Virtusa Announces Second Quarter Fiscal 2008 Financial Results

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Virtusa Corporation reported its financial results for the second quarter of fiscal 2008, ended September 30, 2007.

Virtusa Corporation, a global information technology (IT) services company that provides IT consulting, technology implementation and application outsourcing services through an enhanced global delivery model, reported its financial results for the second quarter of fiscal 2008, ended September 30, 2007.

For the second quarter of fiscal 2008, Virtusa's revenue increased 33.8% year-over-year and 7.5% sequentially, to $40.3 million.

Virtusa reported second quarter income from operations of $4.7 million, or 11.7% of revenue. This represents an increase of 27.8% compared to $3.7 million for the second quarter of fiscal 2007.

Net income for the second quarter of fiscal 2008 was $4.6 million, or $0.20 per diluted share, compared to $3.8 million, or $0.21 per diluted share, for the second quarter of fiscal 2007. The change in diluted net income per share year-over-year was influenced by a higher effective tax rate and an increase in diluted shares outstandi

ng.

The Company's effective tax rate increased to 17.1% in the second quarter of fiscal 2008 from 3.3% in the second quarter of fiscal 2007 as the Company is no longer recognizing an income statement benefit from the use of its deferred tax assets due to the release of its valuation allowance in fiscal 2007. In addition, the diluted shares outstanding in the second quarter of fiscal 2008 increased 29% year-over-year primarily due to the successful completion of the Company's initial public offering.

Kris Canekeratne, Virtusa's Chairman and CEO stated, "We are pleased with the progress we made in our second quarter towards our long-term objective of predictable growth with increasing profitability." Canekeratne continued, "We added 5 new clients and expanded our existing client relationships in the quarter. We believe that this is indicative of the increased value that we provide through our broad range of IT services, transformational platforming approach and op

timal global delivery model, where we provide 20% or less of our services onsite and 80% or more offshore."

The Company ended the second quarter of fiscal 2008 with $100.2 million of cash and cash equivalents, short-term investments and long-term investments, which is an increase of $60.7 million from the prior quarter, due primarily to the net proceeds that were raised through the Company's initial public offering, completed on August 8, 2007. The Company ended the second quarter of fiscal 2008 with no long-term debt.

"Our second quarter performance demonstrated our ability to leverage operating expenses while growing revenue in-line with our guidance," said Tom Holler, Chief Financial Officer. "Although our second quarter cost management initiatives enabled us to exceed profit guidance, we remain committed to our strategy of investing in business development and people practices to support long-term revenue growth."