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 Tracking 1243 U.S. listed China Stocks and Counting...
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 Isoftstone Holdings (NYSE:ISS)

Tuesday, June 10, 2014
Comments & Business Outlook

First Quarter 2014 Financial Results

  • Net revenues increased 28.6% to $123.3 million in the first quarter 2014 from $95.9 million in the first quarter 2013.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.04 in the first quarter 2014 compared with $0.10 in the first quarter 2013.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "I am delighted to see that our net revenues grew at 28.6% in the first quarter 2014 compared with first quarter 2013. Such growth was mainly from our China-based businesses. Although net income was in line with our expectation, the gross profit margin was negatively impacted by the continued cost inflation and less government support received during the quarter. Our efforts to improve operating efficiencies resulted in lower operating expenses as of percent of revenue in the first quarter of 2014 compared with the same quarter in 2013, however, the savings were not enough to absorb the short fall in gross profit.

"Since cash flow from operating activities was a deficit of $34.5 million in the first quarter 2014 mainly due to slower than anticipated cash collections from certain top Chinese customers, we leveraged our cash balances and credit facilities with local commercial banks to support our business growth during the quarter.

"In the next three quarters of 2014, we expect that there will be no significant changes in market conditions and the demand environment. We will remain focused on continuing our strategic direction that includes increased operations through our joint venture with Huawei (now in its second year), winning new business in the Chinese BFSI sector, and continuing to invest in important emerging technologies that include big data, mobile, and cloud computing to further support and build our solutions-based businesses for longer-term success. At the same time, we will continue to fight on the battle of optimizing cost structure and operating efficiencies."


Tuesday, April 22, 2014
CFO Trail

Resignation of CFO

Xiaosong Zhang (Jonathan) has notified iSoftStone of his intent to resign as the Company's Chief Financial Officer. Mr. Zhang will continue to serve as iSoftStone's CFO through the filing of iSoftStone's 2013 annual report on S.E.C. Form 20-F, then continue to serve the Company as a consultant for an initial transition period through the end of August 2014, then for an extended period as the Company desires. Mr. Zhang is leaving to accept a Chief Financial Officer position with a mobile internet company located in Beijing, China.

Following Mr. Zhang's resignation, Cheng Zhang (Charles), iSoftStone's Vice President & Controller, will serve as acting Chief Financial Officer until a successor CFO has been appointed. Charles has been the Company's Vice President and Controller since July 2008. Prior to joining iSoftStone, Charles was the controller at United Information Technology Storage (Beijing) Co., Ltd from January 2008 to June 2008, controller at Nolato Mobile Communication Polymers (Beijing) Co., Ltd from February 2006 to December 2007, and finance manager at Lucent Technologies China Co., Ltd, Kimberly-Clark Beijing Co., Ltd, and Beijing Stone Matsushita Electric Works Co., Ltd from 1996 to 2006. Charles is a Certified General Accountant of Canada, a member of the Association of Chartered Certified Accountants, and a Certified Practicing Accountant of Australia.

Mr. Xiaosong Zhang said, "I am grateful for the exceptional people that I have had the privilege to work with at iSoftStone. I feel so proud that the Company established its market leading position over the past four years, which has been a very critical corporate development stage and during which I participated and contributed. Going forward, I will continue to serve and support the Company from a different role and capacity. Wish iSoftStone great success in the future."

Mr. T.W. Liu, iSoftStone's Chief Executive Officer, said, "Jonathan has been a truly valuable member of management who saw us through a number of significant milestones, including our IPO and establishment of joint venture with Huawei. Together, we witnessed the superior business growth and survived from market headwinds and competitions. We wish him the very best as he continues his career."


Comments & Business Outlook

Fourth quarter 2013 Financial Results

  • Net revenues increased 25.1% to $130.3 million in the fourth quarter 2013 from $104.2 million in the fourth quarter 2012.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.10 in the fourth quarter 2013 compared with $0.19 in the fourth quarter 2012.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "We concluded the fourth quarter 2013 with solid performance, recognizing top line growth of 25.1% over the fourth quarter 2012, and $10.3 million over our expectation for the fourth quarter 2013. The growth came mainly from our largest communications client and domestic banking clients, and modest growth in U.S. business in the fourth quarter 2013. In contrast, revenues from European and Japanese markets continued to decline during the quarter reflecting weakening customer demands."

"We focused on accelerating cash collections from customers during the fourth quarter to catch up where we fell behind during the previous quarters. The result was positive cash flow from operations of $35.9 million in the fourth quarter and $3.8 million for the year 2013. We also secured sufficient credit facilities from local commercial banks to meet capital needs to grow the business."

"Although we were focused on optimizing our business portfolio and improving operating efficiencies, our margins in 2013 declined from the prior year due to higher cost base, primarily in employee compensation, and investments made in business transformation."

"In 2014, we expect to continue our strategic direction that includes smooth operations for the second year of our joint venture with Huawei, gaining additional new business in the domestic BFSI sector, and continuing to invest in emerging technologies, including big data, mobile, and cloud computing to further build our solution-based business capabilities for longer term success."

Outlook for the first quarter 2014

For the first quarter 2014, iSoftStone expects to achieve the following targets:

  • Net revenues for the first quarter 2014 to be at least $122 million.
  • Net income for the first quarter 2014 to be at least $0.2 million.
  • Non-GAAP net income for the first quarter 2014 to be at least $2.2 million.
  • Non-GAAP diluted earnings per ADS for the first quarter 2014 to be at least $0.04, assuming 59.8 million average ADSs will be outstanding in the first quarter 2014. One ADS represents 10 ordinary shares.

Monday, April 21, 2014
Going Private News

BEIJING, April 19, 2014 /PRNewswire/ -- iSoftStone Holdings Limited ("iSoftStone" or the "Company") (NYSE: ISS), a leading China-based IT services provider, today announced that it has entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") with New iSoftStone Holdings Limited ("Parent") and New iSoftStone Acquisition Limited ("Merger Sub"), pursuant to which Parent will acquire iSoftStone (the "Transaction") for US$0.57 per ordinary share of the Company (a "Share") or US$5.70 per American depositary share, each representing ten Shares (an "ADS"). This amount represents a premium of 17.8% over the Company's closing price of US$4.84 per ADS on June 5, 2013, the last trading day prior to June 6, 2013, the date that the Company announced that it had received a "going-private" proposal, and a premium of 26.4% to the volume-weighted average closing prices of the Company's ADSs during the 30 trading days prior to June 6, 2013.

Immediately after the completion of the Transaction, Parent will be beneficially owned by Mr. Tianwen Liu, the Chairman and Chief Executive Officer of the Company (the "Chairman"), and the funds managed by China Everbright Investment Management Limited ("Everbright") and certain other management members and shareholders of the Company and their respective affiliates (collectively, the "Buyer Group"). As of March 31, 2014, the Buyer Group beneficially own, in the aggregate, approximately 21.9% of the outstanding Shares (excluding outstanding options and restricted share units of the Company).

The Company's board of directors (the "Board"), acting upon the unanimous recommendation of an independent committee of the Board (the "Independent Committee"), approved the Merger Agreement and the Transaction and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the Transaction. The Independent Committee, which is composed solely of independent directors of the Company who are unaffiliated with Parent, Merger Sub or any member of the Buyer Group or management of the Company, exclusively negotiated the terms of the Merger Agreement with the Buyer Group with the assistance of its independent financial and legal advisors.

The Transaction is subject to various closing conditions, including a condition that the Merger Agreement be authorized and approved by an affirmative vote of shareholders representing two-thirds or more of the Shares present and voting in person or by proxy as a single class at a meeting of the Company's shareholders convened to consider the authorization and approval of the Merger Agreement. The Buyer Group have agreed to vote all of the Shares beneficially owned by them in favor of the authorization and approval of the Merger Agreement and the Transaction. If completed, the Transaction will result in the Company becoming a privately-held company and its ADSs will no longer be listed on the New York Stock Exchange.

