Revenue up 14%, Gross margin up 15%, EBITDAS up
11%; Company reaffirms 2015 earnings guidance
Perficient, Inc. (NASDAQ: PRFT) (“Perficient”), a leading
information technology and management consulting firm serving
Global 2000® and other large enterprise customers throughout North
America, today reported its financial results for the quarter ended
March 31, 2015.
Financial Highlights
For the quarter ended March 31, 2015:
- Revenue increased 14% to $110.6 million
from $97.2 million for the first quarter of 2014;
- Services revenue increased 11% to $98.6
million from $88.5 million for the first quarter of 2014;
- Gross Margin increased 15% to $36.1
million from $31.5 million for the first quarter of 2014;
- Adjusted earnings per share results (a
non-GAAP measure; see attached schedule, which reconciles to GAAP
earnings per share) on a fully diluted basis increased to $0.26
from $0.25 for the first quarter of 2014;
- Earnings per share results on a fully
diluted basis increased to $0.12 from $0.09 for the first quarter
of 2014;
- EBITDAS (a non-GAAP measure; see
attached schedule, which reconciles to GAAP net income) increased
to $15.5 million from $14.0 million for the first quarter of
2014;
- Net income increased to $4.1 million
from $3.0 million for the first quarter of 2014; and
- Perficient repurchased 187,000 shares
of its common stock at a total cost of $3.7 million.
“Perficient’s digital experience, business optimization and
industry solutions are resonating well in the market as evidenced
by a growing pipeline of opportunities and strong bookings trends
in recent months,” said Jeff Davis, chief executive officer and
president. “We’re well-positioned for another year of solid top-
and bottom-line growth.”
“Higher than anticipated benefit costs negatively impacted
margins during the quarter,” said Paul Martin, chief financial
officer. “We anticipate margin improvement in the current quarter
and second half of the year.”
Other Highlights
Among other recent achievements, Perficient:
- Completed the acquisition of Zeon
Solutions, Inc. and its subsidiary, Grand River Interactive LLC,
which enhances and expands Perficient’s e-commerce, content
management, product information management, mobile and digital
marketing services and solution expertise;
- Earned the Platinum Implementation
Partner designation from Sitecore due to our advanced
implementation capability and our demonstrated leadership in
customer experience management with Sitecore clients;
- Received the prestigious IBM Beacon
Award for Outstanding Information Management Solution, awarded to
elite IBM Business Partners who deliver exceptional solutions that
drive business value and transform the way clients and industries
do business;
- Received two accolades from Magento –
the Spirit of Excellence Award for North America, recognizing
exemplary service to Magento clients, and the Best B2B User
Experience Award, for best-in-class innovation and brilliance in
creating e-commerce solutions; and
- Added new customer relationships and
follow-on projects with leading companies such as Blue Cross Blue
Shield of Massachusetts, Bon-Ton, Carhatt, Cigna, Citizens
Financial Group, Cole-Parmer, C&S Wholesale Grocers, Depository
Trust and Clearing Corp., Fidelis, Health Data Compass, Laclede
Gas, MoneyGram International, NRG Energy, Presbyterian Health Care
Services, Scottrade, Sears Canada, Transpace, U.S. Concrete, the
University of Houston, and Zoetis.
Business Outlook
Perficient expects its second quarter 2015 services and software
revenue, including reimbursed expenses, to be in the range of
$110.5 million to $120.9 million, comprised of $104.5 million to
$109.9 million of revenue from services including reimbursed
expenses and $6.0 million to $11.0 million of revenue from sales of
software. The midpoint of second quarter 2015 services revenue
guidance represents growth of 21% over second quarter 2014 services
revenue.
The company is narrowing its full year 2015 revenue guidance
range of $470 million to $495 million and reaffirming its 2015
adjusted earnings per share guidance range of $1.38 to $1.49.
Conference Call Details
Perficient will host a conference call regarding first quarter
2015 financial results today at 10 a.m. Eastern.
