Nagarro posts 33.7% YoY revenue growth in Q3 2021

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12 Nov, 2021, 10:05 GMT

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.