~ Earnings Per Share up 42%, Net Income up 45%
~
Perficient, Inc. (NASDAQ: PRFT) (“Perficient”), the leading
digital transformation consulting firm serving Global 2000® and
other large enterprise customers throughout North America, today
reported its financial results for the quarter ended June 30,
2016.
Financial Highlights
For the quarter ended June 30, 2016:
- Revenue increased 15% to $124.4 million
from $108.5 million for the second quarter of 2015;
- Services revenue increased 11% to
$107.9 million from $97.2 million for the second quarter of
2015;
- Gross margin increased 10% to $38.3
million from $34.9 million for the second quarter of 2015;
- Net income increased to $5.8 million
from $4.0 million for the second quarter of 2015;
- GAAP earnings per share results on a
fully diluted basis increased to $0.17 from $0.12 for the second
quarter of 2015;
- 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 $0.28
from $0.25 for the second quarter of 2015; and
- EBITDAS (a non-GAAP measure; see
attached schedule, which reconciles to GAAP net income) increased
to $16.5 million from $13.4 million for the second quarter of
2015.
“Volume continues to grow strongly, as evidenced by a 17%
increase in organic billable hours delivered during the quarter,”
said Jeff Davis, chief executive officer and president. “While the
extension of a project timeline from our largest client has
impacted second quarter and projected second half revenue and
earnings, this backlog has simply shifted into 2017. Perficient’s
long-term thesis remains intact and we expect this delay will drive
a material increase to organic growth in 2017.”
Other Highlights
Among other recent achievements, Perficient:
- Received all three Microsoft National
Solution Provider Partner of the Year awards for the second
consecutive year, and was Microsoft’s East Region Cloud Partner of
the Year, underscoring Perficient’s extensive capabilities in, and
successful implementations of, Microsoft solutions;
- Bolstered its reputation as a premier
employer in Minnesota with a Top Workplace designation from the
Minneapolis Star Tribune newspaper for the second year in a row and
fourth since 2012, adding to Perficient’s Top Workplace honors in
Denver, Chicago, and St. Louis;
- Became an Adobe Experience Manager
Specialized Partner for the Americas, placing Perficient among the
most skilled and credentialed global partners for Adobe;
- Partnered with Amazon.com to offer
Amazon Web Services – a highly reliable, scalable, low-cost
infrastructure platform powering thousands of businesses in 190
countries – to expand Perficient’s cloud platform portfolio and
accelerate the digital transformation journey for its
customers;
- Engaged its digital agency, Perficient
Digital, to redesign The Henry Ford’s extensive website, enabling
the internationally recognized museum and cultural destination to
win a Silver MUSE Award for Online Presence by the American
Alliance of Museums; and
- Added new customer-relationship and
follow-on projects with leading companies such as Allegis Group,
Ancestry.com, Bell Canada, Cedars-Sinai Medical Center, Cengage
Learning, Cox Media Group, Flagstar Bank, Mayo Clinic, Moffitt
Cancer Center and Research Institute, Panasonic Avionics, PVH
Corp., TCF Bank, and Trinity Health.
Business Outlook
The following statements are based on current expectations.
These statements are forward-looking, and actual results may differ
materially. See “Safe Harbor Statement” below.
Perficient expects its third quarter 2016 services and software
revenue, including reimbursed expenses, to be in the range of
$118.5 million to $128.5 million, comprised of $109.5 million to
$115.5 million of revenue from services including reimbursed
expenses and $9 million to $13 million of revenue from sales of
software. The midpoint of third quarter 2016 services revenue
guidance represents growth of 3% over third quarter 2015 services
revenue.
Perficient revised its full year 2016 revenue guidance to be in
the range of $495 million to $515 million, its 2016 GAAP earnings
per share guidance to a range of $0.70 to $0.82, and 2016 adjusted
earnings per share (a non-GAAP measure; see attached schedule,
which reconciles to GAAP earnings per share guidance) guidance to a
range of $1.25 to $1.35.
