Luxoft Holding, Inc Reports Results for Three and Six Months Ended September 30, 2016
November 10, 2016
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November 10, 2016
LONDON--(BUSINESS WIRE)--Nov. 10, 2016--
"NYSE:LXFT" Luxoft Holding, Inc (NYSE:LXFT), a leading provider of software development services and innovative IT solutions to a global client base, today announced results for the three and six months ended
September 30, 2016.
Highlights – Three Months Ended September 30, 2016
Highlights – Six Months Ended September 30, 2016
Revenue for the three months ended September 30, 2016 increased to $196.5 million, up 21.6% from $161.5 million for the same period a year ago and 10.3% sequentially. Adjusted EBITDA was $37.4 million and
corresponding margins of 19.1%, as compared to $37.0 million and 22.9% respectively in the year-ago quarter and $29.6 million and 16.6% sequentially. US GAAP net income was $16.3 million, or $0.48 per diluted share, compared to $23.0 million and $0.67 per diluted share for the same period a year ago and $14.1 million and $0.42 sequentially. Non-GAAP net income was $27.8 million, or $0.83 per diluted share, compared to $28.6 million and $0.84 per diluted share for the same
period a year ago and $21.0 million and $0.62 sequentially. Reconciliations between non-GAAP financial measures and US GAAP operating results and diluted EPS are included at the end of this
release.
Revenue for the six months ended September 30, 2016 increased to $374.5 million, up 21.0% from $309.6 million for the same period a year ago. Adjusted EBITDA increased 4.5% year over year to $67.1 million; adjusted
EBITDA margin was 17.9%, as compared to $64.2 million and 20.7% in a year ago period. Operating income was $35.3 million, a decrease of 14.3% year over year from $41.2 million in the first half of last year. US GAAP net income was $30.4 million, or $0.90 per diluted share, compared to $37.6 million and $1.11 per diluted share for the same period a year ago. Non-GAAP net income was $48.9 million, or $1.44 per diluted share, compared to $49.2 million and $1.45 per diluted share for the same period a year ago.
"We are pleased to report financial results for the first half of the
financial year, marked by strong growth despite extremely volatile
economic conditions and lack of visibility on the market," stated Dmitry
Loschinin, CEO and President of "NYSE:LXFT" Luxoft Holding, Inc. "This is a transformational year for "NYSE:LXFT" Luxoft. We are diversifying our business and lowering client and vertical concentration, resulting in 7.5% decline in top-client concentration over the first six months. We are expanding premium services and offering consulting capabilities in many standard
platforms, such as Murex, Calypso, Pivotal and Pega, which our clients are adopting at increasing rates. We are rolling out new offerings in Internet of Things, big data, predictive analytics and many more. During
the past quarter we completed two strategic value-accretive acquisitions, thus entering healthcare and pharmaceuticals, improving our position in the telecom vertical and expanding Human Machine Interface and Digital Cockpit practices in automotive. Given this
improved positioning coupled with the diverse pipeline of business for the year ahead, we hope to achieve our soft target of $1 billion in revenues for the year ending March 31, 2018."
For the six months ended September 30, 2016, telecom, automotive and transport, and financial services were the strongest performers, delivering 61.4%, 54.6%, and 13.5% of revenue growth respectively, compared to the first six months of last year. Outside of the top two
accounts, the company’s revenue grew 37% for the first six months of the year and 45% for the second quarter, both on a year over year basis.
During the past three months the company added seven high potential accounts (HPAs) from telecom, automotive and healthcare sectors. Key revenue generating geographies continued to grow: revenues generated in the U.S. increased 16.6%, in the U.K.</span> increased 5.7%, in Germany increased 38.4%, in Switzerland increased 100.8%, and in the rest of
Europe increased 91.7%, compared to the first six months of last year. The company generated a 1.2% increase in revenue per delivery employee,
to $77,200 for the first half of the year. During the last quarter the total headcount crossed 11,000 employees to reach 11,898 as of September 30, 2016, while maintaining low attrition of 11.5%.
