[November 16, 2017]

Luxoft Holding, Inc Reports Results for Second Quarter FY2018

Luxoft Holding, Inc (NYSE:LXFT), a global IT service provider, today announced results for the three months ended September 30, 2017.

Second Quarter FY2018 Highlights

• Revenue of $228.0 million, up 16.1% year-over-year and up 9.0% sequentially
• Adjusted EBITDA of $38.6 million and adjusted EBITDA margin of 16.9%, compared to $37.4 million and 19.1% in the year-ago quarter
• GAAP net income of $18.4 million, up 13.2% year-over-year and up 191.9% sequentially
• Non-GAAP net income of $28.0 million, up 0.7% from $27.8 million in the year-ago quarter and up 63.8% from $17.1 million last quarter
• Diluted GAAP EPS of $0.54, compared to $0.48 in the year-ago quarter
• Non-GAAP diluted EPS of $0.82, compared to $0.83 in the year-ago quarter
• As of September 30, 2017, total number of employees was 13,090; Annual revenue per billable engineer was $82,800, up 4.9% year-over-year and up 9.0% sequentially

Note: Reconciliations of non-GAAP to GAAP measures are included at the end of the release.

"Second quarter results were largely in line with our expectations as execution of our strategic transformation drove strong growth in several verticals and offset moderating demand patterns among our top two accounts," said Dmitry Loschinin, Luxoft's CEO and President. "Key highlights of our progress include year-over-year revenue growth of 75.6% in Automotive, 43.2% in Financial Services excluding the top two accounts, and 26.0% in Telecom. Overall, we generated 37.5% revenue growth year-over-year outside our top two accounts, which demonstrates the steady progress we are making in transforming our business through new vertical growth, strengthened key platform-architecture expertise and expanded delivery-center scale. Importantly, we also further increased our High Performance Accounts (HPAs) which reached nearly 36.6% of revenue."

During the quarter, the Company continued to expand its global sales and delivery, including opening a new office in Bangalore, India and increasing its presence in Asia Pacific (APAC) through the acquisition of derivIT. In addition to diversifying across attractive new verticals, emphasis was placed on generating balanced growth across key global markets. Progress here includes Q2 year-over-year revenue growth of 54.9% in APAC, 21.2% in Europe and 17.1% in North America.

The Company continued to decrease client concentration of its top two accounts while driving improved operating and financial performance. The top two accounts in the second quarter amounted to 35.4% of revenue, representing a 10.1% point decrease year-over-year. On the same basis, the top five accounts amounted to 46.7% of revenue, representing an 11.4% point decrease and the top ten accounts amounted to 57.5% of revenue, a decrease of 11.1% points.

Mr. Loschinin concluded, "We continue to place strategic emphasis on accelerating our shift to digital innovation as demand for complex digital and cloud-based deployments remain strong. Looking ahead, we are confident that our overall strategy is aligned with the long-term trends across each of our verticals as we look to become an increasingly critical strategic partner for our customers. The entire management team is focused on driving stronger execution, building momentum across our verticals and further driving our business transformation. We believe we are taking the right steps to best position Luxoft for long-term sustainable growth and value creation for our shareholders."

Outlook for the Financial Year Ending March 31, 2018

The Company is reiterating its full-year outlook which includes:

• Revenue is expected to be at least $920 million, which represents an increase of at least 17.1% year over year
• Adjusted EBITDA margin is expected to be in the range of 15.5% - 16.5%
• Diluted EPS on GAAP basis is expected to be at least $1.53, and diluted EPS on a non-GAAP basis at least $2.85
• EPS is based on an estimated weighted average of 34.4 million diluted shares

Conference Call Information

The Company will host a conference call to review the results on Friday, November 17, 2017 at 8:00 a.m. ET. To participate, please dial 877-407-8293 or 201-689-8349 (outside the U.S.) or access the live webcast here.

A replay will be available two hours after the call at http://investor.luxoft.com or by dialing 877-660-6853 or 201-612-7415 (outside the U.S.) and entering the conference ID 13672381. The replay will be available until December 1, 2017.

