~ Services Gross Margin Up 200 Basis Points;
Company Signs Record Second Quarter Bookings ~
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,
2017.
Financial Highlights
For the quarter ended June 30, 2017:
- Revenue decreased 6% to $117.0 million
from $124.4 million for the second quarter of 2016;
- Services revenue decreased 3% to $104.8
million from $107.9 million for the second quarter of 2016;
- Gross margin increased 3% to $39.4
million from $38.3 million for the second quarter of 2016;
- The effective tax rate increased to
68.4% from 34.4% for the second quarter of 2016 primarily due to
the company’s repatriation of foreign earnings from China;
- Net income decreased to $2.4 million
from $5.8 million for the second quarter of 2016 primarily due to
the higher effective tax rate;
- GAAP earnings per share results on a
fully diluted basis decreased to $0.07 from $0.17 for the second
quarter of 2016;
- 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 $0.29
from $0.28 for the second quarter of 2016; and
- EBITDAS (a non-GAAP measure; see
attached schedule, which reconciles to GAAP net income) increased
to $16.9 million from $16.5 million for the second quarter of
2016.
“Positive performance across key operational metrics drove
meaningful margin expansion during the quarter, and we expect
continued margin growth in the third and fourth quarters,” said
Jeffrey Davis, Perficient’s chairman and chief executive officer.
“On top of the margin momentum, June 2017 represented Perficient’s
largest bookings month in history and contributed to a record
second quarter bookings total. Those successes, coupled with record
bookings for the month of July, have Perficient poised for strong
growth over the course of the second half and into 2018.”
Other Highlights
Among other recent achievements, Perficient:
- Acquired Clarity Consulting, a
Chicago-based $27 million annual revenue consultancy with deep
expertise in custom development, cloud implementations, and digital
experience design;
- Received three prestigious awards from
Microsoft – Global Messaging Partner of the Year, U.S. EPG Office
365 Consumption Partner of the Year, and Performance Partner of the
Year;
- Received one Platinum and two Gold
Hermes Creative Awards recognizing innovative website development
delivered by Perficient Digital for Mohawk Flooring, the Carhartt
workwear clothing company, and The Henry Ford history museum;
- Appointed Brian Matthews, co-founder
and general partner of Cultivation Capital, as an independent
member of the company’s Board of Directors;
- Joined the new Microsoft Customer
Engagement Alliance, a group of digital consulting firms that
advise Microsoft on digital transformation initiatives and
collaborate on best practices for addressing the technology
challenges faced by chief marketing officers; and
- Added new customer relationships and
follow-on projects with leading companies such as Adient, Ashley
HomeStore, BJC HealthCare, Blue Cross Blue Shield of Michigan,
Buckingham Asset Management, Caterpillar, Cedars-Sinai, Emerson
Electric, Express Scripts, Flagstar Bank, FordDirect, Ford Motor
Co., GM Financial, Hager Companies, Hunter Douglas, Husqvarna,
Jo-Ann Stores, Learning Care Group, Mohawk Flooring, Ohio Health,
RGA, St. Luke’s Healthcare, Scottrade, and Trinity Health.
Visit www.perficient.com under the heading “Investor Relations”
for additional Performance Highlights for the quarter ended June
30, 2017.
Business Outlook
Perficient expects its third quarter 2017 services and software
revenue, including reimbursed expenses, to be in the range of
$120.5 million to $134.0 million, comprised of $114.3 million to
$121.7 million of revenue from services including reimbursed
expenses and $6.2 million to $12.3 million of revenue from sales of
software. Third quarter adjusted earnings per share (a non-GAAP
measure; see attached schedule which reconciles to GAAP earnings
per share guidance) is expected to be in the range of $0.32 to
$0.34.
Perficient is narrowing its previously provided full year 2017
revenue guidance range to $490 million to $510 million, and
narrowing its full year 2017 adjusted earnings per share guidance
(a non-GAAP measure; see attached schedule which reconciles to GAAP
earnings per share guidance) to a range of $1.19 to $1.29.
Conference Call Details
Perficient will host a conference call regarding second quarter
2017 financial results today at 10 a.m. Eastern.
WHAT:
Perficient Reports Second Quarter 2017
Results
WHEN:
Thursday, August 3, 2017, at 10 a.m. Eastern
CONFERENCE CALL NUMBERS:
855-246-0403 (U.S. and Canada); 414-238-9806 (International)
PARTICIPANT PASSCODE:
43853002
REPLAY TIMES:
Thursday, August 3, 2017, at 1 p.m. Eastern, through Thursday,
August 10, 2017, at 1 p.m.