"We are pleased to report to our shareholders another period of steady revenue growth," said Roman Yakushkin, Chief Financial Officer. ”This
year Luxoft embarked on many important initiatives on both, the business and operational sides, growing our sales force and increasing onshore presence in North America and Europe. We are also in the process of
integrating three acquisitions closed during this calendar year, all of which are affecting our sales and general administrative expenses and temporarily weighing on our bottom line. At the same time we delivered healthy adjusted EBITDA margins in line with our internal targets and our guidance to the investment community. Our balance sheet remains
strong and we continue to deliver healthy cash flow. Our revenue per engineer keeps growing and reached an all-time high six-month level, despite market-wide pricing and budgetary pressures, which is a
testament to the quality and depth of the work we deliver. We are encouraged by the progress Luxoft is making on its way to becoming a strong diversified global IT services and IT consulting player."
Outlook for the Year Ending March 31, 2017
The Company is reiterating its original revenue, adjusted EBITDA margin and non-GAAP EPS guidance for the financial year ending March 31, 2017:
The company is lowering its diluted EPS guidance on a GAAP basis to at least $1.65 from the original guidance of $2.10 due to higher acquisition-related expenses and SOP-related costs for additional
incentives for new and existing key managerial personnel
EPS is based on an estimated weighted average of 33,967,797 diluted shares
Reconciliations between forward-looking non-GAAP financial measures and comparable forward-looking measures on a US GAAP basis are included at
the end of this release.
Conference Call Information:
"NYSE:LXFT" will host a conference call on November 11, 2016 at 8:00 a.m. EST to discuss its financial results for the three and six months ended September 30, 2016. To participate in the conference call please dial 877-407-8293 (for domestic U.S. callers) or 201-689-8349
(for international callers). A live webcast will also be available during the call and can be accessed at
Non-GAAP Financial Measures
To supplement our financial results presented in accordance with US GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures:
earnings before interest, tax, depreciation and amortization (EBITDA); adjusted EBITDA; non-GAAP net income; and non-GAAP diluted Earnings per
share (EPS). Non-GAAP net income and non-GAAP EPS exclude stock-based compensation expense, amortization of fair value adjustments to intangible assets and impairment thereof and other acquisitions related costs, that may include changes in the fair value of contingent consideration liabilities. Non-GAAP diluted EPS are calculated as non-GAAP net income divided by weighted average number of diluted
shares. We provide these non-GAAP financial measures because we believe that they present a better measure of our core business and management uses them internally to evaluate our ongoing performance. Accordingly, we believe that these non-GAAP measures are useful to investors in enhancing their understanding of our operating performance. These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable US GAAP measures. The non-GAAP results and a full reconciliation between US GAAP and non-GAAP results are provided in
the accompanying tables at the end of this press release.
Forward-Looking Statements
In addition to historical information, this release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements include information about possible or assumed future results of our business and financial condition, as well as the results of operations, liquidity, plans and objectives. In some
cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of
these terms or other similar expressions. These statements include, but are not limited to, statements regarding: the persistence and intensification of competition in the IT industry; the future growth of
spending in IT services outsourcing generally and in each of our industry verticals, application outsourcing and custom application development and offshore research and development services; the level of
growth of demand for our services from our clients; the level of increase in revenues from our new clients; seasonal trends and the budget and work cycles of our clients; general economic and business conditions in our locations, including geopolitical instability and
social, economic or political uncertainties, particularly in Russia and Ukraine, and any potential sanctions, restrictions or responses to such conditions imposed by some of the locations in which we operate; the
levels of our concentration of revenues by vertical, geography, by client and by type of contract in the future; the expected timing of the increase in our corporate tax rate, or actual increases to our effective
tax rate which we may experience from time to time; our expectations with respect to the proportion of our fixed price contracts; our expectation that we will be able to integrate and manage the companies we acquire and that our acquisitions will yield the benefits we
envision; the demands we expect our rapid growth to place on our management and infrastructure; the sufficiency of our current cash, cash flow from operations, and lines of credit to meet our anticipated cash needs; the high proportion of our cost of services comprised of personnel salaries; our plans to introduce new products for commercial resale and licensing in addition to providing services; our anticipated
joint venture with one of our clients; and our continued financial relationship with IBS Group Holding limited and its subsidiaries including expectations for the provision and purchase of services and
purchase and lease of equipment; and other factors discussed under the heading "Risk Factors" in the Annual Report on Form 20-F for the year ended March 31, 2016 and other documents filed with or furnished to the Securities and Exchange Commission. Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.