WHAT: Perficient Reports First
Quarter 2015 Results
WHEN: Thursday, May 7, 2015, at 10
a.m. Eastern
CONFERENCE CALL NUMBERS:
877-415-3178 (U.S. and Canada); 857-244-7321 (International)
PARTICIPANT PASSCODE: 93252544
REPLAY TIMES: Thursday, May 7,
2015, at 2 p.m. Eastern, through Thursday, May 14, 2015
REPLAY NUMBER: 888-286-8010 (U.S.
and Canada) 617-801-6888 (International)
REPLAY PASSCODE: 54878916
About Perficient
Perficient is a leading information technology and management
consulting firm serving Global 2000 and enterprise customers
throughout North America. Perficient delivers digital experience,
business optimization and industry solutions that enable clients to
improve productivity and competitiveness; strengthen relationships
with customers, suppliers and partners; and reduce costs.
Perficient’s professionals serve clients from a network of offices
across North America and offshore locations in India and China.
Traded on the Nasdaq Global Select Market, Perficient is a member
of the Russell 2000 index and the S&P SmallCap 600 index.
Perficient is an award-winning Premier Level IBM business partner,
a Microsoft National Service Provider and Gold Certified Partner,
an Oracle Platinum Partner, and a Platinum Salesforce Cloud
Alliance Partner. For more information, visit
www.perficient.com.
Safe Harbor Statement
Some of the statements contained in this news release that are
not purely historical statements discuss future expectations or
state other forward-looking information related to financial
results and business outlook for 2015. Those statements are subject
to known and unknown risks, uncertainties, and other factors that
could cause the actual results to differ materially from those
contemplated by the statements. The forward-looking information is
based on management’s current intent, belief, expectations,
estimates, and projections regarding our company and our industry.
You should be aware that those statements only reflect our
predictions. Actual events or results may differ
substantially. Important factors that could cause our actual
results to be materially different from the forward-looking
statements include (but are not limited to) those disclosed under
the heading “Risk Factors” in our annual report on Form 10-K for
the year ended December 31, 2014 and the following:
(1) the possibility that our actual
results do not meet the projections and guidance contained in this
news release;
(2) the impact of the general economy and economic uncertainty on
our business; (3) risks associated with the operation of our
business generally, including: a) client demand for our services
and solutions; b) maintaining a balance of our supply of skills and
resources with client demand; c) effectively competing in a highly
competitive market; d) protecting our clients’ and our data and
information; e) risks from international operations including
fluctuations in exchange rates; f) obtaining favorable pricing to
reflect services provided; g) adapting to changes in technologies
and offerings; h) risk of loss of one or more significant software
vendors; and i) the recent implementation of our new Employee
Resource Planning system; (4) legal liabilities, including
intellectual property protection and infringement or the disclosure
of personally identifiable information; (5) risks associated with
managing growth organically and through acquisitions; and (6) the
risks detailed from time to time within our filings with the
Securities and Exchange Commission.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance, or achievements.
This cautionary statement is provided pursuant to Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The forward-looking
statements in this release are made only as of the date hereof and
we undertake no obligation to update publicly any forward-looking
statement for any reason, even if new information becomes available
or other events occur in the future.
