VRTU - Earnings call transcript Q2 2019

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Operator

Good day, and welcome to the Virtusa Second Quarter 2019 Earnings 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.

Will Maina

Thank you, Jessica, and welcome to Virtusa's Second Quarter Fiscal Year 2019 Earnings Conference Call, where we will be discussing our financial results for Virtusa second quarter ended September 30, 2018.

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

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

our we Relations and Please presentation reconciliation has a cash, results equivalents, insight provides a to cash website. on posted present quarter believe investments our also Investor of total overall cash position second our fiscal that supplemental We and been liquidity. to data short-term long-term also that note

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

Kris Canekeratne

I highlights. execute Good begin financial quarter evening, call. then deliver with joining I are you and generated strategy will value the We're second differentiated how and to services and continuing fiscal of total in solid share sequential discuss the we digital second our and year-over-year solutions remarks are million, second XX% will some industry growth. market. our how pleased XXXX proposition $XXX.X and quarter, to our leading X.X% representing my winning everyone, for thank results. engineering In we revenue quarter

which XXXX, year-over-year. second is strong points non-GAAP XXX margin up growth we of of EPS to In accretion margin fiscal second and compared of revenue XX% fiscal addition, although quarter drove expansion delivered non-GAAP quarter operating operating basis the $X.XX,

position. and on our to strategy moving Now

capacity the or and result and new we positioned and to infrastructure. replace their work call X.X. of our platforms legacy systems era our capable rapidly our of experience, rethinking, the business. is customer realize X.X and never As clients being Digital and from perfectly every digital our customer of is capacity experience we the and includes for back-end big effective immersive today's a progressing enterprises. towards that is full-scale to design that That and reimagining to realizing in to end-to-end full transformation, of that legacy about X.X. discussed experiences the to proposition on call, digital monolithic aspect from help the see digitize centricity depth reengineering to market were breadth last modernizing digital to Digital with every applications us the the modernize what enterprise, to top those systematically designed you small, proven It need digital-first support continue we to Digital build benefits systems, engineering sometimes Virtusa's ability bottom,

our top own them their set material that and clients We application estates. are of resulting their From IT as clients' their specifically, the insights of bottom futures. offer tissue both we're partnerships modernize form and system, and and applications and core cleanup customer-facing our engineering More tools at that businesses to serving our sustained connective impact and clients services, alongside comprehensive helping line. counsel, digital-first modernizing into X.X of behaviors solutions grounded having scale, on gain systems, implementing a strategic, to allows customers. and reengineering are while a We simultaneously our building we their back-end actionable in Digital legacy are

design, Data, a IT modern leverage API creating that integration and deployment operate and strategy and continuous architectures a Big are cloud-first continuous methodology. microservices-based utilize We

iterative machine wins more how of value gaining generate new Digital built clients, and few reducing and are engagements illustrate In storefronts capacity and line bottom are learning just implementing designed smart, are adaptive digital-first business can that expenses. systems the eliminate to and and deliver winning. establish modernize opportunities, foundation the addition, and in over time. intelligence redundancies, continued businesses, we like artificial share results solutions our their and Virtusa types new top clients' data It momentum, X.X our by analytics now the revenue is line you legacy create share to for and with for Virtusa I'd technologies. augmented our driving their a we

continuing clients. software scale I As engineering, digital to cloud to earlier, transformation at and our technologies for we are microservices, API growing to see digital demand alluded deliver for

our the microservices and API their and will to U.K. a initiative This another example, in being In architecture been lab, example, network. which wealth our our management, financial innovations using of solutions as transform and develop institution encompass our retirement for For we suite yet microservices-based microservices clients' engineering leading on pension, is framework, an by recently also domain-driven, groups. cloud This industry see growing recently was clients' has and to engagement legacy U.S. retail implemented retail will bank private such application significant important partner. growing digital Digital mortgages. bank's insurance our across pioneering demand a clients' Virtusa selected enterprise-wide planning and digital and practice, leveraged banking, rapidly which Virtusa Virtusa ultimately roadmap, design most entire hosted Analytics lines business, of proprietary toward X.X is analytics architecture all the an a financial to component major develop be our expertise. continue chosen of utilizing to

company. analytics an telecom error won financial engagement by clients' one learning formidable operations. U.S. and recently artificial a CNT enabled example, leading and smart for our highly strategic the And we grid in at engine machine largest competition of global and were Digital intelligence to surveillance recently, team the modernization For and our engaged implement installed prediction institutions a develop X.X

