Syntel, Inc. (Nasdaq:SYNT), a global provider of digital transformation, information technology and knowledge process services to Global 2000 companies, today announced financial results for the third quarter, ended September 30, 2014.
Third Quarter Financial Highlights
Syntel's revenue for the third quarter increased nine percent to $228.3 million from $209.9 million in the prior-year period, and was unchanged from $228.3 million in the second quarter of 2014. During the third quarter, Banking and Financial Services accounted for 51 percent of total revenue, with Healthcare and Life Sciences at 16 percent, Retail, Logistics and Telecom at 15 percent, Insurance at 15 percent and Manufacturing at three percent.
The Company's gross margin was 41.4 percent in the third quarter, compared to 46.6 percent in the prior-year period and 39.2 percent in the second quarter of 2014. Selling, General and Administrative (SG&A) expenses were 11.6 percent of revenue in the third quarter, compared to 10.7 percent in the prior-year period and 11.5 percent in the previous quarter.
The third quarter income from operations was 29.8 percent of revenue as compared to 35.9 percent in the prior-year period and 27.7 percent in the second quarter. The sequential rise in operating margin during the third quarter primarily reflects the impact of lower visa and immigration-related expenses and currency-related balance sheet translations.
Net income for the third quarter was $61.6 million or $1.47 per diluted share, compared to $59.4 million or $1.42 per diluted share in the prior-year period and net income of $59.3 million or $1.41 per diluted share in the second quarter of 2014.
During Q3, Syntel spent $5.1 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $808.7 million. The Company also added 211 net employees, ending the quarter with 24,333 employees globally.
"During the third quarter, we experienced some temporary headwinds in our Health Care and Life Science segment that have impacted our full-year 2014 growth outlook," said Syntel CEO and President Nitin Rakesh. "We remain confident that the healthcare industry holds considerable promise for future growth and we continue to invest in all segments of the industry, especially in evolving needs of the market, and are well-positioned to benefit from this long-term trend."
"Syntel continues to deepen ties with existing customers while adding new relationships that will provide an important foundation for future growth," said Rakesh. "We are investing in strategic areas like digital transformation, to help our customers embrace the change impacting their businesses."
"We also remain committed to identifying impactful trends within our focus industries and building robust capabilities in these areas. We continue to see our pipelines build as a result of our investments and expect to capitalize on these opportunities in the years to come."
Based on current visibility levels and an exchange rate assumption of 61 Indian rupees to the dollar, the Company is updating 2014 revenue to a range of $908 to $915 million from $920 to $940 million and EPS to a range of $5.60 to $5.70 from $5.50 to $5.65.
The EPS range provided is based on shares outstanding as of September 30, 2014 and is before the impact of the 2-for-1 stock split that was announced on October 8, 2014. For additional details, about the stock split, please refer to the Company's Form 8-K filed on October 8, 2014.