Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the first quarter, ended March 31, 2012.
First Quarter Financial Highlights
Syntel's revenue for the first quarter increased 17 percent to $170.7 million, compared to $145.4 million in the prior-year period, and decreased one percent sequentially from $172.4 million in the fourth quarter of 2011. During the first quarter, Applications Outsourcing accounted for 75 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 15 percent, e-Business contributing eight percent and TeamSourcing at two percent.
The Company's gross margin was 41.8 percent in the first quarter, compared to 35 percent in the prior-year period and 42.1 percent in the fourth quarter of 2011. Selling, General and Administrative (SG&A) expenses were 15.8 percent of revenue in the first quarter, compared to 16.9 percent in the prior-year period and 11.4 percent in the previous quarter.
The first quarter income from operations was 26.1 percent of revenue as compared to 18 percent in the prior-year period and 30.7 percent in the fourth quarter. The sequential reduction in operating margin primarily reflects the impact of balance sheet translations and the appreciation in the Indian rupee during the first quarter.
Net income for the first quarter was $40.7 million or $0.98 per diluted share, compared to $25 million or $0.60 per diluted share in the prior-year period and net income of $44 million or $1.05 per diluted share in the fourth quarter of 2011.
During Q1, Syntel spent $4.5 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $334.4 million. The Company also added 175 net employees, ending the quarter with 19,659 employees globally.
"Our company's commitment to its customers yielded benefits during the quarter," said Syntel CEO and President Prashant Ranade. "Year-over-year revenue growth of 17% in the first quarter positions us well to meet our goals for 2012. While we are mindful of the global backdrop, we saw stable trends for client spending during the quarter and building pipelines."
"Syntel's commitment to providing value to our customers guides our plans for investment in our business," said Ranade. "We remain on track with hiring and infrastructure build-outs and expect to make additional investment as 2012 progresses."
"During the first quarter, we were pleased to see growth from clients six through 20 continue to outpace that of the company overall. We think our investments in value-added horizontal solutions coupled with our deep domain expertise will help us develop these relationships over the long-term. In addition to the innovation we deliver, our customer-centric culture will be a key success factor as we look to help all our clients meet their internal objectives and derive value from their IT investment."
Based on current visibility levels and an exchange rate assumption of 51.80 Indian Rupees to the dollar, the Company currently expects 2012 revenue of $730 to $755 million and EPS in the range of $3.40 to $3.65.