VRTU - Earnings call transcript Q2 2020

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Operator

Welcome to the Virtusa Corporation Second Quarter Fiscal Year 2020 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to William Maina, Investor Relations. Please go ahead.

William Maina

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

On the Canekeratne, Chief Officer. President Officer; Executive Vice are Ranjan Executive Chief Chairman Kalia, and and and with call me Kris Financial

Securities pursuant based Litigation of are forward-looking information statements on made historical provisions XXXX. of this Certain Act harbor which Reform call to are on the safe that Private are not the statements,

of Virtusa which statements, as those which could new forward-looking revise differ prospective of contemplated which and promises objectives During are as date of statements this no ability Existing events, circumstances call the clients These the management's future growth or statements guarantees things, and we information, implied call, on speak to obligation management's nor risks a the in strategies. to to update benefits IT information plans, may make business; and statements. concerning hereof. relating this the undue only during realize to of Virtusa's are and a neither from of reliance from or expressed Virtusa's investors to results disclosed and assumptions undertakes are whether place forward-looking beyond forecast use these result materially otherwise. and cautioned forward-looking cause or not these performance; Virtusa's other subject of actual of many financial to, Virtusa's are variety among of uncertainties, services; expectations Virtusa's control,

currency to assessing SEC. information non-GAAP adjusted call non-GAAP provide We a this provide non-GAAP revenue certain We included income, in to provide currency present excluding how we fluctuations. on effect page performed, our financial Investor are which adjusted statements today's for the Relations the as of rate be website. sheet, the defined our of Other release operating include framework and of by the revenue non-GAAP of foreign income Reconciliations constant non-GAAP which and share, press per GAAP our insight data business. net believe into can earnings on measures performance operational found earnings also

present also provides our position total that into long-term cash, investments and a cash We reconciliation believe equivalents, insights overall and cash we short-term liquidity. of

that note data second a quarter has Relations our to supplemental been results our Please posted to presentation website. also Investor

SEC and regarding please additional For press other Virtusa's see faced our release. earnings in these contained Virtusa, the disclosure the and by risks public filings disclosures in with

call I'd that, turn like Kris. to With Kris? the over to

Krishan Canekeratne

industry us major thank everyone, our year-over-year growth. $XXX.X was We X% exceeded evening, delivered you, today. guidance range. second financial We and all sequential revenue solid representing million, quarter joining growth of for Good Thank the across Will. revenue fiscal you sequential Total that and midpoint our generated X.X% results groups.

basis up operating non-GAAP XXX margin Our our X.X%, in and points sequentially line with was expectations.

was Our non-GAAP EPS $X.XX.

results digital quarter strong second geographies industry cloud across demand our and reflect transformation Our and transformation. groups with

of are cloud every and reimagine order, the in approaches being transformation virtually by some company our of rethink, to to and are distributed, the order business. subject to make fourth ultimately initiatives to, or cases, trajectory from in areas Our and, controlled are layered disrupted continuing cornerstone Digital the user they customer realization called new a that past that shift has transformation what an technology-driven on flat fully placing model be unrelenting that remain are competitive. CT of their businesses key transform reflects It's that the discrete, pressure happen, industrial the legacy The destroyed our practices drivers of DT was and to business. the unwavering been cornerstones business the and and revolution, this profound user-empowered. ones to and

organizations clients' attention global DT strategic more of projects is $X a its our metrics. budget as study consequently, This importance IDC and, to evident by trend spending garner to continues top note, survival. clients transformation recent their the in our levels Of more to Digital realize our at trillion highest XXXX.

is digital work increasing. Our

Our And our quarter. total QX. XX% digital XX% the by more of year-over-year than second in grew for pipeline was digital straight revenue revenue fiscal

are seeing As demand to cloud grow, we continues and the digital transformation across the interest in transformation, all are from clients increased industries linked. two inextricably

they and global stage working adoption no transformation is currently cloud We begin data it their with moving the question from well-established of organizations who clients multi-cloud journey what cloud-native rather developing in. or migration journey, the a to engagements when clients to will cloud cloud, at longer are cloud if but range of beginning of are for are considering Our believe strategies. our with enterprise application they

of been business strategic we our anticipation and creating our making with expertise, this trend, public investments cloud-native In a providers. building workforce partnerships cloud with strong have in-house service industry-leading our capabilities, solutions in across augmenting cloud strengthening cloud

