Hexaware Technologies (HEXT) Q4 2010 earnings summary

Executive summary

• FY2010 revenue reached $231.16m (₹10,545.64m), up 7.68% in dollars and 1.54% in rupees; net income fell 19.82% to ₹1,075.89m.

• Growth strengthened after a weak Q1, with sequential dollar revenue growth of 13.2% in Q2, 11.2% in Q3 and 9.0% in Q4; Q4 EBIT margin was 9.3%.

• Strategic focus areas included Enterprise Solutions, Travel & Transportation, Testing and Capital Markets; about 94.5% of revenue came from existing clients.

Financial highlights

• Revenue was $231.16m versus $214.68m in 2009; reported operating profit was ₹663.17m versus ₹1,705.10m, and PBT including exceptional items was ₹1,168.22m versus ₹1,445.36m.

• Net income was ₹1,075.89m versus ₹1,341.78m; reported PAT margin was 10.2% in rupees.

• Other income rose to ₹554.56m from ₹374.77m, largely reflecting profit on sale of surplus assets; employment expenses increased 18.28% to ₹6,754.88m.

• Consolidated basic EPS was ₹7.44 reported after exceptional items and ₹5.89 before exceptional items; adjusted for fair-value ESOP accounting, EPS was ₹7.33 and ₹5.89, respectively.

Outlook and guidance

• FY2011 revenue guidance was at least $290m, implying stated growth of at least 25% YoY; management targeted double-digit EBIT margins versus 6.6% in FY2010.

• Planned FY2011 hiring exceeded 1,500 employees, including 700 fresh graduates; added capacity was intended to support anticipated demand growth.

• Management expected stronger demand in Europe and growth across geographies, with focus on Mexico, the UK, India and Australia.