REPLAY NUMBER:
855-859-2056 (U.S. and Canada); 404-537-3406 (International)
REPLAY PASSCODE:
43853002
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 Premier Partner, and a Platinum
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 2017. 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 most recently filed annual report
on Form 10-K, 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 uncertainties resulting from changes
to policies and laws following the U.S. elections in November
2016;
(4) 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) changes to immigration policies;
g) obtaining favorable pricing to reflect
services provided;
h) adapting to changes in technologies and
offerings;
i) risk of loss of one or more significant
software vendors;
j) making appropriate estimates and
assumptions in connection with preparing our consolidated financial
statements;
k) maintaining effective internal controls;
and
l) changes to tax levels, audits,
investigations, tax laws or their interpretation;
(5) legal liabilities, including intellectual property
protection and infringement or the disclosure of personally
identifiable information;
(6) risks associated with managing growth organically and
through acquisitions; and
(7) 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, 2017 2016
2017 2016 Revenues Services $
104,794 $ 107,882 $ 205,681 $ 217,629 Software and hardware 9,270
11,247 16,269 20,723 Reimbursable expenses 2,962
5,267 6,096 9,886 Total
revenues 117,026 124,396 228,046
248,238
Cost of revenues (exclusive of
depreciation and amortization, shown separately below)
Cost of services 65,561 69,684 130,040 139,858 Software and
hardware costs 7,727 9,742 13,692 17,155 Reimbursable expenses
2,962 5,267 6,096 9,886 Stock compensation 1,385
1,383 2,752 2,795 Total
cost of revenues 77,635 86,076
152,580 169,694 Gross margin 39,391
38,320 75,466 78,544 Selling, general and administrative
23,868 23,204 47,236 47,678 Stock compensation 2,260
2,386 4,576 4,627 Total
selling, general and administrative 26,128 25,590 51,812 52,305
Depreciation 1,205 1,214 2,464 2,407 Amortization 3,537
3,306 7,162 6,671 Acquisition costs 893 162 1,383 405 Adjustment to
fair value of contingent consideration (597 ) (1,189
) (439 ) (952 ) Income from operations 8,225
9,237 13,084 17,708
Net interest expense 657 467 1,004 987 Net other
(income) expense (51 ) (97 ) (69 ) 5
Income before income taxes 7,619 8,867 12,149 16,716
Provision for income taxes 5,210 3,052
7,030 5,495 Net income $ 2,409 $
5,815 $ 5,119 $ 11,221 Basic earnings
per share $ 0.07 $ 0.17 $ 0.15 $ 0.33 Diluted earnings per share $
0.07 $ 0.17 $ 0.15 $ 0.32 Shares used in computing basic
earnings per share 32,942 33,994 33,161 33,953 Shares used in
computing diluted earnings per share 33,747 34,843 34,080 34,891
PERFICIENT, INC. CONSOLIDATED BALANCE
SHEETS (in thousands)
June 30, 2017 December 31, (unaudited)
2016 ASSETS Current assets: Cash and cash equivalents
$ 5,692 $ 10,113 Accounts receivable, net 100,624 103,702 Prepaid
expenses 4,028 3,353 Other current assets 3,051
5,331 Total current assets 113,395 122,499 Property
and equipment, net 8,301 8,888 Goodwill 304,456 275,205 Intangible
assets, net 59,041 45,115 Other non-current assets 6,132
4,869 Total assets $ 491,325 $ 456,576
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 12,044 $ 18,416 Other current
liabilities 31,998 27,637 Total current
liabilities 44,042 46,053 Long-term debt 68,000 32,000 Other
non-current liabilities 19,807 19,058
Total liabilities 131,849 97,111 Stockholders' equity:
Common stock 47 46 Additional paid-in capital 396,801 379,094
Accumulated other comprehensive loss (2,160 ) (2,743 ) Treasury
stock (149,841 ) (126,442 ) Retained earnings 114,629
109,510 Total stockholders' equity 359,476
359,465 Total liabilities and stockholders'
equity $ 491,325 $ 456,576
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, stock compensation, acquisition costs, and adjustment
to fair value of contingent consideration), 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 restricted stock awards, the amortization
of intangible assets, acquisition costs, adjustments to the fair
value of contingent consideration, net other income and expense,
the impact of other infrequent or unusual transactions, 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 EBITDAS, 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.
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.
