Luxoft Holding (NYSE: LXFT) announced weaker-than-expected fiscal first-quarter results on Thursday after the market closed, highlighting a seasonal slowdown and sluggish sales to the software development specialist's top two clients. Still, sales growth to smaller accounts remained strong. And similar to last quarter, Luxoft managed to sustain exceptional growth in the automotive and telecom sectors.
Let's have a closer look at what Luxoft achieved over the past few months, as well as what investors can expect from the company going forward.
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Luxoft Holding results: The raw numbers
What happened with Luxoft Holding this quarter?
- On an adjusted (non- GAAP) basis -- which adds perspective by excluding items like stock-based compensation and acquisition expenses -- net income declined 18.6% year over year to $17.1 million. Adjusted net income per share also dropped 19.4% to $0.50.
- Luxoft doesn't provide specific quarterly guidance. So, for perspective -- and though we don't usually pay close attention to Wall Street's demands -- consensus estimates predicted Luxoft would turn in higher adjusted earnings of $0.75 per share on revenue of $213.5 million.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 10.8% to $26.4 million.
- By industry vertical:
- Financial services revenue slipped 6.7%$to $113.5 million.
- Automotive and transport revenue grew 38% to $35.1 million.
- Digital revenue jumped 30% to $25.8 million.
- Telecom revenue increased 157.1% to $25.5 million.
- Revenue from the newer healthcare segment was $8.7 million.
- Annualized revenue per billable engineer was $75.9 million, up from $75.5 million in the same year-ago period.
What management had to say
As Luxoft CEO Dmitry Loschinin stated:
Given its relative underperformance to start the year, Luxoft now expects revenue for the full fiscal year (ending March 31, 2018) to be at least $920 million -- a reduction from its previous guidance for full-year revenue of at least $943 million. Luxoft also lowered its guidance to call for adjusted EBITDA margin to be in the range of 15.5% to 16.5% (down from 17% to 19% previously), GAAP earnings per diluted share of at least $1.53 (down from $1.90 previously), and adjusted earnings per share of at least $2.85 (down from $3.26 previously).
It's disappointing by any measure to see Luxoft reducing its outlook, especially considering its progress diversifying away from those larger accounts. So while Luxoft's long-term story appears to remain intact, and with shares up around 10% over the past year leading into this report, it's no surprise to see the stock pulling back in after-hours trading right now.
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