Devops We develop This not our engineering execute large-scale wallet and support. industry us how their enabling are transforming share clearly only effectively engagement is designing capabilities modernization legacy demonstrates innovation programs. further us client combination our enabling stack, application Digital digital transformational positioned and portfolio. we win are and across providing expertise, but in industries. our gain their digital also X.X This deeper, more to are differentiating domain-specific relationships microservices Overall, combination deep consequential of target to is and to

the have which to we of larger XX we in and Europe, example, a relationships continue North an and capture across their As largest all with Across budgets. global meaningful banks America currently non-digital of digital XX share as increasing in partner largest account selected history strategic have seen the of who global we industries, clients Virtusa well which our momentum, resulted the accelerating in an has number as pipeline have as of company. a

revenues Virtusa year-over-year and As than XX% of of second strength and increased our revenue underscoring non-digital and continues digital continue shift Breaking the grow our thought industry fiscal report rates our our I'm sequentially. clients' digital research company and which of also in to segment the the out be our ongoing sequentially faster and for both Both share ability year-over-year, through the quarter. X% in by digital total total pleased to recognized year-over-year services. budgets that digital specifically, X% leadership the firms initiatives, to key XX% win second pipeline our market. quarter, growing is digital to wallet up with in pipeline the this

Magic For the services for visionary positioned for Virtusa XXXX consecutive Quadrant second as services its year, in IT a communication Gartner providers.

solid. our named FinTech program was This recognition powered Real digital industry remain Bank. trust IDC and continued Mashreq and a quarter implementation automation well category. growth. second we fiscal we were performance, In we are and In Award award believe stewardship by winner for demand our Results for the artificial environment with The from addition, conclusion, recently above of is in for pleased transformation intelligence digital IDC's we the positioned of leading

that well are digital of engineering for the their to positioned. programs enterprises offerings rely number continues And leading grow. transformational Virtusa service Our on

to on XXXX our like details our provide Ranjan? I'd who and to over will quarter Now the results turn guidance. call Ranjan, and more fiscal third

Ranjan Kalia

good evening and Kris, Thanks, everyone. to

increased XXX currency in margin basis growth compared the and with basis up and the Year-over-year, points income and second revenue for in $XXX.X up was current by Revenue the the midpoint quarter Year-over-year, sequentially then start revenue in sequential our QX XX, reported client quarter guidance increased X.X% opening utilization before our on with GAAP which quarter and both million was line quarter prior basis. year was of a the $XX.X reduced quarter ending was portfolio. top March Gross our growth $XX in for operating by results year-ago points second $XX.X constant of basis, in use our slightly currency. me expectations, constant-currency period. X.X% driven a provide second our the our second and XX.X% questions. call and currency. XXXX. for currency fiscal sequentially I summarizing Let organic constant on revenue XX.X% XX was was fiscal from reflecting XX.X% will and XXX XX.X% XX.X%, year-over-year, subcontractors. XXXX, third in quarter for growing second and guidance, in of consolidated fiscal million reported quarter the million the in million, above reported

net $X.XX million note, our per to and prior an foreign net unrealized not other income of quarter was share, loss $X.XX foreign inclusive interest share Second This period. compares in of exchange in year-ago loss of of exchange after-tax diluted minority losses our of interest and the includes per interest $X.X net dividend included $X.XX unrealized million QX second million guidance. $X.X per approximately $X.XX of basis. of share was quarter. comprised XXXX and million on of of GAAP expense prior net item Please million $XX.X other This $X.X the or of income negative the net preferred was $X.X convertible stock in in quarter expense, and $XXX,XXX EPS net income. GAAP

income quarter prior quarter turning to period. XX.X% $XX.X our $XX second in in $XX.X from the million million million up Now operating Non-GAAP year-ago to and results. in non-GAAP compared the was the

prior is with Second sequentially $X.XX line in and second quarter, basis the period. margin the in X.X% compared $X.XX expectation period. non-GAAP to points in operating earnings points our up quarter This $X.XX basis of Non-GAAP share midpoint quarter our $X.XX was and diluted from the above XX prior the XXX and year-ago per the year-ago in was guidance.