The Buyer Group intends to fund the Transaction through a combination of (i) the equity financings provided by the Chairman and Everbright pursuant to customary equity commitment letters, and (ii) the proceeds from a committed and underwritten loan facility contemplated by a debt commitment letter dated April 18, 2014 pursuant to which China Merchants Bank Co., Ltd., Hong Kong branch has agreed as the mandated lead arranger to arrange US$130 million in the aggregate of debt financing for the Transaction, subject to certain conditions.

The Company will prepare and file with the U.S. Securities and Exchange Commission (the "SEC") a Schedule 13E-3 transaction statement, which will include a proxy statement of the Company. The Schedule 13E-3 will include a description of the Merger Agreement and contain other important information about the Transaction, the Company and the other participants in the Transaction.

Goldman Sachs (Asia) L.L.C. is serving as financial advisor to the Independent Committee. Kirkland & Ellis is serving as U.S. legal advisor to the Independent Committee and Hankun Law Offices and Maples and Calder are serving as PRC and Cayman Islands legal advisors to the Company, respectively. O'Melveny & Myers is the Company's U.S. legal adviser.

Lazard is serving as financial advisor to the Buyer Group in respect of the Transaction. Cleary Gottlieb Steen & Hamilton LLP is serving as U.S. legal advisor to the Buyer Group and Zhong Lun Law Firm and Conyers Dill & Pearman are serving as PRC and Cayman Islands legal advisors to the Buyer Group, respectively. Clifford Chance is serving as Hong Kong and English law legal advisor to the mandated lead arranger of the debt financing and Fangda Partners and Walkers are serving as PRC and Cayman Islands legal advisors, respectively, to the mandated lead arranger of the debt financing.


Tuesday, November 26, 2013
Comments & Business Outlook

Third quarter 2013 Financial Results

  • Net revenues increased $12.8 million or 12.9% to $111.3 million in the third quarter 2013 from $98.6 million in the third quarter 2012
  • Non-GAAP diluted earnings per ADS (note 1) were a loss of $0.04 in the third quarter 2013 compared with an income of$0.18 in the third quarter 2012.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "The third quarter was challenging for us, especially in costs. Our revenues grew 12.9% from last year's third quarter, with the highest growth in IT services, up 21.2% in revenues, while Consulting & Solutions services revenues were down 8.4% mainly due to lower volume in SMART business as we worked off some of its backlog. Higher business volume came from our largest communications client and China banking clients, plus modest growth from our U.S. business, but was partly offset by lower revenues in the European and Japanese markets that continued to decline during the quarter.

"We have reviewed all significant current and future identifiable factors in our business, including structural changes in the industry and global economies, geographic markets, our service lines, and the client verticals that we have chosen to serve. We have concluded that our strategic direction remains valid: smooth effective operations in our joint venture with Huawei, gaining additional new business in China's banking, financial services, and insurance sector, and continuing to invest in our SMART business capabilities and emerging technologies that include big data, mobile, and cloud computing to support our clients' growth and accelerate their business expansions. In the short run, we must focus on continuing to deliver outstanding service to customers while mitigating cost increases and simultaneously improving quality, effectiveness, efficiency, and margins."

Outlook for the fourth quarter 2013

For the fourth quarter 2013, iSoftStone expects to achieve the following targets:

  • Net revenues for the fourth quarter 2013 to be at least $120 million.
  • Net loss for the fourth quarter 2013 to be at most $7.0 million.
  • Non-GAAP net loss for the fourth quarter 2013 to be at most $3.0 million.
  • Non-GAAP diluted earnings per ADS for the fourth quarter 2013 to be at most a loss of $0.05, assuming 58.3 million average ADSs will be outstanding in the fourth quarter 2013. One ADS represents 10 ordinary shares.

Monday, November 4, 2013
Going Private News

BEIJING, Nov. 4, 2013 /PRNewswire/ -- iSoftStone Holdings Limited ("iSoftStone" or "the Company," NYSE: ISS), a leadingChina-based IT services provider, today announced that the independent committee of its board of directors (the "Independent Committee") has received a revised offer (the "Offer"), dated November 2, 2013, from a consortium (the "Consortium") consisting of (i) Mr. Tianwen Liu, the chief executive officer and the chairman of the board of directors of the Company, (ii) ChinaAMC Capital Management Limited ("ChinaAMC"), an alternative investment platform and an affiliate of China Asset Management (Hong Kong) Limited, and (iii) Accurate Global Limited, Advance Orient Limited and CSOF Technology Investments Limited, to acquire all of the Company's outstanding ordinary shares not currently owned by the Consortium for$0.545 per ordinary share or $5.45 per American depositary share ("ADS," each representing ten ordinary shares of the Company) in cash (the "Transaction"), subject to certain conditions. The Offer adjusted down the proposed price of $0.585 per ordinary share or $5.85 per ADS in the non-binding proposal received by the Company's board of directors from Mr. Liu and ChinaAMC on June 6, 2013. A copy of the Offer is attached hereto as Exhibit A.

The Independent Committee, which was formed to consider the proposed Transaction and any potential alternative transactions involving the Company, with assistance from its financial and legal advisors, is in the process of evaluating the Offer and any alternative proposals it may receive. The Independent Committee cautions the Company's shareholders that no decision has been made by the Independent Committee or the Company's board of directors with respect to the Company's response to the Offer and there can be no assurance that any agreement will be executed or that this or any other transaction will be approved or consummated.


Monday, October 21, 2013
Joint Venture

KIRKLAND, Wash., Oct. 21, 2013 /PRNewswire/ -- iSoftStone Holdings Limited ("iSoftStone") (NYSE: ISS) has announced a partnership with Excipio, a business solutions provider that delivers analytical resources and a proven methodology to improve technology-related decisions. Excipio will leverage iSoftStone's technical and architectural capabilities in cloud computing, BI, mobile and Internet technologies to build upon Excipio's offerings in its solution suites.

Glenn Bowers, Senior Vice President of iSoftStone, said, "The partnership allows us to leverage Excipio's solutions suites and its proven EAMM® processes and combine it with our deep expertise in consulting and engineering services. The combination of these services creates a seamless end-to-end solution that will enable our clients to move rapidly towards their data center and business strategies."

David Hutchison, Excipio's founder, described the benefits of the partnership as follows, "Excipio's industry leading EAMM® assessment process combined with iSoftStone's integrated suite of IT services and solutions provides a complete end to end offering from the initial assessment phases through implementation and into on-going production. The combination of the two organizations provides companies financial, technical and business entities with a complete strategy."


Tuesday, August 27, 2013
Comments & Business Outlook

Second quarter 2013 financial  results

  • Net revenues increased 15.9% to $106.7 million in the second quarter 2013 from $92.0 million in the second quarter 2012.
  • Gross profit increased 12.3% to $33.9 million in the second quarter 2013 from $30.2 million in the second quarter 2012.
  • Net loss in the second quarter 2013 was $1.9 million compared with a net income of $3.6 million in the second quarter 2012.
  • Non-GAAP net income (note 1) decreased 23.1% to $6.3 million in the second quarter 2013 from $8.2 million in the second quarter 2012.
  • Diluted earnings per American Depositary Share ("ADS") were a loss of $0.03 in the second quarter 2013 and an income of$0.06 in the second quarter 2012. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.11 in the second quarter 2013 compared with $0.14 in the second quarter 2012.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "Our top line performance was largely in line with our expectations for the second quarter of 2013. Despite continuing to face challenging market conditions and cost pressures, we remained focused on the three previously identified strategic efforts: namely, smooth operations of ISST, our joint venture with Huawei, capturing business opportunities in the domestic BFSI sector and continue investment in our SMART business capabilities. We strived to grow our business while seeking to improve our margins and cash flow in the short term. We will also continue to invest in emerging technologies including mobile, big data, and cloud computing, which help clients expand and accelerate their businesses and position us to drive our own business growth in the longer term."

Outlook for the third quarter 2013

In light of the going-private proposal received during the second quarter of 2013 and ongoing work being performed by the Independent Committee, iSoftStone has decided to provide guidance for the next quarter but will not provide guidance for an annual outlook.