on these delivering create cloud everyday promise and transform scalable of transformation, of our increasingly ready-for-anything for resolve proven and are their infrastructure. Virtusa the clients a to leadership result a to organizations turning As investments in challenges, our solutions cloud digital

give me examples doing we of in now a what are space. the few Let cloud you

engagement Virtusa is migration to an cloud. cloud a multinational extends transformation telecommunications beyond enterprise-wide just today company. for the multiyear leading This application

applying blueprint approaches transformation application use begins and lighthouse our engagement this a to new client creating several development application for utilizing blueprint cases. with agile Our

global expertise, our tens development development further cloud Virtusa because applications engineering preferred win, to Our clients centers but to leading this against our then are application millions facilitate as their not multiple increased data migration With playbook presence CT efficiencies this generation value to will this from importantly, our we a position of deal migration clients' total enable in provider. within in now with across a will the which consulting ecosystem. of of radiate program dollars. capabilities and XXX cloud disparate creativity multiyear our its competing leverage one public won only just over this of new firms,

This to implementation a into for proprietary their transforming client platform Virtusa transformation multinational debit using program enable our multi-cloud tools. modernize their selected at of client cloud built was experience the by careful was scalability diligence also and delivering after chosen transformation will will that platform cost. recently ascertain cutting-edge programs Virtusa leading and enablement achieve cloud-native a due expertise partner large card debit our major the a our legacy in bank U.S.-based preferred a transformation client's to as be platform banks. for reduced

migrate one of recently our infrastructure. separating well of client by centers because example, last our private extensive data requirement of set This Europe's banks engineering enable a for my XXX shared Virtusa was expertise largest applications deep our over as to onto In cloud within cloud mediate time-bound to its gained knowledge a selected will as and subsidiary domain Virtusa company. disengagement program heritage. one

Our transformation area undertaken clients' to to digital-first expand through client BAU and markets costs. reduce being to practice our leadership digital our examples our DT position. strategies, continue are and speed and their increase risk demonstrate addressable initiatives mitigate their digital-only been in have market,

remain All priorities groups. client our of outcomes across industry of all key these

area Health example, substantial care, our for for industries we our an solution. fastest-growing demand DT remains and where one seeing are of is

and better, insights, looking AI/ML, in facilitate to health clients providers by provide advanced implement business to more patients for driven solutions, and order care better gain greater Our are engagement patients. between analytics care increasingly

technology is to company example, analytics system. Virtusa For health modernize engaged their leading currently care by current a

we and provide run data. predictive AI patients. of this able complete, be which prescriptive give to advanced care the providing engagement, of information users, the to ultimately interactive be engagement and will to will capabilities When dashboards, providers robust be this analytics advanced health better medical is highly Over developing access new that analytics its set an will will course to system care of

We a Houston also machine of find new strategies Using seek trends to The learning at use prebuilt AI/ML Health and AI collaboration can research. advanced Cardinal to illnesses. Services Virtusa's with Center Texas and range at will recently Science a cloud-based and Amazon to platform, of announced models, UTHealth medical medical University researchers Web Health, and that for treatment cures lead APIs to

proud this are be part to of We very collaboration.

spending services, our financial and priorities, banking compliance forefront of Europe. in the especially near Within remain clients' initiatives DT regulatory

see to collaboration KYC Your increased or with Know banks around requirements. continue We specifically Customer

are models with developing multiple investments solution In with are their looking banks accelerators partners. platform, benefiting area. building we in Today, addition, building to this investments by engaged banks European monetize usage and in APIs that are customers KYC KYC-compliant in from those earlier fee-based for their early our

Our capabilities leading for cloud transformation is and continue and digital to recognized this be opportunities to greater market-wide, even Virtusa.

positions example as recent partner is client's in us on us digital selection other process us with our most record European gives fourth The selected their a one quarter grueling fiscal and service bank's of being against attention of digital the engineering track number involving the consistent XXX% Our RFP partner XX beginning projects the competitive after Virtusa and both choice. ability to a strategic as reward, bid garnering providers. major

work, awarded digital but importantly, bank engagement division including to sizable been personal a the of customers. have it We project, already build retail coach budget. an within their a the a is financial to for as It's banking expand opportunity with new largest digital

as numbers of known and a growing the believe pleased position our it record leader very excellence. are We as reflects in work engineering this to our for be our integrity space of client's the selected digital delivery and partner track

are strong groups Moving across our we but forward, remaining all still. demand we of industry geographies, see and standing not

of diversification priority continue and are We making revenue strides. to solid make

including health care and on tech, our high-growth EMEA. and verticals, We focus high are high-growth geographies targeting increasing in

risk better-than-industry to high-potential initiatives revenue We company's concentration than to the accounts rate believe growth. over to revenue. further also are growth committed and time lead will faster these reduce We growing diversify

every one believe right today's a and our task to we conclusion, that the the geographies work and virtually it digital is necessary across happen our transformation ability focus and The in make become of for has remains core In transformation on strength. world, industries focus. business cloud

Our ability confidence deliver position us sustainable to solid, in our progress and gives growth.

