â€śWe have delivered above industry revenue growth and robust profit margin performance for 9 successive quarters under the prevalent global macro-environment regime. The strong performance of 7.2% CQGR in revenue and 22% in EBITDA over the last 9 Quarters substantiates the sustained growth at Hexaware. Over the same period, we have also had a healthy client addition and have added 12 new clients in the last quarter. Our number of active clients has increased to 210, of which 50+ belong to Fortune/ Global 500 clientsâ€ť,remarked Atul Nishar, Chairman, Hexaware Technologies Limited.
â€śThe initiatives taken over the recent quarters have resulted in healthy addition of new logos â€“ 51 in 2011 and 24 in the first half of 2012. Further, we have launched several new programs cutting across all our focus vertical and horizontal competencies to address the unique requirements of the customers and add value through our engagements. With the healthy pipeline and on the back of several strategic steps currently underway, we remain firmly on track to deliver 20%+ revenue growth during 2012â€ť,saidP. R. Chandrasekar, CEO and Vice Chairman, Hexaware Technologies Limited.
Q3 2012 Revenue Guidance
Revenue for Q3 2012 is likely to be in the range of$ 92.5 mn - $ 94.0mn(exchange rates taken at 1 ÂŁ = 1.57 $, 1 â‚¬=1.23$ and 1 $ = `55.59); a Q-o-Q sequential revenue growth in $ terms of 1.4% - 3.0%
Second Interim Dividend of 2012
In line with the Dividend Policy announced last year, the Board of Directors declared a second interim dividend of ` 1.50 per share (75%) on equity shares of ` 2 each. The record date is fixed as Friday, 10 August 2012 for determining the shareholders entitled for this second interim dividend of the year 2012. The payment shall be made on August 16, 2012. This would result in a cash outflow of ` 51.6 Crores for dividend payment including tax, amounting to a dividend payout ratio of 58% for Q2 2012.
Large Deal Wins
Hexaware has recently entered into a strategic alliance with a multi-billion global corporate to establish a large, secure Enterprise Resource Planning (ERP) Application Outsourcing services unit for its global customers across multiple geographies and industry verticals on a Build Operate and Transfer model. This is expected to bring revenues estimated to the tune of $ 100 million cumulatively over the next 4 years. This partnership will yield a platform for further innovations and efficient business models for ERP Applications marketplace.
The revenues from this partnership will begin to accrue from early 2013 and ramp up from there. Hexaware will be setting up a dedicated unit within its Chennai SEZ campus, which is expected to grow to a global talent size of 1,000+ ERP consultants over the next 4 years, centering on Oracle, PeopleSoft and SAP service lines. This partnership will thus enable Hexaware to provide its services to newer clients in different market segments.
Launch of Analytics for Investment Management (AIM)
Enterprise Data Management (EDM) is a Business Intelligence/Business Analytics offering tailored specifically for Capital Markets Industry. The current version, EDM 3.0, is a multi-faceted offering that includes Technology & Business Architecture consulting, Multi product niche such as Eagle, Golden Source, CADIS, Integrated IT and BPO services, Specialized Accelerators, Processes, Methodologies, and Approach for addressing common data issues in Capital Markets Industry.
Hexaware has rolled out its proprietary EDM Intellectual Property Asset called AIM (Analytics for Investment Management). AIM is a prebuilt repository of dashboards, KPIs and reports supported by a dimensional data model for Investment reporting for a 360 degree view of the Portfolios and Assets under Management (AUM) they manage, in conjunction with the Trades, Performance and Risk related thereto. It is a revolutionary mechanism of delivering high ROI on existing data warehouses. Built on the philosophy of â€śdelivering power to business usersâ€ť, AIM is designed to leverage the full power of dimensional modeling, industry leading in-memory analytics products. The prebuilt repository of dashboards, KPIs and reports greatly reduces the time to market in taking the solution to the business users.
At the core of the toolkit lies a flexible and an integrated data model that helps manage the key dimensions and metrics across the mentioned Investment Management functions. This service predominantly solves the problem of traditional data warehouse, provides quicker access to business data, and offers a 360 degree view of Portfolio, Performance and Risk and supports ad-hoc reports, self-service and advanced dashboard capabilities.