About Luxoft

Luxoft (NYSE:LXFT) is a global IT service provider of innovative technology solutions that delivers measurable business outcomes to multinational companies. Its offerings encompass strategic consulting, custom software development services, and digital solution engineering. Luxoft enables companies to compete by leveraging its multi-industry expertise in the financial services, automotive, communications, and healthcare & life sciences sectors. Its managed delivery model is underpinned by a highly-educated workforce, allowing the Company to continuously innovate upwards on the technology stack to meet evolving digital challenges.

Luxoft has more than 13,000 employees across 42 offices in 21 countries within five continents, with its operating headquarters office in Zug, Switzerland. For more information, please visit the website.

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with US GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: earnings before interest, tax, depreciation and amortization (EBITDA); adjusted EBITDA; non-GAAP net income; non-GAAP diluted Earnings per share (EPS) and Free Cash Flow (FCF). EBITDA is calculated as earnings before interest, tax, depreciation and amortization, where interest includes unwinding of the discount rate for contingent liabilities. Prior year amounts were amended accordingly. Non-GAAP net income and non-GAAP EPS exclude stock-based compensation expense, amortization of fair value adjustments to intangible assets and impairment thereof and other acquisitions related costs that may include changes in the fair value of contingent consideration liabilities. Non-GAAP diluted EPS are calculated as non-GAAP net income divided by weighted average number of diluted shares. Free Cash Flow is calculated as operating cash flow less capital expenditure which consists of purchases of property, plant and equipment and intangible assets as defined in the cash flow statement.

We adjust our non-GAAP financial measures to exclude stock based compensation, because it is a non-cash expense. We also adjust our non-GAAP financial measures to exclude the change in fair value of contingent consideration, because we believe these expenses are not indicative of what we consider to be normal course of operations. Our non-GAAP financial measures are adjusted to exclude amortization of purchased intangible assets in order to allow management and investors to evaluate our results from operating activities as if these assets have been developed internally rather than acquired in a business combination. Finally, we adjust our non-GAAP financial measures to exclude acquisition-related costs, which comprise payments to consulting firms as well as fees paid upon successful completion of acquisition; as well as certain incentive payments for members of management of the acquired companies as provided for in the acquisition agreements. These payments are based on performance of the acquired businesses and are classified as part of management compensation rather than part of purchase consideration. These costs vary with the size and complexity of each acquisition and are generally inconsistent in amount and frequency, and therefore, we believe that they may not be indicative of the size and volume of future acquisition-related costs.

We provide these non-GAAP financial measures because we believe that they present a better measure of our core business and management uses them internally to evaluate our ongoing performance. Accordingly, we believe that these non-GAAP measures are useful to investors in enhancing and understanding of our operating performance. These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable US GAAP measures. The non-GAAP results and a full reconciliation between US GAAP and non-GAAP results are provided in the accompanying tables at the end of this press release.

Forward-Looking Statements

In addition to historical information, this release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include information about possible or assumed future results of our business and financial condition, as well as the results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential," or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements regarding: the persistence and intensification of competition in the IT industry; the future growth of spending in IT services outsourcing generally and in each of our industry verticals, application outsourcing and custom application development and offshore research and development services; the level of growth of demand for our services from our clients; the level of increase in revenues from our new clients; seasonal trends and the budget and work cycles of our clients; general economic and business conditions in our locations, including geopolitical instability and social, economic or political uncertainties, particularly in Russia and Ukraine, and any potential sanctions, restrictions or responses to such conditions imposed by some of the locations in which we operate; the levels of our concentration of revenues by vertical, geography, by client and by type of contract in the future; the expected timing of the increase in our corporate tax rate, or actual increases to our effective tax rate which we may experience from time to time; our expectations with respect to the proportion of our fixed price contracts; our expectation that we will be able to integrate and manage the companies we acquire and that our acquisitions will yield the benefits we envision; the demands we expect our rapid growth to place on our management and infrastructure; the sufficiency of our current cash, cash flow from operations, and lines of credit to meet our anticipated cash needs; the high proportion of our cost of services comprised of personnel salaries; our plans to introduce new products for commercial resale and licensing in addition to providing services; our anticipated joint venture with one of our clients; and our continued financial relationship with IBS Group Holding limited and its subsidiaries including expectations for the provision and purchase of services and purchase and lease of equipment; and other factors discussed under the heading "Risk Factors" in the Annual Report on Form 20-F for the year ended March 31, 2017 and other documents filed with or furnished to the Securities and Exchange Commission. Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.

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