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

Ranjan Kalia

to everyone. good Kris, Thanks, and evening

summarizing guidance our provide and ending March for the fiscal XXXX, I will opening quarter questions. quarter Let then year for fiscal both before the current fiscal of second results XX, third XXXX. call me start by our

was for midpoint and second quarter X.X% fiscal in $XXX.X currency. growth in X% Revenue sequential currency reported and representing above the our of million, constant growth guidance

second our revenue industry Year-over-year, growth reported constant sequential across Our currency X.X% in growth by revenue our X.X% driven and increased currency. quarter of all groups. in was

basis Gross utilization. sequentially, reflecting above $XX.X GAAP our was the our with the income up operating operating was GAAP higher $XX.X $XX quarter the XX.X% with of slightly primarily line million expectation, second quarter the for and expectation in period. margin was income year-ago our prior points of revenue and million reflecting BEAT. in XXX million in compared midpoint

expense million interest This income. $X.X and quarter net Second of quarter other other $X.X was and other and prior million. and the $X.X net $X.X per $X.X includes million exchange $X.XX in year-ago of This in foreign GAAP expense compares includes interest Net to expense million earnings quarter. was interest the other interest period. $X.XX million the of and in $X.XX of second and loss share expense.

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

the margin primarily and This X.X%, and operating prior operating compared our due of the prior non-GAAP $X.XX the line in income guidance, in above the second in was to quarter quarter is $X.XX earnings $X.XX expectations. prior share share with higher the $X.XX period. in quarter. per in Non-GAAP midpoint repurchases quarter, to year-ago was our Second our

provided cash Turning activities $XX cash stock we the long-term was XXXX, quarter, million equivalents, XX, funded of the X% revenue. of in our million, second buyback short-term Ending $XX.X Cash and September sequentially investments. inclusive by cash sheet. and approximately $XXX.X million was Cash as declined to representing operating program. balance at

days XX period. of year-ago the Our one DSO two sequentially from and quarter for an second days, was day the improvement

QX, repurchased share million for approximately under XXX,XXX our we $XX.X buyback shares program. current In

this XXXX, As available million program. of September XX, was $XX.X under

points primarily revenue across by growth revenue our the I reflects representing groups growth including increased our increase will revenue. BFSI at X.X% year-over-year, group. services turn prior of previously BFSI largest all Revenue exceeded Now financial expected. performance to sequentially sequential second quarter our clients, discussion industry our in some and midpoint XX% industry client XX basis The of detailed more of and with as banking expectation.

revenue. group and from sequentially in year C&T and up QX, revenue strong year-over-year. represents industry of technology decreased information revenue other. quarter-over-quarter and increased remaining Media, revenue ago, XX% focus Communication of our and on in XX% diversification. highlighting growth X.X% X% a X.X% Revenue X% year-over-year, increased the ongoing representing this and XX%

XXXX. in in year-over-year, is XX, and XX% I partially by of our America currency. XXXX followed range $X.XX. current to With the $XXX March performance, ending X.X%. by the per share of third the our currency the million year Europe, respect quarter declined to Revenue provide revenue third was expected in our of million. be will to be by reported which X.X% $XXX in to This now and X.X% to North in geographical increased for constant third rest earnings world fiscal $X.XX guidance is XXXX quarter in of quarter of Non-GAAP range expected diluted offset

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

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

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

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

market. As cloud or discussed earlier, learnings generate analyze core often scale insights data, Kris CX to Data continue business and can machine they middleware creating the to experience. Virtusa. when that time and capture, involves of customer want. initiatives key time digital to seamless include is growth. involves allow with mobile-first to ecosystem how growth be real about and for primarily ability performance DT applications partner interfaces to applied areas: driver can transformation transformation building customer engage bridge measure integration improve data three transformation Digital both client drive in the that integration via amounts experience to customers future massive aggregate that and opportunities DT and to

transformation clients demand transformation. greater from across digital cloud As are all grow, to seeing industries continues in interest we also

versus the prior they within of banking believe our expectations, earlier X.X% we holidays. financial for is cloud our significant and from midpoint client-mandated primarily QX insurance DT, fiscal of care higher-than-anticipated as cloud are guidance, revenue with sequentially, adoption growth services and high-tech our in health their below As services, increase is clients. expected to impacted runway At there transformation slightly clients by