For the third quarter 2013, iSoftStone expects to achieve the following targets:

  • Net revenues for the third quarter 2013 to be at least $115 million.
  • Net loss for the third quarter 2013 to be at most $1.2 million.
  • Non-GAAP net income for the third quarter 2013 to be at least $2.3 million.
  • Non-GAAP diluted earnings per ADS for the third quarter 2013 to be at least $0.04, assuming 59 million average ADSs will be outstanding in the third quarter 2013. One ADS represents 10 ordinary shares.

Thursday, June 6, 2013
Going Private News

BEIJING, June 6, 2013 /PRNewswire/ -- iSoftStone Holdings Limited ("iSoftStone" or the "Company") (NYSE: ISS), a leading China-based IT services provider, today announced that its Board of Directors has received a preliminary non-binding proposal letter, dated June 6, 2013, from Mr. Tianwen Liu, the Company's CEO and the chairman of its Board of Directors, and ChinaAMC Capital Management Limited, an alternative investment platform incorporated under the laws of the Cayman Islands and an affiliate of China Asset Management (Hong Kong) Limited, which in turn is a wholly owned subsidiary of China Asset Management Co., Ltd. (collectively, the "Buyer Group"). According to the proposal letter, the Buyer Group is interested in acquiring all of the Company's outstanding ordinary shares, including ordinary shares represented by the Company's American depositary shares or "ADSs" (each representing ten ordinary shares of the Company), at a price of $0.585 in cash per ordinary share or $5.85 in cash per ADS.

The Buyer Group's proposal letter states that it intends to finance the proposed transaction with a combination of debt and equity capital. Furthermore, the proposal letter specifies that the Buyer Group's proposal constitutes only a preliminary indication of its interest, and is subject to negotiation and execution of definitive agreements relating to the proposed transaction. A copy of the proposal letter is attached hereto as Exhibit A.

The Company's Board of Directors, other than Mr. Tianwen Liu, is reviewing and evaluating the Buyer Group's proposal and cautions the Company's shareholders and others considering trading in its securities that the Board of Directors has just received the proposal letter and has not made any decisions with respect to the Company's response to the proposal. There can be no assurance that any definitive offer will be made by the Buyer Group or any other person, that any definitive agreement will be executed relating to the proposed transaction, or that the proposed transaction or any other transaction will be approved or consummated.

According to the proposal letter, Cleary Gottlieb Steen & Hamilton LLP is acting as U.S. counsel to the Buyer Group. O'Melveny & Myers LLP is the Company's U.S. counsel.


Friday, May 17, 2013
Comments & Business Outlook

First quarter 2013 Financial results

  • Net revenues increased 11.0% to $95.9 million in the first quarter 2013 from $86.3 million in the first quarter 2012.
  • Gross profit increased 11.1% to $30.9 million in the first quarter 2013 from $27.8 million in the first quarter 2012.
  • Net income decreased 9.9% to $3.0 million in the first quarter 2013 from $3.3 million in the first quarter 2012.
  • Non-GAAP net income (note 1) decreased 23.8% to $5.6 million in the first quarter 2013 from $7.3 million in the first quarter 2012.
  • Diluted earnings per American Depositary Share ("ADS") were $0.05 in the first quarter 2013 compared with $0.06 in the first quarter 2012. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.10 in the first quarter 2013 compared with $0.12 in the first quarter 2012.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "We are pleased with the financial results we achieved during the first quarter of 2013. Net revenues for the quarter were $96 million, up 11% from the same quarter last year. Both revenues and net income were in line with our expectation.

"During the next three quarters of 2013, we will continue to expand our business drivers, work aggressively to increase margins and cash flow, and invest in emerging technologies, like mobile, big data, and cloud computing, to help clients accelerate their business transformations.

"Although the market continues to be challenging, our strategy remains focused on opportunities that should create long-term growth and value. We expect to create satisfied clients, higher employee performance, and greater value for shareholders in 2013 and in the years ahead."

Outlook for the second quarter 2013 and year 2013

For the second quarter 2013, iSoftStone expects to achieve the following targets:

  • Net revenues for the second quarter 2013 to be at least $108 million.
  • Net income for the second quarter 2013 to be at least $4.8 million.
  • Non-GAAP net income for the second quarter 2013 to be at least $8 million.
  • Non-GAAP diluted earnings per ADS for the second quarter 2013 to be at least $0.14, assuming 59 million average ADSs will be outstanding in the second quarter 2013. One ADS represents 10 ordinary shares.

For the year 2013, iSoftStone expects to achieve the following targets:

  • Net revenues in 2013 to be at least $467 million.
  • Net income in 2013 to be at least $28 million.
  • Non-GAAP net income in 2013 to be at least $41 million.
  • Non-GAAP diluted earnings per ADS in 2013 to be at least $0.68, assuming 60 million average ADSs will be outstanding in 2013. One ADS represents 10 ordinary shares.

The above quarterly and annual outlook for net income reflects an estimated effective income tax rate of 15% and the contractual allocation of all ISST profits to iSoftStone in 2013.


Thursday, May 2, 2013
Joint Venture

BEIJING, May 2, 2013 /PRNewswire/ -- iSoftStone Holdings Limited ("iSoftStone," NYSE: ISS), a leading China-based IT services and solutions provider, and International Business Machines ("IBM"), the largest IT and business solutions provider today announced a collaboration to build www.xb-cloud.cn ("XB-CLOUD"), a Cloud Service Platform for Small and Medium-Sized Enterprises ("SMEs") in Northwest China. The two companies, together with Industry and IT Committee of Gansu Province, Lanzhou Municipal Government, and China Mobile Gansu also recently officially established the Cloud Service Association for SMEs of Gansu Province. These initiatives aim at facilitating SMEs' daily operations through efficient use of cloud computing and promoteLanzhou as a model of the Northwest China in using advance technology to drive industries' growth.

The establishment of XB-CLOUD and Cloud Service Association for SMEs of Gansu Province is an extension of the Cloud Computing Service Center for SMEs in Northwest China co-launched by Lanzhou Municipal Government, China Mobile Gansu and IBM last year. The Cloud Computing Service Center has been built inChina Mobile Gansu's Xigu premises, and the initial phase of cloud computing services platform and application development are completed.

Contributing to the collaborative effects, iSoftStone will leverage its experience in cloud computing and smart city to provide support in the whole lifecycle management of XB-CLOUD including infrastructure and application development, deployment and operation, while IBM will provide its excellent consultation services and hardware facilities and products. XB-CLOUD currently provides a wide range of services that meet SMEs' every aspect of needs including communication services, coordinated office management, production management and sales management, etc.

The Chinese government attached great importance on the development of cloud computing, and listed it as a strategic and emerging industry in its 12th Five-Year Plan. The output value of China's cloud computing industry chain is expected to reach RMB200 billion by 2016. SMEs will benefit enormously from utilizing cloud computing to save cost and enhance efficiency in IT infrastructure set-up, to facilitate scalable application and information sharing, and to be equipped with various software application services to meet specific needs at different stages of their business development.

In the opening ceremony, Niu Xiangdong, Vice Mayor of Lanzhou Municipal Government said, "After ten months' of initial set-up, XB-CLOUD has been officially launched. This marks the completion and official introduction of the first cloud computing project in Northwest China. Without the joint efforts and coordination of China Mobile Gansu, IBM and iSoftStone, this can never be achieved." Niu spoke highly of the quick launch and introduction of the platform.


Tuesday, April 23, 2013
Comments & Business Outlook

BEIJING, April 23, 2013 /PRNewswire/ -- iSoftStone Holdings Limited ("iSoftStone," NYSE: ISS), a leading China-based IT services and solutions provider, and Jiangxi Ganyue Expressway Co., Ltd. ("Ganyue Expressway") today announced a collaboration to build a smart transportation system for China's Jiangxi Province. Huang Zheng, President of Ganyue Expressway, General Manager Tan Shengguang, Deputy General Manager Qi Zhiping, and Huang Li, Executive Vice President of iSoftStone officially launched the Ganyue Expressway IT infrastructure development program on March 25th at the project launching ceremony.