million quarter, to balance equivalents, Cash million, long-term representing in operating September $XX the short-term XX, revenue. activities by of cash of investments. Turning the sheet. inclusive and cash $XXX.X second and at provided Ending XXXX, was cash XX.X% was

additional the days, of to Polaris XX% facility prior XX $XX for was quarter. revolving XX%. In ownership purchase DSO quarter our our improvement second that tendered, second shares days were of on an fund the quarter, million the from increasing credit from Our to additional X down we the an drew

by performance turn across I discussion year-over-year, and a of will Now industry revenue follows: our was detailed revenue. groups more BFSI increased on to revenue as quarter X.X% our Revenue group. sequentially representing second industry XX% XX.X%

XXXX of per to XX.X% third performance third our quarter be share M&I March XXXX. year-over-year, Revenue in quarter X% million second was sequentially and quarter. representing were technology expected in our growth second ending by our the and X.X% at to Non-GAAP to million. diluted driven technology revenue $X.XX. to largest slightly $XXX increased revenue quarter is resumed from of revenue. of the eTouch's revenue. year-over-year, is our and in representing information clients. $X.XX range client of sequential of XX, Virtusa will XXXX in in remaining the was services. experienced now growth solutions the expectations. results earnings our strong other largest benefiting of but of XX.X% both client eTouch I for the third current scale year be Media in and expected, Internet the guidance provide and C&T Communications and As and range our X.X% organic down up and expectations sequentially, above XX% expected quarter the $XXX below

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

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

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

rates. higher both expanded year-over-year pace pipeline and monthly at Our injection benefiting strong a sequentially from

towards allocation microservices which and projects, an As to and to regulations accelerate compliance we market enable see budget services, we continue efficiencies. in new help of to with API discussed operational time changing increase last quarter, increase

on initiatives across In the and analytics spend addition, greater AI data-driven and demand for is increased enterprise all we ML serve. insights industries driving

Our of at clients their gain larger and invest and interest communications BFS into in quarters healthcare initiatives. who many banking onset deeper actionable are of to midsize ML insights base. AI solutions of By comparison, clients continue our the policy increased cloud client initiatives growing fraud for their prior spending AI ongoing clients of launching by are management, their and are QX ML such Transmission AI we interest sciences, to in in to and underwriting, pilot enterprises administration programs. grow digitalization focused as consistent insurance showing delivery media, gain our on journey their programs the platforms, are to In legacy claims management. At and enterprises migration with a and and and insights demand we sequentially. deliver greater life guidance, In content analytics customers. appears seeing investing with own into to revenue ML midpoint more personalized our expect at X.X%

FX third reflects $X furloughs. additional includes representing implied prior Our million of compared X.X% from guidance our This quarter -- $X headwind guidance, headwind to and from $X growth. million million

QX quarter. revenue prior well at Our as our with and QX fourth QX revenue of be our BFS in from we non-GAAP reversal upcoming margin will Consistent clients. QX growth absorbed of is to operating last consistent expected growth with year, expecting are furloughs C&T strong in expectations. benefit the growth as

the year expect midpoint we of XX.X%. XXXX, of our guidance at For revenue range, fiscal growth

momentum business incremental from is our maintain the midpoint to FX our guidance. after $X current fiscal even absorbing of to XXXX prior of Our headwinds us forecasted guidance, an million allowing compared