QX. we strong sequential As in operating prior contemplated expect our in guidance, non-GAAP margin accretion

number QX; one at Looking to of contemplates that billing strong by guidance acceleration with of the following days organic our large telecom European usual the of resumption fiscal with our client; the you and QX, line banking past our a be clients, in which growth will revenue at previously; versus large European growth supported third, we sequential revenue QX performance. our first, second, higher growth factors: discussed last, with other clients

'XX, revenue of of continue our in currency. range, reported and guidance to constant currency X.X% we FY the growth at midpoint X.X% expect For in

FY we XX 'XX. margin of expect In basis addition, operating points accretion in non-GAAP

expected previously to Our fiscal rate is non-GAAP versus effective be XX% tax XXXX for XX.X% year stated.

continues tax be As to which entities, our our of as legal not a any does BEAT include have a reminder, ETR reorganization been contemplating Indian we track. impact on

guidance non-GAAP anticipates interest $XX.X million expense. of current Our

in of is activity non-GAAP The midpoint. to 'XX in EPS at in our primarily $X.XX share EPS We increase to our growth expect guidance strong FY due repurchase XX% continue non-GAAP QX. the

our our second our fiscal midpoint in the our quarter current conclusion, Based results we prior of In demand revenue fiscal expectations, the our to raised backlog second our of results and with non-GAAP perform and exceeded guidance. reiterate guidance. pipeline, XXXX half midpoint and we guidance line trends, expect on year EPS

demand potential and high continue banking clients business U.K. we their our in monitor impact While trends the to our particularly U.S. within will positive, in care health remains momentum macroeconomic and at on and tech,

delivering beyond. long-term in growth creating to fiscal continues focus by and shareholder be strong XXXX EPS Our value on

begin session. now may Q&A you Operator, the

Operator

[Operator Instructions].

question & Mayank Tandon comes Company. Needham of first from The

Kyle Peterson

for actually This Mayank. is Peterson Kyle on

Just to walking on start year-on-year kind of margins, wanted kind expansion. that XX bps through of

itself of Or as any to between Just through the expansion of margin gross SG&A? guys there it's be of more do be kind gross we Just kind or you that walk of that of rates is kind utilization see and going whether thinking margin should year see to higher? how think, room, most on could want bill is progresses. SG&A, that

Ranjan Kalia

growing Well, Kyle, expected model continues said, points. that that revenue years. we of is had model we basis financial May meet accretion after road because we've be extract of can in we will but have That ourselves, our being to to basis plenty to than for the the be on exception as at to the we be chain believe XXX gross XX margins the that our which that many XXX did our by this OPM the our guidance, at road tend our points levers we year and to mean believe mean basis map accretion guidance, in to I big believe, points that to our be XXX is levers high end, walk would that. we we the higher to margin as midpoint we that continue map last two OPM annually, we business our the continue on an to SG&A. have will designed which XXX well If

Kyle Peterson

took All number then helpful $XX million right. up. clients in a that noticed leg revenue plus with the That's color. follow-up. a just little We of And

that add the to scale have these any is diversification helpful [indiscernible] diversification? nice be to would I existing new Are be might the this just new Just that it's color work Or you and were help the of this bucket see with out. potential clients? out more been because able playing think three clients there to quarter. kind kind ramping revenue in of of

Krishan Canekeratne

Kyle, diversification we focused absolutely, have Kris. yes, And been our this strategy. is on

strategy diversification multiple areas. Our spans

tech. high and care health including verticals, high-growth targeting are We

specifically the And faster $XX our to potential also be the are we're high-potential increasing than rate, the and to than committed accounts growing that million accounts. greater such accounts Australia. focus company's geographies have growth We those on as U.K. high-growth

of some that been accounts actually with accounts working those for have Now time. have been we some

necessary the have We made investments.

of have accounts whether instances, $XX service other those cloud And In we plus new it that be offerings, be to in million the accounts. to We our are we market the have proven emerging actually digital across potential able rapidly transformation. of differentiation accounts. become crop expanding our a and/or provide are addressable to

level newer are that are from perspective some for large accounts existing both that quite have in that underlying reason transformation. think also the accounts especially be that the and expertise those for to we seeing million, we're in perspective we over $XX time, with potential meaningful with worked of growth, capabilities to it the accounts of seeing I So it and of from we've our and and accounts closing. cloud digital transformation are But the this do has

