Virtusa stock slumps after downgraded 2020 expectations

Town of Westborough Virtusa's headquarters at 2000 West Park Drive in Westborough

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By Zachary Comeau

Southborough’s global IT service provider Virtusa Corp. saw its stock price fall more than 17% on Friday after the company said reduced spending from a European banking client is impacting its outlook.

The company’s first quarter for its fiscal year was actually an improvement over last year. The company’s $319 million in revenue reflected a 6% increase from last year’s period and the company profited $6 million compared to a $5.5-million loss last year.

Compared to the fourth quarter, revenue was down 2.3%, and profit was down to $4.7 million compared to $7.3 million last quarter.

Chairman and CEO Kris Canekeratne said in a statement a European banking client’s reduction in spending and increased currency headwinds are impacting the company’s 2020 guidance.

When the company released its 2019 financial results in May, the company said it predicted 2020 revenues between $1.36 billion and $1.4 billion. Now, that estimate is between $1.32 billion and $1.35 billion.

This marks two earnings reports in a row that were followed by sharp declines in the company’s share price. In May, the company's stock dropped from $54.20 to the $43 range.

On Friday, Virtusa's stock was trading on the Nasdaq for less than $36 per share after closing at $43.59 on Thursday.