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Virtusa Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 31, 2012 09:14AM

Virtusa Corp. (VRTU) filed Quarterly Report for the period ended 2012-06-30. Virtusa Corporation has a market cap of $336.7 million; its shares were traded at around $12.71 with a P/E ratio of 16.6 and P/S ratio of 1.2.



Highlight of Business Operations:

In the three months ended June 30, 2012, our European revenue increased by 15.0%, or $1.7 million, to $13.4 million, or 17.6% of total revenue, from $11.7 million, or 19.1% of total revenue, in the three months ended June 30, 2011.

Our gross profit increased by $3.5 million to $26.6 million for the three months ended June 30, 2012, as compared to $23.1 million in the three months ended June 30, 2011.The increase in gross profit during the three months ended June 30, 2012, as compared to the three months ended June 30, 2011, was primarily due to higher revenue, partially offset by increased cost of revenue, which includes increases in the number of IT professionals and higher costs related to an increased percentage of onsite work. As a percentage of revenue, gross margin was 34.9% and 37.8% in the three months ended June 30, 2012 and 2011, respectively. This reflects an increase in the number of IT professionals, higher costs related to an increased percentage of onsite work and an increased use of subcontractors.

Revenue increased by 24.9%, or $15.2 million, from $61.0 million during the three months ended June 30, 2011 to $76.2 million in the three months ended June 30, 2012. The increase in revenue was primarily driven by higher revenue contribution from our clients existing as of June 30, 2011 and revenue of $5.7 million from clients obtained in connection with the acquisition of ALaS in July 2011. The increase in revenue was also the result of continued broad based revenue growth from all of our industry groups, led by growth in our BFSI industry group. Revenue from North American clients in the three months ended June 30, 2012 increased by $13.3 million, or 28.5%, as compared to the three months ended June 30, 2011, due to higher revenue contribution from new clients, including those acquired in connection with the ALaS acquisition. Revenue from European clients increased by $1.7 million, or 15.0%, as compared to the three months ended June 30, 2011. We had 91 active clients at June 30, 2012, as compared to 82 active clients at June 30, 2011.

Costs of revenue increased from $38.0 million in the three months ended June 30, 2011 to $49.6 million in the three months ended June 30, 2012, an increase of $11.6 million, or 30.6%. The increase in cost of revenue was primarily driven by an increase of $5.6 million in compensation costs for our IT professionals and higher onsite costs related to increased onsite work, including the costs related to the number of employees added as a result of the ALaS acquisition. At June 30, 2012, we had 5,348 IT professionals as compared to 4,924 at June 30, 2011. In addition, we incurred increased subcontractor costs of $3.3 million in the three months ended June 30, 2012, as compared to the three months ended June 30, 2011. There was also a net increase of $1.8 million of hedging expense, consisting of $1.3 million of hedging losses in the three months ended June 30, 2012 compared to $0.5 million of hedging gains in the three months ended June 30, 2011.

Operating expenses increased from $18.3 million in the three months ended June 30, 2011 to $19.8 million in the three months ended June 30, 2012, an increase of $1.5 million, or 8.1%. The increase was primarily due to an increase of $1.0 million in compensation expenses and the costs related to the number of employees added as a result of the ALaS acquisition, a net increase of $1.0 million of hedging expense consisting of $0.7 million of hedging losses in the three months ended June 30, 2012 compared to $0.3 million of hedging gains in the three months ended June 30, 2011 and a $0.3 million increase in facilities costs. These increases in operating expenses were partially offset by a $0.8 million decrease in professional services incurred. As a percentage of revenue, our operating expenses decreased to 25.9% in the three months ended June 30, 2012 as compared to 29.9% in the three months ended June 30, 2011. This decrease was primarily due to increased operating efficiencies leveraged over a larger revenue base.

Read the The complete Report



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