Ganyue Expressway is principally engaged in the operation of expressways and large scale engineering construction projects in China, and is the only publicly listed company in the highway industry in Jiangxi. The smart transportation system that iSoftStone and Ganyue Expressway will build includes a data center, five internal control management systems, five operation management systems, and internal and external web portals. This smart system will help Ganyue Expressway increase competitiveness by achieving business innovation, optimizing system architecture, improving efficiency, and reducing operation costs.

"It is a pleasure to work with iSoftStone, a pioneer in the IT services industry, and hit the ground running with the development of our IT infrastructure program," said Huang Zheng, Chairman of Ganyue Expressway. "We believe the opportunities and experiences afforded by this program are immense for both Ganyue Expressway and iSoftStone."

iSoftStone provides consultation and technical support for government-led construction and smart city development projects. Its integrated smart city solution delivers an environmentally friendly and economically efficient development strategy for the modern Chinese city.

Huang Li, Executive Vice President of iSoftStone said, "iSoftStone has already accumulated a wealth of experience in smart city solutions, and through diligent practice and exploration we have formed a highly intelligent, tailored solution for smart transportation." Mr. Huang added, "Jiangxi is experiencing rapid rates of urbanization, and a rising population, currently standing at over 40 million people. Streaming the province's transportation system is imperative to ease pressure on the road network. We will endeavor to assist Ganyue Expressway with our most-advanced technology and know-how for their IT infrastructure development program to help Jiangxi form a smarter transportation system."

"At iSoftStone, we believe China's future growth will be closely linked to the development of information and communication technologies. With an ambition to create a better mode of living for the Chinese people, we are committed to investing in R&D and continue to offer our strong support in the development of IT infrastructure for governments, enterprises and the transportation sector. Our ultimate goal is to help build more smart cities in China to fully realize our smart city vision, one that harnesses the latest technological advancements as they become embedded into the physical spaces of cities.


Friday, March 8, 2013
Comments & Business Outlook

Fourth Quarter 2012

  • Net revenues increased 21.4% to $104.2 million in the fourth quarter 2012 from $85.8 million in the fourth quarter 2011.
  • Gross profit increased 21.0% to $36.9 million in the fourth quarter 2012 from $30.5 million in the fourth quarter 2011.
  • Net income in the fourth quarter 2012 increased 235.1% to $7.7 million from $2.3 million in the fourth quarter 2011.
  • Non-GAAP net income (note 1) was $11.2 million both in the fourth quarter 2012 and in the fourth quarter 2011.
  • Diluted earnings per American Depositary Share ("ADS") were $0.13 in the fourth quarter 2012 compared with$0.04 in the fourth quarter 2011. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.19 both in the fourth quarter 2012 and in the fourth quarter 2011.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "I am very delighted with the solid results we achieved during the fourth quarter and full year of 2012. The quarter met our expectation with stabilized margins and improved operating cash flow.

"Overall, 2012 was a solid year. Despite of the challenges for our business and the industry, we managed to respond effectively, by securing major partnerships such as Huawei JV, optimizing business mix, expanding key verticals, improving operational efficiencies, and boosting capabilities in emerging technologies and domain expertise.

"Going forward, although facing challenges of weakening overseas markets, constant cost pressure, and demand shift in emerging technologies, we will continue to execute our strategy, including expanding our business drivers, focusing on cash flow and margin improvement, and investing in technical competencies and domain expertise to support future growth. With the sound foundation strengthened in 2012, we are confident that our growth momentum will continue, and business quality will further improve in 2013."

Outlook for the first quarter of 2013 and year 2013

For the first quarter 2013, iSoftStone expects to achieve the following targets:

  • Net revenues for the first quarter 2013 to be at least $93.8 million.
  • Net income for the first quarter 2013 to be at least $2.4 million.
  • Non-GAAP net income for the first quarter 2013 to be at least $5.4 million.
  • Non-GAAP diluted earnings per ADS for the first quarter 2013 to be at least $0.09, assuming 58.5 million average ADSs will be outstanding in the first quarter 2013. One ADS represents 10 ordinary shares.

For the year 2013, iSoftStone expects to achieve the following targets:

  • Net revenues in 2013 to be at least $465 million.
  • Net income in 2013 to be at least $28 million.
  • Non-GAAP net income in 2013 to be at least $41 million.
  • Non-GAAP diluted earnings per ADS in 2013 to be at least $0.68, assuming 60 million average ADSs will be outstanding in 2013. One ADS represents 10 ordinary shares.

Thursday, January 24, 2013
Joint Venture

BEIJING, January 24, 2013 /PRNewswire/ - iSoftStone Holdings Limited ("iSoftStone," NYSE: ISS), a leading China-based IT services provider, and Huawei Technologies Co., Ltd. ("Huawei"), a leading global information and communications technology ("ICT") solutions provider, have completed the formation of iSoftStone Technology Service Limited ("the new joint venture"), a joint venture based in Wuhan, Hubei province, China. The new joint venture began operations today, January 24, 2013.

In September 2012, iSoftStone announced the planned formation of the new joint venture that focuses on serving the technology and communications ("T&C") industry. The new joint venture has registered capital of RMB 100 million, with 75% owned by iSoftStone and 25% owned by Huawei. As previously announced, iSoftStone has not contributed any U.S. assets to the new joint venture.

Mr. T.W. Liu, Chairman and CEO of iSoftStone, will also serve as Chairman and CEO of the new joint venture. The new joint venture's workforce is expected to reach more than 20,000 employees by 2015. The new joint venture should be mutually beneficial to both Huawei and iSoftStone. In addition to securing a long-term, large-scale, and sustained business account from Huawei, the new joint venture should help iSoftStone strengthen its core competitiveness through the continued integration of the fragmented IT services industry in China. The new joint venture should provide Huawei with a long-term and committed partner that will deliver outstanding IT services through the new joint venture's team of highly qualified and talented employees.

Mr. Liu said, "Thanks to the impressive growth of the information & communications technology industry in the region, IT services in China have continued to grow rapidly amid slower growth or reductions in IT expenditures in other parts of the world.

"The new joint venture is part of iSoftStone's strategy to benefit from this market opportunity. The new joint venture fuses Huawei's excellent practices in management and its leading position in the ICT market with iSoftStone's accumulated vertical depth in technology & communications services. We expect the new joint venture to become a leading global IT services company focused on serving current and prospective clients in the T&C industry, in both the private and public sectors.

"We believe the new joint venture should experience stable growth by leveraging advantages provided by both partners. Leveraging Huawei's leading position in the global ICT market, the new joint venture should help further expand iSoftStone's market knowledge and capabilities in the T&C vertical, which will be an important cornerstone for iSoftStone in becoming a major integrated IT services and solutions provider serving multiple industry verticals.

Mr. Qiuen Peng, Senior Vice President of Huawei, said, "We are very pleased with iSoftStone's effectiveness in establishing the new joint venture. We look forward to working with iSoftStone as a team in the joint venture as we create a leading IT services provider in the T&C vertical. We believe the new joint venture will provide very high quality services to its clients, including Huawei."


Friday, November 16, 2012
Comments & Business Outlook

Third quarter 2012 results

  • Net revenues increased 33.7% to $98.6 million in the third quarter 2012 from $73.7 million in the third quarter 2011.
  • Gross profit increased 30.9% to $34.7 million in the third quarter 2012 from $26.5 million in the third quarter 2011.
  • Net income in the third quarter 2012 increased 31.9% to $7.5 million from $5.7 million in the third quarter 2011.
  • Non-GAAP net income (note 1) increased 14.0% to $10.4 million in the third quarter 2012 from $9.1 million in the third quarter 2011.
  • Diluted earnings per American Depositary Share ("ADS") were $0.13 in the third quarter 2012 compared with$0.09 in the third quarter 2011. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.18 in the third quarter 2012 and $0.15 in the third quarter 2011.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "Although continually facing a global economic slowdown and geopolitical uncertainties, we have achieved another solid result for this quarter. Our net revenue grew at a healthy rate from last year's third quarter, and our profit margin and operating cash flow have continued to improve sequentially since our first quarter this year. All these achievements are the direct results of our successful execution of our key business strategy launched earlier this year.

