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Luxoft Holding, Inc Reports Results for Three Months Ended June 30, 2017

LONDON--(BUSINESS WIRE)--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, 2017.

Highlights – Three Months Ended June 30, 2017

  • US GAAP revenue amounted to $209.2 million, an increase of 17.5% year over year
  • Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $26.4 million and adjusted EBITDA margin was 12.6%, compared to $29.6 million and 16.6% in the year-ago quarter
  • Diluted EPS on a US GAAP basis was $0.18, compared to $0.42 in the year-ago quarter
  • Diluted EPS on a non-GAAP basis was $0.50, compared to $0.62 in the year-ago quarter
  • As of June 30, 2017, the total number of employees was 12 814, revenue per billable engineer has increased to $75.9 thousand.

Revenue for the three months ended June 30, 2017 increased to $209.2 million, up 17.5% from $ 178.0 million for the same period a year ago, and increased 2.5% sequentially. Adjusted EBITDA was $26.4 million with corresponding margins of 12.6%, as compared to $29.6 million and 16.6%, respectively, in the year ago quarter. US GAAP net income was $6.3 million, or $0.18 per diluted share, compared to $14.1 million and $0.42 per diluted share for the same period a year ago, and $13.7 million and $0.40 sequentially. Non-GAAP net income was $17.1 million, or $0.50 per diluted share, compared to $21.0 million and $0.62 per diluted share for the same period a year ago, and $21.5 million and $0.63 sequentially. Reconciliations between non-GAAP financial measures and US GAAP operating results and diluted EPS are included at the end of this release.

"We posted a top line growth for the quarter below 20%, impacted by the expected deceleration in the top two accounts. Additional headwinds came from seasonal weakness, decision making slowdown in the financial services vertical, and softer growth within two large M&A-related customers, affected by their internal reorganizations. Despite of that, outside of the top two accounts the business posted a strong annual growth in excess of 55%. We are expanding offerings in Automotive, Healthcare and Digital Enterprise, where we see demand for high complexity digital innovation and cloud deployments, which is a part of our current backlog,” said Dmitry Loschinin, Luxoft's CEO and President. “As we continue to diversify our business, we are pleased to see success across a broad client base and a further increase in our revenue per billable employee, while top 3 client concentration decreases 16% year over year.Financial year 2018 is a pivotal year for our company, with a lot of moving parts, some challenges, yet really exciting changes and business opportunities."

The company’s following verticals experienced revenue growth, with Telecom and Automotive delivering the strongest performance of 157.1% and 38.0%, respectively, on a year over year basis. Financial Services decreased 7.3%, compared to the year ago quarter.

The company exhibited solid performance across the following core revenue-generating geographies: revenues generated in North America increased 66.3% and revenues generated in Europe increased 23.4%. This quarter the company changed its methodology for reporting revenue breakdown by geography, merging some of the locations previously reported on the stand-alone basis. This methodology will be consistently applied going forward.

"We are pleased to report good double digit growth in the first quarter, most of which was delivered by strong performance of high potential accounts, which comprise 37% of total revenues for this period. This year we continue seeing some headwinds on our gross margin side, primarily driven by investments associated with development of our high potential accounts, which, while growing in revenue concentration, have not yet reached firm-wide average gross margin levels. Our profitability is also affected by rebalancing of the client portfolio and initially lower margin accounts that usually come from the acquisitions," stated Evgeny Fetisov, Chief Financial Officer. "We have a solid pipeline of new opportunities and a continued strong performance of the HPA base, now consisting of 50 accounts. Thus, we expect the pace of organic growth to improve as compared to last year to above 30% outside of top 2 accounts. In the upcoming quarters we also anticipate to post improved adjusted EBITDA and net income."

Outlook for the Financial Year Ending March 31, 2018

  • Revenue is expected to be at least $920 MM, revised down from originally announced $943 million, which represents an increase of at least 17.1% year over year
  • Adjusted EBITDA margin is expected to be in the range of 15.5% - 16.5%, revised from previous guidance of 17.0% - 19.0%
  • Diluted EPS on GAAP basis is expected to be at least $1.53, and diluted EPS on a non-GAAP basis at least $2.85
  • EPS is based on an estimated weighted average of 35,051 thousand diluted shares

Conference Call Information

A conference call will be conducted with the members of Luxoft's senior management at 8:00 a.m. EDT on Friday, August 11, 2017 to review the financial and operational performance of the company for the above-mentioned period.

To participate in the conference call please dial 877-407-8293 (for domestic U.S. callers) or 201-689-8349 (for international callers). A live webcast will also be available during the call and can be accessed at http://edge.media-server.com/m/p/ek9zw46c/lan/en. Participants, please access the website at least 10 minutes prior to the call to register and follow the instructions provided on the website to download and install the necessary applications.

If you are unable to join our live event, a replay will be available by dialing 877-660-6853 (for domestic U.S. callers) or 201-612-7415 (for international callers) and entering the conference ID# 13666208. The replay will be available from two hours as of the end of the call and up to 11:59 p.m. EDT on August 25, 2017. The replay will also be available at Luxoft's Investor Relations portal for 14 days following the call.

About Luxoft

Luxoft Holding, Inc (NYSE:LXFT) is a leading provider of software development services and innovative IT solutions to a global client base consisting primarily of large multinational corporations. Luxoft's software development services consist of core and mission critical custom software development and support, product engineering and testing, and technology consulting. Through its services and solutions, Luxoft helps clients improve their competitive position by increasing efficiency, optimizing costs, and enabling changes through disruptive digital technologies that enhance end-user experience and shorten time-to-market.. The Company develops its solutions and delivers its services from 35 dedicated delivery centers worldwide. It has over 12 800 employees across 40 cities and 19 countries in North America, Mexico, Western and Eastern Europe, Asia Pacific, and South Africa. Luxoft is incorporated in Tortola, British Virgin Islands, has its operating headquarters office in Zug, Switzerland and is listed on the New York Stock Exchange. For more information, please visit http://www.luxoft.com.

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with US GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: earnings before interest, tax, depreciation and amortization (EBITDA); adjusted EBITDA; non-GAAP net income; non-GAAP diluted Earnings per share (EPS) and Free Cash Flow (FCF). EBITDA is calculated as...


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