Syntel Reports First Quarter 2011 Financial Results

/ Source: GlobeNewswire

Highlights:

  • Q1 revenue of $145.4M, up 25% from year-ago quarter and less than 1% sequentially
  • Q1 EPS of $0.60 per diluted share
  • Q1 cash & short term investments of $278.5M
  • Global Headcount of 17,610 on March 31, 2011, up 29% versus prior year

TROY, Mich., April 21, 2011 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the first quarter, ended March 31, 2011.

First Quarter Financial Highlights

Syntel's revenue for the first quarter increased 25 percent to $145.4 million, compared to $116.0 million in the prior-year period, and increased less than one percent sequentially from $144.9 million in the fourth quarter of 2010. During the first quarter, Applications Outsourcing accounted for 73 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 16 percent, e-Business contributing nine percent and TeamSourcing at two percent.

The Company's gross margin was 35.0 percent in the first quarter, compared to 42.4 percent in the prior-year period and 38.4 percent in the fourth quarter of 2010. Selling, General and Administrative (SG&A) expenses were 16.9 percent in the first quarter, compared to 19.2 percent in the prior-year period and 17.4 percent in the previous quarter. First quarter income from operations was 18.0 percent as compared to 23.3 percent in the prior-year period and 20.9 percent in the fourth quarter of 2010. The sequential reduction in operating margin was the result of compensation increases, advanced hiring which lowered utilization levels, and costs associated with transition revenues.

Net income for the first quarter was $25.0 million or $0.60 per diluted share, compared to $25.1 million or $0.60 per diluted share in the prior-year period and net income of $29.8 million or $0.71 per diluted share in the fourth quarter of 2010.

During Q1, Syntel spent $20.9 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $278.5 million. The Company also added 227 net employees, finishing the quarter with 17,610 employees globally.

Operational Highlights

"As discussed on our February earnings call, first quarter revenues were flat with fourth quarter levels," said Syntel CEO and President Prashant Ranade. "With 2011 budget cycles largely complete, the flow of new project commitments from our clients has begun. We remain encouraged about the growth opportunities within our blue-chip client base, and the role Syntel will play in helping them achieve their 2011 business objectives."

"Syntel continues to invest ahead of the curve in the resources and infrastructure necessary to gain market share in our industry," said Ranade. "While these costs are temporarily putting pressure on our margins, they are essential to driving enhanced value to our clients and critical to Syntel's revenue and profit growth."

2011 Guidance

Based on current visibility levels and an exchange rate assumption of 44.5 rupees to the dollar, the Company currently expects 2011 revenue of $610 to $635 million and EPS in the range of $2.70 to $2.90.

Syntel to Host Conference Call

Syntel will discuss its first quarter 2011 results today on a conference call at 10:00 a.m. (EDT). To listen to the call, please dial (877) 837-3915 in the US/Canada or (973) 638-3495 internationally. The call will also be broadcast live via the Internet at Syntel's web site: investor.syntelinc.com. Please access the site at least 15 minutes prior to the call to register and download any necessary software. A replay will be available until April 28, 2011 by dialing (800) 642-1687 and entering "60073439". International callers may dial (706) 645-9291 and enter the same passcode.

About Syntel

Syntel (Nasdaq:SYNT) is a leading global provider of integrated information technology and Knowledge Process Outsourcing (KPO) solutions spanning the entire lifecycle of business and information systems and processes. The Company is driven by its mission to create new opportunities for clients by harnessing the passion, talent and innovation of Syntel employees worldwide. Syntel leverages dedicated Centers of Excellence, a flexible Global Delivery Model, and a strong track record of building collaborative client partnerships to create sustainable business advantage for Global 2000 organizations. Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2000 certified. As of March 31, 2011, Syntel employed more than 17,600 people worldwide. To learn more, visit us at: .

Safe Harbor Provision

This news release includes forward-looking statements, including those 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 Report on Form 10-K for the year ended December 31, 2010 or from other factors not currently anticipated.

CONTACT: Jon Luebke Syntel (248) 619-3503 jon_luebke@syntelinc.com