Chennai: Polaris Software Lab Limited (POLS.BO), a leading Financial Technology company, today announced the third quarter results for FY 2010-11.

Highlights for the quarter ended December 31, 2010

•             The quarter saw 19 new IntellectTMwins; recording a growth of 16% q-o-q and 42% y-o-y in dollar terms

•             IntellectTM Payment Services Hub won an “XCelent” award from Celent for breadth of functionality and the IntellectTMCore Banking platform won Polaris the “Vendor to Watch” award by Aite Group

•             The Days Sales Outstanding (DSO) stood at 44 days, reflecting high customer satisfaction and extreme execution

•             Operating Profit (EBITDA) grew 32% y-o-y in dollar terms for the quarter

•             Offshore revenue increased by 171 basis points at 56.23%, showing an increase of 10% sequentially in dollar terms, representing a strong Global Delivery Model

•             Cash and cash equivalents stood at Rs. 508 crore at the end of the quarter. Gross addition of Rs 81 crore to cash reserves has been the highest ever in a single quarter

Key Performance metrics

For the quarter ended 31 December 2010, Revenue grew by 23% year-on-year to USD 89.12 million from USD 72.55 million, Profit after Tax (PAT) grew by 30% to USD 11.17 million from USD 8.58 million. Operating Profit (EBITDA) grew by 32% to USD 14.24 million from USD 10.83 million.

In rupee terms, Revenue grew to Rs. 399.90 crore from Rs. 338.89 crore compared to the same quarter last year. Profit after Tax (PAT) grew to Rs. 50.13 crore from Rs.40.07 crore. Operating Profit (EBITDA) grew to Rs. 63.91 crore from Rs. 50.57 crore.

Americas contributed 44%, Europe 26%, IMEA 12% and Asia Pacific 18% of the quarter revenues.

IntellectTM Business

IntellectTM product business recorded a sequential growth of 16% and an annual growth of 42% in dollar terms. IntellectTM registered 19 wins during the third quarter, and IntellectTM sales contributed to 23% of the quarterly revenue.

IntellectTM Banking sales forged ahead with the analyst community recognizing Intellect products with multiple awards and favourable mentions.

The major highlight of the quarter was IntellectTM going live for two North America customers, which has provided us with strong tailwinds for our journey. Our complex solution in the Bank of Montreal was one of the fastest implementations for such a large account. Another large North American bank which chose IntellectTMto grow their corporate banking business in the Asia Pacific and Europe regions, has gone live in 16 countries in less than 21 months. The product business continued to trail-blaze when one of the largest banks in Europe went live in more than 16 countries with IntellectTMTreasury.

During the quarter, IntellectTMCore Banking established its efficiency by going live at the Central Bank of Seychelles with full functionality in under 7 months.

IntellectTM went on to win a large deal in the APAC region for an implementation that spanned 8 countries. IntellectTM Core Banking has also gone live at a major bank in Japan. Closer to home, IntellectTM gained momentum by going live in 5 Indian banks across the private, public and cooperative sectors.

New wins in IMEA include multiple engagements and an IntellectTM Core Banking deal with one of Africa’s premier export finance institutions, a Capital Markets solution for an emerging market as well as a Retail Banking solution respectively for two leading banks in Egypt.

IntellectTM Insurance too firmly entrenched its position by going live at one of the largest Insurance players in Australia, and we also won an important deal with a large bank in Canada.

FT SourcingR

This year we achieved better penetration into our strategic accounts by providing full canvas services. The Polaris FT SourcingR model provided over 11% more efficiency than other established service providers in the industry because of its deep-domain knowledge, customized tools and frameworks for the specialized business of financial technology.

Business from non-Citi accounts grew to double digits during the quarter and we also signed 10 new engagements in the Managed Services space and won 4 new customers.

Awards and Recognition

Polaris and its flagship suite of products branded under IntellectTM have consistently been recognized and awarded by analysts and other influencers. Listed below are some of the recognitions we received in the last quarter.

•             Polaris received an “XCelent Award” and the highest score in the breadth of functionality dimension for IntellectTMPayment Services Hub (PSH). In a report titled ‘Evaluating the Payment Services Hub Vendors – The Vision Is Getting Closer’, Celent described IntellectTMPSH as: “Its solution has an impressive connectivity layer… it also has ready adapters to directly connect to the client’s ERP systems and has sophisticated capabilities to handle mixed files.”

•             IntellectTM Core Banking platform won Polaris the “Vendor to Watch” award by Aite Group in their report ‘Evaluating the Vendors of Global Core Banking Systems: Seeking New Opportunities in Emerging Countries’. “Polaris is growing its core customer base at a faster rate factoring in its product suite, larger deal sizes, and some recent wins in North America…” says Aite in their report

•             Polaris’ client for IntellectTM Claims Solution, ICICI Prudential Life Insurance won the Celent “Model Insurer Award”. The company was chosen for Model Insurer Asia because of its best practices in automation, STP and system integration

•             The Polaris Banking Platform was featured in Forrester Research, Inc. in their December 17, 2010 independent report ‘The Forrester Wave™: Global Banking Platforms, Q4 2010’ which stated, “Polaris emerges as ‘Strong Performer’ with good first-time performances.” The report added: “IntellectTM offers one of the two highest levels of SOA readiness. In addition, Intellect’s scores show cross-channel support for a broad range of channels as well as a sound degree of platform agility.”

•             IntellectTM Core Banking was recognized by the TowerGroup in its report on ‘Wholesale Banking: Top 10 Technology Initiatives for 2011’ which stated: “Polaris as one of the top global core banking vendors slated to be a leader among the technology partners of choice for 2011.”

•             Polaris Global Sourcing was recognized by Celent in its report titled ‘IT Services Vendors Solutions Spectrum, EMEA Version, 2010’. The report says, “Polaris has a mature to emerging presence in Custom Development / Maintenance / Domain Consulting / Testing / Architectural design….”

Arun Jain, Founder, Chairman & CEO, said, “The IntellectTM suite has given us the opportunity to tap market potential in 60 countries worldwide and 8 out of 10 top global banks use our product. This year I was pleasantly surprised during Sibos 2010, where heads of the world’s top 30 banks engaged with our FT experts and openly discussed their business problems. To their delight, we had solutions for all their problems, and our challenge for 2011 will be to capture the demand and convert it into firm orders.”

Govind Singhal, President & COO, Polaris Software., said, “With proprietary frameworks and tools in place, Polaris can perform with higher efficiency than the current industry benchmark and we have proven increased improvement in delivery in our offshore engineering centres reflecting extreme execution.”

R Srikanth, President & CFO, Polaris Software, said, “This quarter has seen the highest PAT recorded in the company, with quarterly profits crossing Rs 50 crore (annualized EPS = 20.08) for the first time, which has propelled our networth in the balance sheet to Rs 1,000 crore. We were able to accrue foreign exchange gains this quarter as a result of our advanced hedging and fund management capabilities. We have prudently added to cash reserves while fully supporting business growth.”