Bangalore : Virtusa Corporation (NASDAQ GS: VRTU), a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to transform the customer experience, today reported consolidated financial results for the third quarter of fiscal year 2014, ended December 31, 2013.

Third Quarter Fiscal 2014 Consolidated Financial Results

Revenue for the third quarter of fiscal 2014 was $101.0 million, an increase of 17% year-over-year on both a GAAP reported and constant currency(1) basis. Sequentially, revenue increased 7% in reported currency and 6% on a constant currency basis.

Virtusa reported income from operations of $11.2 million for the third quarter of fiscal 2014, an increase of 14% compared to $9.8 million for the second quarter of fiscal 2014, and an increase of 22% compared to $9.1 million for the third quarter of fiscal 2013.

Net income for the third quarter of fiscal 2014 increased to $9.3 million, or $0.35 per diluted share, compared to $7.5 million, or $0.28 per diluted share, for the second quarter of fiscal 2014, and compared to $7.4 million, or $0.29 per diluted share, for the third quarter of fiscal 2013.  Net income for the third quarter of fiscal 2014 included $0.1 million of foreign currency transaction gains compared to a loss of ($1.0) million in the second quarter of fiscal 2014, and a loss of ($0.2) million in the third quarter of fiscal 2013.

The Company ended the third quarter of fiscal 2014 with $142.3 million of cash, cash equivalents, and short-term and long-term investments(2), inclusive of the draw down on December 31, 2013 of $20 million from the Company’s amended and restated secured revolving credit facility used to acquire TradeTech Consulting which closed on January 2, 2014.  This borrowing was repaid in full on January 14, 2014 with the $86.2 million of net proceeds from Virtusa’s underwritten public offering of 2,645,000 shares of common stock.  The shares sold in the offering, which closed on January 14, 2014, include the exercise in full of underwriters’ option to purchase additional shares.  The Company also generated $17.6 million of cash from operating activities during the third quarter of fiscal 2014.

Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “We are pleased with our third quarter results, our differentiated value proposition and the progress we have made against our strategic goals. Our clients are making investments to grow their revenue and to reduce the costs and risks of running their business.  We are helping them expand their addressable market by providing a distinctive millennial experience and industry leading transformational solutions to run their business as usual operations better. Overall, we are pleased with the progress we have made in winning new clients, expanding our existing client relationships, capturing larger programs, extending our global presence, and crossing over $100 million in quarterly revenue, an important milestone for Virtusa.”

Ranjan Kalia, Chief Financial Officer, said, “During the third quarter, we delivered broad based growth across our client portfolio as well as geographies.  As we continue to scale and win larger programs, we are realizing more opportunity for resource optimization resulting in operating margin expansion.”  Mr. Kalia added, “Our strong cash position continues to provide the Company with increased flexibility to invest for growth and capture operating efficiencies.”

Financial Outlook

Virtusa’s current guidance for the fourth fiscal quarter and full fiscal year ending March 31, 2014, which reflects the January 2, 2014 acquisition of TradeTech Consulting as well as the issuance of 2,645,000 shares from the Company’s follow-on offering which closed on January 14, 2014, is as follows:

•             Fourth quarter fiscal 2014 revenue is expected to be in the range of $110.3 million to $112.3 million, with diluted EPS of $0.33 to $0.37.

•             Fiscal year 2014 revenue is expected to be in the range of $396.2 million to $398.2 million, with diluted EPS of $1.26 to $1.30.

The Company’s fourth quarter and fiscal year 2014 diluted EPS estimates assume an average share count of approximately 28.9 million and 27.0 million respectively (assuming no further exercises of stock-based awards), and assume a stock price of $34.72, which was derived from the average closing price of the Company’s stock over the five trading days ended on January 29, 2014.  Deviations from this stock price may cause actual EPS to vary based on share dilution from Virtusa’s stock options, restricted stock and stock appreciation rights.

Conference Call and Webcast

Virtusa will host a conference call today, January 30, 2014 at 5:00 pm Eastern time to discuss the Company’s third quarter fiscal year 2014 financial results, current financial guidance, and other corporate developments.   To access this call, dial 888-802-2239 (domestic) or 913-312-1399 (international).  The passcode is 2770111. A replay of this conference call will be available through February 6, 2014 at 877-870-5176 (domestic) or 858-384-5517 (international).  The replay passcode is 2770111.  A live webcast of this conference call will be available on the “Investors” page of the Company’s website