Virtusa Corporation (
F2Q2011 (Qtr End 09/30/10) Earnings Conference Call
October 27, 2010 5:00 PM ET
Staci Strauss Mortenson – IR, ICR
Kris Canekeratne – Chairman and CEO
Ranjan Kalia – SVP and CFO
Bhavan Suri – William Blair
Jon Maietta – Needham & Company
Puneet Jain – JPMorgan
Vincent Colicchio – Noble Financial
Previous Statements by VRTU
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» Virtusa Corporation F2Q09 (Qtr End 09/30/08) Earnings Call Transcript
Welcome to the Virtusa Corporation Second Quarter 2011 Earnings Conference Call. (Operator Instructions) I would like to remind everyone that this conference is being recorded.
And now I’d like turn the conference over to Ms. Staci Strauss Mortenson, ICR. Please go ahead.
Staci Strauss Mortenson
Thank you. Good evening and welcome to Virtusa’s second quarter fiscal year 2011 earnings conference call, where we will be discussing our financial results for Virtusa’s second quarter ended September 30, 2010.
On the call with me are Kris Canekeratne, Chairman and Chief Executive Officer; Tom Holler, Executive Vice President and Chief Operating Officer; and Ranjan Kalia, Senior Vice President and Chief Financial Officer of Virtusa.
Certain statements made in this call that are not based on historical information are forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
During this call, we may make express or implied forward-looking statements relating to among other things Virtusa’s expectations and assumptions concerning management’s forecast of financial performance. Virtusa’s ability to assimilate and integrate the operations of InSource and ConVista Consulting, the growth of Virtusa’s business, the ability Virtusa’s clients to realize benefits from the use of Virtusa’s IT services, the potential impact of currency exchange on our business and operation and management’s plan objectives and strategies.
These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond Virtusa’s control which would cause actual result to differ materially from those contemplated in these forward-looking statements. Existing and perspective investors are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof.
Virtusa undertakes no obligations to update and revise the information disclosed during this call, whether as a result of new information, future events or circumstances or otherwise.
Other statements in this call also include certain non-GAAP financial information as defined by the SEC. We present constant currency revenue to provide a framework for assessing how our revenue performed excluding the effect of foreign currency rate fluctuations. We also present a reconciliation of cash, cash equivalents, short-term and long-term investments that we believe provide insight into our total cash position and overall liquidity.
For additional disclosure regarding these and other risks faced by Virtusa, see the disclosures contained in Virtusa’s public filings with the Securities and Exchange Commission and on our earning press release.
With that, I would like turn the call over to Kris. Kris, please go ahead.
Thank you Staci and thank you for joining us on our second quarter fiscal year 2011 conference call. We are pleased with our second quarter results. The business environment remains stable and clients continue to expand their programs with us. Our value proposition resonates particularly well due to our unique ability to improve IT efficiencies and drive business outcome.
In addition, we are pleased with the solid progress we have made over the last 18 months to improve the quality and diversity of our client base and build a sustainable growth platform. We are now seeing the results of these efforts and consequently, we are increasing our full fiscal year 2011 revenue guidance.
Here are some of the highlights from the Q2 fiscal year 2011. For the September quarter, total revenue was $52.7 million, an increase of 40% year-over-year. Our operating income was $4 million or 7.7% and earnings per diluted share was $0.15.
Financial services revenue was quite strong growing 70% year-over-year. Growth in financial services was primarily driven by our existing plan expanding program with us and the significant number of new high quality clients added during the last 18 months.
Now, let’s turn to some of the key factors that are contributing to our everyday, to capture market share and our increase confidence in the business.
First, there is increasing demand for our service and solution offering around improving IT efficiencies and driving business outcome. Virtusa’s go-to-market strategy includes a unique combination of IT consulting, best in class solution and outsourcing services that provide end to end value to our clients.
It begins with deep domain expertise and consulting to help clients identify opportunities to improve business efficiencies, which typically leads to the re-definition, multiplication and modernization of key business processes in IT systems.
Our engagement team focused on leveraging our planned interesting technology assets and implementing solutions that accelerate their business goals. We are experiencing demand for our offering across all our industry growth in areas such as reducing operating cost, on boarding of new customers, improving the end consumer experience and accelerating the launch of new products and services.
This value proposition including industry specific solution has resonated particularly well with many of the world’s leading financial services institutions enabling us to either expand our existing partnerships or win new clients. We are pleased with the strong progress we have made as evidence by our significant growth in this industry group.
In one client example, we are working to develop an approach to increase process automation in mortgage origination. We were chosen for two primary reasons, our consulting skills and our deep business process management expertise. Our consulting skills are helping the client define the solution approach and roadmap, and our deep business process management expertise enables us to accelerate solution development and deployment. In addition, our IT rationalization and simplification approach is enabling our client to reach their desired outcome faster and more cost effectively.