Enterprise Solutions â€“ Business Update
Over the last couple of years, Hexaware has delivered several successful instances of PeopleSoft v9.1 upgrades and roll-out to its clients across all the geographies and spanning several lines of business. This period also saw Enterprise Solutions Horizontal add 40 new clients over the last 10 quarters. There are several strategic initiatives underway to strengthen the core capabilities in PeopleSoft through focus on Innovation and creation of different toolkits and internally, getting ready for the launch of PeopleSoft v9.2 to continue with the growth momentum and sustain the successful performance over the medium term.
Currently, Hexaware is also actively invested in increasing its competencies in Oracle Fusion range of products particularly focusing on Human Capital Management modules. Leveraging the Platinum partner status in the Oracle Partner NetworkÂ®, Hexaware has engaged with Oracle in participating in the Pre-release Testing phase of Oracle Fusion Product modules since 2011.
During the previous quarter, the Company added 12 new clients across all its key focus areas. Of these, 3 clients were added in the Banking and Financial Services (BFS) Domain and 1 in Travel and Transportation Vertical.
From a horizontal service line perspective, 4 clients were won in Enterprise Solutions space, 3 in Business Intelligence & Business Analytics (BI / BA) and 2 each in Business Process Outsourcing and Quality Assurance & Testing Services (QATS) business segments.
Of the 12 clients added in Q2 2012, 6 customers are based in Americas,3 in Europe and 3in Asia Pacific (APAC) region. For the quarter just completed, 63.3% of revenues originated from Americas, 29.2% from Europe, and the remaining 7.5% from the Asia Pacific region. Repeat business remained healthy at 93.2%.
The number of clients registering annual revenues in excess of$ 20 mn each remained steady at 3; clients in the $ 10 mn - $ 20 mn range remained stable at 3, 7clients in the $ 5 mn - $ 10 mn range, 44 clients in the $ 1 mn - $ 5 mn category and the clients with $ 1 mn+ increased further to 57 â€“ all on a trailing twelve months basis. At the end of the quarter, the number of active clients improved to210.
Foreign Exchange Cover
The Company has forward contracts worth $ 219 mn at an average rate of `50.4 and hedges worth â‚¬ 13 mn at an average exchange rate of ` 69.6 maturing over the course of the next eight quarters (from July 2012 till June 2014).
The average bill rate per hour for Q2 2012 remained stable at $ 73.50for onsite services and at $ 22.85for offshore locations.
At the end of June 2012, the headcount increased to 8,733; up 109 from March 2012 and an increase of 1,314 compared with June 2011. For the IT business, the technical personnel comprised 92.1% of the work force.
During the Quarter, the Company completed its annual appraisal process and rolled out annual compensation increase for all its India based employees effective April 1, 2012. The annual wage revision for all overseas employees would be effective July 1, 2012. Attrition for Q2 2012 reduced further to 9.6%. This is compared to 11.0% in Q1 2012 and down from 18.0% in Q2 2011.
Awards and Recognition
Hexaware has been selected for the International Association of Outsourcing ProvidersÂ® (IAOPÂ®) Global Outsourcing 100Â® list. The Company was recognized for its global expertise overall and for its work in key areas such as Human Resources Services, Transaction Processing Services and Air Transportation.
In addition to being listed in the IAOPÂ® Global Outsourcing 100Â® list, Hexaware achieved recognition on sub lists including:
Â· Best 10 Leaders â€“ Human Resources Services
Â· Best 20 Leaders â€“ Transaction Processing Services
Hexaware has been mentioned as one of the fastest growing RIMS providers in the Gartner report titled â€śCompetitive Landscape: India-Based Remote Infrastructure Management Service Providersâ€ť dated 5th June 2012 by Arup Roy and Biswajeet Mahapatra.
Hexaware has won the Best CIO of India Award conferred by the Stars of the Industry Group and Asian Confederation of Businesses. This award was presented to recognize the best performing CIO in the IT Sector and acknowledges the Companyâ€™s IT-agility and project and IT performance.