PERFICIENT, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except per share data)
Three Months Ended March 31,
2015 2014 Revenues
Services $ 98,629 $ 88,489 Software and hardware 8,502 5,003
Reimbursable expenses 3,467 3,678 Total
revenues 110,598 97,170 Cost of
revenues Project personnel costs 62,248 55,663 Software and
hardware costs 6,728 4,502 Reimbursable expenses 3,467 3,678 Other
project related expenses 896 786 Stock compensation 1,199
1,082 Total cost of revenues 74,538
65,711 Gross margin 36,060 31,459
Selling, general and administrative 21,735 18,568 Stock
compensation 2,308 2,115 12,017 10,776
Depreciation 1,081 912 Amortization 3,801 2,736 Acquisition
costs - 1,493 Adjustment to fair value of contingent consideration
85 214 Income from operations
7,050 5,421 Net interest expense (553 )
(167 ) Net other (expense) income (280 ) 20
Income before income taxes 6,217 5,274 Provision for income taxes
2,151 2,229 Net income $ 4,066 $
3,045 Basic earnings per share $ 0.12 $ 0.10 Diluted
earnings per share $ 0.12 $ 0.09 Shares used in computing
basic earnings per share 33,046 30,729 Shares used in computing
diluted earnings per share 34,164 32,628
PERFICIENT,
INC. CONSOLIDATED BALANCE SHEETS (unaudited) (in
thousands)
March 31, December 31,
2015 2014 ASSETS
Current assets: Cash and cash equivalents $ 6,353 $ 10,935 Accounts
receivable, net 99,427 113,928 Prepaid expenses 3,910 2,476 Other
current assets 5,105 4,679 Total
current assets 114,795 132,018 Property and equipment, net 8,336
7,966 Goodwill 252,819 236,130 Intangible assets, net 55,333 46,105
Other non-current assets 4,251 3,823
Total assets $ 435,534 $ 426,042
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 10,901 $ 22,035 Other current liabilities
26,476 33,028 Total current liabilities 37,377
55,063 Long-term debt 67,500 54,000 Other non-current liabilities
10,375 12,251 Total liabilities 115,252
121,314 Stockholders' equity: Common stock 44 43 Additional
paid-in capital 349,980 334,645 Accumulated other comprehensive
loss (822 ) (651 ) Treasury stock (99,030 ) (95,353 ) Retained
earnings 70,110 66,044 Total
stockholders' equity 320,282 304,728
Total liabilities and stockholders' equity $ 435,534 $
426,042
About Non-GAAP Financial Information
This news release includes non-GAAP financial measures. For a
description of these non-GAAP financial measures, including the
reasons management uses each measure, and reconciliations of these
non-GAAP financial measures to the most directly comparable
financial measures prepared in accordance with Generally Accepted
Accounting Principles (GAAP), please see the section entitled
“About Non-GAAP Financial Measures” and the accompanying tables
entitled “Reconciliation of GAAP to Non-GAAP Measures.”
About Non-GAAP Financial Measures
Perficient provides non-GAAP financial measures for EBITDAS
(earnings before interest, income taxes, depreciation,
amortization, and stock compensation), adjusted net income, and
adjusted earnings per share data as supplemental information
regarding Perficient’s business performance. Perficient believes
that these non-GAAP financial measures are useful to investors
because they provide investors with a better understanding of
Perficient’s past financial performance and future results.
Perficient’s management uses these non-GAAP financial measures when
it internally evaluates the performance of Perficient’s business
and makes operating decisions, including internal operating
budgeting, performance measurement, and the calculation of bonuses
and discretionary compensation. Management excludes stock-based
compensation related to employee stock options and restricted stock
awards, the amortization of intangible assets, acquisition costs,
adjustments to the fair value of contingent consideration, and
income tax effects of the foregoing, when making operational
decisions.
Perficient believes that providing the non-GAAP financial
measures to its investors is useful because it allows investors to
evaluate Perficient’s performance using the same methodology and
information used by Perficient’s management. Specifically, adjusted
net income is used by management primarily to review business
performance and determine performance-based incentive compensation
for executives and other employees. Management uses EBITDAS to
measure operating profitability, evaluate trends, and make
strategic business decisions.
Non-GAAP financial measures are subject to inherent limitations
because they do not include all of the expenses included under GAAP
and because they involve the exercise of discretionary judgment as
to which charges are excluded from the non-GAAP financial measure.
However, Perficient’s management compensates for these limitations
by providing the relevant disclosure of the items excluded in the
calculation of EBITDAS, adjusted net income, and adjusted earnings
per share. In addition, some items that are excluded from adjusted
net income and adjusted earnings per share can have a material
impact on cash. Management compensates for these limitations by
evaluating the non-GAAP measure together with the most directly
comparable GAAP measure. Perficient has historically provided
non-GAAP financial measures to the investment community as a
supplement to its GAAP results to enable investors to evaluate
Perficient’s business performance in the way that management does.
Perficient’s definition may be different from similar non-GAAP
financial measures used by other companies and/or analysts.
