Persistent Systems (PERSISTENT) Q4 08/09 earnings summary

Executive summary

• FY09 revenue grew amid the global downturn, but profitability fell as foreign-exchange losses, higher doubtful-debt provisions and operating costs weighed on results.

• Strategic customer discussions with executives from 150+ customers focused on broader, end-to-end product responsibility and long-term partnerships.

Financial highlights

• Consolidated revenue was Rs. 5,938.31 million, up 39.77% YoY in rupees and 20.90% in US dollars to USD 127.84 million.

• Consolidated total income was Rs. 6,006.84 million; PAT after exceptional items was Rs. 660.92 million, down from Rs. 831.74 million YoY.

• Adjusted for exceptional items, PAT was Rs. 675.65 million versus Rs. 866.92 million; total income increased 32.96% YoY.

• Personnel costs rose 22.60% to Rs. 3,324.25 million; operating and other expenses rose to Rs. 1,700.52 million, including substantial FX and derivative losses.

Outlook and guidance

• FY10 was expected to remain challenging as the slowdown continued into Q1; long-term customer prospects were described as strong and management cautiously optimistic.

• Planned to hire 1,800 software professionals in FY10 across Pune, Goa, Nagpur and Hyderabad, while investing in skills, technologies and new business models.

• Growth opportunities were expected from renewed IT investment after recovery, broader customer partnerships and expansion into new geographies and domains.