We expect to non-GAAP basis expand continue points year-over-year. to margin our XXX operating

guidance. prior expected in Our the to non-GAAP compared XX.X% effective rate for to fiscal our XXXX year XX.X% is contemplated be tax

our interest prior Our non-GAAP tax current million million versus guidance, guidance higher $X.X rate. $X.X of anticipates minority our in offsetting

net expense Our income. $XX.X $X.X of of and is guidance $XX.X includes expense interest million million million, interest interest

basis objective revenue to operating we and delivered organic annually, we XXX to will These FY second of for non-GAAP continuing the us enable solid with of benefits XXX execute achieve savings while initiative revenue cost-savings our will second of flows. half year-over-year conclusion, additional In double-digit 'XX invest points improvement margin to results, $XX approximately growth. XXXX, Finally, continued margin above-industry quarter operating an in cash profitability strong including accretion strong million. annual fiscal growth,

incremental sets Our above-industry half we're the expansion. positioned half margin Operator, in FY of annual now back 'XX. to momentum believe growth continued drive for continue begin and Q&A you the performance session. first the revenue We to stage may well

Operator

Thank William go with to Instructions] Blair. first Maggie And we'll you. [Operator Nolan

Margaret Nolan

a Hi, as with expansion is lot margin there about balance obviously. how are annually, investments well, you. We but driving a talked there

undertaking? that little comment So bit any coming couple are investments be of on could you a current Or you quarters? that investments may the next over

Kris Canekeratne

that So Maggie, are the set with you've strategy us. investments in out we line for seen, as much of our directly have

we've of while strong firm our to capable have as above-industry helping that's firm clients as their revenue by well are that this growth seen positioning reap within we've that we of benefits they're you've continue very of engineering So cost driven their rates at continue We're to the as continued primarily made digital to a that reduce that dramatically finding a also our the growing. investments operations. grow BAU to the

Ranjan Kalia

we've I of for as prepared help current related on cost actually that help benefits and to very cost-savings we're us as really about us our into our Maggie, now. of to as realign get kind similar investments restructurings severance and will take to And for And, year that the pretty the speak we the expense expenditure. to about my million, the -- talked program, those embarked we that set comfortable deep in business, some accretion. $XX further us margin this back a do, that of up Those in always annualized fact, cost-savings of we those deliver in structure time at initiatives right what really initiatives expenses on remarks, really last did into we

Margaret Nolan

have or with that looking clients like spend XXXX? been thoughts conversations what their you of calendar with there maybe in XXXX? then for have about initial are compares initial And how And Understood. do budgets kind any any

Kris Canekeratne

probably above digital it to it's Virtusa just continues would of indication continue is garner indication a all be continues say, digital at is every excitement be that grow that industry digital that And well programs. It's our strong is as mean, transformation I there. industry. non-digital business to levels. But, early. a for the plus mid-teens share for for there be in growing of will it's type And strong us, that very the a the out would that's I us. spend not digital Virtusa, say, both that there I transformation propensity there spend of that's that's the to Maggie, if around investment the to as piece continues

Operator

a Needham Mayank from now take We'll Tandon question from Company. &

Mayank Tandon

Kris and margin run around the Ranjan, just here. some commentary rate

into you pricing? about compression take plays on the headcount your pricing pricing think growth on Where talk portion? leverage legacy As How much also model, around on have And could that all And then that do out? versus utilization? play how more maybe maybe your targets. you the you some revenue can you additions commentary about digital maybe

Kris Canekeratne

Sure.

Mayank, there premium. fairly So we digital the of have. scale And work margin the digital-first the our for there, much and support we're are said enterprise. as of help for strong pricing us clients opportunities grow on side, cost terms a relationships reduce that, that well ends Having of back our legacy that transformation on clients, the that in we engineering seeing margin we in to significant are as opportunities are services Virtusa finding to a higher the we clearly of that premium, point the as doing specifically side, a garner legacy price overhauling

