Nagarro posts 33.7% YoY revenue growth in Q3 2021

Rhea-AI Summary

Nagarro reported a strong Q3 2021, with revenue reaching €141.0 million, a 33.7% increase year-over-year. The nine-month revenue grew 19.5% to €384.0 million. Despite the growth, gross margin fell from 33.1% to 28.4% in Q3 due to wage inflation and trainee costs. Adjusted EBITDA grew to €21.7 million, but net profit decreased by €0.7 million, totaling €8.4 million. The company has revised its 2021 revenue guidance to €525 million while maintaining margin expectations.

Positive

• Q3 2021 revenue increased 33.7% YoY, reaching €141.0 million.
• Nine-month revenue grew to €384.0 million, up 19.5% YoY.
• Adjusted EBITDA improved to €21.7 million in Q3 2021, up from €20.4 million in Q3 2020.
• Added over 1,100 professionals in the quarter.

Negative

• Gross margin decreased from 33.1% in Q3 2020 to 28.4% in Q3 2021.
• Net profit fell to €8.4 million, down from €9.1 million in Q3 2020.
• EBIT decreased from €12.4 million in Q3 2020 to €13.4 million in Q3 2021.

FRANKFURT, Germany, Nov. 12, 2021 /PRNewswire/ -- Nagarro, a global leader in digital engineering and technology solutions, today stated its unaudited financial numbers for Q3 2021 and released its nine-month statement.

Reflecting strong demand, revenue grew to €141.0 million in Q3 2021, up 33.7% YoY from €105.4 million in Q3 2020, and up 10.7% QoQ from € 127.3 million in Q2 2021. Constant currency YoY revenue growth for Q3 2021 was 33.6%. Gross profit grew to €40.0 million in Q3 2021 from €34.9 million in Q3 2020. Gross margin dropped, changing from 33.1% in Q3 2020 to 28.4% in Q3 2021. Adjusted EBITDA grew by €1.3 million from €20.4 million (19.4% of revenue) in Q3 2020 to €21.7 million (15.4% of revenue) in Q3 2021. It may be noted that Q3 2020 also included the effect of salary cuts in response to the onset of the Covid-19 pandemic. In addition, wage inflation and the carrying of a large number of trainees weighed on the gross margin and on the Adjusted EBITDA in Q3 2021 despite some relief from reduced travel and reduced utility bills.

EBITDA increased by €1.6 million from €17.6 million in Q3 2020 to €19.2 million in Q3 2021. Our most significant adjustments to EBITDA in Q3 2021 are the expense on stock option of €1.6 million and expenses of €0.5 million related to the rollover of non-controlling interest. EBIT increased by €1.1 million from €12.4 million in Q3 2020 to €13.4 million in Q3 2021. Net profit decreased by €0.7 million to €8.4 million in Q3 2021 from €9.1 million in Q3 2020.

Nine-month results

Nagarro's 9M 2021 revenues grew to €384.0 million, up from €321.4 million for the same period in 2020, a growth of 19.5%. In constant currency, the revenue growth was 22.1%. Gross profit grew to €112.1 million in 9M 2021 from €105.9 million in 9M 2020. Gross margin dropped, changing from 32.9% in 9M 2020 to 29.2% in 9M 2021. Adjusted EBITDA grew 5.5% from €56.1 million (17.5% of revenue) in 9M 2020 to €59.2 million (15.4% of revenue) in 9M 2021.

EBITDA decreased  by €1.4 million from €53.3 million in 9M 2020 to €51.9 million in 9M 2021. EBIT decreased by €2.5 million from €37.3 million in 9M 2020 to €34.8 million in 9M 2021. Net profit decreased by €2.5 million to €21.7 million in 9M 2021 against €24.2 million in 9M 2020.

"Nagarro's revenue growth continued, despite an overheated job market," said Vaibhav Gadodia, Managing Director. "We again added over 1,100 professionals in this quarter, including fresh graduates, net of attrition. The company has raised its revenue guidance for 2021 to €525 million, while it retains its gross margin and Adjusted EBITDA margin guidance." The company will offer an earnings video call (webcast) on November 12 at 10 am Central European Time, which is 4 am in New York City and 5 pm in Singapore. To participate in the earnings video call, participants can register here for the webcast.

