Syntel Reports Second Quarter 2012 Financial Results

Troy, MI - 19 July 2012

  • Q2 revenue of $179.0M, up 14% from year-ago quarter, and 5% sequentially
  • Q2 EPS of $1.04 per diluted share, up 57% from year-ago quarter, and 6% sequentially
  • Q2 cash & short term investments of $354.9M
  • Global Headcount of 20,060 on June 30, 2012, up 11% versus prior year

Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) company today announced financial results for the second quarter, ended June 30, 2012.

Second Quarter Financial Highlights

Syntel's revenue for the second quarter increased 14 percent to $179 million, compared to $157 million in the prior-year period, and increased five percent sequentially from $170.7 million in the first quarter of 2012. During the second 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 41.3 percent in the second quarter, compared to 36.2 percent in the prior-year period and 41.8 percent in the first quarter of 2012. Selling, General and Administrative (SG&A) expenses were 10.6 percent of revenue in the second quarter, compared to 17.7 percent in the prior-year period and 15.8 percent in the previous quarter.

The second quarter income from operations was 30.7 percent of revenue as compared to 18.5 percent in the prior-year period and 26.1 percent in the first quarter. The sequential rise in operating margin primarily reflects the impact of currency-related balance sheet translations and the depreciation in the Indian rupee during the second quarter, which more than offset costs related to offshore wage increases and visas.

Net income for the second quarter was $43.4 million or $1.04 per diluted share, compared to $27.6 million or $0.66 per diluted share in the prior-year period and net income of $40.7 million or $0.98 per diluted share in the first quarter of 2012.

During Q2, Syntel spent $6.7 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $354.9 million. The Company also added 401 net employees, ending the quarter with 20,060 employees globally.

Operational Highlights

"We continue to execute along our objectives in the second quarter with an ongoing focus on delivering solutions to meet our clients' business needs," said Syntel CEO and President Prashant Ranade. "We saw growth across the key verticals we serve and continue to feel well-positioned as the year progresses. With an eye on prevailing uncertainty in global economic trends, we still see opportunities to grow our business and strengthen our market standing."

"Our planned investments in our intellectual property, our business, and our people remain on track, and we view these as necessary to capture the current market opportunity," said Ranade. "These investments will deliver value over time and help support our future growth."

"Newer technologies such as Cloud, mobility and analytics continue to garner high levels of customer interest and are critical to our long-term success and growth. The investments we make and the innovations we develop in these areas will allow us to harness our strengths to create new opportunities for our clients."

2012 Guidance

Based on current visibility levels and an exchange rate assumption of 55 Indian Rupees to the dollar, the Company currently expects 2012 revenue of $730 to $740 million and EPS in the range of $3.90 to $4.00.

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