Ranjan Kalia

you that. the really a billion-plus significant platform, margin really embarked, the We're goal that on X our $X being double-digit a a margins, remember of very So Mayank, platform. ago, company cusp get we was insight at years may on to first had

of the If implied really X.X% about if in will look guidance guidance terms that. the at, be out, you plays

to are next to really margins be from for of which work. will be of but mid-XXs the will X lot mid-teens forward we're to of margin go out X type company, few them company It'll probably banking higher So to last margins will And Yes, come. expectations utilization, be going the now of frameworks, our complicated that are they our a garner years, type utilization not we the going really use transformation company. we've over as but mid-teens there's, and prepared digital years, to in there be continue a historical increments. us help utilization delivery the a rolling increments over the margin very

look to the going margin believe It's So to of utilization at second that And to that's be that margin from our believe is to be continuing you these that. will and like help And our new on you XX margin solution developed, basis significant in we've have levers an meet opportunities annual margin mix. continue subcontractor continue going gross gross XX lever, lot now as oriented. our in XX piece to SG&A. going XX we that's like that's at to our that, objectives basis, to And all to which that we we SG&A, that. exist basis significant have platforms this if opportunities, the do work, to piece from of really, accretion. And about continued look do us levers continue drive to optimize which very to utilization, is are which if

Mayank Tandon

then follow-up opportunities? contribution. XQ have to That's impacted Internet And eTouch If clients? can other how Can you I much revenue? cross-selling the drive on that very terms large beyond client words, your able any very other other been to in Ranjan share helpful. into you quickly In it of just synergies

Kris Canekeratne

start me Ranjan add let Mayank, So will and to this.

to significant value after our So Polaris acquisition like relationship, client the got clients expand seeing saw the very ability that as acquisition. and trend create with high-tech clearly, are we similar largest just we Internet a the that of our and eTouch a result for we

those together our the can to intelligence some bring even deployment terms X.X at beyond dramatically able or and artificial scale. expertise, engagements clients' of accelerate industries But Internet continuous our client. first rest in to of a and bring synergies some integration, and large AIML formidable learning, Data, So machine acquisition, as we of our cloud that at Digital impact and learnings even to continuous Big scale grow we've the of very result been eTouch that,

Ranjan Kalia

in quarter. Mayank, own And terms is if the it's as of you at revenue was the $XX.X terms in was look its million Virtusa it, it's in umbrella, eTouch revenue the acquisition Virtusa on experiencing synergies the the, All year-over-year versus Virtusa. growth contribution about what platform eTouch of a Virtusa scale the to under well solutions the platform. that as of prior significant inside the because there

Operator

We'll a from with Puneet now take question JPMorgan. Jain

Puneet Jain

for thanks Hi, my question. taking

of increasing your Some your digital had labor talent? quarter. in and risks, with hiring the immigration digital hiring And have to peers training issues it can about relates you talk as plans

Kris Canekeratne

ability continue believe a Digital where clearly, deliver work we time, low. that an capabilities of headwinds many a immigration while delays. And But, have and the So as work. of as specifically arms is that, and this more form having policies and are. we us will seen all-time for of naturally the burgeoning will seen said some result of the in much changes, to There we've some so basically our more this say what is at an race that this, unemployment in as I people And more issue significant strengthen to X.X is over the strategic is result are client demand, to issue. geographies, clear a that very the because to the the a IT opposed of and actual work sector as where migrate transient reason in is our

appealing IT a a clearly geographies in is very very in well And of hiring that join professionals for in digital Virtusa. And the and some reasons. we it's that engineers. whether they extremely known as we variety our benefit So client Lanka Sri of that India result transformational we space geographies in our from to high-quality finest get from benefit for wanting work, the of to also or fact which are in the

Ranjan Kalia

is digital And look always become up. the just may to to we remember, in effort it go add that the data, said you to when at to deal the on-site size Puneet, it, say, mean bigger, to terms look necessarily that used you doesn't continues because going you of as

you it's therefore, And show adds, really offshore campus internal, run by starting you to leverage you So, to by talent. run talent numbers. start the can the from and run your offshore by you training, in really

is bigger, on-site flat but that being are year-over-year, use means up our able effort means which of quarter-over-quarter, deal which flat lot It's -- offshore it's size the quarter-over-quarter. to is Our offshore to becoming the going a that we talent. be

Puneet Jain

that the there off-shore headcount like quarter? revenue any I've utilization? reason? in And Was was happened it lot but offshore increased Or sequentially. same, revenue -- the a by anything noticed specific Was Understood. just

Kris Canekeratne

No.

that. like Just Nothing specific.

deal so nothing the Just increasing and this much about had of time. margin size. has impact, unusual that revenue increase -- And, that you as last know, year strategy a a versus utilization, we bigger talked pretty

