted ask about employees as the nice side bit, job retaining about you're to manage talent? talk

Kris Canekeratne

for Frank that question. you Thank

are continue. of momentum to So, generally an strong we considerably lot the of part are in another join has we our very career that it which Virtusa, to faster than faster type opportunities rates fact of career is the and that part a growing the had to hiring correlation has we're progression a do anomaly the we rest the expect A to do work given has direct obviously that with it of with industry growth in with those that and we quality and geography. that of terms momentum especially their doing

won know retaining do in deployment which the type engineers of knowledge how and two, awards that top Best how do is one well is a that are which performing of real of to very comes in our internal of perform. appealing the class to real high they really. Their Virtusa to engineers to on best it And and So with as engineering transformational innovative essentially numerous know attractive engineers generation has performance time which gamefied they millennial and that's in leader engagement go the of some up Virtusa integration, group. continuous incredibly and results Really it appreciated we how how is boards terms peer engineers. work amongst meritocracy think very, an but and platform platform. continuous that's one, that have I exactly tier the global depth things strength obviously beyond because very talent attracting the the when and creates has drives you the about they that's their

Frank Atkins

that consistent Okay, helpful then of fixed amount bit can great, the about talk you you at color. work, all? in that's seen impact price the eTouch also increase have and And little a a

Kris Canekeratne

organic. fixed is oriented, the T&M much fixed don't of No, actually eTouch have been has price The business is more price all they increase business. really all of than that really the majority

sometimes price up moved you business, some as sometimes, know fixed that being Just I from are clients always, profitability mean of can to T&M price not higher. our end fixed

very those So we're of happy trends.

Frank Atkins

for Okay, taking great, my thank questions. you

Operator

And Research. we'll take our next Colicchio Barrington question Vincent from -

Vincent Colicchio

small that? Yes, outperformed Ranjan on expectation, a could Telco drove that your you you what mentioned give us color

Ranjan Kalia

the just I know clients sure it's March make BT. as but called with portfolio British of case and our Vince you then quarter wanted in this strong bigger to not really Telco out always reason a is Telecom

we called the We had about a FY continue for will to half us. grow vertical on growth talked But have XXXX it always mean, back slow remember did. had was it and strong performance. may in we you earlier I telecom strongly

that of significant clients. the before work the telecom that about that transformation type some work type cost talked of has So, Kris at continue and digital optimization we to of of lot embark

Vincent Colicchio

level And then consistent the what past on visibility is annual your that and with your of is approach? guidance

Ranjan Kalia

of means the only from visibility come also to are going of about as then Yes, our qualified new expecting supported from metrics X% that going to the current yes. The is well unqualified clients an base new XX% similar we pipeline is that logos. is come and talked by revenue and really pipeline client that are as revenue which our I

Vincent Colicchio

Okay, nice quarter guys. Thanks.

Operator

Mayank Company. And our with we'll take & question Tandon Needham next from

Mayank Tandon

given look when between breakdown does you morning. and expansion versus Ranjan for the guidance Thank for how you've expectations good year you, the top that at your utilization. line hiring

pricing some I what on potential pricing for think also counted fiscal might improvement in that there comment tying expectations XXXX? and be you improvement for overall earlier your around

Ranjan Kalia

which QX would would very utilization close for utilization to we levels obviously us. deliver run and to margin Mayank will our be So, the continue increments strategy really slight to benefit expect a utilization

we in be believe I've to of won't we do to next strong points increase it are XXX a more over XXXX. to automation from an a before and Virtusa. like -- on more the utilization annual so period industry two to years XX and continue basis, FY more will happen probably basis so at utilization So the for said But three being uptake continue where continue

the has continues Our pricing piece help what and increase, to all deal the know well realized to to to as And right element as you it. the it pricing pricing on increase, is utilization. size a those about continues a element mix really element realized really tenure increase deal element pricing our pieces to us as talked I

So business higher of on on the well card mix element share rate rate the card we're and also our some pricing garnered increases. as accounts increases, slight of a seeing some as we've gone bigger realized being

Mayank Tandon

you'll with maybe Got because assume some benefit not -- revenue in should and probably the as it be and then on based comments your we line but from will strong hiring utilization? get growth not pricing

Ranjan Kalia

rate being inside strong. is Yeah, be almost It consolidated XX% is I piece revenue said growth eTouch -- if organic parse out even and very XX the industry the the with standards. it's mean growth hiring you still would that

So hiring very still would strong. be

Mayank Tandon

the be clarity the has past Got to question the is -- what at it happen has the around to go and upper at earlier, you you pretty you your range? and one what on the to what guidance consistent to some get for final with guidance, I end, is expectations range that as from puts me what think lower said the for want -- just takes happen come into versus end the are to and

Ranjan Kalia

versus average. company delta we look let where higher XX the as FY started top growth XX, XXXX our at FY is is top So, XX a year. the if And you that's this XXXX non-top saw year we than our even actually where our the -- have lot would me

events We are at have growth midpoint end the that think on do is performance be our we really our to lower I the primarily for there top to the high-end just not beating of really to and because going the much XX watch we continue volume approaching And ourselves, economic seen the there. by that guidance usually to global the driven start non-top XX. at

all an this different this larger always multinational border have financial on internet impact trade large case these discussions know our to continue happen, in and client. that could clients services You multinational now that

watching that for. So those are some always of are issues we the

Mayank Tandon

Great, the thank you. on quarter. Congrats

Operator

any it no additional this conference there back to appears are for And remarks. further to at the questions or like turn Kris I'd Canekeratne time. closing

Kris Canekeratne

Thank and for you. thank team our We work the you our their I progress Thank global clients to would they And call. joining. you day our of fiscal dedication at and like for out. to you team. forward our earnings commitment and thank to do members updating look day year QX in XXXX

Ranjan Kalia

you. Thank

Operator

Thank you conclude does participation. your for conference. that And today's

disconnect. now may You

Virtusa (VRTU) 15 May 182018 Q4 Earnings call transcript