Syntel, Inc. (SYNT) Reports Third Quarter 2012 Financial Results

Syntel, a global information technology services and Knowledge Process Outsourcing (KPO) company, announced financial results for the third quarter, ended September 30, 2012. Syntel reported robust financials for the third quarter of 2012. Revenues increased by 11 percent to $186.4 million, compared to $167.6 million in the prior-year period, and increased four percent sequentially from $179 million in the second quarter of 2012. During the third quarter, Applications Outsourcing accounted for 75 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 15 percent, e-Business contributing 8 percent, and TeamSourcing at 2 percent.

“Our third quarter results reflect a continued focus on delivering differentiated domain-led offerings, and our dedication to providing real solutions to our customers,” said Syntel CEO and President Prashant Ranade. “Amid ongoing global economic headwinds, our commitment to our customers and to delivering innovation continues to present us with new opportunities to provide thought leadership in the markets we serve.”

Syntel’s gross margin was 45.5 percent in the third quarter, compared to 39.8 percent in the prior-year period and 41.3 percent in the second quarter of 2012. Selling, General and Administrative (SG&A) expenses were 15.6 percent of revenue in the third quarter, compared to 21.9 percent in the prior-year period and 10.6 percent in the previous quarter.

The third quarter income from operations was 29.9 percent of revenue, versus 17.9 percent in the prior-year period and 30.7 percent in the second quarter. Currency-related balance sheet translations and, to a lesser extent, costs arising from a customer event and facility-related improvements, are attributed to being the main drivers of this change.

Net income for the third quarter was $51.5 million or $1.23 per diluted share, compared to $26.2 million or $0.63 per diluted share in the prior-year period and net income of $43.4 million or $1.04 per diluted share in the second quarter of 2012. During Q3, Syntel spent $11.3 million in infrastructure-related CAPEX investments. At the end of the quarter, cash and short-term investments totaled $422.1 million. The company also added 132 net employees, ending the quarter with 20,192 employees globally.

Based on current visibility levels and an exchange rate assumption of 52.70 Indian Rupees to the dollar, the company currently expects 2012 revenue of $730 to $735 million and EPS in the range of $4.36 to $4.40.

“During the quarter, we saw growth across our verticals that will support our aim to grow faster than the market overall, bolstered by investments in our capabilities,” said Ranade. “Technology has become the language of business and we expect to be fluent in the kinds of capabilities that will enable this growth.”

“The complexity of our customers’ business environment is rising,” he continued. “Our responsiveness coupled with an innovative approach to providing solutions will allow us to differentiate ourselves while we build on the strong relationships we enjoy.”

Syntel 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.

To learn more, visit www.syntelinc.com

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