Conference Call Details
Perficient will host a conference call regarding second quarter
2016 financial results today at 10 a.m. Eastern.
WHAT: Perficient Reports Second Quarter 2016
ResultsWHEN: Thursday, August 4, 2016, at 10 a.m.
EasternCONFERENCE CALL NUMBERS: 844-742-4248 (U.S. and
Canada); 661-378-9471 (International)PARTICIPANT PASSCODE:
46527500REPLAY TIMES: Thursday, August 4, 2016, at 1 p.m.
Eastern, through Thursday, August 11, 2016REPLAY NUMBER:
855-859-2056 (U.S. and Canada) 404-537-3046
(International)REPLAY PASSCODE: 46527500
About Perficient
Perficient is the leading digital transformation consulting firm
serving Global 2000® and enterprise customers throughout North
America. With unparalleled information technology, management
consulting, and creative capabilities, Perficient and its
Perficient Digital agency deliver vision, execution, and value with
outstanding digital experience, business optimization, and industry
solutions. Our work enables clients to improve productivity and
competitiveness; grow and 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, an Adobe Business Solution Partner, and a Gold
Salesforce Consulting 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 2016. 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, 2015, 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;i) making appropriate estimates and assumptions in
connection with preparing our consolidated financial statements;j)
maintaining effective internal controls; andk) managing
fluctuations in foreign currency exchange rates;
(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 June 30, Six Months
Ended June 30, 2016 2015
2016 2015 Revenues Services $
107,882 $ 97,186 $ 217,629 $ 195,815 Software and hardware 11,247
7,468 20,723 15,970 Reimbursable expenses 5,267
3,810 9,886 7,277 Total revenues
124,396 108,464 248,238
219,062
Cost of revenues (exclusive of
depreciation and amortization, shown separately below)
Cost of services 69,684 61,930 139,858 125,073 Software and
hardware costs 9,742 6,636 17,155 13,364 Reimbursable expenses
5,267 3,810 9,886 7,277 Stock compensation 1,383
1,187 2,795 2,387 Total cost of
revenues 86,076 73,563 169,694
148,101 Gross margin 38,320 34,901 78,544
70,961 Selling, general and administrative 23,204 22,653
47,678 44,389 Stock compensation 2,386 2,160
4,627 4,467 Total selling, general and
administrative 25,590 24,813 52,305 48,856 Depreciation
1,214 1,093 2,407 2,174 Amortization 3,306 3,411 6,671 7,212
Acquisition costs 162 21 405 21 Adjustment to fair value of
contingent consideration (1,189 ) 89
(952 ) 174 Income from operations 9,237
5,474 17,708 12,524 Net interest
expense 467 548 987 1,101 Net other (income) expense (97 )
(9 ) 5 271 Income before income taxes
8,867 4,935 16,716 11,152 Provision for income taxes 3,052
938 5,495 3,089 Net
income $ 5,815 $ 3,997 $ 11,221 $ 8,063
Basic earnings per share $ 0.17 $ 0.12 $ 0.33 $ 0.24 Diluted
earnings per share $ 0.17 $ 0.12 $ 0.32 $ 0.24 Shares used
in computing basic earnings per share 33,994 33,333 33,953 33,190
Shares used in computing diluted earnings per share 34,843 34,138
34,891 34,151
PERFICIENT, INC. CONSOLIDATED BALANCE SHEETS
(unaudited) (in thousands)
June 30, December 31, 2016
2015 ASSETS Current assets: Cash and cash equivalents
$ 9,490 $ 8,811 Accounts receivable, net 109,412 120,612 Prepaid
expenses 3,537 3,297 Other current assets 2,228
7,032 Total current assets 124,667
139,752 Property and equipment, net 10,351 7,891 Goodwill 269,536
269,383 Intangible assets, net 47,965 53,408 Other non-current
assets 3,891 3,930 Total
assets $ 456,410 $ 474,364
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 14,812 $ 18,793 Other current liabilities
27,789 37,783 Total current
liabilities 42,601 56,576 Long-term debt 36,000 56,000 Other
non-current liabilities 14,327
12,978 Total liabilities 92,928 125,554 Stockholders'
equity: Common stock 45 45 Additional paid-in capital 372,343
364,786 Accumulated other comprehensive loss (2,055 ) (1,875 )
Treasury stock (107,123 ) (103,197 ) Retained earnings
100,272 89,051 Total
stockholders' equity 363,482
348,810 Total liabilities and stockholders' equity $ 456,410
$ 474,364
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 Assets
Perficient 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 Costs
Perficient incurs transaction costs related to merger and
acquisition-related activities 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 Consideration
Perficient 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 Compensation
Perficient incurs stock-based compensation expense under
Financial Accounting Standards Board Accounting Standards
Codification Topic 718, Compensation – Stock Compensation. In
addition, the Company adopted Accounting Standards Update No.