Ranjan Kalia

think I is really our mean clients just guidance none working been thing, you're remarks that I million more that was a $XX significantly. of showing it's what Kris' grown We've on year. into that the of really in in one pretty are our - actually by have clear. earlier add to design. translated seeing all Kyle, I incorporated lot this want initiatives

a none actually to was this on behind We've been working surprise this us. So of scenes. the

Operator

next JPMorgan. The Puneet of from question Jain comes

Puneet Jain

So your the offset by areas. other in driven vertical, which is quarters few organic last growth second has telecom over weakness the

or industry the business? high that's trends, driving So it in maybe growth synergies growth or there, driving Is in that telecom vertical? from that goes care, revenue what's if any eTouch in health in that deal

Krishan Canekeratne

and that's and increasing transformation, digital to driving services addressable us Puneet, an So, robust be to transformation. and our build fundamental consumers layer growth actually able provide in expertise markets expand strength a volume activity enable significant clients is of their fairly our micro cloud in areas journeys to seamless to the of for

large initiatives, finding found that year was are a experiments there done that cloud are these are we we about were programs of a and that substantial So around becoming now ago, number being programs. what

need XX%. digital pipeline, and as health care grown digital our in in have and revenue telco And digital our probably over of are tech, and services. cloud you we in in high increased, a Specifically by quarters and noticed, significant seeing adoption now transformation mix and has transformation two row, increases

Puneet Jain

at any like out there into about you confident the Got client? client are your And is Got that improvement fourth or U.K.-based revenue Brexit in in how where with U.K. client? XQ, from is And QX that it. to banking it going is - quarter, likely further step-down it. uncertainty be in given into that pushed are seeing - QX

Krishan Canekeratne

some large of me our in client. let So sharing color European start by just terms banking

and going that lower - especially expect we've our do from QX. an standpoint than was expectation banking large we that forecast, So European client into recalibrated our in

We client and very pursuit deep revenue driven our - fairly rise provider. expecting number QX, services services at by and being in that's sharp digital being engineering selected selected going European complex into XX as providers growth large a are banking and amongst a in sharp us the one being

result that and go of client pipeline selection, start of growth significant QX will sharply, first increased the the in calendar of has have, we're we a some calendar revenue banking as have As as that European those we activity we year into programs quarter especially that and we our drive 'XX. from or momentum the our large 'XX, expecting that

Ranjan Kalia

So, to expected the - call the where in guidance of QX our expectation is the probably QX - our European for will whereas was - continues continued be expectation versus be guidance this. large same that last always one just still a so that decline, we Puneet, client, from quarter declines prior this

at are because the one client not - start is in somehow to March an quarter. their first thought as that is is will should level, quarter, budgeting growth the reverse quarter the We growth expecting, But not that. we growth the about exponential grow going be to

at will that be that growth a won't manner. is happens for growth We clients. of the that more big at happen, are at but will least masking the a will it measured other company a lot the happen But happen piece expecting the

the show growth start at would that other to had the happened clients also very favorable. So

Operator

The next question comes from Bryan Cowen. Bergin of

Bryan Bergin

that Any you call success the expansion here that large out? deal, early think on that might signs health to you I be can you progressing. wanted care potential ask of how

Ranjan Kalia

Yes.

large do quarterly health QX revenue the of million we in either probably it's care to $X that worth talked Bryan, to well, continues contributing about basis. about $X million So, on a

try As to and synergy to really these play is extract are the that later play working synergy how we and heavy hard really you we go is don't we earlier something maybe do start on, very know, things on on that QX. Virtusa not do There talked are that. in initiatives that million, in are And but we continues opportunities synergy revenue about, numbers there, to that part expect these for to I million contemplate synergy do revenue $X that. $X

So the deal track what has how the model. done on - pretty - acquisition much designed had with we

Bryan Bergin

And last Is in that That's half? forward? with helpful. Okay. fare it that it still with you growth to client, as quarter a quarter. expectation? expected better your the here your going How than of we this move through sequential bit your in did outlook then did top kind and come think relative that line little did I back

Ranjan Kalia

Yes.

growth and QX. So it expecting are in sequential than better sequentially expectations, was slightly growth grew, our our and we again the sequential

for about expectations pretty our client our guidance. is we year, talked full May what So in had this much

