AUSTIN, Texas – March 6, 2009 – Perficient, Inc. (NASDAQ: PRFT) a leading information technology consulting firm serving Global 2000 and other large enterprise customers throughout North America, today reported financial results for the quarter and year ended December 31, 2008.
Financial Highlights
For the fourth quarter ended December 31, 2008:
- Revenues decreased 9% to $56.8 million from $62.4 million during the fourth quarter of 2007;
- Services revenue, excluding reimbursable expenses, decreased 8% to $49.2 million from $53.8 million during the fourth quarter of 2007;
- Earnings per share on a fully diluted basis decreased 80% to $0.03 from $0.15 per share during the fourth quarter of 2007. Fourth quarter 2008 earnings per share included a non-cash impairment charge of $1.6 million (or $0.03 per share) related primarily to the value of intangible customer relationship assets. Excluding this non-cash charge, earnings per share was $0.06 for the fourth quarter 2008 (see attached schedule detailing this calculation);
- Non-GAAP earnings per share (see attached schedule which reconciles to GAAP earnings per share) on a fully diluted basis decreased 41% to $0.13 from $0.22 per share during the fourth quarter of 2007;
- Net income decreased 83% to $0.8 million compared to $4.5 million during the fourth quarter of 2007. Excluding the non-cash charge described above, net income was $1.9 million for the fourth quarter of 2008 (see attached schedule detailing this calculation);
- EBITDA (a non-GAAP measure; see attached schedule which reconciles to GAAP net income) decreased 50% to $4.8 million from $9.5 million during the fourth quarter of 2007. EBITDA included GAAP non-cash stock compensation expense of approximately $2.2 million and $1.7 million in the fourth quarter of 2008 and 2007, respectively;
- Gross margin for services revenue excluding reimbursable expenses and stock compensation expense was 32.6% compared to 39.2% in the fourth quarter of 2007. The decline in gross margins is primarily the result of lower utilization; and
- Gross margin for software and hardware revenue was 24.5% compared to 15.4% in the fourth quarter of 2007.
For the year ended December 31, 2008:
- Revenue increased 6% to $231.5 million compared to $218.1 million during 2007;
- Services revenue, excluding reimbursable expenses, increased 8% to $207.5 million compared to $191.4 million during 2007;
- Earnings per share on a fully diluted basis decreased 39% to $0.33 from $0.54 per share during 2007. Excluding the non-cash charge mentioned above and the one-time non-cash charge of $0.9 million related to the write-off of deferred offering costs incurred and paid in 2005, earnings per share was $0.39 for 2008 (see attached schedule detailing this calculation);
- Non-GAAP earnings per share (see attached schedule which reconciles to GAAP earnings per share) on a fully diluted basis decreased 15% to $0.66 from $0.78 per share during 2007;
- Net income decreased 38% to $10.0 million from $16.2 million during 2007. Excluding the non-cash charges described above, net income was $11.7 million for 2008 (see attached schedule detailing this calculation);
- EBITDA (a non-GAAP measure; see attached schedule which reconciles to GAAP net income) decreased 22% to $26.3 million from $33.7 million during 2007. EBITDA included GAAP non-cash stock compensation expense of approximately $9.0 million and $6.1 million for the years ended December 31, 2008 and 2007, respectively;
- Gross margin for services revenue excluding reimbursable expenses and stock compensation expense was 35.6% compared to 39.1% during 2007;
- Gross margin for software and hardware revenue was 19.4% compared to 15.9% during 2007;
- The Company continued to generate strong operating cash flow during 2008 and had a cash balance of $23.0 million at December 31, 2008; and
- The Company repurchased 1,848,300 shares of its stock during the year at a cost of $9.2 million. Since the end of the year we have purchased an additional 450,000 shares bringing the total shares purchased to date to 2,298,300 shares at a total cost of $11.1 million.
“The fourth quarter was a solid close to a challenging year,” said Jack McDonald, Perficient’s chairman and chief executive. “While 2008 did present significant obstacles, we continued to execute against our plan, delivering record revenues, while generating strong cash flow. We continued to strengthen our balance sheet and emerge from 2008 with record levels of cash, no debt and full access to a $50 million credit facility with an accordion feature that provides up to $75 million in borrowing capacity. We believe the share repurchases we have completed will provide earnings per share accretion over time.”
“We expect the market environment in 2009 to remain adversely impacted by the broader economy. Therefore, we’ve made tough but necessary decisions to reduce costs, while continuing to build our balance sheet. Our investments into key industry verticals and toward strengthening our multi-sourcing capabilities by achieving CMMI Level 5 status at our development center in China have us well-positioned for 2009. We remain confident in our capacity to continue to deliver meaningful cash flow and profits,” said Jeffrey Davis, Perficient’s president and chief operating officer. “Our solutions portfolio is broader and stronger than it has ever been and Perficient remains committed to our long-term growth plans and goals.”
