MindTree Consulting (MindTree) held a conference call on 19th January 2009 to discuss third quarter of FY09 results and future prospects. Ashok Soota, executive chairman along with other senior management members addressed the call.
Highlights of the call
- For the quarter ended December 2008, on consolidated sequential basis, operating revenues grew 17% at Rs 363.80 crore. In rupee terms, EBITDA for the quarter was 30.5% against 27.8% sequentially which improved mainly due to Rupee depreciation.
- For the quarter, MindTree provided foreign exchange loss of Rs 78.94 crore towards derivative instruments not qualifying for hedge accounting. The resultant PAT was down 77% sequentially at Rs 8.72 crore.
- In rupee terms, MindTree’s IT Services revenues grew by 8% Q-o-Q to Rs 217.64 crore while R&D Services posted a growth of 10% Q-o-Q to Rs 58.61 crore. Revenue from Aztec business grew 55% sequentially to Rs 87.55 crore.
- During the quarter, 22 new customers were added taking the active customer base to 260. MindTree now has 60 (US$ 1 Million+), 13 (US$ 5 Million+), and 3 (US$ 10 Million+) customers, including 41 Fortune 500 accounts.
- The company has added 299 people on a gross basis during Q3 FY09, taking total people strength to 5,826 as of December 31, 2008. Attrition on a trailing 12-month period for MindTree has reduced to 13.8% as compared to 15% in Q2 2008-09.
- The average rupee/dollar for the quarter was Rs 48.63/US$ against Rs 42.91/US$ in the sequential quarter.
- In USD terms, on consolidated basis, software revenues grew 3.6% sequentially while for MindTree only the software revenue recorded de-growth of 4.7%.
- For the quarter, share of consolidated revenue from US increased by 240 bps sequentially to 66.2% of total revenue, from India increased by 140 bps to 6.7% while from Europe and APAC dipped by 60 bps and 320 bps respectively to 19.9% and 7.2%.
- Sequentially the revenue of MindTree from IT services declined to 78.7% (79.2) and from R&D services improved to 21.3% (20.8%).
- Top client contribution stood at 7% (7.6% in sequential quarter) on consolidated basis. Top 5 clients contributed 25.8% (26.4%) and top 10 clients contributed 38.2% (39.8%). DSO stood at 79 days down from 83 days in the sequential quarter.
- On consolidated basis offshore/onsite revenue mix stood at 70.6:29.4 for the quarter from 69.5:30.5 in the sequential quarter and offshore/onsite effort mix stood at 87.8:12.2 for the quarter from 87.1:12.9 in the sequential quarter with Fixed Price contracts contributing 12.9% of the revenues (15.1% in the sequential quarter).
- The utilization including trainees marginally declined by 10bps to 70.3% whereas excluding trainees improved 80bps at 71.8%. The utilization is expected to decline in Q4 FY09 as the company has recruited from campus and these candidates would have to go for training.
- The company has cash balance on 31st Dec-08 at USD 26 million on consolidated basis (including USD 8 million with MindTree) and debt stood at USD 23 million (all with MindTree).
- On a consolidated basis, MindTree has announced a revenue guidance of US$ 269-273 million for FY09, EBITDA of US$ 62-65 million and PAT of US$ 14.8-17.5 million. The guidance is on the basis of Rs 48.5/US$.
- The guidance given by management suggests sequential growth of 17% (at higher end) in revenue at Rs 424.6 crore while the EBIDTA margin would significantly dip by 1380 bps to 16.7% against 30.5% reported in Q3 FY09. Further, the company has reported PAT of Rs 33.51 crore in 9M FY09 and PAT guidance for FY09 at Rs 85 crore suggests PAT of Rs 51 crore in Q4 FY09 (higher than 9 month net profit).