Operator

next The question comes of Wedbush Moshe Katri Securities. from

Moshe Katri

Just quarter going the mention That's the number talk mix few you growth to the the topic next digital And in quarterly then maybe back a the here this actually about the just more reflected you numbers European one. also what the for rates? bit was Can and client. of quarters? gets in did how

Krishan Canekeratne

into going the what's banking sequential we European transpiring. large see QX, with that's we exactly client, and So as decline expected, would

little our other expectations, has As hence, performed the plans performed by below a expectations, the offset quarter. exactly when fact, that a our of it we bit being guidance better guided what was matter than last client have

Now fairly partner selected digital having process. strategic client recently said one going their by as through RFP a after that, number we engineering have this extensive been

And that is means they digital whether digital space, which much bid engineering sizable. engineering programs, actually one of everyone pleased consulting to picked that as against digital talks, firms, a are result the Eastern competed the of selected the And pretty we we that also the India-headquartered, other U.S.-headquartered, that or really on the either essentially digital we're from number Europe of companies basically and were And very opportunity differentiated their cloud. is that in strategic one firms points parts entire have as were in highly set and get world. one generation as Europe- what quite Now being we to number partner, partner. of terms and engineering clearly, that services we

is this of more commencing have in a Now the that what's we January happened selected engagements, January been quarter different of variety many for XXXX. [indiscernible] them or of

that ramp we And go the will that, are significant our quarter, number into revenue client. So because pretty expect now significant fourth is strategic partner. we then potential fairly we this that as beyond at we see the one digital

in of year-over-year. up was terms overall XX% pipeline XX% digital pipeline importantly, more our up pipeline, our Now the overall was But year-over-year.

Our XX% was sizes the total average deal for pipeline up close to year-over-year.

digital fact directly So overall overall, we it's increasing. is corroborating are And that of work making our great engineering progress metrics. volume across pipeline the

number transformation well-known very selected just that as against by companies process underscored I described. perhaps this being services one becoming a up further and and some think partner, RFP digital are of I the We that's best-known in transformational the partner cloud and going as

Operator

Nolan from Maggie Blair. comes of question next The William

Margaret Nolan

about the top your large You've pretty XX this other times or top couple to - outside of the talking top actually well. of alluded but a XX grew kind when clients of clients, outside clients, of the

levels I'm there? growth confidence you the rates. of do, what your group expect level kind can double-digit And whether rest strong this and these your these group into continue visibility this wondering what's then So in of to kind of

Krishan Canekeratne

the I this, business portfolio, rest clients, a If about all is growing growing is clients, fully include the large business book two two of But want were for clients if matched activity given large we rest to health to exclude were is though if of look our XX%, our have we data year-over-year the few to growth two So digital do well X%. or around a we the of the that just transformation, - take banking us. of technology of that care you exclude by you on that is And expect, of clearly So industries, points banking traction are level and seeing terms even I banking just banking build XX%. Maggie, our that? for pretty communications provide continue. right? growing you the in Ranjan, at and seeing that and you to want growing to of large and transformation the right? pipeline of banking robust simply cloud are we the that when

Ranjan Kalia

the as our growth Well, portfolio. really about XX into back pieces client nontop Maggie, is the other excited we on are moving the that we're half really

management on importance Kris some lot about, of revenue As we actually There starting the diversification. revenue a talked actually and show. - are recognize it doing are have been we things of of to diversification, as

which and percentage Virtusa And well used than FY growth what growth 'XX, a saw the continue out clients guidance the to points are are contribute we've of aspires way expected XX really for a QX lot to Virtusa lease are to, we a the then client. million average. the been the revenue to nontop faster few grow to is story. and average. at If diversification they really sets That believe You the faster contemplating, than as company very back plays will $XX industry

Margaret Nolan

with of of expertise cloud And maturity building, competitively cloud that we that then are you this work work? you cloud type then on do And curve positioned you're this some been where you've strong feel the do in you're that how the of think doing? regards to transformation

Krishan Canekeratne

first. me second let part So the address

So stages cloud. of we very the early are in

dollars year being - cloud where it's really transformation. seeing is to budget first and are allocated cloud we the this So significant

we This terms lot of mentioned of our relatively seeing we're small As clients are lot and in earlier, concepts cloud very seeing year, prior maturity done of the fairly engagements. adoption going engagements, I level significant but years, there proof of up a being had was a also experimentation, of in sharply.