2016-09, Improvements to Employee Share-Based Payment Accounting,
on January 1, 2016. Perficient excludes stock-based compensation
expense and the related tax effects for the purposes of calculating
EBITDAS, adjusted net income, and adjusted earnings per share
because stock-based compensation 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 June 30, Six Months
Ended June 30, 2016 2015 2016 2015
GAAP Net Income $ 5,815 $ 3,997 $ 11,221 $ 8,063 Additions:
Provision for income taxes 3,052 938 5,495 3,089 Amortization 3,306
3,411 6,671 7,212 Acquisition costs 162 21 405 21 Adjustment to
fair value of contingent consideration (1,189 ) 89 (952 ) 174 Stock
compensation 3,769 3,347 7,422
6,854 Adjusted Net Income Before Tax 14,915 11,803 30,262
25,413 Adjusted income tax (1) 5,295 3,423
10,682 8,234 Adjusted Net Income $ 9,620
$ 8,380 $ 19,580 $ 17,179 GAAP Earnings Per
Share (diluted) $ 0.17 $ 0.12 $ 0.32 $ 0.24 Adjusted Earnings Per
Share (diluted) $ 0.28 $ 0.25 $ 0.56 $ 0.50 Shares used in
computing GAAP and Adjusted Net Income Per Share (diluted) 34,843
34,138 34,891 34,151 (1) The estimated adjusted effective
tax rate of 35.5% and 29.0% for the three months ended June 30,
2016 and 2015, respectively, and 35.3% and 32.4% for the six months
ended June 30, 2016 and 2015, 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 June 30, Six Months Ended June 30,
2016 2015 2016 2015 GAAP
Net Income $ 5,815 $ 3,997 $ 11,221 $ 8,063 Additions: Provision
for income taxes 3,052 938 5,495 3,089 Net interest expense 467 548
987 1,101 Net other (income) expense (97 ) (9 ) 5 271 Depreciation
1,214 1,093 2,407 2,174 Amortization 3,306 3,411 6,671 7,212
Acquisition costs 162 21 405 21 Adjustment to fair value of
contingent consideration (1,189 ) 89 (952 ) 174 Stock compensation
3,769 3,347 7,422
6,854 EBITDAS (1) $ 16,499 $ 13,435 $ 33,661 $
28,959 (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.
PERFICIENT, INC. RECONCILIATION OF GAAP TO NON-GAAP
MEASURES (unaudited)
2016 - Low end
of adjusted goal
2016 - High end
of adjusted goal
Full Year GAAP EPS $ 0.70 $ 0.82 Non-GAAP Adjustment (1): Non-GAAP
Reconciling Items $ 0.83 $ 0.79 Tax Effect of Reconciling Items $
(0.28 ) $ (0.26 ) Full Year Adjusted EPS $ 1.25 $ 1.35
(1) Non-GAAP adjustment represents the
impact of amortization expense, stock compensation, acquisition
costs, and adjustments to fair value of contingent consideration,
net of the tax effect of these adjustments, divided by fully
diluted shares. The Company currently expects its 2016 effective
income tax rate to be 33.5%.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160804005682/en/
Perficient, Inc.Bill Davis,
314-529-3555bill.davis@perficient.com
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