Puneet Jain

cut that you so should And you and on quickly And expect from towards recurring me savings also that is a restructuring we going as expect that million restructuring, Do long-term? margins basis us, let from? next ask about to $XX the cost expand something the from year. you remind try mid-teens which you're areas

Kris Canekeratne

To post the this synergies taking tremendous advantage of us the part a of has to with Polaris acquisition. saw large do we that

capabilities can practice higher industries a gained the basically that's much perhaps basically opposed to to with so, lot streamlined of significant the so continue vertical into where synergies. a that's and horizontally. and our provide but model service, level we preserved a of practice much as orchestrated stronger with themselves X.X So we to obviously leaner, years we And clients with vertical that the a the for that model that or carefully and had, we run we a continued restructuring industry first strength

go our services this that from going to a is our We perspective, are 'XX, confident clients. realizing we have do fiscal provide that to only structural but other we ability significant year we into as are changes not any expect to to very accelerate

Puneet Jain

Thank you.

Operator

Wedbush a We'll Katri now question from Moshe take Securities. with

Moshe Katri

apologize -- strong you the two, number you I thanks was then, the got That a any questions. got the Thanks. was that could Hey if the already on plus I Kris, us of Two Is is bit one, gave it. board? bit a getting on function mix, I of it one? the color helpful? projects are -- on larger? it be new And some there, on that I congrats up that's What function logos think, first pipeline, mentioned And and digital year-over-year. a about question. XX% coming And call a late. color

Kris Canekeratne

both provide the I'll pipeline digital mix. as on color Moshe, as well Great. some

a mix standard sequentially, of steadily strong under continued growth year-over-year, up is our digital and and From our XX% deals. XX% both very has our perspective, overall pipeline big just X% pipeline across So it's climb, to revenue. pipeline

pipeline pipeline. actually digital faster Our grew slightly the than overall

grew increased XX% pipeline the last and by all Average deal much size approximately to we So since year-over-year. XX%. hasn't changed period that our meantime close And sequentially at X% assessed. the digital has

I this in to Virtusa is that, clients opportunity part program a now by And across larger industries. services and provide to of a as brought RFPs. we as of now preferred driven percentage across result our a global all large think partner have Virtusa larger a set a of being of being an

Much these is a that So margin significant because from the that from and perspective as engagements. of company banks Europe, and One, Notwithstanding growth and economies the we financial that meaningful global as both our scale expand that's as for us top banking of from than the the work example, very we XX fact scale with very top as gross service, clearly well perspective well. we line driving relationships them, is in pipeline are standpoint have of benefiting pipeline with broaden benefits. faster XX of us, U.S. and a in growth. pipeline realized an as being a

Moshe Katri

we're color. And changes terms Any follow-up. wage in one cost given perspective your inflation in what thanks there? seeing model, the a from of out for Just

Ranjan Kalia

pretty FY much Moshe, 'XX on put for for together we the is compensation model. that model increases ourselves same that

looks really haven't come don't but the the -- that We in like, I it service had way the just out, going be there's new year-over-year. to expect significant increases I any salary changes

Moshe Katri

Understood, thanks.

Operator

a Bryan take Group. Cowen now question from Bergin We'll with

Bryan Bergin

the client recently? to there of lines on a you Hi, are guys, thank progressing a you. I give new us growth sense your that wanted Can how here. return opened you top business on ask on

Kris Canekeratne

Great question.

X transact for basically of services and X in top our were you X over quarter, months, client So from has the well. recall, X, other probably we last And client our so that opened had fairly us. basically as we X of strong or during as the X the mentioned had that up our large months areas we in groups the last past,

seeing So we've new that rapid up, in overall, the fairly expansion. that opened areas are we

modest obviously, many client, We to positioned I think extremely obviously, And excited at we had these strategic, is growth areas Digital work programs are spend the is for seeing only of new We're, large our some started large in deliver execute areas that well we're in our demand but, program. that at transformational, X.X especially and of what the about at rate and are the most earlier growth. same increasing. the of client not this

that expect Citi large are we forward, And we feel growth And well sequential rapid we growth our second we while positioned. half. do such they quarter-over-quarter, sequentially as that don't grew strategically, them account had very to clip you will So at the significant moving as, grow expect saw, in we fairly a see quarter-over-quarter. X.X% at

