The company added just two clients in the quarter, compared to the normal 8 to 9. Its gross margin was down to 35.3%, from 36.6% in the preceding quarter, and 41.4% in the year ago quarter. Operating margin was down at 16.9% compared to 22.5% a year ago.
Igate CEO Ashok Vemuri, however, noted that one of the contracts was a big $150 million one from a North American client. He said that revenue per client in the quarter had risen to $4.5 million, compared to $3.8 million in the year ago quarter, indicating that existing clients are giving more business to Igate. And he said that volume growth in the last quarter was the highest in the company's history .
Vemuri said the company was investing significantly , which explains some of the margin decline. "We had lagged in investing in talent, capabilities, tool and infrastructure. You can't expect to have a world-class organization without that," he said.
Igate's revenue for the September quarter was up 3.5% at $322.8 million compared to the preceding quarter. It was up 10% compared to the corresponding quarter last year. To put that in some perspective, Igate's sequential growth in the quarter ended June was 3.2%; and in the latest quarter, Infosys' sequential growth was 3.1% and Mindtree's was 4.1%.
Net profit in the September quarter stood at $37.3 million, up 17% from a year ago. In the preceding quarter, there was a one-time charge of $51.8 million on account of extinguishment of debt, which reduced the net profit to $3.1 million.
Vemuri said in his conversations with clients he saw a higher degree of acceptance of Igate as a part ner for large transformational deals. He said the company was hiring for growth. "We have raised the gross hiring target for this year from 6,000 to 10,000," he said.
The company recently hired Srikanth Iyengar, a former Infosys executive in charge of financial services in Europe and head of its UK centre, as a senior VP in charge of Europe and Australia. He's part of Igate's six-member executive council. Executive VP Derek Kemp was recently given a new responsibility of head of the strategic deals team in order to push such deals.
But Vemuri clearly has the challenge of convincing the markets. The share price had touched a high of $40.7 following the announcement last quarter about efforts to sharply reduce its debt burden.
http://timesofindia.indiatimes.com/followceleb.cms?alias=iGate results,iGate Q3,igate,Ashok Vemuri
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