Highlights:    * Q2 revenue of $100.1M  * Q2 EPS of $0.61 per diluted share  * Q2 cash & short term investments of $158.6M 

TROY, Mich., July 29, 2009 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the second quarter, ended June 30, 2009.

Second Quarter Financial Highlights

Syntel's revenue for the second quarter decreased three percent to $100.1 million, compared to $103.4 million in the prior-year period, but increased four percent sequentially from $96.4 million in the first quarter of 2009. Revenue improvement was the result of increased traction in cost-reduction services and appreciation in the Indian rupee. During the second quarter, Applications Outsourcing accounted for 72 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 19 percent, e-Business contributing seven percent and Team Sourcing at two percent.

The Company's gross margin improved to 48.2 percent in the second quarter, compared to 41.1 percent in the prior-year period and 46.5 percent in the first quarter of 2009. Selling, General and Administrative (SG&A) expenses were 20.8 percent in the second quarter, compared to 19.1 percent in the prior-year period and 19.4 percent in the previous quarter. Syntel's income from operations was 27.4 percent in the second quarter as compared to 22.1 percent in the prior-year period and 27.1 percent in the first quarter of 2009.

Operating margins during the quarter were favorably impacted by improved employee productivity and proactive cost management. These benefits were offset by a four percent appreciation in the Indian Rupee which increased both direct costs and SG&A expenses. The negative impact of currency appreciation on operating margin was partially offset by gains in currency hedging, which increased second quarter "other income."

Net income for the second quarter was $25.1 million or $0.61 per diluted share, compared to $17.4 million or $0.42 per diluted share in the prior-year period and net income of $27.3 million or $0.66 per diluted share in the first quarter of 2009.

Operational Highlights

"Syntel was encouraged by improved stabilization in the marketplace and the increasingly positive discussions initiated with our clients during the quarter," said Chief Executive Officer and President Keshav Murugesh. "While discretionary projects remain sidelined, customers are beginning to once again look at cost reduction initiatives which are aligned with their longer-term strategic objectives."

"The timing of new project starts and changes in the marketplace are uncertain going forward. However, based on today's economic environment and our current visibility levels, we believe that the second quarter revenue run-rate represents a minimum level for the balance of 2009. Syntel will continue to focus on driving key investment initiatives and proactive cost management in the second half of the year with the objective of properly positioning the company for long-term sustainable growth."

2009 Guidance

Based on current visibility levels and an exchange rate assumption of 48.7 rupees to the dollar, the Company is updating 2009 guidance to reflect revenue of $395 to $415 million, and EPS in the range of $2.40 to $2.50.