* Q2 revenue increase of 18% to $64.4 million over Q2, 2005
* Q2 EPS of $0.27 per diluted share
* Global headcount of 6,669
* Period-ending cash balance & short term investments of $113M
TROY, Mich. - July 20, 2006 - Syntel, Inc. (SYNT), a global information technology services firm, today announced financial results for the second quarter, ended June 30, 2006.
Second Quarter 2006 Financial Highlights
Syntel's total revenue for the second quarter increased 18 percent to $64.4 million, compared to $54.7 million in the prior-year period and 1.4 percent sequentially from $63.5 million in the first quarter of 2006. The Company's gross margin was 35.6 percent in the second quarter, compared to 40.1 percent in the prior-year period and 38.3 percent in the first quarter of 2006. Margins were impacted by offshore wage increases and visa expenses.
During the second quarter, Syntel's focus area of Applications Outsourcing accounted for 72 percent of total revenue, with e-Business contributing 14 percent, TeamSourcing at 7 percent, and Business Process Outsourcing (BPO) at 7 percent.
The Company's Selling, General and Administrative (SG&A) expenses were 18.1 percent in the second quarter of 2006, compared to 19.6 percent in the prior-year period and 16.7 percent in the first quarter of 2006. The SG&A for the current quarter increased mainly due to additional legal reserves and facility related expenses. Syntel's income from operations was 17.5 percent in the second quarter, compared to 20.5 percent in the prior-year quarter and 21.6 percent in the first quarter of 2006.
Syntel's global headcount grew five percent during the second quarter of 2006 to 6,669 as compared to 6,357 at the end of the first quarter. The Company finished the quarter with cash and short term investments of $113.4 million.
Syntel added nine new clients in the quarter and launched 90 new engagements. The Company added three new "Hunting Licenses" or preferred partnership agreements during the quarter, taking the total to 76 strategic relationships.
"Syntel continued to make progress in developing our client base and deepening our strategic relationships," said Syntel Chairman and Chief Executive Officer Bharat Desai. "We continue to focus on our investment programs, which are designed to further enhance our people, infrastructure and processes and drive even more value for our clients."
Updated 2006 Guidance
Based on current visibility levels, the Company now expects 2006 revenue in the range of $260-$268 million and EPS between $1.07 to $1.11.