VanceInfo Technologies (NYSE:VIT) reported Monday that first quarter net income increased as revenue soared 30%, prompting a hike in the company's 2011 guidance.
For the first three months of 2011, the global IT service provider posted net income of $6.9 million, or $0.15 per share, compared to $6.6 million, or $0.15 per share, a year ago.
Adjusted to exclude acquisition-related expenses, net income jumped 18.1% to $9.1 million, or $0.20 per share.
As a result, VanceInfo, attributing the earnings hike to business growth from American, European and Chinese markets, decided to increase its outlook for the year. It now expects 2011 revenues to hit at least $275 million, and earnings per share to be in the range of $0.95 and $0.96.
The Beijing-based company, a leader in offshore software development, reported net revenue of $57.4 million, a 29.5% increase from the year-ago period.
"We are pleased to report another solid quarter with results ahead of our expectations," CEO and chairman, Chris Chen said.
"With our highly adaptive business strategies, proactive and selective investments in new opportunities and proven execution track record, we remain confident in our growth and profitability for 2011 and years ahead."
Revenue from research and development services, under the core R&D outsourcing services unit, grew 12% to $31.6 million. However, the globalization and localizaton service line saw a 9% decrease in revenue to $1.5 million.
This was more than offset by sales from application development and maintenance, under the company's IT services section, which nearly doubled revenues to $14.2 million.
On a geographic basis, Greater China accounted for 73.6% of net revenues in the first quarter of 2011, while the US contributed 22.0%.
VanceInfo's operating expenses also increased. The company saw a 41.5% increase in operating expenses, attributed to an intensified sales effort, investments in research and development and office expansion to accomodate areas of presumed growth.
First quarter gross margins decreased to 37.4% in the first three months of the year, down from 40.4% in 2010. VanceInfo said the decline was a result of lower government subsidies, wage inflation and the impact that the Chinese New Year holiday had on the often-strong Chinese domestic business.