Persistent Systems (PERSISTENT) Q4 06/07 earnings summary

Executive summary

• FY07 consolidated revenue reached Rs 31,440.53 lakh, up 43% YoY; net profit after exceptional and prior-period items rose 42% to Rs 5,551.78 lakh. Outsourced Software Product Development leadership and scaling were central priorities.

• Growth was driven by broader product-lifecycle services, existing-customer expansion and new customer wins; the customer base added 64 accounts and shipped more than 1,000 product releases.

Financial highlights

• Consolidated software services and products revenue was Rs 31,231.79 lakh, up 43% YoY; exports were Rs 29,862.49 lakh and domestic revenue Rs 294.99 lakh.

• Consolidated EBITDA was Rs 8,262.73 lakh, up 37% YoY; EBITDA margin declined to 26.3% from 27.5%, reflecting higher personnel costs.

• Consolidated PAT before exceptional and prior-period items was Rs 5,370.41 lakh, up from Rs 3,991.87 lakh; PAT margin was 17.1% versus 18.2%.

• Consolidated PAT after exceptional and prior-period items was Rs 5,551.78 lakh versus Rs 3,906.89 lakh; diluted EPS was Rs 54.20 versus Rs 40.86.

• Standalone total income was Rs 29,603.94 lakh, up 40%; standalone PAT after exceptional and prior-period items was Rs 5,907.32 lakh, up 45%.

Outlook and guidance

• Scaling operations was the priority for FY08; management was optimistic about prospects as leadership hires were in place and market conditions improved.

• Planned to hire 1,800 additional software professionals across Pune, Goa and Nagpur; recruitment and retention remained key industry challenges.

• FY08 currency hedges covered USD 48.50 million of revenue at an average USD 1 = Rs 45.48 as of April 30, 2007.