Ranjan Kalia

at, the from said, allowed you really the Just Citi look strong up Citi, to so what was wrap guidance to QX our versus on account because take that's last add to time. when guidance us Kris

Bryan Bergin

to because And just looked And actually, flattish can get going Can my segue client what's then the growth XX sequentially to talk you here. to that it non-top could going down there? about next was I on do Okay. what you on then that turn? question

Ranjan Kalia

European a those of time, away some, banking of lot from top observation. was banking shifting has, Yes. clients. a are period banking over tier been focusing the Maybe that and them large one There we've ourselves Brian, into the clients. clients fair oriented

of role out banking in resource also the there from played a are, which larger that and a clients, have focus that are our European shown lot our to been We've accounts, continued over them change. clients. So retail changing really

been, that's clients in it's European primarily banking around this Asia. the one So from

Bryan Bergin

And Okay. one then me. just last from

there? in slight quarter, concerns Anything, the any attrition the Just a uptick.

Ranjan Kalia

No.

it, in higher prior the side quarter the at versus involuntary look on attrition was quarters. you If the

mentioned And about. restructures Kris is that so some of them earlier the

If is normalized very see attrition, you'll you our that extract out, healthy. that attrition

Operator

We'll Vincent now Barrington Colicchio Research. with take a question from

Vincent Colicchio

if you other impact an revenue the is Ranjan, curious it your having or sequentially. factors? largely banking mentioned? just Brexit dropped I'm European any Was client

Ranjan Kalia

so, of No. I that banking having wouldn't the that, some these more just is It's a say question. clients impact. Brexit smaller it's

larger resource, been clients. banks, banking on so we've so much have at focusing the the opportunity efforts We our the larger

really the So it's talked pieces earlier. I that

Vincent Colicchio

legacy how for being reason a new of terms that capabilities, the market? in Are deals? out then winning modernization your And in is that playing any key of there examples

Kris Canekeratne

well for expansion that revenue. engineering to our as prepare to a to directly our growth seeing digital-first ability core non-digital help And pipeline as Vincent, obviously, the legacy apply it large in attributable is are non-digital in enterprise. part of So and transform our Virtusa's in a we

QX. the to I take had do had there silos engineering. storefront that our few companies, need have are and very their create the But have have when that in journey in into we their of a why from of track momentum momentum is one FX very end-to-end and that And of only think masked especially, it of and rapid this this, and always underlying a that modernize seamlessly. an to work. support they're can or of record we is in an strong, who doing digital continue the very headwinds half to with platforms companies digital perspective, some edge And are the some comes seeing can edge by And that that strong the second underlying and few seen quarter. that's then space such believe tremendous expect underlying fourth we we will furloughs and the our type momentum

Vincent Colicchio

happen guidance high-end from needs to your one for And the range of revenue What the to me. year? make then last

Kris Canekeratne

at the us So, the started see guidance are look at know, basis. pretty actually if we the Vincent, you where numbers that you year, from as a constant much for will we to, you on high-end

of We the have of the impacts million beginning absorbed year. FX from almost $XX worth

had now remember and million may call last You $XX we about $X million. talked a the impact

the there meet to opportunity starts. sometimes to at to us control from XX ends continue It's take bit, a we've execution. That And up estimate it to it's for depends a piece of as outside being even this big That's it. a of really the it, project in our actually our the bit million, little our you that, a It's guidance piece timing being now. already said, that that's is lot try on and a clients. going but absorbed guidance, a we $XX probability piece. So be top know, little the high-end could change our of

Operator

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

Kris Canekeratne

clients. commitment to you, for global Thank and to at I'd for end you. third and quarter. Thank updating participating, our all, the their of dedication thank like and Jessica. our forward look Thank you all of you, to team you we members our

Operator

for today's Thank call. concludes This you participation. your

You may now disconnect.

Virtusa (VRTU) 11 Nov 182019 Q2 Earnings call transcript