"Looking forward, even though facing more challenges in the economic and geopolitical environment, such as potential escalation of the China-Japan standoff, slower economic growth in China, and deterioration of the European debt crisis, we strongly believe that if we stick to our current business strategy and execute well, we can be resilient to short-term pressure and achieve healthy long-term growth."

Outlook for the fourth quarter of 2012 and year 2012

For the fourth quarter 2012, iSoftStone expects to achieve the following targets:

  • Net revenues for the fourth quarter 2012 to be at least $102.0 million.
  • Net income for the fourth quarter 2012 to be at least $7.5 million.
  • Non-GAAP net income for the fourth quarter 2012 to be at least $11.0 million.
  • Non-GAAP diluted earnings per ADS for the fourth quarter 2012 to be at least $0.19, assuming 58.0 million average ADSs will be outstanding in the fourth quarter 2012. One ADS represents 10 ordinary shares.

For the year 2012, iSoftStone expects to achieve the following targets:

  • Net revenues in 2012 to be at least $379.0 million.
  • Net income in 2012 to be at least $22.0 million.
  • Non-GAAP net income in 2012 to be at least $37.0 million.
  • Non-GAAP diluted earnings per ADS in 2012 to be at least $0.63, assuming 58.5 million average ADSs will be outstanding in 2012. One ADS represents 10 ordinary shares.

Tuesday, September 4, 2012
Deal Flow

BEIJING, Sept. 4, 2012 /PRNewswire/ -- iSoftStone Holdings Limited ("iSoftStone" NYSE: ISS), a leading China-based IT services provider, today announced that it has entered into a partnership/joint venture ("JV") agreement with Huawei Technologies Co., Ltd. ("Huawei"), a leading global information and communications technology ("ICT") solutions provider.

The JV aims to build a leading IT services provider in the global Technology and Communications ("T&C") industry. In addition to securing a long-term, sizable business account, the combined entity will strengthen iSoftStone's competitive edge in the highly fragmented IT services industry by incorporating Huawei's best practices and leading market position. Through the JV, Huawei retains a long-term, committed IT service partner capable of providing enhanced delivery quality and a deep, qualified talent pool.

The JV will be 75% owned by iSoftStone and 25% owned by Huawei, with registered capital of RMB 100 million. iSoftStone will appoint the JV's CEO, CFO, and COO. Huawei will appoint the JV's Financial Controller and assign two senior executives to oversee the JV's Huawei related business. The JV will officially start operation in January 2013.

As a key contribution to the JV, Huawei will purchase a significant amount of IT services from the JV in the next three years. Huawei will also provide favorable terms in billing rates, payment terms, and profit allocation. As the JV's majority shareholder, iSoftStone will contribute selected technology and communications businesses into the JV, including iSoftstone's existing Huawei related business but excluding iSoftStone's U.S. businesses and other accounts mutually agreed to by iSoftStone and Huawei.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "Huawei is a leading global player in the ICT industry, and a long-time partner of iSoftStone. We are excited to further extend the partnership with Huawei. Given the favorable terms agreed to by Huawei, we believe the JV will benefit iSoftStone and our shareholders strategically, financially, and operationally. We expect the JV's establishment and operation will be relatively seamless, because both firms have a long history of working closely together.

"To achieve sustainable growth and profitability, iSoftStone needs to scale revenues and deepen vertical capabilities. This T&C-focused JV, combined with our other two major verticals of BFSI (Banking, Financial Services, and Insurance) and ETP (Energy, Transportation, and Public), will accelerate iSoftStone's pace to become a full IT services provider and become a billion dollar revenue company."

The President of the Corporate Development Department of Huawei, Mr. Qinming Wu, said, "We are pleased to form this strategic partnership with iSoftStone to enhance the quality of IT services provided to Huawei and our customers. We believe this partnership will provide Huawei access to enriched IT talent and a highly capable IT services management team.  With over a decade of experience working with iSoftStone, we are confident that the JV will become a leading IT services provider in the T&C industry."



Friday, August 17, 2012
Comments & Business Outlook

Second Quarter 2012 Results

  • Net revenues increased 37.4% to $92.0 million in the second quarter 2012 from $67.0 million in the second quarter 2011.
  • Gross profit increased 22.2% to $30.2 million in the second quarter 2012 from $24.7 million in the second quarter 2011.
  • Diluted earnings per American Depositary Share ("ADS") were $0.06 in the second quarter 2012 compared with $0.10 in the second quarter 2011. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.14 in the second quarter 2012 and $0.13 in the second quarter 2011.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "iSoftStone achieved solid business growth in the second quarter 2012. The vast majority of our growth was organic.

"We continued to execute our business strategies well during the quarter, including optimizing our business mix, balancing our geographic markets, focusing on our key verticals, and improving our operational efficiency.

"Importantly, our Consulting and Solutions business increased 66.8%, second quarter over second quarter. Our major markets, China and the U.S., grew well, as did our major verticals, BFSI and ETP. In some of our newly won and renewed projects, we increased contract values and billing rates and shortened payment cycles.

"We will continue to strive to improve our operating and financial efficiency to respond to the challenges of cost pressures, market competition, and global economic slowing. We believe we can achieve better performance in second half of 2012 and in the years ahead.

"As the IT outsourcing industry continues to evolve globally and consolidate in China, we continue to seek ways to grow our business and deepen our most significant client relationships. For example, we are currently in negotiations about a possible joint venture with Huawei Technologies Co., Ltd. ("Huawei"). Because the negotiations with Huawei are ongoing, no details about the possible joint venture can be disclosed. There can be no assurance that a joint venture will be consummated between iSoftStone and Huawei in the near term or at all."

Outlook for the third quarter of 2012 and full year 2012

For the third quarter 2012, iSoftStone expects to achieve the following targets:

  • Net revenues for the third quarter 2012 to be at least $98.0 million.
  • Net income for the third quarter 2012 to be at least $6.3 million.
  • Non-GAAP net income for the third quarter 2012 to be at least $10.0 million.
  • Non-GAAP diluted earnings per ADS for the third quarter 2012 to be at least $0.17, assuming 58.5 million average ADSs will be outstanding in the third quarter 2012. One ADS represents 10 ordinary shares.

For the full year 2012, iSoftStone expects to achieve the following targets:

  • Net revenues in 2012 to be at least $386.5 million.
  • Net income in 2012 to be at least $23.0 million.
  • Non-GAAP net income in 2012 to be at least $39.0 million.
  • Non-GAAP diluted earnings per ADS in 2012 to be at least $0.65, assuming 60.0 million average ADSs will be outstanding in 2012. One ADS represents 10 ordinary shares.

The above quarterly and annual outlook of net income reflects an estimated income tax rate of 14.5%.


Monday, June 25, 2012
Acquisition Activity

BEIJING, June 25, 2012 /PRNewswire-Asia/ -- iSoftStone Holdings Limited ("iSoftStone," NYSE: ISS), a leading China-based IT services provider, today announced that it has completed a definitive agreement to acquire Abovenet International Inc. ("Abovenet International"), a business intelligence ("BI") and data management services provider based in Toronto, Canada. The acquisition is expected to further strengthen iSoftStone's strategy and capabilities in business intelligence and big data.

Mr. T.W. Liu, Chairman and CEO of iSoftStone, said, "This acquisition will boost our already extensive business intelligence and data services with more advanced capability and greater geography coverage. We are looking forward to working closely with our new colleagues to deliver more value-added BI and data services to our clients around the world."

Mr. Pneuma Lin, Founder and CEO of Abovenet International, said, "We are excited to be part of iSoftStone. By combining our strengths with iSoftStone's vertical domain knowledge, technical capabilities, and global presence, we expect to offer more and better services to our clients and help strengthen iSoftStone's leading position in greater China and the global market."

