BWI: Syntel Reports Third Quarter 2009 Financial Results

Press release from Business Wire India
Source: Syntel, Inc.
Thursday, October 29, 2009 07:15 PM IST (01:45 PM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Financial Analyst, Information technology, Stock exchanges; Technology
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Syntel Reports Third Quarter 2009 Financial Results


Mumbai, Maharashtra, India, Thursday, October 29, 2009 -- (Business Wire India) -- Highlights:

-- Q3 revenue increased 5% sequentially and 1% from year- ago quarter to $104.7M (Rs.506 crore)
-- Q3 operating Income grows 25% yoy and 19% sequentially to $32.7Mn (Rs.158 crore)
-- Q3 Net Income grows 36% yoy and 20% sequentially to $30.3Mn (Rs.147 crore)
-- Q3 EPS of $0.73 per diluted share
-- Added 8 new clients during the quarter
-- Syntel is updating 2009 guidance,
- From Revenue of $395Mn (Rs.1,910 crore) to $415Mn (Rs.2,007 crore) to Revenue of $405Mn (Rs. 1,959 crore) to $408Mn (Rs.1,973 crore) and
- From EPS of $2.40 to $2.50 to EPS of $2.60 to $2.65

Syntel, Inc. (NASDAQ: SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the third quarter, ended September 30, 2009.

Third Quarter Financial Highlights

Syntel's revenue for the third quarter increased one percent to $104.7 million (Rs.506 crore), compared to $103.8 million (Rs.502 crore) in the prior-year period, and increased five percent sequentially from $100.1 million (Rs.484 crore) in the second quarter of 2009. Sequential revenue improvement was driven by our Applications Outsourcing service offering, and growth was broad-based across all verticals. During the third quarter, Applications Outsourcing accounted for 74 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 18 percent, e-Business contributing six percent and Team Sourcing at two percent.

The Company's gross margin improved to 49.3 percent in the third quarter, compared to 44.3 percent in the prior-year period (500 bps increase) and 48.2 percent in the second quarter of 2009 (110 bps increase).

Selling, General and Administrative (SG&A) expenses were 18.1 percent in the third quarter, compared to 19.1 percent in the prior-year period and 20.8 percent in the previous quarter.

Syntel's income from operations expanded to 31.2 percent in the third quarter as compared to 25.2 percent in the prior-year period (600 bps increase) and 27.4 percent in the second quarter of 2009 (380bps increase).

Operating margins during the quarter were favorably impacted by improved utilization, employee productivity and proactive cost management. The Indian Rupee depreciated only 0.6% during the quarter, and therefore had little impact on sequential margin performance.

Net income for the third quarter was $30.3 million (Rs. 147 crore) or $0.73 per diluted share, compared to $22.1 million (Rs.107 crore) or $0.54 per diluted share in the prior-year period and net income of $25.1 million (Rs. 121 crore) or $0.61 per diluted share in the second quarter of 2009.

During the third quarter, Syntel added 8 new clients and two new "Hunting Licenses" or preferred partnership agreements, bringing the total number to 98 strategic relationships.

Operational Highlights

"Increasing stability in the business environment and a gradual improvement in customer confidence had a positive effect on our top line during the third quarter," said Chief Executive Officer and President Keshav Murugesh. "While our clients remain comfortable in moving forward with cost reduction initiatives, they are now increasingly willing to discuss longer-term business plans and strategic technology investments."

"The strong financial and operating discipline at Syntel has been evident in our financial performance during a very difficult nine month period. We expect that as demand for offshore services improves, costs of doing business in India will increase resulting in margin pressure. Syntel continues to invest in the people, infrastructure and new services necessary to drive long-term sustainable value for all of our key stakeholders."

2009 Guidance

Based on current visibility levels and an exchange rate assumption of 47.0 rupees to the dollar, the Company is updating 2009 guidance from Revenue of $395Mn (Rs.1,910 crore) to $415Mn (Rs.2,007 crore) and EPS of $2.40 to $2.50 to Revenue of $405Mn (Rs. 1,959 crore) to $408Mn (Rs.1,973 crore) and EPS of $2.60 to $2.65.

About Syntel

Syntel (NASDAQ: SYNT) is a leading global provider of integrated information technology and Knowledge Process Outsourcing (KPO) solutions spanning the entire lifecycle of business and information systems and processes. The Company is driven by its mission to create new opportunities for clients by harnessing the passion, talent and innovation of Syntel employees worldwide. Syntel leverages dedicated Centers of Excellence, a flexible Global Delivery Model, and a strong track record of building collaborative client partnerships to create sustainable business advantage for Global 2000 organizations. Recently named one of the "50 Best Managed Global Outsourcing Vendors" by The Black Book of Outsourcing, Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2000 certified. As of September 30, 2009, Syntel employed more than 11,400 people worldwide. To learn more, visit us at: www.syntelinc.com.

Safe Harbor Provision

This news release includes forward-looking statements, including with respect to the future level of business for Syntel, Inc. These statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in these forward-looking statements as a result of certain risk factors set forth in the Company's Annual Form 10-K document dated March 12, 2009 and the Company's Quarterly Report on Form 10-Q for the period ending June 30, 2009.

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Keshav Murugesh- CEO, Syntel Inc.
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CONTACT DETAILS
Sudhanshu Patni, Syntel, Inc., +91 9930313192, Sudhanshu_patni@syntelinc.com

KEYWORDS
CONSUMER, ECONOMY, BANKING, BUSINESS SERVICES, Financial Analyst, IT, STOCK EXCHANGES, TECHNOLOGY, SYNT.O

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