Virtusa Announces First Quarter Fiscal 2008 Financial Results

Business Wire, Sept 5, 2007

* Revenue grows 46% year-over-year to $37.4 million

* Income from operations grows 38% year-over-year to $3.2 million

* Recently completed IPO raises $57 million in net proceeds

WESTBOROUGH, Mass. -- Virtusa Corporation (NASDAQ: VRTU), a global information technology (IT) services company that provides IT consulting, technology implementation and application outsourcing services through an enhanced global delivery model, today reported its financial results for the first quarter of fiscal 2008, ended June 30, 2007.

First Quarter 2008 Financial Results

For the first quarter of fiscal 2008, Virtusa's revenue increased 46.1% year-over-year and 6.2% sequentially, to $37.4 million.

Virtusa reported first quarter income from operations of $3.2 million, or 8.5% of revenue. This represents an increase of 37.8% compared to $2.3 million for the first quarter of fiscal 2007.

Total other income, which is comprised primarily of foreign currency transaction gains (losses) and interest income, decreased by approximately $0.5 million year-over-year, to $0.2 million in the first quarter of fiscal 2008 from $0.7 million in the first quarter of fiscal 2007. Foreign currency transaction loss in the first quarter of fiscal 2008 was $0.3 million, compared to a gain of $0.4 million in the first quarter of fiscal 2007. Interest income was $0.5 million in the first quarter of fiscal 2008, an increase compared to $0.3 million in the first quarter of fiscal 2007.

The provision for income taxes increased approximately $0.6 million year-over-year, to $0.7 million in the first quarter of fiscal 2008 from $0.1 million in the first quarter of fiscal 2007. The Company's effective tax rate increased from 3.6% in the first quarter of fiscal 2007 to 20.4% in the first quarter of fiscal 2008 because the Company is no longer recognizing an income statement benefit from the use of its deferred tax assets due to the release of the tax valuation allowance in fiscal 2007.

Net income for the first quarter of fiscal 2008 was $2.7 million, or $0.13 per diluted share, compared to $2.9 million, or $0.16 per diluted share, for the first quarter of fiscal 2007.

Kris Canekeratne, Virtusa's Chairman and CEO stated, "We were extremely pleased to complete our initial public offering in August, marking a significant milestone in Virtusa's history and providing the Company with additional resources to fund our growth." Canekeratne continued, "The first quarter was a strong start to fiscal 2008. Virtusa's differentiated platforming approach, domain expertise and optimized global delivery model are driving business results for our clients, expansion of our existing client relationships and new wins with large enterprise clients."

The Company ended the first quarter of fiscal 2008 with $39.5 million of cash and cash equivalents. The cash balance on June 30, 2007 does not include approximately $57 million in net proceeds before expenses that were raised through the Company's initial public offering, which was completed on August 8, 2007. The Company ended the first quarter of fiscal 2008 with no long-term debt.

"Our fiscal first quarter demonstrated our ability to execute and deliver strong financial results despite the material appreciation in the Indian rupee," said Tom Holler, Chief Financial Officer. "Our construction plans to build a 6,000 person capacity campus in Hyderabad continue to be on track, and we believe that the proceeds from our IPO will enable us to invest in the infrastructure necessary to support the growth of our business. We finished the quarter with approximately 3,690 global team members, and we will continue to hire top IT professionals to help us meet demand for our end-to-end services."

Financial Outlook

Virtusa management provided the following current financial guidance:

* Second quarter 2008 revenue is expected to be in the range of $40.0 to $40.4 million, with diluted EPS of $0.13 to $0.14.

* Fiscal year 2008 revenue is expected to be in the range of $164.0 to $167.0 million, with diluted EPS of $0.60 to $0.64.

Conference Call and Webcast

Virtusa will host a conference call on September 5, 2007 at 8:00 am Eastern time to discuss the Company's financial results and current financial guidance. To access this call, dial 866-293-8972 (domestic) or 913-312-1232 (international). A replay of this conference call will be available through September 12, 2007 at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 4848276. A live webcast of this conference call will be available on the "Investors" page of the Company's website (www.virtusa.com), and a replay will be archived on the website as well.

About Virtusa Corporation

Virtusa is a global information technology (IT) services company providing IT consulting, technology implementation and application outsourcing services. Using its enhanced global delivery model, innovative platforming approach and industry expertise, Virtusa provides cost-effective services that enable its clients to use IT to enhance business performance, accelerate time-to-market, increase productivity and improve customer service.