Virtusa Corporation (NASDAQ GS: VRTU), a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to transform the customer experience, reported consolidated financial results for the first quarter fiscal 2017, ended June 30, 2016.
First Quarter Fiscal 2017 Consolidated Financial Results
Revenue for the first quarter of fiscal 2017 was $205.5 million, an increase of 19.6% sequentially and 52.4% year-over-year. On a constant currency basis, (1) first quarter revenue increased 19.5% sequentially and 53.5% year-over-year.
Virtusa reported GAAP loss from operations of $1.8 million for the first quarter of fiscal 2017, compared to income from operations of $5.5 million for the fourth quarter of fiscal 2016 and income from operations of $12.4 million for the first quarter of fiscal 2016.
On a GAAP basis, net loss for the first quarter of fiscal 2017 was $6.3 million, or $(0.21) per diluted share, compared to net income of $12.3 million, or $0.41 per diluted share, for the fourth quarter of fiscal 2016, and net income of $10.1 million, or $0.34 per diluted share, for the first quarter of fiscal 2016.
Balance Sheet and Cash Flow
The Company ended the first quarter of fiscal 2017 with $207.9 million of cash, cash equivalents, and short-term and long-term investments (2). Cash used for operations was $17.1 million for the first quarter of fiscal 2017.
Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “Our first quarter results reflect consistent, solid execution by the entire VirtusaPolaris team. While our business is facing headwinds arising from macro-economic uncertainty, the fundamental long-term drivers of our growth are strong, giving us confidence in our outlook for the remainder of fiscal 2017 and beyond. Finally, I am extremely pleased with the strong progress we have made on integrating Polaris and the opportunity we have to provide highly differentiated service and solutions to our clients.”
Ranjan Kalia, Chief Financial Officer, said, “First quarter results were in line with our expectations as the combined company executed against our Q1 plan. Our revised fiscal 2017 guidance reflects isolated delays in decision making and new project starts across our Insurance, Telecom and Banking clients, as well as increased currency headwinds from a weaker British Pound.”
Financial Outlook
Virtusa management provided the following current financial guidance:
Second quarter fiscal 2017 revenue is expected to be in the range of $206.5 to $211.5 million. Non-GAAP diluted EPS is expected to be in the range of $0.26 to $0.30. GAAP diluted EPS is expected to be in the range of $0.01 to $0.05.
Fiscal year 2017 revenue is expected to be in the range of $850 to $870 million. Non-GAAP diluted EPS is expected to be in the range of $1.58 to $1.72. GAAP diluted EPS is expected to be in the range of $0.61 to $0.75.
The Company’s second quarter and fiscal year 2017 diluted EPS estimates an average share count of approximately 30.1 million and 30.2 million, respectively, (assuming no further exercises of stock-based awards) and assumes a stock price of $27.11, which was derived from the average closing price of the Company’s stock over the five trading days ended on August 4, 2016. Deviations from this stock price may cause actual diluted EPS to vary based on share dilution from Virtusa’s stock options and stock appreciation rights.
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