Virtusa (VRTU) Misses Q2 EPS by 1c, Beats on Revenues; FY18 EPS Mid-Point Guidance Above Consensus, FY18 Revenue Guidance Above Consensus

Virtusa (NASDAQ: VRTU) reported Q2 EPS of $0.35, $0.01 worse than the analyst estimate of $0.36. Revenue for the quarter came in at $248.2 million versus the consensus estimate of $237.16 million.

Financial Outlook

Virtusa management provided the following current financial guidance:

• Third quarter fiscal 2018 revenue is expected to be in the range of $256.0 to $262.0 million. GAAP diluted EPS is expected to be in the range of $0.21 to $0.27. Non-GAAP diluted EPS is expected to be in the range of $0.41 to $0.47.
• Fiscal year 2018 revenue is expected to be in the range of $998.0 to $1,011.0 million. GAAP diluted EPS is expected to be in the range of $0.73 to $0.85. Non-GAAP diluted EPS is expected to be in the range of $1.50 to $1.62.
• Virtusa anticipates a total restructuring charge of $0.7 million in the second half of fiscal year 2018 related to resource optimization initiatives. This charge is reflected in the full year GAAP EPS guidance, and not included in non-GAAP EPS guidance.
• Guidance does not include the impact of the previously announced proposed offer to delist Polaris Consulting & Services, Ltd. from all stock exchanges on which Polaris’ ordinary shares are listed.

Highlights

• Second quarter fiscal 2018 revenue of $248.2 million increased 9.2% sequentially and 18.1% year-over-year.
• Second quarter fiscal 2018 GAAP operating income of $10.3 million, up 69% sequentially, and non-GAAP operating income of $19.8 million, up 48% sequentially.
• Second quarter fiscal 2018 GAAP diluted EPS was $0.12, up 20% sequentially and 9% year-over-year. Non-GAAP diluted EPS was $0.35, up 40% sequentially and 30% year-over-year.
• Generated $28.8 million of cash from operating activities during the second quarter of fiscal 2018, representing 11.6% of revenue.
• Commenced delisting process for Polaris Consulting & Services, Ltd.

GUIDANCE:

Virtusa sees FY2018 EPS of $1.50-$1.62, versus the consensus of $1.53. Virtusa sees FY2018 revenue of $998-1011 million, versus the consensus of $951.58 million.

For earnings history and earnings-related data on Virtusa (VRTU) click here.

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