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 months ended June 30, 2015.
Highlights – Three Months Ended June 30, 2015
- US GAAP revenue amounted to $148.1 million, an increase of 31.8% year over year on the reporting currency basis and 45.6% increase on the constant currency basis.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for stock based compensation and for change in fair value of contingent consideration was $27.2 million and EBITDA margin was 18.4%, compared to $19.1 million and 17.0%, respectively, in the year-ago quarter.
- Adjusted EBITDA increased 42.5% year over year and net income increased 16.2% year over year.
- Non-GAAP Net Income amounted to $20.6 million, an increase of 40.9% year over year.
- Diluted earnings per share (EPS) on a US GAAP basis was $0.43, compared to $0.38 in the year-ago quarter.
- Diluted EPS on a non-GAAP basis was $0.61, compared to $0.45 in the year-ago quarter.
Revenue for the three months ended June 30, 2015 increased to $148.1 million, up 31.8% from $112.3 million for the same period a year ago in the reporting currency and up 45.6% for the same period a year ago in constant currency. EBITDA adjusted for stock based compensation and for change in fair value of contingent consideration was $27.2 million and corresponding EBITDA margin was 18.4%, as compared to $19.1 million and 17.0%, respectively, in the year-ago quarter. US GAAP net income was $14.6 million, or $0.43 per diluted share, compared to $12.6 million and $0.38 per diluted share for the same period a year ago. Non-GAAP Net Income was $20.6 million, or $0.61 per diluted share, compared to $14.6 million and $0.45 per diluted share for the same period a year ago. Reconciliations between non-GAAP financial measures and US GAAP operating results and diluted EPS are included at the end of this release.
“We are excited to announce the results of another strong quarter for our company,” said Dmitry Loschinin, President and Chief Executive Officer. “The start to the new financial year has been supported by the powerful momentum we have built during 2015 by means of several strategic acquisitions, solid achievements from our Luxoft Global Upgrade program and continued investments into our engineering expertise and solutions. The underlying premise of our M&A strategy has proven to work and our growth, in addition to customary organic forces, is also being fueled by realized synergies from the companies that we have recently added into the Luxoft family. We have diversified our top ten-client list, measurably decreased client concentration and anchored more high potential engagements in financial services, telecom, technology and automotive domains. We are confidently looking to the year ahead, and we are excited to realize all of the opportunities currently available to Luxoft. Therefore, we are pleased to increase our revenue guidance for the year ending March 31, 2016 to at least 23% year over year growth.”
The Company’s core verticals continued to produce healthy annual growth with financial services posting 38% growth, technology posting 59% growth, telecom posting 21% growth, and automotive and transport posting 24% growth. The core revenue generating geographies experienced double digit growth during the past quarter, as compared to the same period a year ago: revenues generated in the U.K. increased 56%, revenues generated in Germany increased 18%. The revenues generated in the U.S. moderately grew by 6% as its overall impact was diminished by M&A activity in Western Europe. As of June 30, 2015, the total number of employees was 9,535, while attrition continued to decrease to the lower portion of the historical range of 9.9%.
Outlook for The Year Ending March 31, 2016:
The Company is increasing its original revenue and EPS guidance for the financial year ending March 31, 2016:
- Revenue is expected to reach at least $640.3 million, an increase of at least 23.0% year over year, compared to at least $625.0 million, an increase of at least 20.0% year over year and 26% year over year in constant currency.
- EBITDA margin adjusted for stock-based compensation is expected to be in the range of 17.0% – 19.0%.
- Fully diluted EPS is expected to reach at least $2.02 on a US GAAP basis, compared to $2.00 previously; fully diluted EPS is expected to reach at least $2.55 on a non-GAAP basis, compared to at least $2.52 previously.
- EPS is based on an estimated weighted average of 34,057,503 diluted shares. The number of diluted shares has increased as compared to 33, 606,018 diluted shares announced earlier, due to larger amount of shares expected to be issued under the stock option program based on the significantly appreciated stock price.
“Our Company has delivered a strong start to the new financial year 2016. As always, around 90% of our top-line growth is comprised of recurring revenues from clients with whom we have strong relationships. Our operating and financial performance metrics remain solid,“ said Roman Yakushkin, Chief Financial Officer. “We have been increasing our adjusted EBITDA margins while carefully managing our cost base. We have expanded our recruiting capabilities and enhanced our presence in the three core delivery hubs within the European Union: Romania, Poland and Bulgaria by 40%, 168% and 297% respectively since June 30, 2014, while reducing our exposure in Ukraine down to 38% of the total engineering staff and in Russia to 23% of the total engineering staff. Finally, we have increased yet again our productivity, which has now approached $75,000 per engineer – a significant difference versus our immediate peers. We are delighted with the results and the opportunity to raise our guidance for the end of the financial year ending March 31, 2016, encouraged by a number of strong quarters that we believe lie ahead.”