The acquisition is subject to closing conditions. The terms of the agreement were not disclosed


Friday, May 18, 2012
Comments & Business Outlook

First Quarter 2012 Results

  • Net revenues increased 51.7% to $86.3 million in the first quarter 2012 from $56.9 million in the first quarter 2011.
  • Gross profit increased 35.2% to $27.8 million in the first quarter 2012 from $20.5 million in the first quarter 2011.
  • Net income was $3.3 million in the first quarter 2012 compared with $5.2 million in the first quarter 2011.
  • Non-GAAP net income (note 1) increased 19.0% to $7.3 million in the first quarter 2012 from $6.2 million in the first quarter 2011.
  • Diluted earnings per American Depositary Share ("ADS") were $0.06 in the first quarter 2012 compared with $0.09 in the first quarter 2011. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.12 in the first quarter 2012 and $0.10 in the first quarter 2011.
  • Total number of employees increased 42.3% to 12,661 as of March 31, 2012 from 8,900 as of March 31, 2011.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "I am pleased to report that we have delivered another quarter of strong growth despite a challenging global economic environment.

"This is a validation of our strategy of continuously enhancing our end-to-end services capabilities, especially around Consulting and Solutions, focusing on targeted industry verticals, and maintaining geographically balanced market growth.

"For the remainder of the year, we are still seeing strong business demand and a solid sales pipeline. However, we remain vigilant about the global economic uncertainties and the slowdown of China's economic growth. We are putting greater focus on improving service quality, operation efficiency, and financial strength while continuing to invest for long-term growth."

Outlook for the second quarter of 2012 and year 2012

For the second quarter 2012, iSoftStone expects to achieve the following targets:

  • Net revenues for the second quarter 2012 to be at least $90.0 million.
  • Net income for the second quarter 2012 to be at least $4.3 million.
  • Non-GAAP net income for the second quarter 2012 to be at least $8.2 million.
  • Non-GAAP diluted earnings per ADS for the second quarter 2012 to be at least $0.14, assuming 60.0 million average ADSs will be outstanding in the second quarter 2012. One ADS represents 10 ordinary shares.

For the year 2012, iSoftStone expects the following targets:

    • Net revenues in 2012 to be at least $382.0 million.
    • Net income in 2012 to be at least $31.0 million.
    • Non-GAAP net income in 2012 to be at least $45.0 million.
    • Non-GAAP diluted earnings per ADS in 2012 to be at least $0.73, assuming 61.5 million average ADSs will be outstanding in 2012. One ADS represents 10 ordinary shares.

The above quarterly and annual outlook of net income reflects an estimated income tax rate of 17.5%.


Monday, April 30, 2012
Shareholder Letters

Dear Shareholder,

The year 2011 was a major milestone for iSoftStone - it was our ten-year anniversary and first year as a public company.

Despite a challenging economic environment in 2011, we have proven to the market our ability to navigate through uncertainties and execute our strategies. We delivered four quarters of consistent performance: net revenue in 2011 was up 44%, mostly on organic growth, and net income increased to US$19.0 million in 2011 from a net loss of $3.6 million in 2010.

Top line growth was largely driven by our vertically focused and geographically balanced market strategy. As the IT services industry in China continues to mature, clients are looking for partners who understand their businesses and industry trends, and have solutions tailored to meet their individual business needs. By managing our businesses around four key verticals - Communications, Technology, Banking, Financial Services and Insurance (BFSI), and Energy, Transportations and Public (ETP) - we have been able to understand the full context of our clients' challenges and have extensive experience in addressing them. As we continue to build in these verticals, we intend to move up the value chain, deepen our relationships with clients, and raise the barrier-to-entry against competitors.  Full Letter


Wednesday, April 11, 2012
Acquisition Activity

BEIJING, April 11, 2012 /PRNewswire-Asia / -- iSoftStone Holdings Limited ("iSoftStone" or the "Company" , NYSE: ISS), a leading China-based IT services provider, today announced that, Beijing Guodian Ruantong Technology Co., Ltd. ("Guodian"), a subsidiary of iSoftStone, has acquired all of the assets, customer base and business of Nanjing Jiangchen Science & Technology Co., Ltd. ("Jiangchen"), a geographic information systems ("GIS") and smart grid software and solutions provider based in Nanjing, China.

The acquisition should broaden iSoftStone's industry coverage by adding power distribution to its existing electric power generation IT services business. Jiangchen helps China's top power distributors by applying its proprietary software products in GIS, smart grid systems, and energy saving services. Jiangchen is expected to enhance iSoftStone's energy industry solution portfolio to help major power distributors gain better insights into their business, and enhance customer satisfaction.

Mr. T.W. Liu, iSoftStone's Chairman & Chief Executive Officer, said, "The power industry favors larger IT solution providers with broad, deep, and integrated domain knowledge in both energy generation and distribution. This acquisition will broaden our array of IT capabilities in the energy vertical. We can now help major electric power distributors address their challenges and seize new opportunities."


Monday, March 5, 2012
Comments & Business Outlook

Fourth quarter 2011 financial and operating results

  • Net revenues increased 38.9% to $85.8 million in the fourth quarter 2011 from $61.8 million in the fourth quarter 2010.
  • Gross profit increased 30.3% to $30.5 million in the fourth quarter 2011 from $23.4 million in the fourth quarter 2010.
  • Net income was $2.3 million in the fourth quarter 2011 compared with a net loss of $3.9 million in the fourth quarter 2010.
  • Non-GAAP net income (note 1) increased 26.2% to $11.2 million in the fourth quarter 2011 from $8.9 millionin the fourth quarter 2010.
  • Diluted earnings per American Depositary Share ("ADS") were an income of $0.04 in the fourth quarter 2011 compared with a loss of $0.25 in the fourth quarter 2010. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.19 in the fourth quarter 2011 and $0.18 in the fourth quarter 2010.
  • Total number of employees increased 34.7% to 12,510 as of December 31, 2011 from 9,285 as ofDecember 31, 2010.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "I am very pleased with our results for both the fourth quarter and the year 2011. In the fourth quarter, we continued to grow our business in most measures, improve our operations, and optimize our cost structure. We executed our business strategy very well during the year. Net revenues in 2011 were up 44%, mostly on organic growth, non-GAAP net income was up 75% to $34.3 million from $19.6 million in 2010, and non-GAAP diluted earnings per ADS were up 33% to 57 cents from 43 cents in 2010, all clearly going in the right direction.

"Looking forward, I am confident we will continue our strong business momentum by sustaining client satisfaction, focusing on operating excellence, building new growth drivers, moving up the value chain, and deepening our penetration in key verticals. Despite facing continued global economic uncertainty and possible slower economic growth in China, plus cost inflation, we believe we can continue to achieve high business growth while improving our margin in 2012


Monday, November 14, 2011
Comments & Business Outlook

Third Quarter 2011 Results

  • Net revenues increased 44.2% to $73.7 million in the third quarter 2011 from $51.1 million in the third quarter 2010.
  • Gross profit increased 40.0% to $26.5 million in the third quarter 2011 from $19.0 million in the third quarter 2010.
  • Net income increased 166.1% to $5.7 million in the third quarter 2011 from $2.1 million in the third quarter 2010.
  • Non-GAAP net income (note 1) increased 75.6% to $9.1 million in the third quarter 2011 from $5.2 million in the third quarter 2010.
  • Diluted earnings per American Depositary Share ("ADS") were $0.09 in the third quarter 2011 and $0.03 in the third quarter 2010. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.15 in the third quarter 2011 and $0.12 in the third quarter 2010.
  • Total number of employees increased 28.1% to 11,750 as of September 30, 2011 from 9,172 as of September 30, 2010.

Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "We achieved our top line growth and profit targets for the third quarter 2011 as strong market demand and our intense focus on operations and deliveries continued to contribute to our positive results.

"We are doing well at diversifying our business base organically. The number of our million-dollar clients exceeded 40 as of September 30, 2011, compared with 30 on December 31 last year. In addition, our continuous new customer wins in both our geographic markets and in all industry verticals have helped to lay a better foundation for future growth in the coming years.

"While facing the challenging cost inflation environment, we managed our cost base carefully, during the third quarter and first nine months of 2011, through pricing adjustments, operational efficiency improvements, and optimizing the cost structure of our project delivery employees. It seems all of our effort has shown good results. We are confident that we can achieve our goals for 2011.

