Third Quarter Financial Highlights
Syntel's revenue for the third quarter increased one percent to $104.7 million (Rs.506 crore), compared to $103.8 million (Rs.502 crore) in the prior-year period, and increased five percent sequentially from $100.1 million (Rs.484 crore) in the second quarter of 2009. Sequential revenue improvement was driven by our Applications Outsourcing service offering, and growth was broad-based across all verticals. During the third quarter, Applications Outsourcing accounted for 74 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 18 percent, e-Business contributing six percent and Team Sourcing at two percent.
The Company's gross margin improved to 49.3 percent in the third quarter, compared to 44.3 percent in the prior-year period (500 bps increase) and 48.2 percent in the second quarter of 2009 (110 bps increase).
Selling, General and Administrative (SG&A) expenses were 18.1 percent in the third quarter, compared to 19.1 percent in the prior-year period and 20.8 percent in the previous quarter.
Syntel's income from operations expanded to 31.2 percent in the third quarter as compared to 25.2 percent in the prior-year period (600 bps increase) and 27.4 percent in the second quarter of 2009 (380bps increase).
Operating margins during the quarter were favorably impacted by improved utilization, employee productivity and proactive cost management. The Indian Rupee depreciated only 0.6% during the quarter, and therefore had little impact on sequential margin performance.
Net income for the third quarter was $30.3 million (Rs. 147 crore) or $0.73 per diluted share, compared to $22.1 million (Rs.107 crore) or $0.54 per diluted share in the prior-year period and net income of $25.1 million (Rs. 121 crore) or $0.61 per diluted share in the second quarter of 2009.
During the third quarter, Syntel added 8 new clients and two new "Hunting Licenses" or preferred partnership agreements, bringing the total number to 98 strategic relationships.