iGate net profit up 14.8% in Dec quarter

Nasdaq-listed software services exporter iGate Corp. reported a 14.8% rise in December quarter net profit, missing analyst expectations as gross margin narrowed. A Bloomberg poll had estimated a net profit of $44 million on revenue of $330.2 million. The company reported a fourth quarter net profit of $38 million, up from $33.1 million in the year-ago period. Revenue rose 10.7% to $331.5 million from $299.3 million, while gross margin narrowed to 34.8% from 39.8% in the year-ago quarter.

The amount of time and effort taken to deliver projects remains the same, but the cost of people working on them is more expensive, Greyhound Research analyst Sanchit Vir Gogia said in an email. “The billing cost to the end customer is not increasing at the same pace as the cost. Hence, downward spiral impact on the overall profitability and margins. This is an industry trend,” Gogia said.

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