Key figures – Quarterly

		Q3		Q3				Q2
		2021		2020		Change		2021		Change
		kEUR		kEUR		%		kEUR		%
Revenue		140,954		105,394		33.7%		127,322		10.7%
Cost of revenues		100,991		70,532		43.2%		89,328		13.1%
Gross profit		40,008		34,926		14.5%		38,038		5.2%
Adjusted EBITDA		21,709		20,442		6.2%		18,960		14.5%
Revenue by country
Germany		32,229		27,353		17.8%		30,754		4.8%
US		50,623		36,600		38.3%		45,413		11.5%
Revenue by industry
Automotive, Manufacturing and Industrial		24,882		15,776		57.7%		21,123		17.8%
Energy, Utilities and Building Automation		11,852		9,159		29.4%		10,875		9.0%
Financial Services and Insurance		17,503		13,918		25.8%		14,687		19.2%
Horizontal Tech		13,883		8,496		63.4%		12,020		15.5%
Life Sciences and Healthcare		9,607		6,902		39.2%		9,149		5.0%
Management Consulting and Business Information		8,539		9,666		-11.7%		7,889		8.2%
Public, Non-profit and Education		10,355		6,746		53.5%		11,107		-6.8%
Retail and CPG		19,324		13,549		42.6%		17,715		9.1%
Telecom, Media and Entertainment		10,517		9,792		7.4%		9,483		10.9%
Travel and Logistics		14,491		11,390		27.2%		13,273		9.2%

 

Key figures – Nine months

Nine-month period ended September 30		2021		2020		Change
		kEUR		kEUR		%
Revenue		384,001		321,433		19.5%
Cost of revenues		272,034		215,728		26.1%
Gross profit		112,100		105,858		5.9%
Adjusted EBITDA		59,228		56,134		5.5%
Revenue by country
Germany		93,538		85,709		9.1%
US		135,307		111,674		21.2%
Revenue by industry
Automotive, Manufacturing and Industrial		64,865		45,310		43.2%
Energy, Utilities and Building Automation		32,139		27,750		15.8%
Financial Services and Insurance		45,245		40,681		11.2%
Horizontal Tech		37,868		26,919		40.7%
Life Sciences and Healthcare		27,622		23,223		18.9%
Management Consulting and Business Information		24,331		25,530		-4.7%
Public, Non-profit and Education		30,785		24,643		24.9%
Retail and CPG		53,106		38,751		37.0%
Telecom, Media and Entertainment		29,113		30,893		-5.8%
Travel and Logistics		38,925		37,732		3.2%

 

Nine-month period ended September 30		2021		2020
		%		%
Revenue concentration (by customer)
Top 5		14.3%		13.8%
Top 6-10		11.0%		10.1%
Outside of Top 10		74.7%		76.1%

 

Segment information

 

Nine-month period ended September 30		2021		2020		Change
		kEUR		kEUR		%
Central Europe
Revenue		129,607		119,639		8.3%
Cost of revenues		92,332		83,398		10.7%
Gross profit		37,276		36,240		2.9%
North America
Revenue		135,636		111,674		21.5%
Cost of revenues		96,892		72,121		34.3%
Gross profit		38,743		39,553		-2.0%
Rest of Europe
Revenue		56,934		47,866		18.9%
Cost of revenues		40,635		32,827		23.8%
Gross profit		16,432		15,192		8.2%
Rest of World
Revenue		61,824		42,254		46.3%
Cost of revenues		42,175		27,382		54.0%
Gross profit		19,649		14,872		32.1%
Gross profit, gross margin and Adjusted EBITDA are neither required by, nor presented in accordance with, IFRS. Non-IFRS measures should not be considered in isolation or as a substitute for results under IFRS.
Gross profit is calculated on the basis of total performance which is sum of revenue and own work capitalized.
Rounding differences may arise when individual amounts or percentages are added together.

 

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SOURCE Nagarro

FAQ

What were Nagarro's Q3 2021 revenue figures?

Nagarro's Q3 2021 revenue was €141.0 million, up 33.7% from Q3 2020.

How did Nagarro's gross margin change in Q3 2021?

Nagarro's gross margin dropped to 28.4% in Q3 2021 from 33.1% in Q3 2020.

What is Nagarro's adjusted EBITDA for Q3 2021?

Nagarro's adjusted EBITDA for Q3 2021 was €21.7 million.

What is Nagarro's updated revenue guidance for 2021?

Nagarro raised its 2021 revenue guidance to €525 million.

How did Nagarro's net profit change in Q3 2021?

Nagarro's net profit decreased to €8.4 million in Q3 2021, down from €9.1 million in Q3 2020.