"Looking at the year ahead of us, our work in greater China should continue to benefit from the expanding Chinese economy. We remain cautious about how the global front-end of our business will develop in 2012, because the global economy continues to be a concern, especially in Europe and the U.S.A. Although so far we have not yet seen any significant slowing in the demand for our services, we do expect reductions to take place if the global economy weakens further."


Wednesday, August 17, 2011
Comments & Business Outlook

Second Quarter 2011 Results

  • Net revenues increased 49.4% to $67.0 million in the second quarter 2011 from $44.8 million in the second quarter 2010.
  • Gross profit increased 63.2% to $24.7 million in the second quarter 2011 from $15.1 million in the second quarter 2010, representing an improved gross profit margin of 36.9% in the second quarter 2011 from 33.8% in the second quarter 2010.
  • Net income in the second quarter 2011 was $5.9 million compared with a net loss of $2.6 million in the second quarter 2010.
  • Non-GAAP net income (note 1) increased 163.2% to $7.9 million in the second quarter 2011 from $3.0 million in the second quarter 2010.
  • Diluted earnings per American Depositary Share ("ADS") were $0.10 in the second quarter 2011 and a loss of $0.26 in the second quarter 2010. Each ADS represents 10 ordinary shares.
  • Non-GAAP diluted earnings per ADS (note 1) were $0.13 in the second quarter 2011 and $0.07 in the second quarter 2010.

    Mr. T.W. Liu, iSoftStone's Chairman and Chief Executive Officer, said, "We are very pleased with our strong revenue growth and increases in our margins in the second quarter. The broad-based improvements and our success in delivering outstanding performance to our clients are validating our strategy of developing a diversified business base with end-to-end services capabilities, targeting multiple industry verticals, and maintaining geographically balanced growth.

    "While the vast majority of our growth was from existing customers, we were especially successful in winning significant new customers in both domestic China and the global markets during the second quarter, which gives us further confidence for achieving our growth targets.

    "Our business in greater China continues to be large and very strong, supported by the expanding Chinese economy and by the advances and technology leverage that our services provide for clients.

    "Although we achieved a great second quarter, today we face an unusual unknown -- a wave of economic uncertainty that is currently moving through North America and Europe and to some extent Asia. It is too early to tell if that economic concern will be short-lived or will become similar to the global recession of a few years ago. We are keeping a close eye on how the global and national economies, industries, and our service markets are evolving and on how we can both maximize our benefits and minimize possible downward effects for iSoftStone in the current flux.

    "So far, our markets, clients, and contracts all appear to be healthy. We will stick with our strategy focusing on top line growth at high rates and improving our operating efficiencies as the company reaches a higher economy of scale. Meanwhile, we will be looking at opportunities for investing in new growth drivers for the future.

    "Given our good results in the first half of 2011, our backlog, and the new contract wins we have achieved, we believe it is prudent to move our guidance upward for the year 2011."

    Outlook for the third quarter of 2011 and full year 2011

    For the third quarter 2011, iSoftStone expects the following measures to be within the ranges shown.

    • Net revenues for the third quarter 2011: $72.0 million to $74.0 million.
    • Net income for the third quarter 2011: $4.5 million to $5.0 million.
    • Non-GAAP net income for the third quarter 2011: $8.5 million to $9.0 million.
    • Non-GAAP diluted earnings per ADS for the third quarter 2011 to be approximately $0.14, assuming 60.7 million average ADSs will be outstanding in the third quarter 2011. One ADS represents 10 ordinary shares.


     

    For the full year 2011, iSoftStone is revising upwards its prior guidance as shown below.

    • Net revenues in 2011: $277.0 million to $284.0 million.
    • Net income in 2011: $23.0 million to $24.0 million.
    • Non-GAAP net income in 2011: $34.0 million to $35.0 million.
    • Non-GAAP diluted earnings per ADS in 2011: $0.55 to $0.57 assuming 61.4 million average ADSs will be outstanding in 2011. One ADS represents 10 ordinary shares.

  • Thursday, August 4, 2011
    Acquisition Activity

    BEIJING and NEW YORK, August 4, 2011 /PRNewswire-Asia/ -- iSoftStone Holdings Limited ("iSoftStone" or the "Company") (NYSE: ISS), a leading China-based IT services provider, today announced that it has completed the acquisition of Adventier Consulting Group, Inc., a U.S.-based ERP consulting services company that provides enterprise resource planning ("ERP") consulting services and solutions to many Fortune 500 companies. With the addition of Adventier, iSoftStone is expected to enhance further its end-to-end service offerings, including ERP consulting and delivery capabilities, to both its global and Chinese clients.

    Mr. T.W. Liu, iSoftStone's Chairman & Chief Executive Officer, said, "We are very pleased to welcome Adventier to our company. By leveraging Adventier's leadership team and expertise, iSoftStone is expected to quickly expand our ERP consulting and delivery capabilities in both China, the U.S., and in global markets. We look forward to working closely with our new colleagues from Adventier to jointly deliver increasing value to our clients."

    Mr. Eric Kang, Adventier's Founder and Chief Executive Officer, said, "We are excited to be part of iSoftStone. Adventier is looking forward to enhancing our service and solution capabilities and further solidifying iSoftStone's leading position in greater China and the global market."


    Sunday, June 5, 2011
    Liquidity Requirements

    Currently we do not have any plan for significant capital expenditures for the next 12 months.

    We believe that our current cash and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for at least the next 12 months. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue.


    Friday, May 13, 2011
    Comments & Business Outlook

    First Quarter Results:

    • Net revenues increased 45.0% to $56.9 million in the first quarter 2011 from $39.3 million in the first quarter 2010.
    • Gross profit increased 49.2% to $20.5 million in the first quarter 2011 from $13.8 million in the first quarter 2010, representing an improved gross profit margin of 36.1% in the first quarter 2011 from 35.1% in the first quarter 2010.
    • Net income in the first quarter 2011 was $5.2 million compared with $0.8 million in the first quarter 2010.
    • Non-GAAP net income(1) increased 141.3% to $6.2 million in the first quarter 2011 from $2.6 million in the first quarter 2010.
    • Diluted earnings per American Depositary Share ("ADS") were $0.09 in the first quarter 2011 and nil in the first quarter 2010. Each ADS represents 10 ordinary shares.
    • Non-GAAP diluted earnings per ADS were $0.10 in the first quarter 2011 and $0.06 in the first quarter 2010.

    Mr. Tianwen Liu, Chairman and CEO of iSoftStone, said, "We are delighted to report strong growth and solid operating results for the first quarter 2011. Revenue came in at $56.9 million, ahead of the top end of our guidance. The 45 percent year-on-year quarterly growth in net revenues was mainly organic, as we successfully increased our services to existing clients. We are particularly pleased with our increase in gross margin which came on the back of improvements in efficiency despite ongoing inflationary pressures and the seasonal slowdown in productivity due to the Chinese New Year Holiday.

    For the second quarter 2011, iSoftStone expects the following measures to be within the ranges shown.

    • Net revenues for the second quarter 2011: $61.0 million to $62.0 million.
    • Net income for the second quarter 2011: $4.5 million to $5.0 million.
    • Non-GAAP net income for the second quarter 2011: $7.0 million to $7.5 million.
    • Non-GAAP diluted earnings per ADS for the second quarter 2011 to be approximately $0.11, assuming 61.1 million average ADSs will be outstanding in the second quarter 2011. One ADS represents 10 ordinary shares.

    For the full year 2011, iSoftStone is revising upwards its prior guidance as shown below. We are also providing for the first time non-GAAP diluted earnings per ADS.

    For the year 2011, iSoftStone expects the following measures to be within the ranges shown.

    • Net revenues in 2011: $262.0 million to $277.0 million.
    • Net income in 2011: $19.5 million to $21.5 million.
    • Non-GAAP net income in 2011: $33.0 million to $35.0 million.
    • Non-GAAP diluted earnings per ADS in 2011: $0.53 to $0.56 assuming 62.1 million average ADSs will be outstanding in 2011. One ADS represents 10 ordinary shares.