their it's size max can it cloud enterprise as really to of today, they So can virtue workloads to scale They part large to requirements driven centers as of their don't have a in going that about cloud, max and as people if, anymore not actually they really move volume adopt question cloud embrace of arena. size is or a and they need. that from the basically they load. are the And by it's when and cloud when data the fact

operating can there's significant that an you move perspective benefit you clearly, once to a from see cloud. So

flexibility of cloud are very in The strategy, advanced the private move Now early And in cloud more multi-cloud they've infrastructure still And still. one that CSPs either with could that They clients the opportunities built to journey, multi-cloud many stages points they or with to and/or them strategy. maybe account. picking their to ability have gives down. have significant actually workloads have providers. to one services basically private to a price cloud from are a significant working the minimal of that move for built obviously and could the workloads them of we a in cloud and drive we've some multiple or changes, the partner another continue clients services

significant very leading We as executed Now strategic have strategic far Virtusa's had with of the programs transformational we CSPs. on partnerships industry. cloud over four for years. the differentiation, cloud partnerships, in some as most And working all been we've

working or to are from to multi-cloud looking layers us actually be they're to have one a CSP, we that move of phases, moving in believe to CSP to early in is a possibility as are we I and differentiated services required no cloud whether or that the maybe build at with able another. cloud highly to one that the at standout, workloads matter to going a client private a the environment So and looking

So working that industry-leading thought a of leadership leadership well and and we clients in in bringing table. positioned extremely to the with cloud terms believe we role our are

Operator

Your Fitzgerald. comes of Cantor Reagan Daniel next question from

Joseph Foresi

Joe. is This

of just ask kind me Let directly.

a call. these now large with it through about appropriately I client. another me quarter a talked you are seeing gone demand comfortable are be you've that why you quite the for during like extensively know and numbers how maybe Help struggles derisked the won't You've understand revision. after there feel

Ranjan Kalia

Yes. Joe. Sure. Fair question,

is them, one period. a stays in methodology, you methodology times this learned it methodology, look was this a to which forecasting and percentage, backlog the forecasting to be our obviously during guidance our from of methodology We continues prior to but our shows consistent. be at if what learning which past continues It quarter's par really case it So data-driven consistent. primarily, really in very incorporate at - there's

way to For revenue as We extract to year close we the go which don't need full XXX% are at works. as and continue how full pipeline means shows need for before. our rolling year, we of to the out well we is calls is year pipeline, incremental show in to forward the forward injection visibility there. This do pipelines our is visibility, pipeline what talked that the don't which remaining backlog the new All methodology number. it very consistent more continue really any backlog and really the revenue to to got make

that quarter absorb. the hits. proven no takes to a Yes, had that it, does quarter. it came we swan choose also March bidding. number in they talked period means case, than very that. will Virtusa gives about March not what in does will believe one, in In as in margin. RFP in, last The of the time, in this client of But first is big resilient, which grow choose of Virtusa but XXX% have that change of be quarter then it I really start we But get And This believe to - shot which growth so we us or work that the mean, digital our may you European to the that absorb versus That else. we've we work viewpoint being that it we and short that that black their It those more come different has no than that events quarters, taken absorb this it a once, of be to is a at these our sometimes, come and this time decline, couple model large the fact is about they by can will is where supported we comfort. earlier. anybody is the access going [indiscernible]

that, that doing - We and and remaining guidance. the well. had had once provides grow. pipeline the and then the to talking about always gives Over That again, revenue in is that continues starting been the was comfort. been overall to was us doing there business business resume us do comfort And to, well, above remaining starting

Joseph Foresi

more large From should growth you those again? you're client? from from people perspective, are me. to go headcount? a that are Got to a have the up? it. productive reassign bench did the going people already And Two client? taken European you resourcing Has now of place that Or the process because at European couple revenue assuming see we reaccelerate rates on did And keep utilizations large

Krishan Canekeratne

to we mean you keep both, A little figured just we back that right, people need to as period. bit letting out skill what somewhat have And some expect. into go yo-yo the between we looked sort aged were a opportunity of to I would of would the we didn't sets basically so then move we took on. and of that some let a short in at would need that people go

be we resourcing bit we of from are perspective, positioned capture demand a very little increased that a But able and both. staffing seeing. well are it's to So this to

that growth positioned perspective, to of we pipeline doing. from well digital transformation, execute type obviously, work we're any to includes continues digital As our are and it. a and pipeline both cloud outstrip And that against of other very have indicated, we transformation