The non-GAAP adjustments, and the basis for excluding them, are
outlined below:
Amortization of Intangible AssetsPerficient has incurred expense
on amortization of intangible assets primarily related to various
acquisitions. Management excludes these items for the purposes of
calculating EBITDAS, adjusted net income, and adjusted earnings per
share. Perficient believes that eliminating this expense from its
non-GAAP financial measures is useful to investors because the
amortization of intangible assets can be inconsistent in amount and
frequency, and is significantly impacted by the timing and
magnitude of Perficient’s acquisition transactions, which also vary
substantially in frequency from period to period.
Acquisition CostsPerficient incurs transaction costs related to
acquisitions which are expensed in its GAAP financial statements.
Management excludes these items for the purposes of calculating
EBITDAS, adjusted net income, and adjusted earnings per share.
Perficient believes that excluding these expenses from its non-GAAP
financial measures is useful to investors because these are
expenses associated with each transaction, and are inconsistent in
amount and frequency causing comparison of current and historical
financial results to be difficult.
Adjustments to Fair Value of Contingent ConsiderationPerficient
is required to remeasure its contingent consideration liability
related to acquisitions each reporting period until the contingency
is settled. Any changes in fair value are recognized in earnings.
Management excludes these items for the purposes of calculating
adjusted net income and adjusted earnings per share. Perficient
believes that excluding these adjustments from its non-GAAP
financial measures is useful to investors because they are related
to acquisitions, and are inconsistent in amount and frequency from
period to period.
Stock-Based CompensationPerficient incurs stock-based
compensation expense under Financial Accounting Standards Board
Accounting Standards Codification Topic 718, Compensation – Stock
Compensation. Perficient excludes this item for the purposes of
calculating EBITDAS, adjusted net income, and adjusted earnings per
share because it is a non-cash expense, which Perficient believes
is not reflective of its business performance. The nature of
stock-based compensation expense also makes it very difficult to
estimate prospectively, since the expense will vary with changes in
the stock price and market conditions at the time of new grants,
varying valuation methodologies, subjective assumptions, and
different award types, making the comparison of current results
with forward-looking guidance potentially difficult for investors
to interpret. The tax effects of stock-based compensation expense
may also vary significantly from period to period, without any
change in underlying operational performance, thereby obscuring the
underlying profitability of operations relative to prior periods.
Perficient believes that non-GAAP measures of profitability, which
exclude stock-based compensation are widely used by analysts and
investors.
PERFICIENT, INC. RECONCILIATION OF GAAP TO
NON-GAAP MEASURES (unaudited) (in thousands, except per share
data)
Three Months Ended March 31,
2015 2014 GAAP Net Income $ 4,066 $ 3,045
Additions: Provision for income taxes 2,151 2,229 Amortization
3,801 2,736 Acquisition costs - 1,493 Adjustment to fair value of
contingent consideration 85 214 Stock compensation 3,507
3,197 Adjusted Net Income Before Tax 13,610 12,914 Adjusted
income tax (1) 4,832 4,869 Adjusted Net Income $
8,778 $ 8,045 GAAP Earnings Per Share (diluted) $ 0.12 $
0.09 Adjusted Earnings Per Share (diluted) $ 0.26 $ 0.25 Shares
used in computing GAAP and Adjusted Earnings Per Share (diluted)
34,164 32,628 (1) The estimated adjusted effective tax rate
of 35.5% and 37.7% for the three months ended March 31, 2015 and
2014, respectively, has been used to calculate the provision for
income taxes for non-GAAP purposes.
PERFICIENT,
INC. RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(unaudited) (in thousands)
Three Months Ended March 31,
2015 2014 GAAP Net Income $ 4,066
$ 3,045 Additions: Provision for income taxes 2,151 2,229 Net
interest expense 553 167 Net other expense (income) 280 (20 )
Depreciation 1,081 912 Amortization 3,801 2,736 Acquisition costs -
1,493 Adjustment to fair value of contingent consideration 85
214 Stock compensation 3,507
3,197 EBITDAS (1) $ 15,524
$ 13,973 (1) EBITDAS is a non-GAAP performance measure and
is not intended to be a performance measure that should be regarded
as an alternative to or more meaningful than either GAAP operating
income or GAAP net income. EBITDAS measures presented may not be
comparable to similarly titled measures presented by other
companies.
PerficientBill Davis, 314-529-3555bill.davis@perficient.com
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