Luxoft data revealed

October 17, 2013

Luxoft IPOI stumbled upon Luxoft earnings call transcript recently. If you are into outsourced software development like I am, then you’ll find this transcript to be pure gold. Public companies are required to disclose much more information than private ones. Even though the revealed information is not supposed to harm the company and give any edge to its competitors, it is still really interesting stuff. At the very least, you can compare industry leader’s metrics to your own, and sometimes learn useful practices. The entire F1Q 2014 Results Earnings Call Transcript is huge, so I’m going to list most interesting points here:

total of 6161 personnel, 5213 of them IT, utilization is about 80%, $83.8 million revenue for quarter. This single line contains like 5 key metrics of an outsourced software development company.

– 40% of the revenue come from US, 30% from UK, 15% from Germany, and 9% from Russia;

– top 5 clients bring 72% of the revenue;

– Deutsche Bank is the largest client responsible for about 30% of total revenue, UBS second at 19%;

– trade receivables are roughly equal to the quarterly revenue;

– wage inflation in the company is about 6-7% last year and is similar this year;

– they say about less than 10% on-site vs off-site presence for their clients and claim this to be a competitive advantage, not sure that it’s completely true nor if it is actually an advantage;

And finally, one more golden quote: “Our GAAP effective tax rate for the first quarter was 5.6%. We have been able to lower our effective tax rate due to successful completion of tax restructuring, involving migration of contracts to Swiss operational headquarters.

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Zynga the super bubble 2

July 3, 2011

Zynga filed for IPO and totally revealed its bubbleness two days ago. The figures turned out to be even worse than what was anticipated. The average net income in 2010 turned out to be $7.5m instead of $15m, and Facebook started taking its 30% cut only during the 2nd half of 2010. This year started off even worse: $11.8m of net income for Q1 of 2011.

The most grave news however is a lack of growth in the key metrics: all of them (DAU, MAU, and MUU) are essentially the same when comparing Q1 2010 and Q1 2011. While the revenue is higher, it will stagnate without growing user base. Apparently, Zynga realizes this too, that’s why they are in a rush for IPO. The time is not working in their favor.

UPDATE: here is what Zynga says about the 30% cut: “In July 2010, we began migrating to Facebook Credits as the primary payment method for our games played through Facebook, and by April 2011, we had completed this migration.” So, it is safe to assume that Zynga wasn’t leaving 30% of their revenue to Facebook for the most of 2010. That’s why income in 2011 is down by 50%.