    Monday, April 4, 2011
    Comments & Business Outlook

    BEIJING, April 4, 2011 /PRNewswire-Asia/ -- iSoftStone Holdings Limited today announced estimated effects on its revenues from the March 11, 2011 earthquake, tsunami, and damaged nuclear power plants in Japan. iSoftStone reconfirmed its previous guidance.

    Mr. Tianwen Liu, Chairman and CEO of iSoftStone, said, "Our estimated revenue from clients headquartered in Japan represents approximately 10% of our estimated 2011 total revenues. After studying the likely effects on iSoftStone from the currently known consequences of the disasters in Japan, we have determined that 2011 total revenues are likely to be reduced by less than 1% as a result of the disasters. We anticipate that the reduction would likely be absorbed by business growth from China and U.S. We are reconfirming our previous guidance for the first quarter 2011 and the year 2011.

    "There are two broad reasons why the estimated reductions are relatively small. First, about 80% of the delivery work we do for companies headquartered in Japan (many of which serve global markets) is performed in China, with the balance done onsite in Japan. Therefore, we have a relatively small team in Japan, with about half of our employees located in Osaka in west Japan, and half in Tokyo. At this moment, it appears there is relatively low risk for our employees and operating locations in Japan.

    "Secondly, we have received increased orders from certain technology and manufacturing customers in Japan for work to be performed in China, which is expected to partly offset the slowing in customer orders we have already seen from Japan-based clients in the financial services sector, especially at insurance companies. In some cases, the work had already been put on hold by certain customers.

    "Therefore, the effect on our total revenues in first quarter 2011 is estimated to be minimal. An important unknown are the effects that the difficult problems at the damaged nuclear power plants could have in Japan. Today, those risks cannot be estimated with precision, and our customers are still assessing their outlook and possible changes in their strategies for the rest of 2011. Assuming that the situation in Japan has stabilized and does not worsen, the negative effect from currently known and unknown consequences on iSoftStone's overall operations in 2011 is estimated to be limited."

    "As a global IT services provider headquartered in China, we have many links with Japan, both human and business. We extend to every citizen of Japan and everyone directly and indirectly affected by the consequences of the natural disasters our heartfelt sympathy, thoughts, and hopes for the future as the country continues the long and difficult process of recovery. Our hearts, minds, and support continue to be with you."


    Friday, March 4, 2011
    Comments & Business Outlook

    Fourth Quarter Highlights:

    • Net revenues increased 39.3% to $61.8 million in the fourth quarter 2010 from $44.4 million in the fourth quarter 2009.
    • Gross profit increased 50.6% to $23.4 million in the fourth quarter 2010 from $15.5 million in the fourth quarter 2009, representing an improved gross margin of 37.9% in the fourth quarter 2010 from 35.1% in the fourth quarter 2009.
    • Non-GAAP net income(1) increased 61.2% to $8.9 million in the fourth quarter 2010 from $5.5 million in the fourth quarter 2009.
    • Non-GAAP diluted EPS(1) was $0.02 per diluted share in the fourth quarter 2010 compared to $0.01 per diluted share in the fourth quarter 2009.

    Mr. Tianwen Liu, Chairman and CEO of iSoftStone, said, "We are very pleased with our strong operating results and financial performance for the fourth quarter and full year 2010. Our Global+China dual market and multiple service offering strategies yielded positive responses from our clients. Almost all of our top line growth in the year was organic in our targeted industries that include Technology, Communications, BFSI and Energy, and Transportation & Public Sector. Also, our significant historical investments in sales and marketing, delivery platform, service quality and capability, management team, and employees helped drive a remarkable improvement in the quality of our revenues and margins.

    For the first quarter 2011, iSoftStone expects the following measures to be within the ranges shown.

    • Net revenues for the first quarter 2011: $54 million to $55 million.
    • Net income for the first quarter 2011 to be approximately $1 million.
    • Non-GAAP Net income for the first quarter 2011 to be approximately $5 million.
    • Non-GAAP diluted EPS for the first quarter 2011 to be approximately $0.01, assuming 605 million total average shares will be outstanding in the first quarter.

    For the year 2011, iSoftstone expects the following measures to be within the ranges shown.

    • Net revenues for 2011: $260 million to $275 million.
    • Net income for 2011: $15.5 million to $17.5 million.
    • Non-GAAP net income for 2011: $32.5 million to $34.5 million.
    • Non-GAAP diluted EPS for 2011: $0.05 to $0.06, assuming 621 million total average shares will be outstanding in 2011.

    Friday, November 26, 2010
    Financials
     For the Year Ended
    December 31
    ,
      For the Nine Months
    Ended

    September 30,
     
             2007             2008             2009             2009             2010      
         (U.S. dollars in thousands)  

    Net income (loss) (U.S. GAAP)

         (10,308     (3     9,028        5,714        272   

    Share-based compensation

         3,970        1,388        2,350        727        5,817   

    Amortization of intangible assets from acquisitions

         582        2,649        2,015        1,510        1,158   

    Interest expense of convertible notes

         —          —          63        —          2,677   

    Changes in fair value of contingent consideration in connection with business combinations

         —          —          3        —          (231

    Changes in fair value of the return rate reset feature of convertible notes

         —          —          —          —          1,028   

    Changes in fair value of warrants

         1,419        676        —          —          —     

    Gain on bargain purchase of a business

         —                  (66     (66     —     
                                              

    Total non-GAAP adjustments

         5,971        4,713        4,365        2,171        10,449   
                                              

    Net income (loss) (non-GAAP)

         (4,337     4,710        13,393        7,885        10,721   
                                              

     


    IPO Activity

    iSoftStone Holdings Limited plans for Initial Public Offering

    Company Snapshot:

    A leading China-based IT services provider, serving both Greater China and Global clients

    Industry Snapshot:

    Businesses, both domestically in China and globally, are outsourcing a growing portion of their IT services and business processes to China-based IT services providers. China is one of the largest and fastest growing markets for IT services, and as shown in the charts below, China’s domestic IT services market and offshore software development market are expected to experience significant growth in the coming years.

     

         
    LOGO   LOGO

    There are several factors driving the overall growth of China’s IT services industry, including the rapid growth of China’s economy and domestic demand for IT services, the strategic importance of China as a target market for Global clients, strong offshore outsourcing demand, availability of low-cost qualified IT professionals with global and regional language skills, well-developed infrastructure in China and strong government support and spending.

    Use Of proceeds:

    We intend to use our net proceeds from this offering to repay outstanding bank borrowings, and use the remainder for other general corporate purposes, such as working capital, facilities acquisitions and funding potential acquisitions of, or investments in, other businesses or technologies that we believe will complement our current business and expansion strategies.

    Underwriter:

    • UBS Investment Bank
    • J.P. Morgan
    • Morgan Stanley
    • Needham & Company, LLC

    Proposed offering price: $11.00 and $13.00

    Post IPO Share Calculation: (Using a 10 to 1 Ordinary to ADS conversion ratio).

    • 41,500,781: Pre IPO fully diluted share count used in EPS calculation, assuming all conversion features of preferred stock.
    •  10,833,334: Newly issued ADS shares ( 7,322,223 by the company + 3,511,111  by selling shareholders)
    •  1,666,666: Shares Issued to investor
    •   1,625,000: Underwriter over-allotments ADS shares 

    GeoTeam® best effort calculation of total post IPO ADS count to be used in EPS calculations, assuming full conversions and a Ordinary to ADS conversion ratio of 10 to 1: 52,114,670

    Financial Snapshot: December Year End

    2009 vs. 2008

    • Revenues: $134. 4 million vs. $82.5 million
    • Non-GAAP Net Income: $13.4 million vs $4.7 million

    Nine Months 2010 vs. 2009

    • Revenues: $135.2 million vs. $90.0 million
    • Non-GAAP Net Income. $10.7 million vs. $7.9 million

    Pro Forma Valuation: using price of $12.00 and new share count

    • Trailing EPS (ADS): $0.31
    • Trailing P/E: 38.7