Write-off of Unamortized Credit Facility Fees
Perficient entered into a new credit agreement during the second
quarter of 2017. In connection with the new agreement, the company
wrote off unamortized credit facility fees associated with the
former credit agreement. Perficient believes that excluding this
non-cash write-off from its non-GAAP financial measures is useful
to investors because the expense is infrequent and not reflective
of the company’s business performance.
Tax Impact of China Repatriation
During the second quarter of 2017, Perficient determined that as
a result of changes in the business and macroeconomic environment,
the foreign earnings of the company’s Chinese subsidiary were no
longer permanently reinvested. The company repatriated $4.8 million
in June 2017 and an additional $4.8 million in July 2017. A
provision for the expected taxes on repatriation of these earnings
was recorded in the amount of $2.5 million during the three and six
months ended June 30, 2017. Perficient believes that excluding this
incremental tax expense from its non-GAAP financial measures is
useful to investors because this expense is infrequent and can
cause comparison of current and historical financial results to be
difficult.
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, 2017
2016 2017 2016
GAAP Net Income $ 2,409 $ 5,815 $ 5,119 $ 11,221 Adjustments:
Provision for income taxes 5,210 3,052 7,030 5,495 Amortization
3,537 3,306 7,162 6,671 Acquisition costs 893 162 1,383 405
Adjustment to fair value of contingent consideration (597 ) (1,189
) (439 ) (952 ) Write-off of unamortized credit facility fees 246 -
246 - Stock compensation 3,645 3,769
7,328 7,422 Adjusted Net Income Before
Tax 15,343 14,915 27,829 30,262 Adjusted income tax (1)
5,554 5,295 9,963 10,682
Adjusted Net Income $ 9,789 $ 9,620 $ 17,866
$ 19,580 GAAP Earnings Per Share (diluted) $
0.07 $ 0.17 $ 0.15 $ 0.32 Adjusted Earnings Per Share (diluted) $
0.29 $ 0.28 $ 0.52 $ 0.56 Shares used in computing GAAP and
Adjusted Earnings Per Share (diluted) 33,747 34,843 34,080 34,891
(1) The estimated adjusted effective tax rate of 36.2% and 35.5%
for the three months ended June 30, 2017 and 2016, respectively,
and 35.8% and 35.3% for the six months ended June 30, 2017 and
2016, respectively, has been used to calculate the provision for
income taxes for non-GAAP purposes. The estimated adjusted
effective tax rate for the three and six months ended June 30, 2017
excludes the tax impact of the China repatriation.
PERFICIENT, INC. RECONCILIATION OF GAAP TO
NON-GAAP MEASURES (unaudited) (in thousands)
Three Months Ended June 30,
Six Months Ended June 30, 2017
2016 2017 2016 GAAP Net Income $
2,409 $ 5,815 $ 5,119 $ 11,221 Adjustments: Provision for income
taxes 5,210 3,052 7,030 5,495 Net interest expense 657 467 1,004
987 Net other (income) expense (51 ) (97 ) (69 ) 5 Depreciation
1,205 1,214 2,464 2,407 Amortization 3,537 3,306 7,162 6,671
Acquisition costs 893 162 1,383 405 Adjustment to fair value of
contingent consideration (597 ) (1,189 ) (439 ) (952 ) Stock
compensation 3,645 3,769 7,328
7,422 EBITDAS (1) $ 16,908 $ 16,499
$ 30,982 $ 33,661
(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)
Q3
2017 Full Year 2017
Low end ofadjusted goal
High end ofadjusted goal
Low end ofadjusted goal
High end ofadjusted goal
GAAP EPS $ 0.16 $ 0.19 $ 0.50 $ 0.62 Non-GAAP Adjustment (a):
Non-GAAP Reconciling Items 0.25 0.23 0.97 0.94
Tax Effect of Above Reconciling Items
(0.09 ) (0.08 ) (0.35 ) (0.34 ) Tax Effect of China Repatriation
- - 0.07 0.07
Adjusted EPS $ 0.32 $ 0.34 $ 1.19 $
1.29
(a) Non-GAAP adjustment represents the impact of amortization
expense, stock compensation, acquisition costs, adjustments to fair
value of contingent consideration, and write-off of unamortized
credit facility fees, net of the tax effect of these adjustments
and the China repatriation, divided by fully diluted shares. The
Company currently expects its Q3 2017 and full year 2017 GAAP
effective income tax rate to be 34.5% and 44.0%, respectively.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170803005568/en/
PerficientBill Davis, 314-529-3555bill.davis@perficient.com
Perficient (NASDAQ:PRFT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Perficient (NASDAQ:PRFT)
Historical Stock Chart
From Apr 2023 to Apr 2024