Other 2008 Highlights
Among other achievements in 2008, Perficient:
-- Increased its offshore capabilities by earning CMMI Level 5 certification at its Global Development Center in Hangzhou, China;
-- In the fourth quarter, added new customer relationships and follow-up projects with leading companies including: Abercrombie & Fitch, Adesa, Avaya, Baxter, Beauticontrol, Classified Ventures, Covance, Ercot, Focus on the Family, Guthy Renker, Oncor, Owens Corning and many others;
-- For the third consecutive year, management and its auditors did not identify any material weaknesses in the Company’s internal controls over financial reporting;
--Received multiple partner and high-growth nominations and awards including being recognized by Fortune (Fortune 100 Fastest-Growers List), CRN (2008 Fast Growth 100 List), IBM (Top Lotus Partner in North America), Microsoft (National Systems Integrator Partner), EMC Documentum (Select Services Team Partner of the Year and Content Management and Archive Regional Partner of the Year), Deloitte and Touche (Texas Fast 50 and North American 500 List), VARBusiness (VB500 Lists); and
-- Entered into an expanded and enhanced $50 million credit facility, which provides an accordion feature with access up to $75 million. Business Outlook
The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. The company expects its first quarter 2009 services, software and hardware revenues, including reimbursed expenses, to be in the range of $48.7 million to $51.6 million, comprised of $46.9 million to $48.8 million of revenue from services, including reimbursed expenses, and $1.8 million to $2.8 million of revenue from sales of software and hardware. The guidance range of services revenue, including reimbursed expenses, would represent a decrease in services revenue of 12% to 16% over the first quarter of 2008.
Conference Call Details
Perficient will host a conference call regarding fourth quarter and full year 2008 financial results today at 9:00 a.m. EST.
WHAT: Perficient Fourth Quarter and Full Year 2008 Results
WHEN: Friday, March 6, 2009, at 9:00 a.m. EST
CONFERENCE CALL NUMBERS: 888-713-4205 (U.S. and Canada) 617-213-4862 (International)
PARTICIPANT PASSCODE: 80031000 REPLAY TIMES: Friday, March 6, 2009, at 11:00 a.m. EST, through Friday, March 13, 2009
REPLAY NUMBER: 888-286-8010 (U.S. and Canada) 617-801-6888 (International)
REPLAY PASSCODE: 57455019
About Perficient
Perficient is a leading information technology consulting firm serving Global 2000 and enterprise customers throughout North America. Perficient’s professionals serve clients from a network of 19 offices in North America and three offshore locations, in Eastern Europe, India and China. Perficient helps clients use Internet-based technologies to improve productivity and competitiveness, strengthen relationships with customers, suppliers and partners and reduce information technology costs. Perficient, traded on the Nasdaq Global Select Market, 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 TeamTIBCO partner, a Microsoft National Systems Integrator and Gold Certified Partner, a Documentum Select Services Team Partner, and an Oracle Certified Partner. For more information, please 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 2009. 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 are disclosed under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2008. 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 and Section 21E of the Securities Exchange Act of 1934. 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.
Consolidated Statements of Operations
Consolidated Balance Sheets
About Non-GAAP Financial Measures
Perficient, Inc. (“Perficient”) provides non-GAAP measures for EBITDA, net income and net income 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 exclude non-operating charges. Perficient’s management excludes these non-operating charges when it internally evaluates the performance of Perficient’s business and makes operating decisions, including internal budgeting, performance measurement and the calculation of bonuses and discretionary compensation, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of Perficient. Accordingly, management excludes stock-based compensation related to employee stock options and restricted stock awards, the amortization of purchased intangible assets and other non-operating charges, and income tax effects of the foregoing, when making operational decisions.
Perficient believes that providing the non-GAAP measures management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand Perficient’s financial performance in comparison to historical periods. In addition, it allows investors to evaluate Perficient’s performance using the same methodology and information that is used by Perficient’s management.
Non-GAAP 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 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 non-GAAP EBITDA, non-GAAP net income and non-GAAP net income per share. In addition, some items that are excluded from non-GAAP net income and non-GAAP earnings per share can have a material impact on cash flows and stock compensation charges can have a significant impact on earnings. 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 measures to the investment community as a supplement to its GAAP results in order 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 measures used by other companies and/or analysts.
The non-GAAP adjustments, and the basis for excluding them, are outlined below:
Stock-based Compensation
Perficient incurs stock-based compensation expense under Statement of Financial Accounting Standards No. 123R (As Amended), Share Based Payment (“SFAS 123R”). Perficient excludes this item for the purposes of calculating non-GAAP EBITDA, non-GAAP net income and non-GAAP net income per share because it is a non-cash expense that Perficient believes is not reflective of its business performance. The nature of the 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. The exclusion of stock-based compensation from the non-GAAP measures also allows a consistent comparison of Perficient’s relative historical financial performance, since the method for accounting for stock-based compensation changed at the beginning of fiscal year 2006 when Perficient adopted SFAS 123R. Finally, Perficient believes that non-GAAP measures of profitability that exclude stock-based compensation are widely used by analysts and investors.
Amortization of Intangible Assets
Perficient has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions Perficient has made. Management excludes these items for the purpose of calculating non-GAAP EBITDA, non-GAAP net income and non-GAAP net income per share. Perficient believes that eliminating this expense from its non-GAAP 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.
Impairment of Intangible Assets
During the fourth quarter 2008, Perficient recorded a non-cash charge of $1.6 million to impair certain intangible assets. Perficient has excluded this charge from its calculation of non-GAAP measures presented herein. Perficient believes that eliminating this expense from its non-GAAP measures is useful to investors because the impairment charge is a non-recurring expense that makes comparison of current and historical financial results difficult.
Write-off of Deferred Offering Costs
During the third quarter 2008, Perficient incurred a non-cash charge to write off deferred offering costs associated with a shelf registration statement. Perficient management determined there was no intent to use the shelf registration to complete an offering in the near term and as a result, these costs were required to be expensed. Perficient has excluded this charge from its calculation of non-GAAP measures presented herein.