Ranjan Kalia

no significant Specifically lot. the Marginal a in realigned our on utilization back increases increases. utilization, half. we're not significant but We've really expecting a utilization increase in very

Joseph Foresi

it. Got

is long And of stage mean me the each the last one. strategic Okay. more of a a the evolution then Virtusa for known we've really other next model, time. sort right? What's for question I

during a - core core days. the were offshore You Indian organic

sort in did practices. growth of lumpy And quarters digital overall a which of couple Polaris, You the we've acquisition. steady is transformational had now but really

are transformational acquisition Again, next it just perspective? business looking continuing a us? Would we noise from be once for grow So wondering, focused strategy. of Is to just the it what overall another I'm just the sort get on? you the digital behind

Krishan Canekeratne

mean Joe. I quite simple, it's

leadership differentiate on double We cloud we going a We and that down transformation to position digital have of have we industry transformation. and effectively. demonstrated compete differentiated very And an those. it. we've We're can set in We offerings. - both unique highly

have diversification. we're They're As we of that, be but lot We're to going believe lines. to to to going our are both focus And potential in grow targeting those we of some opportunity and they these continue in underpenetrated be effectively, mindful new million - specifically going do we're to geographies that accounts Virtusa. grow that a them have $XX new terms That's then accounts growing with to in the to scaled service have industries attention a revenue we certain we we areas. and over significant that areas in service where our areas, offerings be importance might and goal. of our in of other

is growing going we're get basis, we to that an As sure of on enjoyed, rates do find of this, business I'm more and points a couple industry. the we which back opportunities have ahead to organic basically always our growth

Operator

Colicchio of Barrington comes [Operator The question Vincent next from Instructions]. Research.

Vincent Colicchio

large Kris, in you weakness? concerned ground? beyond the of on client Yes, What in seeing your banking are broadly Europe, should we terms be more

Ranjan Kalia

Brexit. watching watch on our services We in that, right? play those upcoming events, with this look, macroeconomic even to that that just be the me are out, my that impact That in we would whether play start election. the impact could that Any continue I talked prepared to the remarks, financial significant of a whether plan a some continues of trade of the about, Let play with big Over client, do discussion out continue clients. faced was watch European above because result and that believe macroeconomic - large uncertainties they spending out, as to that uncertainties geo. do or we be we

Krishan Canekeratne

And actually double enterprise a European and and we're prepare servicing for investing in U.K. benefits the clear, in of can't that and post-Brexit Brexit. both that U.K. activity. do down embrace customers of data very - seeing do customers the one that themselves well beyond U.K. that that many consumers like certain ahead needing customers we're also them customers on can data assuming Europe In there service to some Europe, center for they of with opportunity clients terms service impact significant example, European cloud. the center very and the that you just Brexit. And environment, and data down we're to in they're U.K. enterprises and a servicing nor clients right, happens as are And separation, actually focused separation. there in great to large that an in for of the seeing had to are slowdowns, have it's doubling as enterprises isn't surgence just And whatever a may are things U.K. - data a preparing while seeing, is customers situation, have a actually the you with on market U.K. that thing with

result we're Brexit. as some as are In as that time, have well. So the may same increased of very a Brexit enterprises Ranjan some actually of activity mentioned, seen seeing the U.K.-specific negative just impacts

Vincent Colicchio

the margins versus CT work. two? you between And I'm spent lot of how DT time talking about the a do curious, compare

Ranjan Kalia

have and always to is the higher of mix those been XX%, seen, trend CT than which play Yes. margin, driver. a a we portfolio, continues out. company be that slightly to continues have DT digital our strong that on and growth What margins

Vincent Colicchio

heard And, different Kris, I numbers. two

clarity, Just pipeline for was Was up. year-over-year it digital XX% or XX%?

Krishan Canekeratne

Yes.

In XX%. consecutive over this pipeline quarter, XX%. grown two our quarters, has grew in So digital pipeline digital last

Operator

to turn This for I the closing any remarks. conference to back question-and-answer like Kris would session. concludes our Canekeratne over

Krishan Canekeratne

Drew. I'd Thank speaking members commitment our earnings global to look opportunity Thank for us you you. QX and their all today. team And you call. Thank clients. to Thank like our our you, this joining for to take forward dedication to on to you. we thank

Operator

conference Thank presentation. now concluded. for today's The you attending has

disconnect. now may You

Virtusa (VRTU) 10 Nov 192020 Q2 Earnings call transcript