Syntel records $100m quarterly revenue

MUMBAI, INDIA:  Syntel Inc., a global IT and KPO firm has announced its second quarter financial results. The company recorded its first ever $100 million quarterly revenue in the history of the company. The company has also seen a Q2 revenue increase of 29 percent to $103.4 million (Rs. 444.6 crores) over Q2, 2007.

Keshav R Murugesh, President and COO, Syntel said, "Every quarter we see an excellent hike in our performance metrics and the credit goes to the passion, talent and innovation of all the employees of Syntel. Syntel's total revenue for the second quarter increased 29 percent to $103.4 million (Rs.444.6 crores), compared to $80.4 million (Rs.345.7 crores) in the prior-year period and 5 percent sequentially from $98.5 million ( Rs 423.5 crores) in the first quarter of 2008. The company's gross margin was 41.1 percent in the second quarter, compared to 38.2 percent in the prior-year period and 40.3 percent in the first quarter of 2008."

Keshav  further said, "Contributing to  this healthy revenue growth during the second quarter, applications outsourcing accounted for 64 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 20 percent, e-Business contributing 13 percent and team sourcing at three percent.

The Company's Selling, General and Administrative (SG&A) expenses were 19.1 percent in the second quarter of 2008, compared to 20.1 percent in the prior-year period and 20.8 percent in the first quarter of 2008. Syntel's income from operations expanded to 22.1 percent in the second quarter, compared to 18.0 percent in the prior-year quarter and 19.4 percent in the first quarter of 2008. Operating margins during the quarter were favorably impacted by depreciation in the Indian Rupee. Net income for the second quarter was $17.4 million (Rs. 74.8 crores) or $0.42 per diluted share, compared to $13.3 million (Rs. 57.2 crores) (or $0.32 per diluted share in the prior-year period and net income of $20.4 million (Rs. 87.7 crores) or $0.49 per diluted share in the first quarter of 2008. The first quarter of 2008 had a favourable one time tax reversal that added to the EPS, adds Murugesh.

2008 Guidance

Based on current visibility levels and an exchange rate assumption of 43 rupees to the dollar, the company is updating 2008 guidance to reflect revenue of $412 to $422 million and EPS in the range of $1.74 to $1.82.

Safe Harbor Provision

This news release includes forward-looking statements, including with respect to the future level of business for Syntel, Inc. These statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in these forward-looking statements as a result of certain risk factors set forth in the company's Annual Form 10-K document dated March 11, 2008. Factors that could cause results to differ materially from those set forth above include general trends and developments in the information technology industry, which is subject to rapid technological changes, and the company's concentration of sales in a relatively small number of large customers, as well as intense competition in the information technology industry, which the company believes will increase.

During the second quarter, Syntel added 5 new clients and one new "Hunting License" or preferred partnership agreement, bringing the total number to 90 strategic relationships.

"While the timing of certain client spending decisions remains in question, several other operational trends continue to track favorably. These include key supply-side metrics, currency, pricing and the sales pipeline. Our focus is on leveraging our client base, strategic investments and market position to help drive top line acceleration which remains unchanged. Syntel is proud to be named on the list of  Standard & Poor's Inc, which includes only 13 US Information Technology Companies among 73 companies based in the United States that made its annual Global Challengers list. This list released Wednesday of mid-sized companies that show the 'highest growth characteristics included Syntel” said Keshav.