Press release from Business Wire India
Source: Syntel, Inc.
Thursday, February 11, 2010 08:35 PM IST (03:05 PM GMT)
Editors: General: People; Business: Business services, Information technology; Technology
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Syntel Reports Fourth Quarter and Full Year 2009 Financial Results
Mumbai, Maharashtra, India, Thursday, February 11, 2010 -- (Business Wire India) -- Highlights:
-- Q4 revenue increased 12% from year-ago quarter and 12%sequentially to $117.8M (Rs.549 crore)
-- Q4 operating Income grows 29% yoy and 20% sequentially to $39.1M (Rs.182 crore)
-- Q4 EPS of $0.86 per diluted share, up 34% from year-ago quarter and 18% sequentially
-- Full Year revenue increase of 2% to $419.0M (Rs.2,025 crore)
-- Full Year operating income grows 27% to $118.5M (Rs.573 crore)
-- Full Year EPS increase of 36% to $2.86 per diluted share
-- Added 22 new clients during the year
-- Syntel has provided initial guidance for 2010 revenue in the range of $430 (Rs. 1,978 crore) to $460M (Rs. 2,116 crore) and EPS between $2.15 to $2.45 with an exchange rate assumption of 46 rupees to the dollar.
Syntel, Inc. (NASDAQ: SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the fourth quarter and full year, ended December 31, 2009.
Fourth Quarter Financial Highlights
Syntel's revenue for the fourth quarter increased 12 percent to $117.8 million (Rs.549 crore), compared to $104.7 million (Rs. 488 crore) in the prior-year period, and also increased 12 percent sequentially from $104.7 million (Rs.488 crore) in the third quarter of 2009. Sequential revenue improvement was driven by broad-based growth across verticals and service offerings, and by approximately $6 million (Rs.28 crore) of short-term discretionary project work. During the fourth quarter, Applications Outsourcing accounted for 75 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 17 percent, e-Business contributing five percent and TeamSourcing at three percent.
The Company's gross margin improved to 50.2 percent in the fourth quarter, compared to 48.3 percent in the prior-year period and 49.3 percent in the third quarter of 2009.
Selling, General and Administrative (SG&A) expenses were 17.0 percent in the fourth quarter, compared to 19.4 percent in the prior-year period and 18.1 percent in the previous quarter. Syntel's income from operations expanded to 33.2 percent in the fourth quarter as compared to 28.9 percent in the prior-year period and 31.2 percent in the third quarter of 2009.
Sequentially, operating margins during the quarter were favorably impacted by short duration development projects and associated operating cost leverage. This favorability was partially offset by lower utilization and a 3.6% appreciation in the Indian Rupee.
Net income for the fourth quarter was $35.8 million (Rs. 167 crore) or $0.86 per diluted share, compared to $26.7 million (Rs. 125 crore) or $0.64 per diluted share in the prior-year period and net income of $30.3 million (Rs. 141 crore) or $0.73 per diluted share in the third quarter of 2009.
Full Year 2009 Financial Highlights
Revenue for 2009 increased two percent to $419.0 million (Rs. 2025 crore) , from $410.4 million (Rs. 1,983 crore) in 2008. The Company's operating margins in 2009 expanded to 29.9 percent, compared to 24.0 percent in 2008. Net income for the year was $118.5 million (Rs. 573 crore), or $2.86 per diluted share compared to $86.7 million (Rs. 419 crore) or $2.10 per diluted share in 2008. Net income rose 36.7 percent for the full year and associated earnings per share rose 36.2 percent.
During 2009, Syntel spent $25.5 million (Rs. 123 crore) in CAPEX largely in support of campus infrastructure, paid $10.0 million (Rs. 48 crore) in dividends ($0.24 per share), and finished the year with cash and short-term investments of $200.1 million (Rs. 967 crore). The Company added 22 new clients during the year and ended 2009 with 12,567 employees globally.
Operational Highlights
"Our fourth quarter financials were indicative of an improving market for offshore services," said Syntel Chairman Bharat Desai. "Syntel's sequential revenue growth was strong during the quarter, and benefited from short-duration development projects. The rapid revenue expansion also helped improve the Company's margins and EPS."
"Given the economic climate we faced heading into 2009, Syntel is extremely pleased with our operational and financial performance during the year. Despite the challenges of a difficult business environment, the Company was able to post record revenues, margins, earnings per share and cash in 2009."
"As we look forward into 2010, we are optimistic that demand for offshore services will continue to progress," said Desai. "We anticipate that our clients' budgets will remain relatively flat in 2010, however we believe that a larger share of their spending will be allocated to offshore partners. Currently, our clients remain comfortable moving forward with cost reduction initiatives and are increasingly willing to discuss strategic technology and process-related investments."
"While we expect the demand environment to improve in 2010, margin pressures will increase. Wage inflation, appreciation in the Indian rupee, and the possible outcomes from a large contract negotiation could all create margin headwinds this year. Syntel will continue to take a long-term view of our business and focus on driving sustainable value for all of our key stakeholders."
2010 Guidance
Based on current visibility levels and an exchange rate assumption of 46.0 rupees to the dollar, the Company is providing 2010 guidance of $430 (Rs. 1978 crore) to $460 million (Rs. 2,116 crore) in revenue, and EPS in the range of $2.15 to $2.45. Syntel's guidance assumes a range of discounts related to its KPO joint venture which would impact both revenue and margins in 2010. Guidance does not assume that the client will exercise its option to purchase the joint venture, nor does it assume that the contract will continue with the same pricing, terms and conditions and without economic impact to Syntel.
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 December 31, 2009, Syntel employed more than 12,500 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 September 30, 2009.
CONTACT DETAILS
Sudhanshu Patni, Syntel, Inc., +91 9930313192, Sudhanshu_patni@syntelinc.com
KEYWORDS
PEOPLE, BUSINESS SERVICES, IT, TECHNOLOGY, SYNT.O
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