Luxoft Holding (LXFT +0.00%) announced fiscal second-quarter 2018 results on Thursday after the market closed, including strong growth in multiple markets that more than offset continued softness in sales to the software development company's two largest customers.
Let's dig deeper, then, to get a better picture of how Luxoft finished the first half of its fiscal year and what we can watch in the months ahead.
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Luxoft Holding results: The raw numbers
| Metric |
Fiscal Q2 2018* |
Fiscal Q2 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
GAAP revenue |
$228.0 million |
$196.5 million |
16.1% |
|
GAAP net income |
$18.4 million |
$16.3 million |
13.2% |
|
GAAP earnings per diluted share |
$0.54 |
$0.48 |
12.5% |
Data source: Luxoft Holding. *For the three months ended Sept. 30, 2017.
What happened with Luxoft Holding this quarter?
- Adjusted for items like stock-based compensation and acquisition costs, Luxoft's non-GAAP net income grew 0.7% to $28 million, but fell 1.2% on a per-share basis to $0.82.
- Luxoft doesn't offer quarterly financial guidance. But these results were comfortably ahead of consensus estimates, which called for adjusted earnings of $0.77 per share on roughly the same revenue.
- Adjusted EBITDA grew 1.7% to $38.6 million.
- Revenue by industry vertical included:
- 4.9% growth from financial services to $129.2 million
- 75.6% growth from automotive and transport to $40.8 million
- 18.1% growth from digital to $26.1 million
- 26% growth from telecom to $24 million
- a 10.3% decline in healthcare to $7.7 million
- a 22.6% decline from all other verticals to $0.3 million
- Annual revenue per billable engineer grew 4.9% year over year and 9% sequentially, to $82,800.
What management had to say
As Luxoft CEO Dmitry Loschinin stated:
Second quarter results were largely in line with our expectations as execution of our strategic transformation drove strong growth in several verticals and offset moderating demand patterns among our top two accounts. [...] Overall, we generated 37.5% revenue growth year-over-year outside our top two accounts, which demonstrates the steady progress we are making in transforming our business through new vertical growth, strengthened key platform-architecture expertise and expanded delivery-center scale. Importantly, we also further increased our High Performance Accounts (HPAs) which reached nearly 36.6% of revenue.
Loschinin further promised that the company is well positioned to benefit from long-term trends, especially given increasing demand for more complex digital and cloud-based deployments.
Looking forward
With no big surprises this quarter -- a great thing with Luxoft's disappointing showing three months ago still fresh on investors' minds -- Luxoft reiterated its previous guidance, which calls for full fiscal-year revenue of at least $920 million (or growth of at least 17.1%), adjusted EBITDA margin ranging from 15.5% to 16.5%, and adjusted earnings per share of at least $2.85.
In any case, this was an encouraging performance as Luxoft delivered as promised, continuing to diversify its revenue streams away from those sluggish large accounts and further penetrating key market verticals. So I think Luxoft investors should be more than happy with where the company stands today.
